Here's our summary of key economic events over the weekend that affect New Zealand, with news trade uncertainty is growing as the pandemic surges again, and that uncertainly may be compounded by politics.
This is the week of the US Presidential election. Investors eyes will be firmly on it because either outcome, or even a contested outcome, will likely have a significant influence on investment and economic prospects one way or other for a long time to come. And those outcomes will be filtered by a fast-worsening pandemic in most large western economies. Hardly any scenario seems positive.
European and American equity markets are gloomy. They ended last week with outsized losses. And the S&P500 futures trading suggests when they restart this week, more declines are expected.
And that is on top of large pull-backs in Q2 that weren't fully recovered in Q3. And now Q4 is starting with a stumble.
The OECD is reporting that foreign direct investment sank sharply in the first half of 2020, down by -50% to its lowest since 2013. Pullback of investment by foreigners into the USA fell by -74% and drove the trend. Their data shows a -60% decline for New Zealand so investment here was lower than the average. There was an even larger proportionate decline for Australia.
American data on household incomes and spending from before this latest pandemic crisis shows both were recovering in September from the March and April hits. But without a fiscal program to cushion incomes this time, it could get very ugly to round out the year. Hopefully their election result will allow something to be done.
In China, they have started their once-in-a-decade census, a truly massive undertaking.
And China's official PMI data for October was released over the weekend and their factories expanded in a modest manner again. However, their service sector is expanding faster and at a good rate. In fact, this is the fastest service sector expansion in six years. And these official readings have tended to be more conservative than the private sector PMI monitoring during 2020.
Japanese industrial production rose more than expected in September from the prior month but is still -8% lower than a year ago.
In Singapore, their latest survey of business confidence in Q3 was still very negative, but not quite as much as in the prior quarter.
Taiwan’s economy grew with unexpected speed in their third quarter, with GDP rising +3.3% year-on-year and the highest rate in more than two years. It was growth built on both strong exports and a rebound in consumption after successfully taming the pandemic.
But Hong Kong reported a year-on-year GDP decline of -3.4% for its Q3-2020 period. However at least that was not as tough as their Q2 result.
The latest global compilation of COVID-19 data is here. The global tally is 46,245,000 and by nearly +1 mln since Saturday. They now record highs daily now. It is very grim in Russia and Western Europe with serious stress on their hospital systems. Sweden is also getting a new huge spike. The new British lockdown promises a grim Christmas there. Global deaths reported now exceed 1,198,000. A sharp rise in deaths is now expected by this time next week now this third wave has taken hold.
The largest number of reported cases globally are still in the US, which rose +174,000 since Saturday to 9,418,000 in an accelerating trend. The number of active cases is higher at 3,115,000 so many more new cases more than recoveries. And a new trend is the sharp rise in hospitalisations. Their death total now exceeds 236,000 and now rising at much more than +1000 per day.
In Australia, they are not getting any resurgence. There have now been 27,595 COVID-19 cases reported, and that is +13 more cases than we reported Saturday and mainly in NSW. Reported deaths are unchanged at 907.
The UST 10yr yield is up +1 bp today at just on 0.87%. Their 2-10 rate curve has moved steeper again to +72 bps, their 1-5 curve is also a little steeper at +26 bps, along with their 3m-10 year curve, now also steeper at +79 bps. The Australian Govt 10 year yield will start today up +2 bps at 0.85%. The China Govt 10 year yield is unchanged at 3.21%. And the New Zealand Govt 10 year yield is also unchanged at 0.54%.
The price of gold has held over the weekend at US$1879/oz but still a -2.3% loss for the week. However, gold is the commodity to watch if the US election result is confusing.
Oil prices have stayed very low after last weeks sharp decline and are now at just over US$35.50/bbl in the US, while the international price is now over US$37.50/bbl. These prices are nearing those we saw in March at the start of the first global set of lockdowns.
And the Kiwi dollar is little-changed this morning from where we left it at the end of last week at 66.2 USc. Against the Australian dollar we are a little firmer at 94.3 AUc which is actually a three month high. Against the euro we holding at 56.7 euro cents. That means our TWI-5 is little-changed at 69.8.
The bitcoin price starts today at US$13,802 and +2.0% higher than where we left it on Saturday. Over the past week it has risen +5% in US dollar terms, and +6% in New Zealand dollar terms. 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 ».