Here's our summary of key economic events overnight that affect New Zealand, with more and more news detailing the intensity of the global slowdown.
American claims for unemployment insurance filed last week came in at 1,480,000 and far higher than was expected (1.3 mln). More than 20 mln people are on these State programs which typically last about six months (it varies by State) - then you are on your own.
US durable goods orders bounced back better than expected in May from April after two terrible declines - but April was an awful benchmark. But they are still -21% lower in May 2020 than May 2019, a decline of -US$51 bln for the month. That will hurt. New orders for non-defence capital goods are down only -9% year on year in May. Otherwise this would be seen as a disaster too, but in the context of the times it is better than expected.
The US merchandise trade deficit in May came in at -$72.4 bln, much worse than for March and April and almost as bad as for May 2019. Not helping was that exports fell -36% year-on-year while imports fell 'only' -26%.
Coming up, the US Fed is about to release its updated assessment of stress testing their systemically important banks.
In Mexico, their central bank chopped -50 bps from their policy rate, taking it down to 5% even. That comes after the usual terrible retail and trade data for April and May were released.
India is moving to impose restrictions on imports from China.
In China, even though there are some very mixed signals and export order levels are weak, their economy does seem to be staging a minor recovery. Importantly for them however is that it won't be trade-based any longer, it will be based on internal demand.
And the Chinese are no longer out buying up the world. Chinese outbound M&A activity in the first five months of 2020 “collapsed” compared to previous years, to barely 30 deals per month. New outbound deals by Chinese firms for January – May 2020 have fallen -71% in volume and -88% in value compared to the same period in 2019.
In Germany, giant payments platform Wirecard has collapsed after a monumental fraud. It is the first ever DAX30 company to file for insolvency and winding up. That will have echos in this part of the world with challenger banks in Australia tied into their currency exchange.
Australian job vacancies recorded their largest ever fall in the last three months and workers were laid off in record numbers.
Compounding the income loss from job losses, average Australian household wealth fell -$9,982 or -2.3% to AU$428,585 in the three months to March 31 due to falling superannuation balances and share market losses. It was the largest wealth decrease since September 2011.
And a note about an Auckland-based software company that is proving an international winner during the pandemic - Pushpay. It provides software for churches so they can collect their donations from parishioners, and American evangelical churches has adopted the platform in droves. 10,800 churches in the US now use the system and find it helps keep them in touch with members as well. It has turned into a huge business.
The latest compilation of COVID-19 data is here. The global tally is now 9,494,600 which is up +199,000 since yesterday and a rising pace. Global deaths reported now exceed 484,000. We may be focused on the growing disaster in the US, but the infection is out of control in Russia, India, South America and the Middle East too. Europe seems to be getting on top of it though.
A quarter of all reported cases globally are in the US, which is up a very sharp +49,000 since this time yesterday to 2,389,500. US deaths now exceed 122,000. The number of active cases in the US is now up to 1,620,100, up +40,000 in a day. That is near a daily record again - only one day in late April was higher.
In Australia, there have been 7558 cases, +37 more since yesterday. Their death count is up another +1 to 104 and their recovery rate has slipped to just under 92%. There are now 512 active cases in Australia (+18).
The UST 10yr yield is unchanged at 0.68%. Their 2-10 curve is a touch flatter at just under +49 bps. Their 1-5 curve is marginally firmer at +15 bps, while their 3m-10yr curve is also also flatter at +56 bps. The Aussie Govt 10yr yield is also soft by -1 bp at 0.89%. The China Govt 10yr is firmer by +1 bp at 2.92%. But the NZ Govt 10 yr yield is unchanged at 0.96%.
The gold price is marginally lower, down -US$4 to US$1,762/oz.
Oil prices have firmed marginally. It is now just under US$39/bbl in the US and the Brent price is just over US$41/bbl.
The Kiwi dollar is firmer in a minor move up, now at 64.3 USc. On the cross rates we are up slightly too, now at 93.5 AUc and against the euro we have gained to 55.3 euro cents. That means our TWI-5 has firmed slightly to 69.2.
The bitcoin price has stayed down, unchanged today at US$9,277. 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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