Here's our summary of key economic events overnight that affect New Zealand, with news the pressures of weighing against the pandemic is about to bring a 'blizzard' of sovereign ratings downgrades.
Standard & Poor's is saying that the immense costs of supporting health programs, businesses and workers through the pandemic was fundamentally undermining most countries’ finances. And so there are about to be a raft of ratings downgrades to be announced, with most major nations at risk.
One of those downgrades won't be China. They are set for a bumper grain harvest will leave the nation with more than a years consumption in inventory, and cap the recent rise in grain prices, they claim.
After barley, wine, beef and coal, the next trade China is punishing Australia with is apparently going to be cotton, as farmers there brace for a Chinese announcement of a 40% tariff imposed by Beijing. The screws are tightening and Canberra has become much more circumspect very recently. Two thirds of all Aussie cotton is exported to China.
South Korea has posted a worsening jobless rate in September, but it is still a low 3.9% even if it isn't improving. Many countries will look with envy at that level.
And Singapore's exports fell sharply in September, in an unexpected worsening of their trade balance.
In a positive surprise, American retail sales for September ended a bit better than most analysts were expecting. They rose from August and were up +5.4% from the same month a year ago. On-line (non-store) retailing is powering the gains, up +27% from a year ago. Used car sales powered the vehicle retailing industry, up +14.4% year-on-year.
But those gains are not being seen in American industrial production. The latest data fell more than expected in September when actually a rise was expected. This production is now -7.3% lower than in the same month in 2019. Imports (from China) are filling the product demands in a spectacular failure of their avowed industrial strategy.
Consumer sentiment doesn't seem to care. It is up in October from September, although still a massive -15% lower than this time last year. Maybe the 'don't care' description isn't entirely fair - the views on 'current conditions' declined in October from September. But future expectations rose. So perhaps American consumers are just waiting for a leadership change.
And it is now official; the US posted a -US$3.1 tln budget deficit in their fiscal year ended September 2020 - three times more than for the previous year's terrible outcome.
And international holdings of US Treasuries fell for the first time in four months in August, with China's holdings of American government debt falling to the lowest in nearly four years.
The latest global compilation of COVID-19 data is here. The global tally is 39,792,000 and up an average of +356,000 per day. The case growth is concentrated in Russia, the UK, Iran, France and Italy. Global deaths reported now exceed 1,111,000 (+5,000 per day) but clearly many are going unreported.
The largest number of reported cases globally are still in the US, which rose +106,000 in two days to 8,354,000. They are clearly now in a third wave (initial was in April, then a larger one in July, and this new one threatens to be larger again). The number of active cases is at 2,690,000 so as many more new cases as recoveries. Their death total is over 224,000 and still rising at +1000 per day. By the end of 2020 their death toll will top 300,000+.
In Australia, there have now been 27,390 COVID-19 cases reported, and that is just +19 more cases than we reported on Saturday. Most states reported new cases. Deaths are unchanged at 904 however.
The UST 10yr yield is little-changed this morning at just on 0.75%. Their 2-10 rate curve is unchanged at +60 bps, their 1-5 curve is a little steeper at +20 bps, while their 3m-10 year curve is also marginally steeper at +66 bps. The Australian Govt 10 year yield will start the week unchanged at 0.73%. The China Govt 10 year yield is also unchanged at 3.25%. The New Zealand Govt 10 year yield remains at 0.54% as well.
The price of gold is down -US$2 from where we left it Saturday at US$1900/oz even.
Oil prices are marginally firmer to start the week, now just under US$41/bbl in the US, while the international price is still just under US$43/bbl.
The Kiwi dollar starts today little-changed at just under 66.1 USc. Against the Australian dollar we are also unchanged at 93.3 AUc and holding on to the recent gains. Against the euro we are holding at 56.4 euro cents. And that means our TWI-5 is still at 69.6 and little-changed over the past seven days.
The bitcoin price is +1.1% higher today than this time Saturday, now at US$11,469. 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 ».