US jobless claims rise again; Canada still leaking jobs; Japan's trade surplus rises; China's outbound investment modest; AU's jobless rate falls; UST 10yr at 1.10%; oil and gold slip; NZ$1 = 71.9 USc; TWI-5 = 73.2

US jobless claims rise again; Canada still leaking jobs; Japan's trade surplus rises; China's outbound investment modest; AU's jobless rate falls; UST 10yr at 1.10%; oil and gold slip; NZ$1 = 71.9 USc; TWI-5 = 73.2

Here's our summary of key economic events overnight that affect New Zealand, with news of the worldwide struggle to find more jobs as the pandemic issues just keep hurting.

There were +961,000 new American jobless claims filed last week and they took the total people on these programs to 5.6 mln and a decrease of -200,000 as more people came to the end of their qualification than who filed new claims.

New American housing starts in December rose to a record high level, one that is +5.2% higher than the same month a year ago. For all of 2020, American housing starts rose +7.0% and this added +1.0% to their total stock of dwelling units at a time their population rose only +0.7%.

The latest regional Fed factory survey was from the PhillyFed and it was a positive one. A striking feature of this survey was the sharp rise in price indicators.

Canada's ADP employment report for December isn't positive but it is the 'least negative' report they have had since February 2020 so that has to be seen as 'progress'.

And staying in Canada, their updated bank stress tests apparently show banks there could withstand a -37% drop in house prices, and a rise in their jobless rate to 24%.

Japan reported its December trade data overnight and exports rose +2.0% in December compared with the same month in 2019. Imports fell sharply however on that basis, down almost -12% but much of that fall was due to a sharp decrease in the crude oil price. In any event, their trade balance was in surplus in the month by +NZ$10.1 bln.

In the final 2020 tally of how the US:China "Phase One" trade deal ended up, the Chinese only purchased a bit less than 60% of the commitments under that deal. This is not really 'news' because it has been obvious all year, but it does put a line under the failure of the US's trade war offensive. It failed. In terms of the size of the "problem" relative to the size of the two respective economies, the issue was never that large. It was much more about Trump appealing to his "base". But it is likely the Americans will now pivot to a more sophisticated approach to try and bring it back into balance.

Yesterday we reported that inbound investment into China rose +6.3% to US$155 bln in 2020. Today we can report that outbound investment by China also rose, by +3.3% to US$133 bln in 2020. Again, while politically sensitive, in terms of the size of their economy, these are both tiny levels.

In China, a state-sponsored propaganda effort to blame the pandemic on foreign food imports is having an impact on sales levels. It is particularly noticeable on seafood.

There were a set of central bank rate reviews overnight, and none of them changed rate settings. The Bank of Japan sat pat, The Indonesians did so too saying they saw improving conditions. And the ECB completed the theme with no core policy setting changes, although they are not so sanguine about 2021 as the outlook there darkens.

The ECB is right to be concerned; the EU consumer sentiment monitoring in January shows it languishing in negative territory.

Australia’s jobless rate fell to 6.6% in December from 6.8% after their economy gained +50,000 new jobs following the lifting of the Melbourne pandemic restrictions. Almost 90% of their pandemic job losses have now been recovered. (New Zealand's December unemployment data will be released on February 3. Our September jobless rate was 5.3%.)

Wall Street is unchanged in midday trade today. Overnight European markets were mixed ranging from a fall of -0.7% in Paris and +0.1% in Zurich. Yesterday, Shanghai ended its session up +1.1%, Hong Kong was down -0.1%, but Tokyo ended up +0.8%. The ASX200 also rose +0.8% and the NZX50 Capital Index rose another +0.7%.

The latest global compilation of COVID-19 data is here. The global tally is rising faster, now at 97,062,000 and up +665,000 in one day. We are heading for 100 mln early next week now mainly because the UK variant is increasing its grip. It is still very grim everywhere except in our region. Global deaths reported now exceed 2,080,000 and +16,000 since this time yesterday as death rates rise everywhere. No-where yet are vaccines turning the tide.

But the largest number of reported cases globally are still in the US, which rose +202,000 for their tally to reach 25,032,000. The US remains the global epicentre of the virus. The number of active cases rose overnight and is now at 9,644,000 and +16,000 more than yesterday, so more new infections than recoveries yesterday. Their death total is up to 416,000 however (+4000). The US now has a COVID death rate of 1254/mln, awful but made to look 'good' by the disastrous UK level (1389) where deaths are surging.

In Australia, their community outbreak is back well under control. That takes their all-time cases reported to 28,750, and only +10 more cases yesterday, all new arrivals and all in managed isolation. 170 of these cases are 'active' (-16). Reported deaths are unchanged at 909.

The UST 10yr yield will start today unchanged at 1.10%. Their 2-10 rate curve is up +1 bp at +97 bps, their 1-5 curve is still at +35 bps, and their 3m-10 year curve is also up +2 bps at +104 bps. The Australian Govt 10 year yield is up +2 bps at 1.07%. The China Govt 10 year yield is down -2 bps at 3.17%, while the New Zealand Govt 10 year yield split the difference and is unchanged at 1.03%.

The price of gold has slipped -US$2 today in New York and now at US$1864/oz.

Oil prices are also little-changed at just on US$53/bbl in the US while the international price is now just under US$56/bbl.

And the Kiwi dollar is firmer today from this time yesterday at just over 71.9 USc. Against the Australian dollar we are firmer as well at 92.7 AUc. Against the euro we are at 59.2 euro cents. That means our TWI-5 is now up at 73.2.

The bitcoin price has dived this morning and is down -9.2% since this time yesterday. It is now at US$31,555 and near its low for the year. Volatility is high at +/- 7.5% in between. 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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24 Comments

Jeremy Grantham Describes Imminent Risk of Bubble Popping, Prefers Emerging Markets

https://thesoundingline.com/jeremy-grantham-describes-imminent-risk-of-b...

At uni in the 60’s we all studied the infamous South Seas Bubble of the 18th century and of course it cropped up in curriculums subsequent to that, economists during various seminar thingys etc, Rufus Dawe especially entertaining if I remember correctly, dire warnings of credit spiral.Seems to be well forgotten now though.

Finally reality kicking in for some Americans and about time too. BBC article: Biden inauguration leaves QAnon believers in disarray.
"Followers of the baseless QAnon conspiracy theory are divided after Joe Biden's inauguration confounded their predictions that Donald Trump would remain president in order to punish his enemies in the "deep state".
https://www.bbc.com/news/blogs-trending-55746304

"They broke four windows, took selfies and threw papers on the ground.
How many people died?
Four — all Trump supporters."
Hmm seems to be an odd link you have posted there AJ - did they forget 1 Police man beaten to death

I was pulling his leg

LOL I'm too busy laughing at the rapidly reducing pool of Trump supporters. I'm sure he'll try to cash in on them some how; perhaps by starting a religion they're certainly gullible enough.

Most in the capital know that Joe Biden is not a well man. With 75 million votes Trump is a powerful man, i suspect he will pass the flame onto his son.

Nahh they're not that stupid. :)

The 75 million votes are now meaningless. He has no more political power, as of yesterday other than the Save America PAC. And from the indications in Mitch McConnell's word, it looks like the Republican hierarchy is very much interested in putting as much distance between him and the party as possible. I expect some of the Senate Republicans may well throw him under the bus in the looming impeachment hearings.

A Jim Jones type cult?

It already exists: QAnon

When this is finally over, there should (in theory) be a big rebound in global economies.

When the rebound happens though - how do we do this in a controlled manner? Many people typically get left behind in economic rebounds - especially as per what happened after the GFC, where incomes didnt really rise compared to costs. Most people however are hit with the real costs of inflated goods and assets.

Economic downturns always get a lot of attention (in media, govt assistance etc), but upturns are pretty much encouraged and untouched, leading to bubbles forming and often inequalities. Then when the downturn hits it is a double whammy for those who were left behind during the good times.

Should we be planning now for the upturn - and if so - how should we manage it to ensure the spoils are much more fairly distributed and also maybe the rate of growth kept to a sustainable level, rather than a runaway train?

Bitcoin smashing those weak hands out of the market with baseless FUD articles about a double spend occurring on the Blockchain. This is a regular occurrence and resolves itself after the next 1 or 2 blocks have been mined.
https://twitter.com/aantonop/status/1352258125932371968?s=20
Great time to Buy The Dip. Nice bit of consolidation before continuing upwards.

Great to see some clued up bitcoin comments on here rather than the usual terrible takes. Hodl on, comrade.

Thanks :) I try to present detailed and reliable information in the hopes that those less researched can learn something. Always fun to engage in discussion.

Boomers: "You've been on Twitter dot com too much listening to your Bitcoin echo chamber"

Twitter dot com: Andreas M. Antonopoulos ✅ @aantonop - https://en.wikipedia.org/wiki/Andreas_Antonopoulos

#HODL

I dont know how Twitter is still free. Any pleb like me can get information straight from the smartest minds in the business and even interact with them! Such a great resource if you use it correctly, ie dont follow idiots and keep it to research only :)

HODL FOR LAMBOS!

Andrew check this site out.Hodgetwins destroying the BLM movement posted june 12 2020 on Youtube.

Vaccine with efficacy of greater than 95% is already been announced, that alone is enough to deter Covid19, with the use of QR by Kiwis in massive regular intake. Pandemic is already over in Aotearoa.

They also announced they'd do something about the housing crisis....

I'm beginning to think all the vaccines will do is "Flatten the curve" and we will be able to manage it better long term. They are expecting 500,000 deaths in the USA but I think it will go well beyond that. Covid is already mutating and will stay ahead of the speed of vaccine development and then getting it out to the people. Covid is like Ebola, its just going to keep popping up for no apparent reason, except this will be worldwide and not only in Africa. We have to keep it out of New Zealand or its going to stuff us all.