Here's our summary of key economic events overnight that affect New Zealand, with news things seem to be on the 'up' economically in China, but not elsewhere.
But first, inflation in the US has virtually disappeared. In their June update however there have been some key shifts, with food prices up +4.5% over the year, rents are up +2.4%, medical costs up +6.0%, but petrol prices declining -23%.
American retail sales rose +3% last week from the prior week although they are still -5.5% below the equivalent week a year ago. Still, that is the first time in a while where the week-on-week trend isn't lower.
The US earnings reporting season has started with reports from three major banks. They provisioned almost US$28 bln for bad loans in the June quarter, a mark only surpassed by the last three months of 2008, during the depths of the GFC. The total was higher than analysts had expected, with all three lenders saying their economic outlook had deteriorated as the pandemic continues to rage through the US. They are all bracing for a coming wave of defaults by companies. And in about two weeks the roll-off of additional crisis support in unemployment cheques will start, triggering new pressures on households. In addition, 'hero pay' boosts for essential workers are now disappearing.
Boeing only sold ten aircraft in June and lost another 183 from its order book, highlighting how the manufacturing sector is shrinking in the US. Airbus delivered 36 new aircraft and had 298 cancellations. Further, another major airline, Delta, has 'shifted' 15,000 employees into 'early retirement'.
China's merchandise trade surplus fell in June and by more than expected. But for the rest of the world, the signals are relatively positive. Their exports were expected to fall -1.5% year-on-year, but in fact they rose +0.5%. While that was encouraging for them, for suppliers to China their import data was even more encouraging. Imports were expected to fall -10% but actually rose +2.7% year-on-year. China is supplying some impetus to world trade at present. Their overall surplus fell from +US$63 bln in May to +US$46 bln in June. For New Zealand, they recorded a growing deficit with us of US$945 mln in the month (a surplus for us). But with the US, China's trade surplus actually rose to +$10.4 bln in the month (from +US$9.3 bln in May) as Americans just can't stop buying from their arch-rival.
And the growing trade is extending into July. Total cargo throughput in China's eight major coastal ports increased more than +12% in the first ten days of July from the same period last year, boosted by strong imports of commodities including crude oil and iron ore.
While Australian business confidence rebounded in June, continuing the improvement from May, the current levels are still negative and have risen to levels that are still very weak. And the re-emergence of pandemic risks isn't particularly encouraging for July.
Wall Street is currently up +0.6% after a shaky start. Yesterday Shanghai (-0.8%), Hong Kong (-1.1%) and Tokyo (-0.9%) all fell. Overnight European markets were all lower by almost -1%. And yesterday the ASX200 was down -0.6%. Only the NZX50 managed a gain (+0.5%) which seems to have been repeated on Wall Street today.
The latest compilation of COVID-19 data is here. The global tally is 13,165,700 and that is up +181,000 since this time yesterday. Global deaths reported now exceed 575,000 (+5,000).
A quarter of all reported cases globally are in the US, which is up +63,500 overnight to 3,507,600. US deaths now exceed 139,000. The number of active infections in the US is now up +32,000 to 1,803,400.
In Australia, there have now been 10,251 cases reported, another +271 since this time yesterday, and still concentrated in Victoria and NSW. Their death count is unchanged at 108 but 27 people are now in ICU (+9). Their recovery rate has slipped back further to 76%. There are now 2308 active cases in Australia (up +205 in a day).
The UST 10yr yield is -3 bps lower at 0.61%. Their 2-10 curve is flatter at +45 bps. Their 1-5 curve is also flatter at +12 bps, and their 3m-10yr curve down to +49 bps. The Aussie Govt 10yr yield is down -1 bp to under 0.90%. The China Govt 10yr is marginally softer too, down -2 bps at 3.13%. And the NZ Govt 10 yr yield is down -4 bps at 0.94%.
The gold price is holding at US$1,809/oz.
Oil prices are holding if marginally lower today. They are now just under US$40.50/bbl in the US and the international price is just under US$43/bbl.
But the Kiwi dollar is almost -½c lower at just on 65.3 USc. We are more than -½c lower at 93.6 AUc. Against the euro we are down -½c as well at 57.3 euro cents. That means our TWI-5 has fallen to 69.7.
The bitcoin price is also softer at US$9,254, a -½% dip. 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 ».