Here's our summary of key economic events overnight that affect New Zealand, with news it's all about the jobs crisis today.
American jobless claims came in at almost +3 mln last week, a small decrease from the previous week but +20% more than was expected. And the prior week was revised higher. That means in the past eight weeks, 36 mln people have applied for benefits or 23% of those employed at the start of March. The unemployment rate in households earning less than US$40,000 per year (NZ$67,000), is now running at 40%.
A second wave of layoffs in the US is underway, according to early anecdotal reports.
And a new Fed survey taken in March and before the fierce bite of layoffs started showed that a quarter of all adults have had their pay cut. The level will be much higher in April and May. Nowhere else in the world has seen a disaster anything like this.
China's inbound investment is rising again after a brief reduction. It rose almost +9% in April from the same month a year ago after falls in February and March.
China said it is likely to increase its government deficit to about 3.5% of GDP, a rise from 2.8% in 2019. This will allow it to "invest" a vast US$100 bln in additional spending on top of the US$1.3 tln it already plans to spend more than it takes in revenues. Like the US, China is another major debt hog. But unlike the US, it runs external surpluses.
And China purchased about three quarters of Brazil's soybean exports, effectively freezing out the US. It is also a trade that monetises rainforest clearing.
Japanese machine tool orders fell almost -50% in April on a year-on-year basis and are now at their lowest level in more than ten years.
Things aren't happy employment-wise in Australia either. Their unemployment rate jumped to 6.3% in April, with -580,000 jobs lost during the month and a net -400,000 few jobs in April than the same month a year ago. It was the biggest monthly fall in employment since records started being kept in 1978. It the same year, their labour force actually shrank as their participation rate slumped to just 63.7% as the crisis discouraged hundreds of thousands of people of employment age. Of those wanting work, there are now 832,000 people looking for full or part-time work.
But not everyone is hurting in Australia. Google saw its ad revenues rise +16% in the past year and made a local profit of over AU$1.2 bln. But through 'clever' tax maneuvering, it chose to pay just $100 mln in tax there (8%), and left local publishers on the brink of collapse. Facebook would have been similar.
The latest compilation of Covid-19 data is here. The global tally is now 4,406,000 and up +93,000 from this time yesterday which is higher level of increase.
Now, just on 32% of all cases globally are in the US, which is up +21,000 since this time yesterday to 1,401,000. This is a slightly lower rate of increase. US deaths are now exceed 85,000. Global deaths now exceed 300,000. Both Canada and Mexico are struggling with containment although not to the same extent as the US. The situations in Russia, the UK, Brazil, India and Peru are all worsening.
In Australia, there are now 6989 cases (+14 since yesterday), 98 deaths (unchanged) and an unchanged recovery rate of just on 90%. 50 people are in hospital there (+1) with 18 in ICU (+1). There are now 688 active cases in Australia (-16).
Another zero day yesterday in New Zealand, the third in a row. There are still 1497 Covid-19 cases here. Twenty-one people have died (unchanged). There are still only two people left in hospital with the disease (unchanged), and none are in ICU. Our recovery rate is now just over 94% with 86 people known to be infected (-9) and 68 of those are in 12 clusters. That means 18 other cases are recovering in self isolation in the community (-4 from yesterday).
The UST 10yr yield is lower to just under 0.62% and a third consecutive -3 bps retreat. Their 2-10 curve is little-changed at +47 bps. Their 1-5 curve is marginally flatter at +14 bps, and their 3m-10yr curve is also flatter +53 bps. The Aussie Govt 10yr yield is down -4 bps to 0.89%. The China Govt 10yr is up +3 bps at 2.71%. And the NZ Govt 10 yr yield is sharply higher, retracting the RBNZ MPS induced fall, up +18 bps to 0.67%.
Gold is firmer again today, up another +US$17 to US$1,728/oz.
Oil prices are higher today. The US crude price is up by about +US$2/bbl to just over US$27/bbl. The international oil price is up a similar amount to just under US$31/bbl.
The Kiwi dollar is softer this morning and now just under 59.7 USc. On the cross rates we are little-changed at 92.8 AUc. Against the euro we are still at 55.3 euro cents. These shifts mean the TWI-5 is now 65.9.
Bitcoin is higher today however, up another +5.9% to US$9,607. In fact, that continues its rather extreme volatility in May, moving +/-6% during the month a number of times. The bitcoin rate is charted in the exchange rate set below.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.