US pandemic support deal done; US Fed balance sheet expands again; China struggles with jobs, steel output hits massive level; Taiwan stars; UST 10yr at 0.94%; oil lower and gold firm; NZ$1 = 70.9 USc; TWI-5 = 72.5

Here's our summary of key economic events overnight that affect New Zealand, with news China's steel industry is the global star of 2020.

But first in Washington, Congress is about to vote on the pandemic support deal agreed by both parties. It is expected to pass. The separate Federal Government funding deal has been given a short extension to avoid a shutdown, but that problem remains.

The US Fed's balance sheet is rising again, now up to US$7.363 tln which is up +US$120 bln in one week, about the same rise as it took the previous twelve weeks to achieve. This very much faster rise in support comes as Congress wasn't able to agree on its own fiscal support package.

The Chicago Fed's latest update of their National Activity Index records a sharp slowing in the recovery expansion - but at least it is still expanding, if only just.

Americans struggled to access credit this year and felt less prepared to meet unexpected costs, with applications for credit cards plunging the most, according to a newly updated NY Fed survey.

In China, fast-rising factory orders, especially export orders, is placing severe strain on their jobs market. A private index by Renmin University tracking demand for blue-collar labour hit a record in the third quarter. Some factory managers have hiked wages by 25% to ¥10,000 yuan (NZ$2,175) per month, well above the average starting wage for graduates.

China is likely to hit a steel production milestone of almost 1 bln tonnes produced and sold in 2020, an unprecedented global benchmark, and maybe 60% of the world's total output. Meanwhile the iron ore price keeps on rising, against the 'wishes' of Beijing. It is unlikely they will tolerate the situation much longer.

In Japan, they have adopted a record US$1 tln budget for fiscal 2021, as the country grapples with the pandemic, its rapidly aging society, and new security challenges posed by China. It is so large, new fears of financial indigestion are being raised even if Japan is the world's third largest economy.

Taiwan export orders rose sharply again in November, up a massive +30% year-on-year compared to the healthy +10% rise in October. Analysts has expected the November rise to be 'only' +13%.

In South Korea, the Indian-owned SsangYong car company has filed for bankruptcy.

In Australia, it is suddenly a return to locked State borders and lockdowns in parts of Sydney, an unseemly end to a year where most of Australia looked like it escaped most of the pandemic. But it ends with its two largest states hobbled at some point in 2020.

The OECD says international merchandise trade continued to expand in October and November, driven in particular by Asia and by robust global demand for so-called ‘lockdown goods’ such as electronics, computers and mobile phones. It was enough for goods trade to nearly get back to pre-pandemic levels, they say. But trade in services remains a mess.

Wall Street has started the week with the jitters, down -0.4% in early afternoon trade today. Overnight European markets fell much harder, down about -2.5% on the implications of the new fast-spreading UK pandemic strain, the closing of borders and the unlikelihood of any Brexit deal. Yesterday, the Shanghai equity market finished up +0.8%, Hong Kong was -0.7% lower and Tokyo closed -0.2% lower. Locally, the ASX200 closed down a marginal -0.1% while the NZX50 Capital Index was down -0.6%.

The latest global compilation of COVID-19 data is here. The global tally just keeps on rising, now at 77,055,000 and up +523,000 in one day. At this rate, we will top 100 mln in a month. It is very grim in Russia, the UK, Eastern Europe, Brazil, Turkey and Indonesia. It does seem to be easing further in Europe, although not in the UK, Sweden, or Germany. Global deaths reported now exceed 1,697,000 and up +7,000 since this time yesterday as death rates spike everywhere.

But the largest number of reported cases globally are still in the US, which rose +192,000 overnight for their Sunday tally to 18,296,000. The US remains the global epicenter of the virus. The number of active cases is still surging and now at 7,344,000 and that level is up +115,000 in one day, so vastly more new cases more than recoveries. Their death total is surging now and exceeds 325,000. The US now has a COVID death rate of 979/mln and approaching the disastrous UK level (994).

In Australia, their Sydney-based community resurgence is from an as-yet untraced border breach from an American strain. There have now been 28,198 COVID-19 cases reported, and that is +27 cases over the weekend surge. Parts of Sydney are in lockdown. Other states have closed their borders. Now 135 of their cases are 'active' (+15). Their fast reaction might just be effective but the impact will linger. Reported deaths are unchanged at this stage at 908.

The UST 10yr yield will start today a little softer at just over 0.94%, a -1 bp slip. Their 2-10 rate curve is -1 bp flatter at +81 bps, their 1-5 curve is also marginally flatter at +28 bps, while their 3m-10 year curve flatter at +84 bps. The Australian Govt 10 year yield is -3 bps lower at 0.98%. The China Govt 10 year yield is little-changed at 3.31%, while the New Zealand Govt 10 year yield is holding soft at just over 0.96% and a -1 bps dip.

The price of gold is +US$2 firmer today at US$1883/oz. Silver is up +2.0% today at US$26.25/oz.

Oil prices have dropped sharply today, down -US$2 to US$47/bbl in the US, while the international price is down to US$50/bbl.

And the Kiwi dollar is a -½c softer today at 70.9 USc and back where it was this time last week. Against the Australian dollar we are softer at 93.5 AUc. Against the euro we are down at 57.9 euro cents. That means our TWI-5 is now at 72.5 and a small fall from this time yesterday.

The bitcoin price has settled at its new very high level and is now at US$23,195, a -2.3% slip from 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 ».