US 2020 GDP fall not as fierce as expected; China's private consumption to surge; GameStop curbed; Apple and GM make big announcements; UST 10yr at 1.06%; oil and gold soft; NZ$1 = 71.7 USc; TWI-5 = 73.2

Here's our summary of key economic events overnight that affect New Zealand, with news from Apple and GM that is being overshadowed by the daytrading frenzy.

Firstly, the American economy expanded +4.0% in Q4 2020. But it wasn’t enough to prevent a full-year contraction of -3.5%, the most since 1946. But full year growth is expected to return in 2021, and depending on your analyst, it seems to have gotten off to a positive start in January.

But you may not know that from the latest jobless claims report. 874,000 people filed for the first time last week, while many more fell off as their qualification for benefits ended. Another 427,000 applied for Pandemic Assistance claims. There are now 5.2 mln on these programs.

The US merchandise trade balance was a deficit of -$82.5 bln in December, just shy of the record deficit set in November. Exports fell and imports rose on a year-on-year basis, so no improvement yet on this front.

Sales of new homes remain at high levels even though they missed expectations, and are +15% above the year-ago level in December.

The Kansas City Fed factory survey is also positive reporting expanding growth and at a faster pace.

In China, a new report by Morgan Stanley says private consumption there will more than double in the next ten years, with the service sector outperforming the goods sector. Private consumption is likely to reach US$12.7 tln by 2030, making China a global consumption powerhouse and matching the size of the 2020 US market.

China is preparing for a very much slimmed down Lunar New Year travel season with 'only' 1.15 bln trips, -20% fewer than last year and the smallest figure since at least 2003.

Retail sales in Japan in December remained weak and not quite at year-ago levels, and a worrying confirmation their domestic economy is in a real funk.

We are starting to see falls in iron ore prices now, not large, but starting. However, it is unclear whether this is due to destocking ahead of the Chinese New Year shutdowns, or a real market shift.

Not falling however are food prices in China, and they remain a concern to authorities there.

Equity markets have roared back today in New York and shaking off yesterday's risk-off mode with the S&P500 up +1.9% in afternoon trade. Platform operators and exchanges are trying to curb daytraders making fools of themselves, but that just seem to have made them wilder. Meanwhile and somewhat overshadowed, Apple has posted impressive results again. Overnight, European markets were up by about +0.5% on average, although London fell -0.6%. Yesterday, things were ugly in Asian markets with Shanghai down -1.9%, Hong Kong was down by -2.6% while the very large Tokyo market was down -1.5%. In Australia, the ASX200 also fell -1.9% yesterday, while the NZX50 Capital Index was the worst, falling -2.2%.

The latest global compilation of COVID-19 data is here. The global tally is rising faster, now at 101,068,000 and up +626,000 in one day. The UK variant is increasing its grip, and other variants are emerging too. It is still very grim everywhere except in our region. Global deaths reported now exceed 2,180,000 and +18,000 since yesterday. More countries have started their vaccination programs. And although 81.7 mln doses have been given so far (+10.5 mln in a day), nowhere has the tide turned on infections or deaths yet - except perhaps in Israel, and maybe just starting in the US.

But the largest number of reported cases globally are still in the US, which rose +155,000 over the past day for their tally to reach 26,193,000. The US remains the global epicentre of the virus. The number of active cases fell overnight and is now just on 9,806,000 and -25,000 fewer than yesterday, so more recoveries than new infections. Their death total is up to 440,000 however (+4000). The US now has a COVID death rate of 1326/mln, awful but made to look 'good' by the disastrous UK level (1515) where deaths are still raging.

In Australia, their community outbreak is over. That takes their all-time cases reported to 28,794, and only +8 more cases overnight, all new arrivals and all in managed isolation. 92 of these cases are 'active' (-14). Reported deaths are unchanged at 909.

The UST 10yr yield will start today up +5 bps at just on 1.06%. Their 2-10 rate curve is steeper at +94 bps, their 1-5 curve is also steeper at +35 bps, while their 3m-10 year curve is steeper as well at just over +101 bps. The Australian Govt 10 year yield is up +3 bps at 1.07%. The China Govt 10 year yield is up +2 bps at 3.21%, while the New Zealand Govt 10 year yield is up +1 bp at 1.09%.

The price of gold will start -US$8 lower today at US$1838/oz.

Oil prices are softer by -US$1 at just over US$52/bbl in the US while the international price is also softer and now just over US$55/bbl. General Motors says it plans to eliminate petrol and diesel cars by 2035, be carbon neutral by 2040.

And the Kiwi dollar will open at just under 71.7 USc. Against the Australian dollar we are unchanged at 93.5 AUc. Against the euro we are softer at 59.1 euro cents. That means our TWI-5 is lower at 73.2.

The bitcoin price has recovered over the past 24 hours and is now at US$32,164 or a rise of +5.5% since this time yesterday. Volatility remains high at +/- 4.8%. 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 ».