Here's our summary of key economic events overnight that affect New Zealand, with news of more atrophy in the world's largest economy.
Firstly, the September US Fed Beige Book is reporting "uncertainty and volatility" with "its negative effect on consumer and business activity" across the country. There are gains noted, in manufacturing, vehicle sales and residential real estate, but they are "generally modest", they say. And they are outweighed by weakness in commercial real estate, the energy sector and in rural industries "with little expectation of near-term improvement". Basically it paints a picture of a stalled and under-performing American economy, severely constrained by the pandemic.
US mortgage application volumes declined last week.
This weekend we get the August non-farm payroll report. The precursor ADP payrolls report is out today and analysts had expected it to record new job growth of a modest +950,000 bounceback (June was +4.3 mln). But the released report only shows payrolls bouncing back with a weak +428,000, so the minimal July gains were not an outlier.
American factory orders for July were weak, down -6.5% year-on-year. Worse, non-defense capital goods orders were down -19%, so investment for the future is very weak indeed.
One of the bright spots has been vehicle sales. The US automotive market (15 mln annual sales) is now a very distant second to the Chinese market (22 mln), but at least August sales were higher in America than they were in July.
But Ford is cutting back again, announcing 1400 more job cuts. And another large American airline, United, said it will furlough more than 16,000 additional workers starting in October when federal restrictions on job cuts that were a condition of government aid end.
American debt is about to exceed GDP for the first time since the end of WWII. The mismanagement of the US public finances in the past four years has reached an epic scale. This year alone, their budget deficit will reach -US$3.3 tln, three times last year's appalling result.
It's such a fast decline that the Chinese now think their economy will be larger than the US in just 12 years from now.
But stress levels in China and their expanding pool of graduates has seen the five largest state-owned Chinese banks being forced to hire at least an extra 60,000 graduates this year, even as they all post depressed results.
Meanwhile, as Chinese benchmark interest rates rise, companies have been scrambling to cancel or delay their planned bond issuance. Eight-five onshore bond transactions were affected in August involving NZ$10 bln.
In Australia, they have just officially entered into recession (two consecutive quarters of declining economic output), their first since 1991. Their Q2 National Accounts confirmed that output plunged by -7.0%, which was weaker than anticipated, and follows a -0.3% decline in Q1. It's a shock that has created significant labour market stress, with the unemployment rate spiking as a result. But even though the GDP result was worse than expected, the equities market has ignored it.
Australian home prices fell for a fourth straight month. Sydney prices declined another -0.5% in August, Melbourne prices another -1.2%, adding to a negative quarter and cutting back the year-on-year gains.
In New York, the S&P500 is up +1.2% in afternoon trade today. Overnight European markets made big gains, up almost +2.0% on average. Yesterday, Shanghai closed down -0.2%, Hong Kong was down -0.3% and Tokyo managed a +0.4% gain. The ASX200 ended up +1.8% which exactly reversed the prior days retreat, and the NZX50 Capital Index was up +0.9% which didn't quite do the same here.
The latest global compilation of COVID-19 data is here. The global tally is 25,835,000, up +275,000 since yesterday. Global deaths reported now exceed 859,000 (+7,000 in one day).
Just under a quarter of all reported cases globally are in the US, which is up +48,000 in a day to 6,274,000 and a relentless rise. US deaths are now just over 189,300 and a death rate of 571/mln (+3/mln). The net number of people actively infected in the US slipped overnight to 2,573,000 (-2,000).
In Australia, there have now been 25,923 COVID-19 cases reported, and that is +104 more than yesterday. Although most are in Victoria, there has been something of a resurgence in NSW yesterday. Australia's death count is up to 663 (+6). Their recovery rate is still at 83%. There are 3576 active cases in Australia (-88) indicating a turned tide and more recoveries than new infections.
The UST 10yr yield is down another -2 bps today at 0.65%. Their 2-10 curve is flatter again at +51 bps. Their 1-5 curve is unchanged at +13 bps, and their 3m-10yr curve flatter too at +55 bps. The Aussie Govt 10yr yield is down -3 bps at 0.91%. The China Govt 10yr is up +5 bps at 3.11%. But the NZ Govt 10 yr yield is little-changed at 0.64%.
The price of gold is down sharply, down -US$30 today to US$1,941/oz.
Oil prices are a lot lower today, down by -US$1.50 at just under US$41.50/bbl in the US while the international price is down slightly less to just under US$44.50/bbl.
The Kiwi dollar is little-changed today and still at 67.6 USc. However against the Australian dollar we have risen sharply to 92.4 AUc, a rise of more than +¾c. Against the euro we are up +½c to 57.1 euro cents. That means our TWI-5 has firmed to 70.5.
The bitcoin price is sharply lower today from this time yesterday, now at US$11,366 which is a -5.2% drop. It is a bigger fall in New Zealand dollars and the local price of bitcoin is back to its levels of late July. 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 ».