Here's our summary of key economic events overnight that affect New Zealand, with news East Asia is back to normal in contrast to the US and Europe.
First, the number of job openings in the US edged down slightly in the first week of December, a sign of a softening labour market amid an upsurge in pandemic infections, and ebbing fiscal support for households.
And mortgage applications fell for a second straight week and essentially ending a long upward run. But they do remain quite elevated on a year-on-year basis.
In Australia, a Westpac-Melbourne Institute consumer sentiment survey has come in very positively, especially for expected future conditions. It is now 48% above the low in April and has reached its highest level since October 2010, marking a ten year high. Sentiment has fully recovered from their COVID recession.
Separately, China seems to have extended its ban on Aussie log imports, claiming a biosecurity risk.
In China, deflation is setting in harder now. They have had producer price deflation for a long time and in November it eased to -1.5% year-on-year. But now they also have consumer price deflation, and it bit quite hard in November. Analysts had expected the year-on-year inflation rate to fall to 0%, but in fact it fell to -0.5% and below zero for the first time since 2009. A year ago, their CPI was rising at +4.5%, so this has been a sharp turn down. This retreat is being driven by pork (-12%) and petrol prices (-18%). However, beef prices are up +4.2% and lamb prices up +2.2% above year-ago levels.
However, new loan growth in China in November was strong although it just matched analyst expectations.
But the bond woes roll on for some major companies. Their great tech chip-making hope, Tsinghua Unigroup, is now warning more bond payment misses are likely.
Japan is reporting a rather substantial improvement in their machinery orders for October. After a -4.4% monthly fall in September they were expecting a modest +3% rise in October, bringing the year-on-year result to -11%. But in fact orders poured in. They were up a huge +17% from September, meaning the October level is now almost +3% higher than the same month a year ago. That is a very substantial positive surprise. Export orders drove the gains.
Japanese machine-tool orders for November also reported a strong recovery and are now +8% higher than the same month in 2019.
After starting the day in positive territory, the S&P500 has now moved negative, reporting a -0.6% fall and growing in early afternoon trade. Tech stocks are falling even harder today. Overnight European markets closed mixed with Frankfurt up +0.5% and Paris down -0.3%. London was flat. Yesterday, the very large Tokyo market ended its session up a very strong +1.3%, Hong Kong was up +0.8%, while Shanghai was down -1.1%. The ASX200 closed out yesterday with a +0.6% gain while the NZX50 Capital Index closed with a +1.3% rise.
The latest global compilation of COVID-19 data is here. The global tally is 68,470,000 and a +667,000 rise in one day. At this rate, we will top 100 mln by the end of January. It is still very grim in Russia, the UK, Brazil, Turkey and Indonesia. It does seem to be easing further in Europe generally although not in the UK or Sweden. Global deaths reported now exceed 1,562,000 and up a very sobering +13,000 in a day as death rates spike everywhere.
And the first rollout of Pfizer's vaccine has identified issues for people with allergies and official warnings have been issued.
But the largest number of reported cases globally are still in the US, which rose a record +238,000 overnight to 15,627,000. The US remains the global epicenter of the virus. The number of active cases is surging and now at 6,237,000 and that level is up 134,000 in just one day, so many more new cases more than recoveries. The rise in 'active cases' by about +100,000 in one day has been normalised. Their death total now exceeds 294,000 and up +3000 in one day. The US now has a COVID death rate of 886/mln, and now higher than Argentina.
In Australia, they are not getting any resurgence. There have now been 27,993 COVID-19 cases reported, and that is just +6 more cases yesterday. Now 47 of their cases are 'active' (+3). Reported deaths are unchanged at 908.
The UST 10yr yield will start today firmer, now at just under 0.95% and a +4 bps rise. Their 2-10 rate curve is flatter at +76 bps, their 1-5 curve is also flatter at +28 bps, and their 3m-10 year curve is flatter too at +83 bps. The Australian Govt 10 year yield will start today back up +3 bps at 1.03%. The China Govt 10 year yield is +1 bp up at just on 3.31%, while the New Zealand Govt 10 year yield is down -1 bp at 0.93%.
The price of gold is lower today, falling -US$27 to US$1842/oz. For the first time this year, ETFs are divesting their gold holdings.
Oil prices are slightly softer at just under US$45.50/bbl in the US, while the international price is soft at just over US$48.50/bbl.
And the Kiwi dollar is little-changed again at 70.4 USc. But against the Australian dollar we have fallen by -½c, back down to 94.5 AUc. Against the euro we are unchanged at 58.3 euro cents. That means our TWI-5 is still at 72.5, a level it has been at for more than two weeks now.
The bitcoin price has fallen another -2.5% today and is now at US$18,383. 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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