US jobless claims rise, those with benefits fall; Taiwan export orders jump; China floods peaking; China tackles shady banking deals; UST 10yr yield at 0.65%; oil soft and gold drops again; NZ$1 = 65.2 USc; TWI-5 = 68.2

US jobless claims rise, those with benefits fall; Taiwan export orders jump; China floods peaking; China tackles shady banking deals; UST 10yr yield at 0.65%; oil soft and gold drops again; NZ$1 = 65.2 USc; TWI-5 = 68.2

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.

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Good article, but its already two weeks old, and the party continues in Wellington and Christchurch. Try and buy a car, it will probably be sold without buyer seeing it, before you can do a test drive!! Same in Christchurch house market right now, sold before the first open day, happening every day at the moment, as is where is houses selling for their RV. Where is the money coming from , not wage subsidies here, its EQC paying out for Fletcher botch ups, as they try and sweep the mess under the carpet, and keep the masses happy.

Two weeks old? You have missed the point of the article. The sugar rush of more cheap money has already had its impact, while the factors weighing on the downside (expiration of wage subsidy, rising unemployment, lower migration and increasing supply) have all yet to be truly felt.

Good article.
I see they have changed their April estimated fall of 10 to 15% to now being 5 to 10%. That is consistent with RBNZ and bank economists.
I note they don't consider extension mortgage deferrals, and Orrs comments regarding further QE and possibility of negative OCR both of which will provide support for the market.
I also note they don't also recognise possible implications of post-election attitude of the Government which could see some tightening of attitudes to supporting the economy - including employment - which I see as a significant factor which could create downside.

Where is CJ099?
According to CJ099 the market is all about foreign buyer influence - and they don't even get a mention as a factor. :)

when i spoke to the relationship manager at my bank the other day his opinion was that a lot of the market being supported at the top is cashed up people overseas. the other end of the market (sub 1.5m) is about to get squeezed as applications are taking longer to review, and pre-approvals are set to expire.

Good point Poppyc, We all know that the money for top end property has to come from some where, since it well out of reach of most wage earners here in NZ. Hence why the our current Government is having to further introduce reforms to increase transparency for Trust companies.

There is lot of uncertainty in our economy, and this would directly affect housing market coming months.

A little birdy told me that 40% of jobs have gone at Sky.

Yet house prices continuously sky rocket...what could go wrong?

@P8 - I don't know if you read this comment from a post from yesterday.

I believe this sort of behaviour would likely be pronounced and needs to stop as NZ's cannot compete with offshore cash-rich foreigners - how I am now sure...

"An acquaintance told me his mainland Chinese mother in law has been siphoning a lot of money into his wife's and his bank accounts. This has been over a period of time to get around the laws in China preventing large amounts of money being offshored.
They, in turn, have opened bank accounts for their children and been spreading money across these and their own accounts.
The mother in law has her daughter (NZ Resident) looking to buy an investment property here under the daughter's name currently."

I don't believe that any legislation is 100% water tight and that there won't be instances by some who will circumvent it.
However, be aware that the legislation is multi-layered and requires at three levels of compliance - banks, lawyer and real estate agent. Each of these needs to provide assurance as to the source of money, and in the later two cases ownership; this is at the risk of significant fines and/or loss of licence so there is considerable pressure on those involved in transacting the property that the sale meets requirements.
I don't put much weight on the hearsay on one instance that "An acquaintance told me . . . ".

Like any piece of legislation. Liquor laws don't prevent underage drinking, speed limits don't prevent speeding, crime laws don't prevent robberies, burglaries etc.

"..they don't also recognise possible implications of post-election attitude of the Government..."

Good point, and one that might equally apply to many components of the social economy.
If the polls are to be believed, Labour will have 3 unencumbered years of Government; a time in which to start remaking New Zealand.

god save NZ from revolutionaries who have already demonstrated their laziness and incompetence for 3 years. It is incredibly hard to change long-evolved complex systems of human interaction in a way that does not create bigger problems and worse outcomes than the status quo. The coalition have shown no sign of being able to improve things in last 3 years (in fact quite the opposite by most measures), so why would anyone imagine that will improve if they are given the treasury benches for another go?

We have heard that before. Kiwibuild, CGT, Light Rail. Blah blah blah.

More transfers of wealth from other taxpayers to hold things up. Yay, for "socialism" to save the day. Personal responsibility out the window.

At least, one hopes, this will result in a marked decrease in ranting against darn beneficiaries, or students with their funded university.

My tenants have given notice. The TradeMe advert has had a lot of views in just a week and the property manager says they have been deluged with interested people already with more to come. What's going on?

PS Maybe all the marriages breaking up over the lockdowns? Two people now need two houses. Anyway I can't see this property declining in price currently. It's a nice little earner now.

Move into your rental, charge slightly more in rent for the place they own that they used to live in. Arbitrage, maybe?

It occurs to me that there could be many reasons for people seeking to rent, especially the cheaper ones in convenient locations like my one. People fleeing their current housemates who are driving them batty over the lockdown. Apartment dwellers seeking a standalone place. People downsizing due to job losses. People selling their own homes and so on.

I think all of these reasons are likely. I've lived in some awful apartments but having a lifestyle where I was never at home for any significant time made them tolerable. Having to live in them during lockdown would have been horrible.

Borders are closed so people needs to source the substances elsewhere.. Rental properties come to mind, more home lab.. I am not joking, police resources are stretched, the risk of getting bust is minimal...

Agents do fairly thorough inspections quite regularly.

Good luck... doesn't need much these days, just a suitcase of few glass flasks, a burner and a bathroom!

I think it will be okay Chairman Moa.

Is there something particularly appealing about it? A friend struggled for months to get a tenant for her place, despite it being a beautiful place in a nice location. And I've seen a bunch advertising a free week's rent.

I'm not sure. Fairly appealing but not extraordinarily so. I was just expecting a bit of trouble like your friend to be honest. Not months but maybe weeks.

As per others excellent article.

Good to see this article reproduced here. October should give us all a clearer picture of whether house price growth is going to reverse or just stall for a bit.

I had to laugh yesterday while listening to the radio. A local realtor being "interviewed" (clearly an ad) saying she's never seen the Wellington market this strong and it's boom time. But damn - would you believe it - word has gotten out! All these sellers have heard about the incredible prices achieved and there's a huge flood of people selling over the next month and onward. I'm sure that's the reason they're all suddenly selling...

Therefore record prices will continue, yet buyers will finally have choice. Pull the other one mate.

Best is to read news from Oneroof that are published in NZherald.

Not just iron ore that can't be unloaded - log vessels are also backing up.

Tauranga council going for a 12% rate increase, you wonder what they do with all that money?

The same as most councils Aj.. waste it on "pet" projects done poorly

Always, but you would have thought they could have built a car park

you would have thought wrong

Build it and then shut it up - rise and repeat

Did you do any of the suggested reading last night, Hook?

Not likely. He still thinks civil disobedience means civilians being disobedient.

No, I was reading about who,how and why people believe in conspiracy theories. Very interesting.

Wrongthink on facebook, the pressing issue of our time...

These elderly politicians haven't realised that most young people think facebook is a quaint social media platform for old people.

I suspect in 2 years time facebook will have completely evolved into virtual clubrooms for all sorts of hobbyists from radio controlled car enthusiasts to knitting groups to pedigree chicken fanciers because it's heading that way now.

What is he missing in Education? A border quarantine of Kiwibuild proportions.
"Health Minister Chris Hipkins admits he hasn't read the Ministry of Health's COVID-19 testing strategy."

We new he could not count to 61 - OMG he cannot read either ??
BRING BACK HELEN ! ( the real one ..)

Since When has Resurrection been a go-to winning plan.

Better to fix up whats on the ground in front of us.

I'd assume ministers are mostly receiving lots of exec summaries.

Chris Hipkins has admitted he hadn't even read the Ministry of Health's testing strategy (published in June), so it's understandable he wasn't aware of the gaping holes. Underwhelming effort from Labour as always.

Perfect part time performance.

The road to ruin is paved by good intentions.

How come Ash attracts with such idiots.

Market Power, Inequality, and Financial Instability

"The long-run changes in the relative share of wages . . . are determined by long-run trends in the degree of monopoly . . . The degree of monopoly has a general tendency to increase in the long run and thus to depress the relative share of wages in income . . . although this tendency is much stronger in some periods than in others." (Kalecki (1971), p. 65)

Corporatocracy leads to inequality? Shocker.

Cutting official interest rates in half many times over the last forty years has had a major influence on the outcomes noted by these FED researchers.

Tesla shares have broken through the $2000 mark

where will this craziness end....

We've been here before. "At that price, the market is valuing Palm at $53.3 billion, far more than the value of its parent, the 3Com Corporation, which still owns most of Palm. Palm’s market value is higher than that of many far larger companies, including General Motors, Chevron and McDonald’s."

I love TSLA but the valuation looks bonkers to me.

Sold the last of mine at $1250. Seemed like a good idea at the time! I do like that the TSLAQ trolls have been epically burned, though. Some of that lot are really nasty.

It's all about the autonomous driving. If their approach works they will have a long term near unassailable high value monopoly and a market cap of trillions - 5-10x their current cap. I think it has at least a 20% chance of panning out., so price is probably justifiable.

Wow the corruption never ends with Trump. BBC article: Steve Bannon charged with fraud over Mexico wall funds.
"Former Trump adviser Steve Bannon has been arrested and charged with fraud over a fundraising campaign to build a wall on the US-Mexico border. Mr Bannon and three others defrauded hundreds of thousands of donors in connection with the "We Build the Wall" campaign, which raised $25m (£19m), the US Department of Justice (DoJ) said.

Mr Bannon received more than $1m, at least some of which he used to cover personal expenses, it alleged."

David seems to have Ash's problem.
A part time Health Minister that does not like reading.
Not reading seems to be a thing COL wide.

Chief of medicine at Christchurch Hospital David Smyth believes executives at the DHB have been under impossible levels of pressure over finances.

He told Morning Report that he wanted Health Minister Chris Hipkins to hear directly from staff like him what the possible impact of cuts could be: "I'd love him to come and talk to the clinical leaders and hear our concerns; listen to us and just reassure us how this flagship health system can continue."

Senior Canterbury health leaders have expressed disappointment in the prime minister for failing to respond to their warning of a possible catastrophic health system breakdown.

The Clinical Leaders Group at the Canterbury District Health Board (CDHB) took the extraordinary step of writing directly to Jacinda Ardern on July 3, bypassing the usual channels as they felt earlier attempts to raise their concerns about a looming capacity crisis at Christchurch Hospital, financial issues facing the board and inadequate, earthquake-damaged facilities had gone unheeded.

- looks like truth travels but one way.

Yes, HT, the truth travels one way

Medicine is going to have to ask itself some serious questions, as is society.
"We may be very close to learning the price of ignorance and hubris".

I regard Sir John as being of the past, for non-health reasons; I regard the Government (indeed all 'pollies') likewise. Context is everything.

Aye Henry, nicely put, and when Mr Truth arrives at said destination, what does it find? Why a door locked, bolted and soundproof.

Are the government doing anything to quarantine flight crews yet, or is that still in the "too-hard" pile?

Not to worry, since property prices always go UP in NZ (coz we're diffrunt), banks will be very understanding and never force a sale. No reason to, since the asset will be worth more in just a year or two, why sell at a loss now?

Thats a must read Ben72. Shows that the can is still just being kicked down the road. Imagine now having a mortgage thats INCREASING over $20K P/A instead of DECREASING probably $30K P/A, the difference is HUGE. That extra is also compounding so heaven help you if rates go up or the bank calls in your loan because its fast wiping out your equity.

US "death rate of 534/mln"
Second time in two days Trump has been claiming NZ has got it wrong with recent outbreak and US (i.e. Trump) got it so right.
What 534/mln vs 4/mln ???????
How can anyone give Trump any credibility?

I don't think anyone who is paying attention has given him any credibility for quite a long time.

Sadly 40% of people seem not to be paying any attention.

“Two percent of the people think; three percent of the people think they think; and ninety-five percent of the people would rather die than think.”

― George Bernard Shaw

I've reached the conclusion it's true.....

Trump is a buffoon and a bullshitter, but management of response to wuflu is primarily down to State governors and legislatures. Federal govt by design has little control over matters within states. Little that Trump could or can do to make state governments manage it in an effective manner, particularly when so many of those states are implacably opposed to everything he says and does.

"Little that Trump could or can do to make state governments manage it in an effective manner" - are you sure about that? Do not underestimate the effects of communication. If the president says you could just drink bleach and the virus is no big deal, people will treat it as no big deal and ignore whatever the local governor says.

Have you checked into the history of what federal agencies and help existed prior to his dismantling and defunding some of them? As well as the role of FEMA etc.