Here's our summary of key economic events overnight that affect New Zealand, with news the world has ended the week with lackluster economic data but facing resurgent pandemic threats.
First, in the US, building permit levels in June, and new housing start data for the same month both came in pretty much as expected, up from the May levels but below the levels of the same month a year ago..
But consumer confidence is starting to waver and fall again, after a longer-than-expected positive run in June as pandemic lockdowns eased. But the new gravity of the situation is starting to dawn on increasing numbers of previous sceptics.
From July 24, the first of the pandemic support programs runs out in the US and then increasing numbers of these programs start to expire. The US Congress now has only six weeks to come up with extensions or new support, but given Republican Senate reticence to act, the risks are growing sharply all Federal support may vanish.
In China, tax revenue is rising again, up +3.2% in June from the same month a year ago and ending a five month streak of declines. In May, the same data fell -10% so this is a healthy revival.
And the Chinese central bank has let its balance sheet shrink, with far fewer claims on it for monetary support. It shrank by -NZ$150 bln at June compared to the level it was at in December 2019. That is a -2% fall after growth in 2019 of +3%.
Japan is making progress in getting some of its companies to shift manufacturing out of China based on rising strategic risks. 87 companies have qualified for Japanese support to make the move, and of course others are doing it on their own.
China is responding by sending 'survey ships' into Japanese waters and threatening to widen its nine-dash-line extra-territorial waters claim. This comes as the US makes a show of defending the rights of sea passage, but in fact is pulling back its support of traditional allies in the region.
Australia is struggling to figure out how to handle a resurgent pandemic. Decisions the are making there will impact New Zealand significantly and it seems likely they will decide they are just not up to achieving an 'elimination' strategy. If that is where they end up, the Trans Tasman bubble is toast. In fact, the risks of community transmission in New Zealand will rise.
And staying in Australia, the latest release of their Taxation Statistics shows that most landlords were running losing businesses with more expenses claimed than rents earned. "Negative gearing" is their tax rort game, much like tax-free capital gains are in New Zealand.
Wall Street is up +0.5% near its close for the week, cementing in a +1.5% weekly gain. That is notable because it means all the prior losses of 2020 have almost been recovered. At the end of June, the S&P500 had shed -US$1.8 tln in 2020. But now all that 'value' has been recovered. Overnight, European markets were mixed, straddling the no-change benchmark from Thursday. Yesterday Shanghai ended the day with only a marginal gain, and for the week it declined -5% after the prior week's +7.3% rise. For all of 2020, this market is up +4.2% so far. Hong Kong closed up +0.5% on the day, Tokyo closed down -0.3% on the same basis. The ASX200 ended the week up +0.4% on the day for a weekly rise of +1.9% and a full year-to-date loss of -10%. The NZX50 Capital Index rose +0.7% on Friday for a weekly rise of +1.7% and a full year-to-date decline of -1.2%.
The latest compilation of COVID-19 data is here. The global tally is 13,888,900 and that is up +251,000 since this time yesterday. Global deaths reported now exceed 592,000 (+6,000).
A quarter of all reported cases globally are in the US, which is up +80,000 from this time yesterday to 3,730,900. The infection is spreading so fast now that a +100,000 day is not far away. US deaths now exceed 141,600 and a death rate of 428/mln. The number of active infections in the US is now up +40,000 in a day to 1,894,100.
In Australia, there have now been 11,235 cases reported, another +425 since this time yesterday, and still concentrated in Victoria but growing in NSW in Sydney's suburbs. Their death count is up to 116 (+3) and 32 people are now in ICU (+2). Their recovery rate has slipped back further to 72%. There are now 3002 active cases in Australia (up +341 in a day). (More cases have now been reported in Australia than in 11 US states.)
The UST 10yr yield is +2 bps softer at 0.63% and about where it was a week ago. Their 2-10 curve is a little steeper at +47 bps. Their 1-5 curve is also a tad steeper at +13 bps, and their 3m-10yr curve at +50 bps. The Aussie Govt 10yr yield is up +1 bp to 0.89%. The China Govt 10yr is firmer too, up +1 bp at 3.05%. But the NZ Govt 10 yr yield is down another -3 bps at 0.90% which is a retreat of -8 bps in a week.
The gold price is +US$15 higher today at US$1,810/oz and a small net +US$12 gain in a week.
Oil prices are a little softer again today. They are now just under US$40.50/bbl in the US and the international price is just under US$43/bbl. Both levels are almost exactly where they were a week ago. The US rig count slipped only a small number this week, but it is still at an all-time modern low.
And the Kiwi dollar is marginally firmer from this time yesterday at just on 65.6 USc and little-changed in a week. We are also unchanged at 93.7 AUc. Against the euro we stable at 57.4 euro cents. That means our TWI-5 is now at 69.9 and broadly the level for the past two weeks ago.
The bitcoin price is little-changed at US$9,164 but is almost a -1% dip for the week. 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 ».
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