Here's our summary of key economic events overnight that affect New Zealand, with news we are nearing the end of the second quarter of 2020 and it has been a terrible one for economies around the world.
The American GDPNow tracker suggests that their economy has shrunk at a stunning annualised rate of -45%. If you are sceptical of AI models, then know that the median "blue-chip" economists' estimates are for a -35% shrinkage rate in Q2-2020. (On a similar basis, New Zealand is facing its own -15% Q2-2020 economic shrinkage - an all-time record decline, but nothing like what other countries are facing.)
In the US, Apple has said it will be closing retail stores, especially in states where the virus is raging still. This is being taken as a signal that the American economic recovery from the virus shutdowns will be weaker than previously assumed.
Canadian retail sales fell much more than expected in April. Of course, a record sharp drop was expected (-15%) but the actual drop was more than -26% month-on-month, and down -32% year-on-year.
China is reporting that electricity usage rose +4.6% in May from the same month a year ago. Electricity usage is often seen as a proxy for how the real Chinese economy is performing.
Since the reopening of the Chinese economy in April, the iron ore price has risen +25%. In the same time, the copper price has risen a similar amount, but to be fair with the copper price, it had fallen very sharply from the end of 2019, so unlike iron ore it is only back to it previous pre Covid-19 levels. Ditto for coal which is back at five year lows. Precious metals prices have been virtually flat now for more than ten weeks, struggling to find any direction.
Global shipping is in turmoil in large part because crews are trapped on board. Most ships are registered with flags of convenience and almost all countries are reluctant to let crews disembark. Even if they could, attracting replacement crews will involve long term "prison sentences" and is now highly unlikely. A direct consequence of all this is that shipping rates have zoomed sharply higher, trebling in the past thirty days. This will be a severe inhibitor to global trade and will hurt New Zealand's export returns.
Taiwan said its exports rose just +0.4% in May 2020 from the same month in 2019. That was lower than expected but at least it was a rise. So far, the Taiwanese central bank has bucked the international trend of cutting rates, but it doesn't see the growth of its trading partners in a very positive light and has trimmed the 2020 forecasts for the independent island nation.
The Russian central bank cut its policy rate by a full -1% over the weekend to 4.5% as their economy stumbles though its coronavirus crisis. They are expecting a GDP drop of up to -6% in 2020.
Australia is claiming that "China's government" has escalated "malicious" cyber attacks against Australian businesses and government agencies including critical infrastructure. The claim came from a careful public announcement by their Prime Minister. Although he did not name China, he confirmed it is when answering reporters' questions. Venture capital firms, defense contractors, and the NSW State government have all been hit hard.
In equity markets, futures trading suggests that when Wall Street reopens tomorrow, the S&P500 will fall about -1.3%.
The latest compilation of COVID-19 data is here. The global tally is now 8,842,500 which is up +290,000 since Saturday and a faster rising pace. Global deaths now exceed 466,000. Brazil is the second country to report more than 1 mln cases reporting more than +40,000 new cases per day. India is the next one to watch with reported cases rising quickly recently to +15,000 per day.
A quarter of all reported cases globally are in the US, which is up +30,000 since this time yesterday to 2,267,400. Twelve states have hit daily peaks as a 'forest fire' of infection spreads sharply. American cases overall are up +15% in the last two weeks alone. But the US President has instructed that testing be scaled back so as to try and cap the reported totals and make it not look so bad. US deaths now exceed 120,000.
In Australia, there have been 7461 cases, +25 since yesterday and a turning tide of cases especially in Victoria and NSW. Their death count is unchanged at 102 deaths however, but their recovery rate has slipped to under 93%. 15 people are in hospital there (-1) with 2 in ICU (unchanged). There are now 463 active cases in Australia (+17).
The UST 10yr yield is unchanged at 0.69%. Their 2-10 curve is marginally flatter at +50 bps. Their 1-5 curve is also holding at +15 bps, while their 3m-10yr curve is also marginally flatter at +56 bps. The Aussie Govt 10yr yield is unchanged after Friday's sharp fall, still at 0.86%. The China Govt 10yr is also unchanged at 2.90%. And the NZ Govt 10 yr yield still at 0.90%.
The gold price is higher again, up another +US$2 to US$1,744/oz.
Oil prices have held over the weekend, now just under US$40/bbl in the US. The Brent price is just over US$42/bbl.
The Kiwi dollar is unchanged this morning at 64.1 USc. On the cross rates we are stable too at 93.8 AUc and against the euro we are still at 57.3 euro cents. That means our TWI-5 is holding at 69.1.
The bitcoin price is also still in its quiet phase, eleven days where the price has changed but +/-½% and it will start this week at US$9,345 today. 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 ».
Our currency charts are here.
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