Here's our summary of key economic events over the weekend that affect New Zealand, apart from the local community COVID spread in South Auckland.
First, a 7.3 magnitude earthquake hit off Fukushima prefecture in northeastern Japan late Saturday night, causing no deaths but causing widespread power outages in the region. There was no threat of a tsunami from the quake. This one is being said to be an aftershock from the 2011 quake.
China is ramping up its efforts to join the TPP. This comes as it tries to get ahead of the growing Quad (US, Japan, Australia, India) moves to check China's regional expansions. New Zealand as part of the Five Eyes alliance (US, Canada, Australia, the UK and New Zealand) is drawn into those efforts anyway. Now the latest Chinese foray puts New Zealand at the centre of this tension, with Beijing saying Wellington is the key for its TPP membership drive. New Zealand diplomacy is both elevated, and at the same time running huge risks for our trade given the upgraded NZ:China FTA recently agreed. The Chinese have successfully made us very vulnerable to the consequence of their displeasure if we don't do "the right thing" for them.
China's 'stay put' order over their Luna New Year holiday is distorting transport modes. Passenger travel is down nearly -70% in the first half of February compared to the same period last year. But freight traffic is up nearly +9% on the same basis.
In the US, the latest UofM consumer sentiment survey edged downward to a six month low in early February, with the entire loss concentrated in the Expectation Index and among households with incomes below US$75,000. Households with incomes in the bottom third reported significant setbacks in their current finances, with fewer of these households mentioning recent income gains than anytime since 2014.
But a new survey of economists expects US 2021 growth to show its strongest gains in 25 years. And in fact, the Atlanta Fed's GDPNow forecast suggests Q1-2021 might be off to a sharp +4.5% pa rise. Most senior professionals however think it is likely to be more like a +2% growth rate.
In the US State of Maryland (basically Baltimore), they have enacted a tax on Big Tech revenues along the lines the EU has proposed and Australia is contemplating. It too will face fierce opposition from the industry. But not everyone; Microsoft is urging Canada to take on Facebook and Google News like Australia.
In Washington DC, ex-Fed boss and now Treasury Secretary Janet Yellen is to create a new senior position that will drive their regulators to do more to strengthen their financial system’s resilience to climate risks.
In Canada, their Senior Loan Officer survey has turned very negative again.
In India, industrial production rose in December, surprising analysts who had expected another decline.
In Italy, the former head of the ECB, Mario Draghi, has formed a new national unity government in an attempt to get Italy out of its economic funk and break the entrenched partisanship in their politics.
In the UK, they released their Q4-2020 GDP data over the weekend. It rose by +1.0% from the prior quarter which was a surprise, but the level of economic activity there is now -7.8% below its year-ago level. That is its worst annual result since 1709! Even so, this grisly decline is marginally better than forecasted.
In Australia, property developers building housing for NSW renters will be eligible for tax discounts and planning exemptions.
Victoria is now in a “short, sharp circuit-breaker” lockdown for five days amid fears the highly infectious UK strain of coronavirus has spread in the community there.
The latest global compilation of COVID-19 data is here. The global tally is still rising but at a slower pace, now at 108,655,000 and up +155,000 in one day. The pandemic seems to be easing in some places now although that may just because it is the weekend and counting systems are delayed. Global deaths reported now exceed 2,396,000 and +4,000 since yesterday.
More countries (88) have started their vaccination programs. About 160.7 mln doses have been given so far (+9.0 mln more over the weekend), and 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 +186,000 over the past two days for their tally to reach 28,210,000. The US remains the global epicentre of the virus although there is clearly some easing. The number of active cases fell sharply overnight and is now just on 9,560,000 and -41,000 fewer in two days, so less new infections again than recoveries. Their death total is up at 496,000 (+8000) also in two days. The US now has a COVID death rate of 1494/mln, and that compares to the disastrous UK level (1720) where deaths are also still rising (117,000).
In Australia, their community control is impressive but Victoria is in a snap 5-day lockdown again as the UK strain may be in the community there from a border breach. Their all-time cases reported is now 28,898 and only +6 more cases overnight, +2 in the community and the rest new arrivals and all in managed isolation. 41 of these cases are 'active' (+8). Reported deaths are unchanged at 909.
The UST 10yr yield is up +1 bp from yesterday at just on 1.21% and its highest in almost one year. Their 2-10 rate curve is a little steeper at 110 bps, their 1-5 curve is steeper too at +43 bps, while their 3m-10 year curve is also marginally steeper at +118 bps. The Australian Govt 10 year yield is up +1 bp at 1.27%. The China Govt 10 year yield is unchanged at 3.26%, while the New Zealand Govt 10 year yield is also unchanged at 1.31%.
The price of gold will start today up +US$4 at US$1824/oz.
Oil prices have drifted slightly since Saturday and are now at just over US$59.50/bbl in the US, while the international price is just over US$62/bbl.
And the Kiwi dollar opens today little-changed at 72.2 USc. Against the Australian dollar we are similar at 93.1 AUc. Against the euro we are at 59.6 euro cents. That means our TWI-5 is the same as it was on Saturday at 73.6 and largely unchanged in a week.
The bitcoin price is up +2.7% from this time Saturday and is now at US$49,106. It hasn't hit US$50,000 yet but it did reach a new all-time high of US$49,716 in the past 24 hours. Volatility has been high at +/- 3.2%. 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 ».