Here's our summary of key economic events overnight that affect New Zealand, with news the pandemic surge in the US is reaching frightening levels.
But first, 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.
The bricks-and-mortar retail industry is in substantial trouble. A list of 17 recently bankrupt key retail chain names have closed more than 11,000 locations, with sales of more than US$41 bln. Clearly those purchases will happen elsewhere and probably online, but that is still a major hollowing-out.
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. And in New York, they are pushing ahead with a tax on second homes. It too seems likely to pass.
And in Argentina, they have passed the 'millionaire's tax', supposedly a one-time impost on about 12,000 people to raise US$3.2 bln which will be allocated to buying supplies to fight the pandemic.
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.
In Australia, they see a new ban coming from China, this one for wheat' (pg28). Fortunately for them, Chinese demand is high and the Aussies sell relatively little to China, so their opportunity in in markets where wheat to China is diverted from. The Aussie rural sector is expecting its second-biggest ever grain crop this year and and is enjoying high livestock prices.
The latest global compilation of COVID-19 data is here. The global tally is 66,774,000 and a +1,221,000 rise over the weekend. 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 1,533,000 and up a very sobering +36,000 in two days as death rates spike everywhere.
But the largest number of reported cases globally are still in the US, which rose +410,000 over the weekend to 15,012,000 and an exploding increase. The US remains the global epicenter of the virus. The number of active cases is surging and now at 5,933,000 and that level is up +196,000 in just two days, so many more new cases more than recoveries. The rise in 'active cases' by more than +100,000 in one day is being normalised. Hospitalisations are becoming a very major concern, as are reinfection rates. Their death total now exceeds 288,000, up +4000 in two days and its pace is rising quickly again. The US now has a COVID death rate of 868/mln, similar to Argentina.
In Australia, they are not getting any resurgence. There have now been 27,965 COVID-19 cases reported, and that is just +16 more cases yesterday. Now 44 of their cases are 'active' (-1). Reported deaths are unchanged at 908.
The UST 10yr yield will start today higher at 0.97% and holding over the weekend. Their 2-10 rate curve is marginally steeper at +82 bps, their 1-5 curve is also steeper at +32 bps, with their 3m-10 year curve is marginally steeper too at +90 bps. The Australian Govt 10 year yield will start the week at 1.06%. The China Govt 10 year yield will start at 3.32%, while the New Zealand Govt 10 year yield is up at 0.91%.
The price of gold is up another +US$3 to US$1838/oz.
Oil prices are holding at Saturday's level, and now just over US$46/bbl in the US, while the international price is now just over 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 firmed marginally to 70.5 USc and off its recent highs but at a similar level to a week ago. Against the Australian dollar we have firmed slightly as well, back to 95 AUc. Against the euro we up marginally to 58.2 euro cents. That means our TWI-5 is up to 72.6 and slightly below last week's level.
The bitcoin price has changed little over the weekend, now at US$19,116 and a +0.6% rise since this time Saturday. 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 ».