Here's our summary of key economic events overnight that affect New Zealand, with news China is extending its economic lead in the pandemic recovery race.
In the US, their budget deficit tripled in the fiscal year ended September. It widened to -US$3.1 tln from just under -US$1 tln a year earlier. Four years ago this Administration inherited an annual deficit of -$585 bln. This is the largest and fastest deterioration ever. As a share of GDP, the annual 2020 deficit reached -15.2%, the largest since World War II.
The latest USDA WASDE report indicates that despite rising output they expect dairy prices to rise from here on good international demand. Also their beef import forecast has been raised for this year and next, despite noting that their beef exports are likely to fall. That is because their local prices are higher and less competitive internationally.
Canada released its September jobs data overnight and it came in much better than expected. They reported a gain of +378,000 jobs, +344,000 of them full-time positions. Their jobless rate fell but only to +9.0%. Their participation rate eased up.
The Chinese services sector reported another solid increase in business activity in September, cementing in a fifth straight month of expansion. They seem well past the pandemic struggle. This growth was backed up by a good rise in new orders, though new export work continued to decline. Still, payrolls rose for the second month in a row amid increased capacity pressures. It is a trend many other countries will envy at this time. (Their factory sector earlier reported an good expansion too, but exports there were stronger than for services.)
The buoyant Chinese economic mood has seen their currency appreciate its most in 15 years. It is all driven by an expanding domestic economy.
In India, official forecasts are that the Indian economy will contract -9.5% in the current fiscal year through March 2021 as the fallout from the coronavirus pandemic severely curtails economic activity there.
The latest household data out of Sweden indicates that their households are in a tough spot with consumption down -3.7% year-on-year. That is similar to Norway and to Denmark. There is no evidence yet that the Swedish tolerance for its high pandemic death toll (583/million) gives it some sort of economic advantage. (Norway = 51/mln, Denmark = 115/mln.)
In Australia, the RBA's latest financial stability review is somber reading. Business failures and household financial stress will rise significantly over the coming months when loan repayment deferrals and government income supports end, they say.
And in the same report, the central bank warns trading banks about 'culture' issues when they come to "the challenging task of dealing with customers' loan repayment deferrals". (p44)
The UN World Food Program was awarded the Nobel Peace Prize for its efforts to combat hunger and prevent it from being used as a weapon of war.
Wall Street is up today by +0.9% in afternoon trade for the S&P500 and heading for a +3.9% rise for the week. Expectations of new stimulus is driving this rise, one that has taken the capitalisation of this index up +US$1 tln in just one week and half its gain since the start of 2020. European markets were up about +0.6% last night. Yesterday Hong Kong was down -0.3% and Tokyo closed down -0.1%. Shanghai's resumed trading saw it gain +1.7%. Yesterday the ASX200 ended flat but that locked in a strong +5.4% rise for the week. The NZX50 Capital Index was up +0.4% and cementing in a weekly rise of +3.9%.
The latest global compilation of COVID-19 data is here. The global tally is 36,686,000 and up at the new faster pace of +405,000 per day which is near the sharpest increase ever recorded in this pandemic. It is being driven higher by sharp rises in the UK, Russia, Argentina and Iran. Global deaths reported now exceed 1,064,000 (+7000) but clearly many are going unreported.
The largest number of reported cases globally are still in the US, which is up +70,000 in one day to 7,863,000 which is a new rising pace. The number of active cases is at 2,603,000 (+25,000) so many more new cases that recoveries and going backwards on that front. Their death total is over 218,000 and still rising at about +1000 per day.
In Australia, there have now been 27,229 COVID-19 cases reported, and that is +23 more cases than yesterday with the spike in NSW persisting. Deaths are unchanged at 897.
The UST 10yr yield is up +1 bp to 0.78%. Their 2-10 rate curve is firm at +63 bps, their 1-5 curve is also firm at +21 bps, while their 3m-10 year curve is little-changed at +69 bps. The Australian Govt 10 year yield is down -1 bp to 0.86%. The China Govt 10 year yield is up +5 bps at 3.21%. The New Zealand Govt 10 year yield is unchanged at 0.55%.
The price of gold is up by a sharp +US$43 this morning at US$1925/oz in New York trade. That is an overnight rise of +2.3% which is a lot for the yellow metal. And silver has jumped too, and proportionately more with a +4.7% rise.
Oil prices start today down by about -US$0.50, now just on US$40.50/bbl in the US, while the international price is down a bit more to just over US$42.50/bbl. There was another modest weekly rise in US rigs put into production, an odd turnaround at such low prices.
The Kiwi dollar starts today sharply higher, up by nearly +1c to 66.7 USc and a three-week high. Against the Australian dollar we are firmish at 92.2 AUc. Against the euro we are up to 56.4 euro cents. And that means our TWI-5 has risen back to 69.7 and where it was at the start of this past week.
The bitcoin price is higher yet again today, now at US$11,064 and +1.3% higher than this time yesterday and a full +5.0% higher than a week ago. 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 ».