Here's our summary of key economic events overnight that affect New Zealand, with news investors are retreating yet again on the consequences of bad public policy choices.
First up today, Wall Street is in a major retreat. The S&P500 is down -1.9% in afternoon trade. Bond yields are falling. Oil prices are diving. The gold price is down sharply as a risk-off mood envelopes financial markets.
Investors are realising that polarised politics are a recipe for fiscal inaction, and the Congressional Budget Office issued a report showing how dire Administration policies will be. The US budget debt
deficit is already as large as their GDP and similar to levels in WWII. They now say it will get twice as bad if current policy settings remain unchanged. It is mismanagement on an epic scale.
These policies have however pumped up asset prices. And on that basis, US household net worth is rising steadily - at least it was until today's retrenchment.
And the Chicago Fed's National Activity Index shows that the rebound after the pandemic shutdowns has run its course and is settling in with only 60% of the March and April losses recovered.
The rise and rise of coronavirus infections in places that had hoped to be under control now, in both the US and Europe, is threating renewed lockdowns. The inability to lockdown properly the first time seems to be unleashing ugly public policy choices. Markets are scared of what could come next.
But in Asia, prospects don't seem so dire.
In Taiwan, their export orders rose impressively in August, up more than +13% compared to the same month in 2019. And that builds on impressive June and July data.
In China, a senior central bank adviser says China's economic growth will accelerate to "around 6%" in the fourth quarter of this year, as life and production in most parts of China have returned to normal. And he says full 'normal' will return in the first quarter of 2021.
But we should note that the shares of HSBC have fallen to a 25 year low as its misdeeds seem to be catching up with it. Worse, China is threatening to put it on its new "unreliable entity" list.
In Europe, equity markets were down almost -4% in a major selloff triggered by pandemic resurgence worries. Yesterday, Shanghai ended down -0.6%, Hong Kong fell -2.1%, but Tokyo recorded a gain of +0.2%. Locally, the ASX200 retreated -0.7% and the NZX50 Capital Index fell -0.8%.
The latest global compilation of COVID-19 data is here. The global tally is 31,163,000 and up +304,000 in one day. Global deaths now exceed 962,000.
Just under a quarter of all reported cases globally are in the US, which is up 32,000 overnight to 7,019,000. The number of active cases are stable at 2,543,000. Their death total is now just over 204,000 but rising at a slower rate.
In Australia, there have now been 26,912 COVID-19 cases reported, and that is only +14 more cases from yesterday. Deaths are up slightly at 851 (+2). Their recovery rate is now under 90%.
The UST 10yr yield is down at 0.67% and a -3 bps retreat. Their 2-10 rate curve is sharply lower at +53 bps, their 1-5 curve has slipped to +15 bps, while their 3m-10 year curve is also lower at just under +59 bps. The Australian Govt 10 year yield is down -3 bps to under 0.90%. The China Govt 10 year yield is also lower at 3.13% and a -2 bps slip. And the New Zealand Govt 10 year yield is also down -2 bps at 0.53%.
The price of gold will start today down a remarkable -US$38 at US$1911/oz and a very unusual -2.2% fall. It is acting just like any other risk asset which traditionally hasn't been its role. Silver is down a stunning -8.8%.
Oil prices have taken a hard hit today and are now at US$39/bbl in the US which is a full -US$2 lower, while the international price is also down sharply at just on US$41/bbl.
The Kiwi dollar is starting today sharply lower at 66.7 USc and a full -1c drop overnight. Against the Australian dollar we are slightly lower at 92.4 AUc. Against the euro we are down at 56.7 euro cents. That means our TWI-5 has fallen to 69.9.
The bitcoin price is down -4.8% today, and now at US$10,399. 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 ».