Worrying US data released ahead of Thanksgiving holiday; China raises regulatory pressure; airlines in big trouble; France starts tech tax crackdown; UST 10y at 0.87%; oil and gold firmer; NZ$1 = 70.1 USc; TWI-5 = 72.6

Here's our summary of key economic events overnight that affect New Zealand, with news that any recovery for the world's largest economy is looking increasingly tenuous. Their incoming Administration has been handed a mess.

There is a mountain of American data to report today, a dump just before their long Thanksgiving Weekend. Next week, it will all be about the signals from the retail sector.

But first, US jobless claims for last week came in higher than expected. In fact a small dip was expected but a rise is what they got, to 778,000 new claims. And the prior week was revised up, making matters worse. There are now 6.071 mln people on these benefits, a drop of -300,000 in a week as support levels expire at a fast rate. And without new Congressional action in the next few weeks that ending of qualification will bite millions more. The chance of new or renewed support seems low as Republican senators seem intent of hobbling the incoming Administration.

The recovering in durable goods orders slipped in October from September, but at least there was some small growth. At least that growth didn't slip as much as expected. On a year-on-year basis, they are -1.1% lower. Non-defense capital goods orders are level-pegging year-on-year, and if you exclude aircraft orders (there were none in October 2020 but quite a few in October 2019), then they are up +5.5% year-on-year and that is a good sign.

However, there is no progress to report for the American merchandise trade deficit. It came in at a record -US$86.9 bln for the month with exports down -7.1% on a year-on-year basis, and imports little-changed.

There is good news on one front however - sales of new-built houses is holding at their high level of about +1 mln per month, and that is more than +40% higher than a year ago. That makes it four months in a row or sales at this very elevated level.

Not so good is data for personal incomes in October (-0.7%). They fell more than expected while spending stayed in growth mode (+0.5%). It is not a trend that can continue much longer. In fact, the spending growth is tailing off quite quickly now and this may be the last we see of it.

The latest consumer sentiment readings continue to show lower levels, and lower expectations. In fact, the November levels are now more than -20% below where they were at this time last year.

There will be considerable attention on the release of the US Fed minutes at 8am New Zealand time. If there are important policy insights there, we will update this item then.

In China, regulatory pressure is rising on the many SOE companies that are under bond pressures.

And China has substantially dialed back its criticism of Australia, saying recent remarks by PM Morrison were "positive". It is hard to tell at this point whether this is a reset, or just a test. A more internationally engaged American Administration in the region will be a tougher test for China's relatively hard line policies.

And in Australia, home-building fell to a six-year low in the September quarter, as a combination of Victoria's lockdown, less infrastructure work and falling commercial construction made for a weak result of completed construction.

Global airline trade association IATA is signaling that airline industry losses will be much greater than originally estimated. They now say a net loss of US$119 bln is expected for 2020 (deeper than the -US$84 bln forecast in June). A net loss of US$39 bln is expected in 2021 (deeper than the $16 bln forecast in June).

And France has started its crackdown on Google and Facebook among other major US tech giants for tax avoidance. The US is on record of retaliating if this happened, but the situation is less sure now.

After touching new records, Wall Street is backing off a little today with the S&P500 dipping -0.2% in cautious pre-holiday afternoon trade. Overnight, European markets were mixed, but with London down -0.6%. Yesterday Tokyo closed up +0.5%, Hong Kong was up +0.3%, but Shanghai went the other way closing down -1.2% in losses that grew as their session progressed. The ASX200 ended up +0.6% and the NZX50 Capital Index was up +0.9%.

The latest global compilation of COVID-19 data is here. The global tally is 60,038,000 and a +637,000 rise overnight. It is still very grim in Russia, the UK, and Italy with great stress on their hospital systems. It does seem to be easing in Belgium, France and Spain. Global deaths reported now exceed 1,415,000 and up +14,000 from yesterday.

The largest number of reported cases globally are still in the US, which rose +202,000 overnight to 13,004,000 and at their higher pace of infection. The US remains the global epicenter of the virus and the consequence of a very bad public health response. The number of active cases is surging at 5,073,000 and that level is up +93,000 in one day, so many more new cases more than recoveries. Overwhelmed, many jurisdictions have just given up on contact tracing. Their death total now exceeds 267,000. The US now has a COVID death rate that now exceeds Brazil at 804/mln.

In Australia, they are not getting any major resurgence. There have now been 27,854 COVID-19 cases reported, and that is just +6 more cases overnight. Now 95 of their cases are 'active' (-1). Reported deaths remain unchanged at 907.

The UST 10yr yield will start today -2 bps lower at 0.87%. Their 2-10 rate curve is little-changed at +71 bps, their 1-5 curve is flatter at +28 bps, with their 3m-10 year curve flatter too at just under +80 bps. The Australian Govt 10 year yield is also down -2 bps at 0.91%. The China Govt 10 year yield is down -1 bp and now at 3.32%, while the New Zealand Govt 10 year yield is up another +6 bps at 0.97%.

The price of gold is has recovered some of the big falls over the past few days, up +US$7 today to US$1811/oz.

Oil prices are higher again today, up by another +US$0.50 or so to just on US$45.50/bbl in the US, while the international price is now just under US$48.50/bbl.

And the Kiwi dollar has risen again to 70.1 USc this morning and another 'good' gain since this time yesterday. And it is a 30 month high. Against the Australian dollar we are firmer at 95.2 AUc. Against the euro we are holding at 58.8 euro cents. That means our TWI-5 will start today up at 72.6. We were last at this level in March 2019.

The bitcoin price has fallen overnight after very briefly touching a record high. But is now at US$18,987 and -1.4% below the price this time yesterday. 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 ».