Here's our summary of key economic events overnight that affect New Zealand, with news of problems with perspectives.
But first, in their latest Survey of Consumer Expectations, 21% of American told the NY Fed survey they expect to lose their job in the next year. This of course is a sharp rise and will fundamentally change the way household budgets are planned and spending patterns change. Those surveyed also thought interest rates would rise from here as the Federal deficit implications bite.
As the US public debt approaches US$24 tln and seems to be rising at the rate of almost $4 tln per year at present, it is wise to step back for a moment and just ensure we have these large numbers in perspective.
We toss around terms like million, billion and trillion easily, but we basically don't understand the scale of the concepts. Here are two perspectives.
If you stacked US dollar bills, a million of them would be a pile 109 metres high. While that is a lot, a billion of them would be 109 kms high, high enough to reach outer space. And a trillion would go a quarter of the way to the moon, up 109,220 kms high. Given the circumference of the earth is 40,000 kms, that stack would go around the world 2½ times. The scale of a trillion is a complete other league to a million.
Here's another perspective. If a dollar was a second, a million dollars equates to almost 12 days. A billion equates to 32 years. A trillion to 31,700 years and far, far longer than human history. A trillion dollars is an enormous amount of money. And the US Federal Government had a deficit in April alone of -US$737 bln or "23,400 years" at a dollar-a-second.
Enough. Enough to show that we are being overwhelmed by public debt from the world's largest economy. There is going to be a reckoning at some point.
And of course there is Japan, the EU, and China. Overnight the Chinese reported that their total debt levels grew faster than anticipated although at a lesser pace than in March.
China also reported a small but worrying resurgence of Covid-19 cases in Wuhan that has authorities on edge.
There are also fears of a coronavirus resurgence in the US as well, even before they have anything like a controlled curve.
The latest compilation of Covid-19 data is here. The global tally is now 4,148,000 and up +70,000 from this time yesterday which is slower level of increase.
Now, just over 32% of all cases globally are in the US, which is up +17,000 since this time yesterday to 1,337,500. This is a marginally slower rate of increase. US deaths are now almost 80,000. Global deaths now exceed 284,000. The infection rate is still rising fast in the UK (+4000/day) but it rising even faster in Russia (+12,000/day) and they are about to overtake the UK to become the second most infected country in the world.
In Australia, there are now 6948 cases (+7 since yesterday), 97 deaths (unchanged) and an unchanged recovery rate of just under 89%. 49 people are in hospital there (+6) with 16 in ICU (-1). There are now 769 active cases in Australia (-5).
There are 1497 Covid-19 cases identified in New Zealand, with three new cases yesterday, a rise from +2 the prior day. Twenty-one people have died (unchanged). There are now two people left in hospital with the disease (also unchanged), and none are in ICU. Our recovery rate is now just over 92% with 111 people known to be infected (-12) and 83 of those are in 12 active clusters. That means 28 cases are recovering in self isolation in the community (-8 from yesterday).
Wall Street like trillions of public stimulus. That boosts asset prices. The S&P500 is up +0.5% in afternoon trading today. That follows European markets that were generally lower overnight. Yesterday Shanghai was flat, Hong Kong rose +1.5% and Tokyo was up +1.0%. The NZX50 rose +0.6% and the ASX200 rose +1.3%.
The UST 10yr yield is now up to just on 0.72% and a +3 bps rise. Their 2-10 curve is marginally steeper at +54 bps. Their 1-5 curve is also steeper at +20 bps, and their 3m-10yr curve has followed the trend to +62 bps. The Aussie Govt 10yr yield is up +3 bps to 0.98%. The China Govt 10yr is also up +3 bps to 2.66%. And the NZ Govt 10 yr yield has gained +2 bps to 0.59%.
Gold is lower again today, down -US$6 to US$1,697/oz.
Oil prices are lower today. In the US, they are currently just on US$24/bbl and a +US$1 dip. International oil prices are just on US$29.50/bbl and a slightly larger sag.
The Kiwi dollar is a lot lower this morning, down more than -½c to now be at 60.7 USc. On the cross rates we will also open lower at 93.6 AUc. Against the euro we are slightly firmer at 56.2 euro cents. These overall slippages mean the TWI-5 is now 66.8.
Bitcoin is lower as well, down another -1.3% to US$8,427. 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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