US deficits rise sharply; China's births collapse; China's debt rises again; Japanese machine tool orders swell; Aussie business confidence up; UST 10yr at 1.15%; oil up and gold unchanged; NZ$1 = 72.3 USc; TWI-5 = 73.8

Here's our summary of key economic events overnight that affect New Zealand, with news China's population may now be shrinking.

But first, the US federal budget deficit widened sharply in January as the latest pandemic-relief package sent direct stimulus payments to millions of Americans. The monthly deficit widened to -US$165 bln in January, and for the first four months of the 2021 fiscal year the federal budget deficit rose 90% to -US$738 bln. On top of that, US$54 bln will be the cost of raising the minimum wage to US$9.50/hr (NZ$13.10) starting in June this year.

Last week, retail sales sagged somewhat with same-week year-on-year gains falling away.

December job opening data however came in on the positive side, even if the gains were minor.

The USDA WASDE report confirms that strong Chinese demand for grains, especially wheat and rice, is keeping prices high. American beef and dairy production is rising and prices for both are expected to slip.

China is reporting a sharp drop in births down from 14.6 mln in 2019 to 10.4 mln in 2020. That means China is aging at a very fast pace indeed when you get a more than -30% fall in births in just one year. Given that 2019 deaths were 10.0 mln, China's population growth likely stalled in 2020. Other official police data put the birth decline at -15%, still very major.

China is also reporting strong loan demand in January, with debt levels rising +12.7% year-on-year.

And that comes after a very positive report on car sales in the country in January, up +30% year-on-year.

And China is reinforcing its extra-territorial claims, saying anyone born in the country is a Chinese national, no matter what their passport says. You can't escape Beijing's grip if you are Chinese.

Japanese machine tool orders rose +9.7% in January from a year ago, and the December data was revised higher.

In Europe, carmaker BMW has contracted to buy "green aluminium" from the UAE (that is, aluminium made via renewable electricity) in a signal about how fast climate criteria is changing global supply chains. Tiwai Point may have a much longer life than even recently expected - and the conversation with Rio Tinto may be quite different at the next renewal.

In Australia, business conditions pulled back in January from unusually high levels in December. But business sentiment rose and to well above its long run average. Especially notable was the return of boardrooms to invest in capital expenditure.

And we should note that James Packer and his Crown casino company was deemed as unfit to run the new facility in Sydney. This decision will have knock-on impacts in other Packer/Crown casinos in Australia and maybe elsewhere.

On Wall Street the S&P500 is little-changed in early afternoon trade. Overnight European markets were mixed. Yesterday Shanghai rose a very strong +2.0% and matching the prior day's Tokyo gain, Hong Kong was up only +0.5%, and the very large Tokyo market was up +0.4%. The ASX200 fell -0.9% and the NZX50 Capital Index fell -1.0% with a late fall-away.

The latest global compilation of COVID-19 data is here. The global tally is still rising, now at 106,617,000 and up +339,000 in one day. The pandemic seems to be easing in many places now. Global deaths reported now exceed 2,330,000 and +10,000 since yesterday.

More countries (83) have started their vaccination programs. And although 134.7 mln doses have been given so far (+3.9 mln more overnight). There is clear evidence the vaccines are working to reduce or even eliminate deaths for those who have taken it.

The largest number of reported cases globally are still in the US, which rose +87,000 overnight for their tally to reach 27,704,000. The US remains the global epicentre of the virus although there is some easing. The number of active cases fell overnight and is now just on 9,696,000 and -91,000 less in one day, so more recoveries than new infections. Their death total is up however as 477,000 as the vaccination program kicks in. We now wait to see if there is any Superbowl party super spreading data. The US now has a COVID death rate of 1435/mln, and that compares to the disastrous UK level (1672) where deaths are also still rising (114,000, +1000 overnight).

In Australia, their community control is impressive. Their all-time cases reported is now 28,860 and only +3 more cases overnight, all from new arrivals and all in managed isolation. 44 of these cases are 'active' (-7). Reported deaths are unchanged at 909.

The UST 10yr yield is down another -1 bp from yesterday at just under 1.15%. Their 2-10 rate curve is marginally flatter at 103 bps, their 1-5 curve is unchanged at +40 bps, while their 3m-10 year curve is also flatter at +111 bps. The Australian Govt 10 year yield is down -2 bps at 1.22%. The China Govt 10 year yield is also down, by -1 bp at 3.25%, while the New Zealand Govt 10 year yield is firmer, up by +6 bps at 1.44%.

The price of gold will start today unchanged at US$1837/oz.

Oil prices are slightly higher at just over US$58/bbl in the US, while the international price is now just under US$61/bbl.

And the Kiwi dollar will open today firm at 72.3 USc. But against the Australian dollar we are a little softer at 93.6 AUc. Against the euro we are softer too at 59.7 euro cents. That means our TWI-5 is little-changed at 73.8.

The bitcoin price has risen sharply again overnight and is now at US$46,744 and up by +8% in a day. It reached a record high of US$48,226 in between. Volatility remains very high at +/- 6.6%. 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 ».