Here's our summary of key economic events overnight that affect New Zealand, with news China is worried about economic bubbles while the rest of the world struggles with declines.
The latest US Fed Beige Book summary of individual Fed district surveys reports that American economic activity increased in June and early July in almost all Districts, but remained well below where it was prior to the onset of the pandemic. Consumer spending picked up as many nonessential businesses were allowed to reopen. Retail sales rose in all Districts, led by a rebound in vehicle sales and a rebound in the food, hospitality and home improvement sectors but they were far below year-ago levels. Most Districts reported that manufacturing activity moved up, but from a very low level. Overall, they are reporting a lame rebound, now compromised by reintroduced lockdown in many large states.
And the Fed's industrial production report for June makes grim reading with activity down more than -10% year-on-year although most of that happened in April.
But despite that spark, most estimates for American GDP levels are for a huge -35% fall quarter-on-quarter in the Q2 of 2020.
North of the border, the Bank of Canada sees a -13% fall in Q2 compared to Q1-2020 and slightly more on a year-on-year basis (p13).
In China, their banks extended a record US$1.73 tln of new loans in the first half of 2020, up +25% from the same period in 2019. But now it seems that some of this leaked illegally into high-risk housing and commercial property, raising the stakes of an unstable bubble in that sector. We will get Chinese house price growth data later today, but recall in May it rose +4.9% year-on-year. One major city has re-instituted home-buying restrictions to deal with the problem.
And China has moved to impose their income tax system in Hong Kong, taking the top rate in the City suddenly from 15% to 45%, a move neither the international community - nor anyone - saw coming. That will hasten their exit from Hong Kong.
In Europe, an EU court has overturned the tax ruling in the Irish/Apple case delivering a huge €14 bln win for Apple. They ruled that the 0.3% tax rate the Irish Government had agreed with Apple was lawful under EU rules. The judgment hinged on the fact that the Irish Government gave the same breaks to other tech giants, not just Apple. Google and Amazon have separate appeals running over similar tax issues.
Australian consumer sentiment has dived in July, especially in Victoria, in the latest Westpac-MI survey. There were also declines in the rest of Australia, but they were 'milder'. In the absence of the pandemic shock, those wider declines would likely have attracted a stronger description.
Wall Street is currently up +0.9% in early afternoon trade. Yesterday Shanghai fell (-1.6%), Hong Kong was flat (+0.1%) and Tokyo rose (+1.6%). Overnight European markets were all higher by almost +2%. And yesterday the ASX200 ended up +1.9%%. The NZX50 ended up +1.0%.
The latest compilation of COVID-19 data is here. The global tally is 13,397,200 and that is up +232,000 since this time yesterday. Global deaths reported now exceed 580,000 (+5,000, or more than 3 every minute).
A quarter of all reported cases globally are in the US, which is up +71,800 overnight to 3,579,400. US deaths now exceed 140,000. The number of active infections in the US is now up +23,000 in a day to 1,826,700.
In Australia, there have now been 10,495 cases reported, another +244 since this time yesterday, and still concentrated in Victoria and NSW. Their death count is up to 111 (+3) and 28 people are now in ICU (+1). Their recovery rate has slipped back further to under 76%. There are now 2456 active cases in Australia (up +148 in a day).
The UST 10yr yield is +2 bps firmer at 0.63%. 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 0.89%. The China Govt 10yr is softer again, down -6 bps at 3.07%. And the NZ Govt 10 yr yield is unchanged at 0.95%.
The gold price is just a little higher today, up by +US$3 to US$1,812/oz.
Oil prices are holding if marginally higher. They are now just over US$41/bbl in the US and the international price is just over US$43.50/bbl.
And the Kiwi dollar is firmer at just on 65.7 USc. We are also firmer at 93.8 AUc. Against the euro we are up to 57.6 euro cents. That means our TWI-5 has risen marginally back to 70.1.
The bitcoin price is softer at US$9,214, but it only a marginal 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 ».