Here's our summary of key economic events over the weekend that affect New Zealand, with news China has a big problem with mortgage foreclosures.
But first, in a sign of a recovered economy, the upcoming Golden Week holiday (October 1-7) is expected to raise the total number of domestic flight trips made during the holiday to more than 15 million, a +10% rise from last year. Of course, some of that will be because many international destinations are not open, but still, the bulk of Golden Week travel is domestic anyway.
And staying in China, new official data claims that their digital economy accounted for over two-thirds of China's GDP growth in 2019 from about one third of all its economic activity.
But all is not well there. In 2018, a data service reported 180,000 home foreclosures in China. In 2019 the same source reported 300,000. To the middle of September 2020 they are saying 1.25 mln homes were foreclosed on by banks in China as vast numbers of people struggled with meeting mortgage payments due to "deteriorating job prospects and shrinking income". How credible the source is, is up for conjecture, but it is part of the giant Alibaba service. You would think they would know.
And the grain price rise in China is attracting speculators, accentuating their problems with low domestic supply and high import demand.
In Japan, like everyone else, they are making no progress reigniting inflation, partly because of fiscal policies. Japan's core consumer prices fell at their fastest pace in almost four years in August, dragged down mostly by government-sponsored discounts for domestic travel aimed at supporting the battered tourism sector. Now, also like everyone else, they are shifting the goalposts to include jobs growth as a core monetary policy mandate.
In the US, the latest poll of consumer sentiment remains very negative year-on-year (-15%) but improved in September from August. Things are even more negative year-on-year about current economic conditions (-19%) but less so for future expectations (-12%).
The US Fed balance sheet is rising again, up +$54 bln in the last week to September 16 and the fastest rise in 15 weeks. In the period from mid-May to early July, it was well over $7 tln and then fell back steadily. Now it is back up sharply to US$7.06 tln. A rise like this indicates the Fed mandarins think their economy and financial system is in need of enhanced support.
And surging deposits and declining lending are driving banks to dramatically increase their holdings of US Treasury bonds, underpinning support for their bond market at a time of unprecedented government borrowing. And that support in significant.
The US Administration raised its agricultural subsidies overnight by another US$14 bln in what has been described a "vote-buying".
Prospects for economic support from Congressional fiscal action is fading fast as Republicans block any meaningful aid. Oddly Democrats, and now the Trump Administration seem willing to act.
The S&P500 futures trading suggests that Wall Street will open -1% lower tomorrow.
In Australia, which currently has about 1 mln unemployed, industrial action on the Sydney waterfront has the potential to add many more. Wharf workers are striking, and now major shipping lines are refusing to dock in the face of endless cargo unloading delays. See here and here. Diversion to Melbourne is a poor option because of limited operations there in their pandemic restrictions.
Of course, it is not all bad in Australia. Despite their recession, business is booming across farms amid drought breaking rains and rising commodity prices.
The latest global compilation of COVID-19 data is here. The global tally is 30,859,000 and up +562,000 in two days. Global deaths now exceed 959,000 (+11,000).
Just under a quarter of all reported cases globally are in the US, which is up 84,000 in two weekend days to 6,987,000. The number of active cases are rising again at 2,546,000. Their death total is now just over 204,000 and still rising at more than +1000 a day (and now 616/mln and only Spain and Belgium have a higher death rate among Western countries).
In Australia, there have now been 26,898 COVID-19 cases reported, and that is just +37 more cases from Saturday. Deaths however are up at 849 (+12). Their recovery rate is now over 89%.
The UST 10yr yield is still at 0.70% and unchanged since the end of trading on Wall Street. Their 2-10 rate curve is just marginally higher at +57 bps, their 1-5 curve is up at +16 bps, while their 3m-10 year curve is also unchanged at just under +61 bps. The Australian Govt 10 year yield is unchanged at 0.93%. The China Govt 10 year yield is also unchanged at 3.15%. And the New Zealand Govt 10 year yield is a little below 0.55% and little-changed as well.
The price of gold will start today down -US$4 at US$1949/oz.
Oil prices are little-changed today at US$41/bbl in the US while the international price is down slightly to just on US$43/bbl.
The Kiwi dollar is starting the week firmer at 67.7 USc and almost +1c higher than this time last week. Against the Australian dollar we are unchanged in a week at 92.7 AUc. Against the euro we are up at 57.1 euro cents and a +½% appreciation in a week. That means our TWI-5 has risen to 70.5.
The bitcoin price is a little-changed today, still at US$10,898 and very similar to where we left it on Saturday. 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 ».