Here's our summary of key economic events overnight that affect New Zealand, with news the Chinese are claiming an amazing supercomputer breakthrough.
But first in the US, their November non-farm payrolls data disappointed. A rise of just +469,000 was expected after the October +610,000 gain with the November expectations undermined by the weak ADP data. But the actual result undershot all those estimates, coming in up just +245,000. It is a significant loss of momentum. Their participation rate slipped to a low 61.5% although that is not as low as it has gotten earlier in the year. Weekly earnings growth held at +4.4% pa.
This means there are now -9.7 mln fewer people employed in November 2020 in the US than were employed in November 2019 even though their working aged population grew by +1.1 people over the same time.
New factory orders fell -3.7% in October from the same month a year ago, and they slipped from the prior month as well (although on a seasonally adjusted basis, they are being reported as being +1% up on a monthly basis). Non-defense capital goods orders brought marginally better news rising +0.4% year-on-year even if they too slipped from September. None of this data represents a recovering economy.
On the trade front, their October trade deficit for both goods and services came in at -US$63 bln, its second largest ever and only beaten by the awful August result. Their October goods deficit was 21% higher than a year ago, their services surplus was -24% lower. The politically sensitive deficit with China came in at -$30 bln for goods alone and little changed from the same month in 2019.
This poor data has re-energised Congress. Lawmakers on Capitol Hill are currently negotiating details of a roughly US$900 bln plan to support various at-risk sectors of their economy. The stumbling block are the Republicans who have "suddenly" rediscovered their aversion to deficit spending.
North of their border, the Canadians reported labour market data for November as well. They added +62,000 jobs in the month and that was much better than the +20,000 expected. And that is also better than it appears because full time work grew by +99,000. But despite the better-than-expected result, it was all less than for October.
In Toronto, they are pushing to get approval for a tax on vacant homes to increase the housing supply by encouraging homeowners to sell or rent their unoccupied home. If they choose to continue to keep the home vacant, it will be taxed and this revenue used to fund affordable housing projects.
In China, their are claiming a major scientific breakthrough. Chinese physicists say they have built a quantum computer one trillion times faster than the most powerful supercomputer. The researchers said that using a process called “Gaussian boson sampling”, their prototype quantum computer took a little over three minutes to complete a task that the world’s fastest present machine would not be able to complete in 600 million years.
In Singapore, they may be turning a corner with retail sales rising in October from September (even if only modestly) and the year-on-year decline reduced to -8.6%. It was -10.7% in September on the same basis.
Wall Street is up +0.6% in early afternoon Friday trade for the S&P500. It is heading for a weekly gain of +1.4% and the second successive week it has added about US$½ tln in capitalisation. Overnight European markets were generally up by about +0.7%. Yesterday, Tokyo closed down -0.2% to cap a minor weekly rise of +0.4%. Hong Kong rose +0.4% on the day to cap a weekly slip of -0.2%. Shanghai closed flat and had a good weekly gain of +1.1%. Meanwhile, the ASX200 was up +0.3% yesterday for a weekly rise of +0.5%, while the NZX50 Capital index closed -0.1% lower on the day and locked in a minor weekly dip of -0.2%.
The latest global compilation of COVID-19 data is here. The global tally is 65,553,000 and a +829,000 rise overnight. It is very grim in Russia, the UK, Brazil, Turkey and Indonesia. It does seem to be easing further in Europe generally. Global deaths reported now exceed 1,497,000 and up +12,000 in one day.
But the largest number of reported cases globally are still in the US, which rose +247,000 overnight to 14,602,000 and an exploding increase. The US remains the global epicenter of the virus. The number of active cases is surging and now at 5,737,000 and that level is up +135,000 in one day, so many more new cases more than recoveries. This is the first time 'active cases' have risen by more than +100,000 in one day. Hospitalisations are becoming a very major concern. As are reinfection rates. Their death total now exceeds 284,000, up +3000 in a day and its pace is rising quickly again. The US now has a COVID death rate of 855/mln, similar to Argentina.
In Australia, they are not getting any resurgence. There have now been 27,949 COVID-19 cases reported, and that is just +10 more cases yesterday. Now 45 of their cases are 'active' (-7). Reported deaths are unchanged at 908.
The UST 10yr yield will start today higher at 0.97% and a +5 bps rise. Their 2-10 rate curve is steeper at +81 bps, their 1-5 curve is also steeper at +32 bps, with their 3m-10 year curve is again much steeper at +89 bps. The Australian Govt 10 year yield is also up +5 bps at 1.06%. The China Govt 10 year yield has dipped -1 bp to 3.32%, while the New Zealand Govt 10 year yield is up +1 bp at 0.91%.
The price of gold is up another +US$2 to US$1835/oz.
Oil prices are higher today by about +50c, and now just under US$46/bbl in the US, while the international price is now just under US$49/bbl. We are getting back to levels that were around in early 2020 and prior to the onset of the pandemic.
And the Kiwi dollar has slipped overnight to 70.4 USc and off its recent highs but at a similar level to a week ago. Against the Australian dollar we have fallen back as well to 94.7 AUc which is another half cent fall. Against the euro we have dipped to 58 euro cents and more than a -½c lower in a week. That means our TWI-5 is back down to 72.4 and slightly below last week's level.
The bitcoin price has also slipped overnight, now at US$19,008 and a -2.0% lower than 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 ».
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