Here's our summary of key economic events overnight that affect New Zealand, with news of some reversals today.
There was a surprise result for last week's jobless claim numbers in the US. A further reduction was expected from the prior week's lower +971,000 new claims level. But in fact it rose and rather sharply, to +1,106,000. There are now 14,844,000 people on these unemployment benefits as -636,000 found their qualification expire. A small number of people had their benefits boosted by a +$300/week topup, but the conditions are so tight, that program won't help a significant number of people. The number of people who have their qualification for support expire will only grow over coming weeks, mainly because the White House and Congress, especially the Republican Senate, can't agree on extending support.
And the lower employment levels may persist for many more years than officials have claimed, and that is according to the US tax authorities. (See page 4.)
And in Fed matters, opposition is growing to the Trump appointment of July Shelton to the Fed board.
In Taiwan, they say that new July export orders in USD rose more than +12% on a year-on-year basis. Some of this was a currency gain but even in local currency this was an impressive result. Orders to the US and Europe were especially strong, those to Japan were especially weak.
China floods are building and a peak at the Three Gorges Dam on the Yangtze River tomorrow has brought rising levels of anxiety for those downstream.
And an unusual situation might be behind the rise-and-rise of the iron ore price. Ships can't unload in China until their crews have passed pandemic tests. One trader estimates 30% of China’s imported ore is stuck on ships anchored offshore while their crews wait to be checked for the virus. So the rising price may be solely due to this bureaucratic bottleneck.
And China has kept its benchmark lending rates unchanged for the fourth straight month. The one-year Loan Prime Rate was kept unchanged at 3.85%, while the five-year remained at 4.65%.
Meanwhile, China’s Supreme People’s Court said it will slash the maximum interest rate on private loans protected by law, in a move to crackdown on the private lending sector plagued with shady practices, and lower borrowing costs of small business. The ceiling on private lending will be capped at four times the Loan Prime Rate.
After starting our lower, Wall Street has moved back into positive territory - just - with the S&P500 up +0.3% in afternoon trade. They are heading for a marginal weekly rise but they are hovering at a record high level. Overnight, European markets were all down about -1.3%. Yesterday, Shanghai ended down -1.3% as well, Hong Kong was down -1.5% and Tokyo shed -1.0%. The ASX200 and the NZX50 both closed yesterday -0.8% lower.
The latest global compilation of COVID-19 data is here. The global tally is 22,497,000 and that is up +282,000 since when we last checked this time yesterday. Global deaths reported now exceed 789,000.
A quarter of all reported cases globally are in the US, which is up +47,000 since yesterday to 5,720,000. US deaths are now just over 176,800 and a death rate of 534/mln (+4/mln). The net number of people actively infected in the US rose +10,000 overnight to 2,476,100, so substantially more new infections than recoveries and a reversal of the recent improving direction.
In Australia, there have now been 24,236 COVID-19 cases reported, another 243 since yesterday, and still very much concentrated in Victoria. Australia's death count is up to 463 (+13). Their recovery rate has jumped to 74%. There are 5927 active cases in Australia (-2375) indicating a turned tide and more far recoveries than new infections.
The UST 10yr yield is down -3 bps at 0.65%. Their 2-10 curve is marginally flatter at +51 bps. And their 1-5 curve is unchanged at +15 bps, while their 3m-10yr curve is also marginally flatter at +58 bps. The Aussie Govt 10yr yield is down -2 bps at 0.86%. The China Govt 10yr is up another +1 bps at 3.02%. And the NZ Govt 10 yr yield will start today at 0.64% and down -3 bps.
The price of gold is weaker today having fallen another -US$28 to US$1,940/oz.
Oil prices are marginally softer today. They are just over US$42.50/bbl in the US and the international price is now just over US$44.50/bbl.
And the Kiwi dollar fell overnight and sharply too, now just on 65.2 USc and that is almost a full -1c drop. We are now at our lowest in almost eight weeks. Against the Australian dollar we are weaker by more than -½c at 90.8 AUc. Against the euro we are down to 55 euro cents. That means our TWI-5 has dropped to under 68.2.
The bitcoin price is little-changed from this time yesterday to now be at US$11,842. 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 ».