Here's our summary of key economic events overnight that affect New Zealand, with news geopolitical risks are now being added to pandemic, debt and deficit risks, and markets are still ignoring them all.
Firstly however, American existing home sales in June bounced back as expected, but not quite to the level anticipated. And the new level is still more than -10% lower than in the same month a year ago. Prices are up +3.5% over the same period but that is a flattening trend.
Canada's core inflation came in at a very modest +1.1% pa in June but that was higher than expected and higher than in May. Still, it is very much lower than the June 2019 CPI rise of +2.0%.
In Japan, their first report of factory PMIs in July shows them contracting at a slower rate (41.2) but that is still a very steep shrinkage. Their services sector is also contracting, also less than in June, but the July contraction (45.2) is very similar to the June one.
Taiwan's June unemployment rate fell from 4.2% to 4.0%. (China's jobless rate is 5.7%.)
In China, more heavy rain, and increasing nervousness about the ability of their artificial dams to take the strain. China has over 90,000 dams and a handful of small ones have already given way. A large one could cause a 'black swan' event.
And in the middle of this, there is rising concern Beijing may embark on an invasion of Taiwan. This just one of the rising geopolitical tensions at present, and markets are ignoring these risks.
They are also ignoring debt and deficit risks, something they have been doing for quite some time. In Australia, they are looking at a government revenue plunge, that when combined with their AU$164 bln in emergency pandemic spending support, will contribute to a budget deficit of around -AU$180 bln this year, or approaching -10% of 2020 GDP. The decline will be particularly tough in Victoria.
After making two attempts at posting gains, the S&P500 was flat on Wall Street in afternoon trade, but is ending with a +0.5% daily gain near the close and taking it to within 3% of its all-time pre-pandemic high. Overnight, European markets posted retreats of about -1%. Yesterday, Shanghai was the only gainer, up +0.4%, but Hong Kong sank a sharp -2.3% and Tokyo fell -0.6%. Yesterday, the ASX200 ended down -1.3% and the NZX50 took late losses to close -0.1% lower.
The latest compilation of COVID-19 data is here. The global tally is 15,016,000 and that is up +241,000 since this time yesterday. Global deaths reported now exceed 618,000 (+6,000).
A quarter of all reported cases globally are in the US, which is up +73,500 from this time yesterday to 4,062,900. US deaths now exceed 145,400 and a death rate of 439/mln (+3/mln). The number of active infections in the US is now up +37,000 in a day to 2,019,300.
In Australia, there have now been 12,896 cases reported, another +468 since this time yesterday, and still concentrated in Victoria but growing in NSW in Sydney's suburbs. Their death count is up to 128 (+2). Their recovery rate has slipped back further to 67%. There are now 4115 active cases in Australia (up +354 in a day). (The NSW chief health officer is estimating that ½ mln Australians may now have been infected, so community transmission is under reported and rampant.)
The UST 10yr yield has dipped by another -1 bp to now be under 0.60% and a new three month low. Their 2-10 curve is a little flatter at +44 bps. Their 1-5 curve is soft at +13 bps, and their 3m-10yr curve has dipped slightly to +50 bps. The Aussie Govt 10yr yield is unchanged at 0.87%. The China Govt 10yr is down -2 bps at 2.93%. The NZ Govt 10 yr yield is unchanged at 0.87%.
The gold price will start today sharply higher again, up +US$20 to US$1,863/oz. That drives the rise from the start of July to +US$95/oz or +5.4%. Silver is up +27% in the same period. Copper is up sharply too, up +9%.
Oil prices are soft but little-changed today. They are still just under US$42/bbl in the US and the international price is just over US$44/bbl.
And the Kiwi dollar will start today firmer again at 66.6 USc. Against the Australian dollar we are now at 93.3 AUc. Against the euro we unchanged at 57.6 euro cents. That means our TWI-5 is now at 70.5 and near the top of the recent range.
The bitcoin price is unchanged at US$9,373. 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 ».