Here's our summary of key economic events overnight that affect New Zealand, with news that despite a sharply recovering economy, China seems to be challenged by deflation again.
But first, the latest assessment of US retail sales shows them softening quite noticeably and down -1.2% from the prior week. And that means the year-on-year gain of +3.2% has fallen away to just +1.1%. A lot now hangs on having a good Black Friday and holiday season, and in turn that depends on the pandemic.
In China, today is Double-11, or Singles Day, a major retailing event. Although the buildup has been massive, it is expected to reach a crescendo today with unreal sales numbers. Alibaba alone has contracted 3000 chartered freight flights to move its sales, and more than 2 bln individual orders are expected today requiring a monumental delivery effort. The day's sales are expected to top US$32 bln and that is double what the US's Black Friday and Cyber Monday combined will generate.
China’s consumer inflation slumped to their lowest level in more than eleven years, just +0.5% year-on-year, dragged down by the first drop in pork prices in 19 months. However, beef (+7.0%) and lamb prices (+3.6%) are still rising. Petrol prices fell sharply. It is such a sharp shift lower than deflation is a real possibility before the end of 2020 and that is quite an unexpected situation.
Deflation is already the story at the factory. It is the ninth straight month of deflation and a situation they can't seem to get out of. Current policies aren't addressing this imbalance at all.
Growing worries the German economy may be heading back into recession has seen the ZEW sentiment index there fall sharply in November, undermined by the second pandemic wave washing over the country.
In Australia, the October business sentiment survey from NAB is reporting a sharp improvement following the lockdown easing in Victoria.
Locally, all eyes will be on the RBNZ Monetary Policy Review this afternoon. International investors are seeing a central bank that now controls a third of our bond market and see 'Japanification' here suddenly. That is such a distorted market, those investors will likely lose interest in it all together, hastening its demise.
Wall Street is marking time today after reaching new highs. The S&P500 is down -0.2% in early afternoon trade after having dipped more earlier. Overnight, European markets rose again, mostly by about +1%. Yesterday's Shanghai fell by -0.4%. Hong Kong gained another +1.1% and the very large Tokyo exchange rose +0.3%. Locally the ASX200 ended up +0.7% and the NZX50 Capital Index was up +0.4%.
The latest global compilation of COVID-19 data is here. The global tally is 50,913,000 and up +322,000 rise in the past day. It is still grim in France, Russia, the UK and central and southern Italy with very serious stress on their hospital systems. Global deaths reported now exceed 1,263,000 and up +5,000 in just one day.
The largest number of reported cases globally are still in the US, which rose +137,000 since this time yesterday to 10,439,000. The US remains the global epicenter of the virus. The number of active cases is surging at 3,639,000 so many more new cases more than recoveries. Their death total now exceeds 245,000 and continuing to rise by more than +1000 a day.
China is facing a winter coronavirus threat, but claims it sees no signs of a renewed outbreak yet. It is applying "strict measures" to ensure it doesn't happen.
In Australia, they are not getting any resurgence. There have now been 27,678 COVID-19 cases reported, and that is just +10 more cases than we reported yesterday. Reported deaths remain unchanged at 907.
The UST 10yr yield will start today very similar to yesterday at 0.96% and holding the big recent gains. Also holding their recent steepening is their 2-10 rate curve which is unchanged at +77 bps, their 1-5 curve is also unchanged at +32 bps, while with their 3m-10 year curve is up marginally at +87 bps. The Australian Govt 10 year yield will start today up +6 bps at 0.96%. The China Govt 10 year yield is unchanged at 3.26%. But the New Zealand Govt 10 year yield is a startling +13 bps higher, now at 0.73%.
The price of gold has gained back +US$26/oz from this time yesterday, back up to US$1884/oz.
Oil prices have held up today and are now at just on US$41/bbl in the US, while the international price is now just on US$43/bbl.
And the Kiwi dollar is a tad firmer this morning at 68.2 USc and staying relatively elevated ahead of today's RBNZ Monetary Policy Review. Against the Australian dollar we are firmer at 93.8 AUc. Against the euro we have stayed up at 57.8 euro cents. That means our TWI-5 will start today at 71.3 and near its high for the year.
The bitcoin price starts regaining +1.2% at US$15,277. 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 ».