Here's our summary of key economic events overnight that affect New Zealand, with news the restarting American economy is driving some economic expansion worldwide.
In China, they are exporting more to the US (and making their trade surplus higher). July exports to their bitter rival were up more than +12% year-on-year. Shipping is in demand to service the surge, boosting freight rates. US west coast ports report their busiest month of imports for 2020 in July. Punitive tariffs seem to be having little impact on this flow - other than taxing Americans.
And consumer finance is rising fast in China, even if it is from a low base. Customer numbers were up more than +50% in the 2019 year. It is now a NZ$110 bln sector. The surge continued on into 2020.
At the Three Gorges Dam, record high water levels are now receding somewhat as the peak passes. It is the fifth major test of 2020 at this strategically important piece of infrastructure. At its peak, incoming water arrived at the rate of 75,000 m3 per second (and far above its previous peak if 67,000 m3). It was released at the dam at a rate of less than 50,000 m3/sec. This was enough to cause massive flooding downstream but no emergency. Upstream, major cities were inundated and 100,000s were evacuated.
It's not the only threat China is facing. In the city of Leshan in Sichuan province on Thursday, a leak at a chemical plant sparked a huge spontaneous mass exodus of the city - after authorities said there was nothing to worry about.
In Thailand, youth-led street protests are growing against the government and its military rulers.
In Australia, retail sales rose at a +3.3% month-on-month pace in July, up +12% year-on-year with a bounceback effect, with household goods sales up +30% from a year ago. And this was with data for Victoria declining in their lockdown.
And an inability to pay the rent on time has seen landlord Westfield move in and board up 129 stores run by Mosaic Brands in Australia. Landlords are getting as desperate as tenants.
In the US, rehiring laid-off workers is a trend that will bolster demand in the rest of 2020, but a quarter of the 22 mln laid off will unlikely find employment soon. That is more than 5 mln people, and surveys suggest at least 2 mln of them will never get re-employed. In fact, survey data shows workers are increasingly pessimistic that they’ll return to their same job. That is an expansion of a disappointed and frustrated underclass.
It is two weeks from their summer Labor Day holiday, which marks the end of their summer break and hiring generally picks up. But for companies looking to never have to go through such large-scale redundancies like they have in the past six months, and the pain they cause, they are looking to restart with much more automation, even in service jobs. It is a fast emerging trend that makes rehiring prospects even harder. It may not be long before concepts like the UBI become regularly discussed as a policy tool. These are issues sure to be canvassed privately at the Fed's Jackson Hole talkfest later this week.
The latest global compilation of COVID-19 data is here. The global tally is 22,781,000 and that is up +284,000 since when we last checked this time yesterday. Global deaths reported now exceed 795,400.
A quarter of all reported cases globally are in the US, which is up +79,000 since Saturday to 5,856,000 and a slowing rise. US deaths are now just over 180,400 and a death rate of 545/mln (+7/mln). The net number of people actively infected in the US rose +30,000 overnight to 2,523,900, so a rising number of new infections more than recoveries. There is no sign of improvement there yet.
In Australia, there have now been 24,812 COVID-19 cases reported, another 405 since Saturday, and still very much concentrated in Victoria. Australia's death count is up to 502 (+30). Their recovery rate is up to 77%. There are 5082 active cases in Australia (-398) indicating a turned tide and more recoveries than new infections.
The UST 10yr yield will start the week at under 0.64%. Their 2-10 curve is marginally flatter at just under +49 bps. And their 1-5 curve is also marginally flatter at +14 bps, while their 3m-10yr curve is unchanged at +56 bps. The Aussie Govt 10yr yield is at 0.88%. The China Govt 10yr is unchanged at 3.02%. And the NZ Govt 10 yr yield will start today at a soft 0.62% and down -6 bps in a week.
And we should also note that New Zealand swap rates ended the week in record low territory across the curve. In fact the two year fell -5 bps over last week, the five year fell -8 bps and the ten year fell -11 bps in a major flattening move, all triggered by RBNZ MPS signals and banks getting their collective heads around what the potential for what a negative interest rate means.
The price of gold has stayed low but up +US$3 since we last checked to US$1,943/oz.
Oil prices have stayed soft. They are still just over US$42/bbl in the US and the international price is now just over US$44/bbl.
And the Kiwi dollar will start the week unchanged at 65.4 USc which is at the lower end of a two week range of +/-30 bps. Against the Australian dollar we are unchanged too, at 91.3 AUc. Against the euro the story is similar at 55.4 euro cents. That means our TWI-5 is still at 68.6 and where it was a week ago.
The bitcoin price is unchanged from this time Saturday, and still at US$11,641. 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 ».