Here's our summary of key economic events overnight that affect New Zealand, with news that after losing full power to some key engines, the US economy is in serious trouble and losing altitude quickly now.
American jobless claims have now risen almost +41 mln in the past ten weeks, after another +2.1 mln were added last week. The weekly additions may be declining, but still, a backlog may be leaving many uncounted.
And US durable goods order levels are still crashing lower. In March they fell -16.6% month-on-month and in April they were down -17.2% on that basis. That leaves them an eye-watering -29% lower than the same month a year ago. Capital goods orders are down -27% on that basis. There has never been anything like these sorts of falls for American durable goods production, ever.
Things were declining in March before the April free-fall. US GDP fell -5.0% in Q1-2020 after rising +2.1% in Q4-2019. That is a huge change, and April data isn't included yet. To get an idea of what Q2-2020 will look like, the Atlanta Fed's GDPNow estimate says it will be down at the rate of -40%. Again, a collapse at this level is unprecedented. This is a world-scale economic shock.
(Just for perspective, the Massey University GDP Live tracker shows the New Zealand Q2-2020 economic activity contracting -15% in the quarter, or -2% year-on-year.)
So it will be no surprise to learn that house sales in April in the US took a massive tumble, down -34%. The realtor industry is hoping that April is the low-point.
And because it undermines his re-election chances, the White House is stopping all economic projections.
With the global economic engine stuttering, it is no surprise that international trade is faltering. Compared with the fourth quarter of 2019, exports fell by -4.3% and imports by -3.9% in Q1-2020, and now stand at their lowest levels since the second quarter of 2017. Early indications for April point to more precipitous falls in the second quarter, with Korean and Japanese exports, for example, falling -22% and -11%, respectively, compared with March 2020. It is hard to see May or June levels returning to anything but lower levels than a year ago.
In Europe, both consumer and business sentiment levels are remaining in the basement.
In China, they are ignoring US threats and have passed their opaque Hong Kong security law extensions.
At the same time, China launched NZ$900 bln of new stimulus, described as their "largest-ever economic rescue package". "We are providing water so the fish can survive", the Premier said.
Despite all this economic news, equity markets are all up again today. The S&P500 has gained another +0.8% today. European markets all rose more than +1%. Yesterday however, Shanghai was only up marginally. Hong Kong fell another -0.7%. But Tokyo was up a strong +2.3%, and the ASX200 was up +1.3%. The NZX50 however never got invited to the party, falling -1.7%.
The latest compilation of Covid-19 data is here. The global tally is now 5,931,100 and up a startling +291,000 from this time yesterday, which is rising at a much faster pace than recently.
Now, just under 29% of all cases globally are in the US, which is up +22,000 since this time yesterday to 1,711,300. This is a similar rate of increase and still more than any other country. US deaths are now exceed 101,000. Global deaths now exceed 358,000.
In Australia, there are now 7150 cases (+11), 103 deaths (unchanged) and a recovery rate of just on 92%. 27 people are in hospital there (-3) with 5 in ICU (-1). There are now 467 active cases in Australia (-3).
There were zero cases again yesterday, leaving the total at 1504 cases identified as either confirmed (1154) or probable (350). But 13 people with the disease were confirmed as recovered taking that total to 1474, so now only 8 people are left with it in New Zealand. Our recovery rate is now just on 98%. One earlier death of a 96 year old has been classified as due to the coronavirus, so official deaths are now 22.
The UST 10yr yield is back up +3 bps today at 0.70%. Their 2-10 curve is a little steeper at +53 bps. Their 1-5 curve is still at +17 bps, and their 3m-10yr curve is also unchanged +58 bps. The Aussie Govt 10yr yield is up +2 bps at 0.90%. The China Govt 10yr is little-changed at 2.70%. And the NZ Govt 10 yr yield is firmer, up +4 bps in overnight trade at 0.76%.
The gold price is basically unchanged again today, up +US$2 at US$1,715/oz.
Oil prices are back up today by about +US$1/bbl. The US crude price is now just under US$34/bbl. The Brent price is just over US$35.50/bbl. However, American inventories of crude oil leapt unexpectedly last week and that data may change these prices soon.
The Kiwi dollar has firmed overnight. We are now just over 62.2 USc. On the cross rates we are little-changed at 93.4 AUc. Against the euro we are also similar at 56.1 euro cents. That means our TWI-5 is up to just under 67.7.
Bitcoin is up solidly again today, up another +2.9% from this time yesterday to US$9,467. 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 ».