Here's our summary of key economic events overnight that affect New Zealand, with news of general decline everywhere.
First, the big news is that real American gross domestic product decreased at an annual rate of -33% in the second quarter of 2020. That is on top of the first quarter's real GDP decrease of -5.0% annual rate. In current dollars that means that US GDP fell from $22.3 tln in 2019 and is now running at an annual rate of just US$19.4 tln. The missing -US$2.9 tln in annualised activity is a world scale economic calamity of the first order and neither China nor the EU nor Japan nor any combination of them can make that up in any sustained way without artificial stimulus. The ripple effects are global. About the only 'good' bit is that the decline was slightly less than analysts were expecting. Actual Q2-2020 US GDP is -9.6% lower than Q2-2019 GDP, itself a reduction of -US$560 bln.
As if that wasn't bad enough, jobless claims rose by another +1.4 mln last week and now just over 17 mln people are on these benefits. From August, increasing numbers will start to fall off assistance as their claim eligibility ends. This will build during the month and into September to become the dominant social metric.
Mexico also reported Q2-2020 GDP and it was -10.5% lower than for Q2-2019, or -17.3% below Q1-2020. These results were about as expected.
Chinese companies reported their overseas acquisitions tumbled by -40% in the first half of the year to the lowest level in a decade.
Hong Kong reported that their Q2 GDP was -9% lower in 2020 than for the equivalent 2019 period. And their retail sales were -25% lower in June 2020 than June 2019
In Australia, more than half a million people are estimated to have "completely cleaned out" their superannuation savings as the pandemic crisis bites, and their Treasury predicts workers will withdraw a total of AU$42 bln under their new early-access scheme. But their tax authorities are watching closely to ensure the claims of hardship are genuine. There are large tax penalties for those making invalid claims.
The S&P500 is down -0.5% so far today little-affected by the GDP result. The FAANGs all report earnings today after the closing bell. Overnight, European markets all fell very heavily, some as much as -3%. Yesterday, Shanghai ended down -0.2%, Hong Kong was down -0.7%, and Tokyo ended down -0.3%. The ASX200 rose +0.7% (on strong mining prospects) and the NZX50 rose +0.8% in a late final burst.
The latest compilation of COVID-19 data is here. The global tally is 17,109,000 and that is up +289,000 since this time yesterday. Global deaths reported now exceed 669,000 (+7,000).
A quarter of all reported cases globally are in the US, which is up +77,100 from this time yesterday to 4,603,600. US deaths are now just over 154,600 and a death rate of 467/mln (+5/mln). And the net number of people actively infected in the US rose +33,000 yesterday to 2,193,300.
In Australia, there have now been 16,303 cases reported, a record +721 since this time yesterday, and still very much concentrated in Victoria but also small pockets in both Sydney's suburbs and now Queensland. Their death count is up to 189 (+13). Their recovery rate has slipped to under 60%. There are now 6356 active cases in Australia and almost all are community transfer.
The UST 10yr yield is down -4 bps to just on 0.54% and equal to its record low. This is one market that is reacting to the US GDP result. Their 2-10 curve is flatter at +42 bps. Their 1-5 curve is little-changed at +12 bps, while their 3m-10yr curve is also flatter at +46 bps. The Aussie Govt 10yr yield is down -3 bps at 0.85%. The China Govt 10yr is unchanged at 2.96%. But the NZ Govt 10 yr yield is lower and now at 0.81% after another -2 bps dip.
The gold price is down -US$9 today to US$1,953/oz.
The World Gold Council released its Q2-2020 gold demand results. That showed jewellery demand down -53% year-on-year from Q2-2019, coin and bar demand down -32% on the same basis, and industrial demand down -18%. Even central bank demand slumped -50% on this basis. But much of this general decline was made back by EFT speculators who piled in in a serious was with +300% higher demand. Overall demand was down -11%. Supply however fell -15% which helped keep prices up.
Oil prices are lower today by about -US$1/bbl. They are now just under US$40/bbl in the US and the international price is just at US$42.50/bbl.
And the Kiwi dollar will also start today little-changed at 66.7 USc. Against the Australian dollar we are firmer than yesterday at 93 AUc. Against the euro we are also soft at 56.4 euro cents. That means our TWI-5 has slipped to 69.7 but still in the general range we have been in, all year.
The bitcoin price is also soft, down -1.5% since this time yesterday to US$11,047. 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 ».