Here's our summary of key economic events overnight that affect New Zealand, with news of widely varying economic data out overnight.
Retail sales in the US rose strongly, up +4.1% from the week before and down only -0.6% from the same week a year ago. This was the closest they have come to a year-on-year gain since before the pandemic.
And new home sales rose far more than expected in July, in fact to a new all-time record high for any month and an impressive +36% more than the same month in 2019. Sales were particularly strong in the Mid-West and South and these July sales filled in some of the low results posted in the March to June period.
But despite those two positive bits of data, American consumers are feeling downcast in August, and much more so than analysts were expecting. Both the Present Situation, and the Expectation categories took unexpectedly sharp reversals down. In fact, analysts had expected improving consumer sentiment, but apparently that is not the case. This measure is now at a six year low.
Maybe consumers are overdoing the gloom it somewhat. The latest regional Fed survey from the Mid-Atlantic states area shows factories making a small recovery and employment - usually the laggard - eased up, even if only marginally.
But then, maybe they aren't. Banks are feeling the same gloom as consumers with profits down -70% in Q2-2020 than the same quarter a year ago. And these same banks took in a flood of new deposits, more than +US$1 tln of additional money. That is a growing problem because even though they pay hardly anything for that money, their Net Interest Margin fell at a record rate - to 2.81% and the lowest ever recorded. (New Zealand banks would be envious however; RBNZ data shows our NIMs are far tighter at just +1.82% and also a record low.)
And American Airlines said it will cut 19,000 jobs in October when their government wage support scheme extended to airlines during the pandemic comes to an end. The world's biggest airline said the cuts, on top of voluntary departures and leave, would leave its workforce 30% smaller than it was in March.
In Australia, nearly 2,500 more Qantas jobs are being culled as the airline looks to outsource domestic ground handling operations in a bid to save cash during the COVID-19 pandemic. And that is on top of 6,000 job cuts made earlier.
And, NAB is forecasting Australian unemployment to peak at 9.6% early next year and the only fall to 7.6% by the end of 2022. They are also bracing for a 10-15% fall in house prices, with the biggest falls in Sydney and Melbourne. They also see steep price falls for commercial property, especially retail and office space in the Sydney and Melbourne CBDs. None of this will encourage banks to lend unless deposits are substantial.
In Germany, a key business sentiment index there shows them on the road to a recovery with improving results.
In China, some mid-sized banks are under severe liquidity stress, and that is requiring bailout actions by Beijing.
Back in New York, the S&P500 is up +0.2% today in late trade. They follow Europe where results were flat overnight, except in London that fell -1.1%. Yesterday, Shanghai fell -0.4%, Hong Kong fell -0.3, and Tokyo rose and impressive +1.4%. The ASX200 also closed up +0.5% and the NZX50 Capital Index rose +0.6% although it had an early close after suffering a cyber attack.
The latest global compilation of COVID-19 data is here. The global tally is 23,721,000, up +213,000 since when we last checked this time yesterday. Global deaths reported now exceed 815,000 (+5,000 in a day).
Just under a quarter of all reported cases globally are in the US, which is up +37,000 since yesterday to 5,929,000 and a relentless rise. US deaths are now just over 181,600 and a death rate of 548/mln (+2/mln). The net number of people actively infected in the US fell -15,000 overnight to 2,525,000, so more recoveries than new infections - a rare day's result.
In Australia, there have now been 25,053 COVID-19 cases reported, another +137 overnight, and still very much concentrated in Victoria. Australia's death count is up to 525 (+8). Their recovery rate is up to just over 79%. There are 4719 active cases in Australia (-1082) indicating a turned tide and far more recoveries than new infections.
The UST 10yr yield is up +4 bps at 0.69%. Their 2-10 curve is rising and now at just under +53 bps. And their 1-5 curve is up marginally at +16 bps, while their 3m-10yr curve is up as well at +61 bps. The Aussie Govt 10yr yield is up +4 bps at 0.92%. The China Govt 10yr is also up +4 bps at 3.06%. But the NZ Govt 10 yr yield is going the other way, down by another -3 bps to 0.55%.
The price of gold has fallen again overnight, down another -US$9 to US$1,920/oz.
Oil prices have risen overnight but by less than +US$1. They are now just under US$43.50/bbl in the US while the international price has lifted to just under US$45.50/bbl.
And the Kiwi dollar is unchanged yet again today at 65.4 USc. Against the Australian dollar we are basically unchanged too, at 91.1 AUc. Against the euro the story is similar at 55.3 euro cents. That means our TWI-5 is still at 68.5 and still in a stable range.
The bitcoin price is down -4.1% from this time yesterday at US$11,276 and a three week low. 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 ».
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