Here's our summary of key economic events overnight that affect New Zealand, with news we are now all focused on the depth of the global recession with recovery a long way off.
The US Fed has been meeting and has kept its policy settings unchanged for a fourth consecutive time. But its forecasts show that it plans to hold these positions until at least 2023. It says it is expecting something of an economic growth bounceback in 2021 but it seems to have trimmed the scale of the recovery expectations in 2021 (from +5% to +4%). Reducing forward projections is a Fed pattern these days. But at least they don't see the 2020 jobless rate rising from here.
US retail sales for August were virtually unchanged from a year ago, and well below analysts' expectations. This is consistent with the weak Redbook reporting. And the July data was revised lower even though that was a +3.5% year on year gain.
American mortgage applications were lower last week than the previous one.
American businesses continue to destock, with inventories now down a massive -5.9% year-on-year, and taking -US$120 bln out of their reserves.
And Canada is reporting a stubbornly low inflation rate of +0.8% year-on-year, but deflation month-on-month.
In China, manufacturing investment rose +5% in August from a year earlier, the first gains of 2020 and another sign the Chinese economy's recovery is embedding. Further, these gains are from the private sector, with national and local authority investment taking a back seat in this data and unchanged from a year ago.
In Japan, their trade surplus swelled in August when a small deficit was expected, with exports down less than expected and less than in July, but their imports were down more than expected and about the same decrease as in July.
In Australia, universities are now shedding jobs in large numbers are there is no end to the enrollment retrenchment from foreign students. This is likely to become a very sore workplace issue among the articulate and influential staff.
The OECD is reporting a substantial decline in economic activity among its members but is also says the decline has been less than feared. But New Zealand gets no mention in its assessment.
We will get our own economic impact review for the June quarter later this morning with the GDP release that is certain to show we have been in recession. The signal that the NZ Government's borrowing program has been scaled back suggests our recovery may not be as distant.
On Wall Street today, the S&P500 is up +0.1% in afternoon trade although earlier it was up as much as +0.7% with a brief bounce following the Fed data release. But it was very brief. Overnight, European markets closed mixed but generally up of about +0.2% even if London was down -0.4%. Yesterday, Shanghai ended the day down -0.4%, but Hong Kong and Tokyo were little-changed on the day. The ASX200 ended up more than +1.0% while the NZX50 Capital Index gained +0.4%.
The latest global compilation of COVID-19 data is here. The global tally is 29,657,000 and up +271,000 in one day. Global deaths now exceed 931,000 (+5,000).
Just under a quarter of all reported cases globally are in the US, which is up +37,000 to 6,802,000. Active cases exceed 2,514,000. Their death total is now just over 200,000 and still rising at about +1000 a day (and now 606/mln).
In Australia, there have now been 26,779 COVID-19 cases reported, and that is only +41 more cases from yesterday and only from Victoria and NSW. Deaths however are up however at 816 (+8). Their recovery rate is holding at 88% now.
The UST 10yr yield is unchanged at just on 0.68%. Their 2-10 rate curve is softish however at +53 bps, their 1-5 curve is still at +14 bps, while their 3m-10 year curve is now just over +58 bps. The Australian Govt 10 year yield is down -1 bp at 0.91%. The China Govt 10 year yield is up +2 bps at 3.16%. However, the New Zealand Govt 10 year yield is -3 bps lower at 0.58%.
The price of gold will start today up +US$6 at US$1960/oz.
Oil prices are much firmer today, up more than +US$1.50 to just on US$40/bbl in the US while the international price is now just on US$42/bbl.
The Kiwi dollar will start today at 67.4 USc and marginally higher from this time yesterday. Against the Australian dollar we are higher as well at 92.3 AUc. Against the euro we are up at 57 euro cents. That means our TWI-5 is now at 70.3.
We should also note that the Chinese yuan appreciated significantly against the US dollar yesterday, taking it up to levels last seen more than a year ago.
The bitcoin price is also higher today, now at US$11,035 and +2.2% higher than this time yesterday. 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 ».