Here's our summary of key economic events over the weekend that affect New Zealand, with news the economic squeeze is on and getting tighter.
Among our trading partners, Singapore reported current activity is contracting sharply still, and this is confirmed in a parallel survey.
Japan's PMI is also contracting even though their bounceback is notable. But there hasn't been a good bounceback for their manufacturing sector. Like Germany, it is very dependent on exports, so is now taking a harder hit. Taiwan and South Korea are feeling similar pain on the factory floor.
These results are what makes the Chinese factory PMI result stand out.
And now the Chinese service sector has signaled its sharpest increase in activity for over a decade in June. Their service sector PMI rose from 55.0 in May to 58.4 in June, to signal a substantial increase in service sector activity. It the largest gain in ten years. Furthermore, total new orders rose at the quickest pace since August 2010 and new export work expanded for the first time since January. Firms widely reported that overall market conditions had continued to improve following an easing of measures related to the coronavirus pandemic.
The big question now is whether the Chinese economy can hold on to these expansion rates in the face of the global weakness. Most observers are sceptical.
And this comes at a time major flooding is affecting their agriculture nationwide. Although rice and cotton are unlikely to be affected much, other grains are, and especially animal fed grains. That will keep meat prices elevated over the next year - and keep up Chinese demand for New Zealand meat.
In Australia, retail sales rose +16% in May from April and marginally better than expected. Year-on-year they were up +5.5% after the -9% year-on-year drop in April.
But there is a rising expectation that a fiscal cliff will arrive in Australia about September when payroll support ends. High and still rising unemployment, the collapse in immigration which has reduced underlying housing demand by around 80,000 a year and the depressed rental market will likely combine to drive increased forced sales. Price declines of -10% or more are now widely assumed among real estate professionals, and that may become self-fulfilling. Right now, auction listings are falling, and buyers who have brought off the plan are increasingly walking away from their contracts.
And there is another problem. State and Federal programs that offer grants and subsidies for new home building in the outer suburbs are diverting and strangling demand in inner city neighbourhoods, probably accentuating the price falls.
The US was on holiday this weekend and all markets there were closed.
The latest update of the US Fed's balance sheet shows it is still not adding to its holdings with more QE, and it is now a full month that it has held back. Given that the US Senate is blocking more fiscal stimulus, it seems likely that little more assistance for their economy is coming any time soon.
Official unemployment is at 11.1%, wages and time worked are falling. Part-time working has doubled since February. And the the extra US$600 per week top-up of unemployment insurance will end later this month which means being jobless will get very tough, very soon, and stress about that will be starting to mount about now.
The latest American GDP Now tracking still suggests their economy is shrinking at a striking rate.
Of course, they are not the only country whose economy is shrinking. Most are, and the outliers are now the ones who are growing, like China.
But in Canada, Vancouver house sales returned to more normal levels in June.
And all five of Canada's biggest banks have joined an international boycott of Facebook over concerns that the platform is complicit in promoting racism, violence and misinformation.
The latest compilation of COVID-19 data is here. The global tally is 11,317,600 and that is a jump of +366,000 since Saturday. Global deaths reported now exceed 532,000 (+9000).
A quarter of all reported cases globally are in the US, which is up +74,000 since Saturday to 2,964,100. US deaths now exceed 132,000. The number of active infections in the US is now up to 1,543,300. Recording is slower over the holiday weekend. We are coming up to two weeks since lockdown rules eased so next week is likely to show record new infections. Brazil, Russia and India may soon be joined by Mexico as the worst-managed outbreak outside the US. Inside the US, Texas, Florida and Arizona are the main states where new infections are rife and Georgia is about to join that unfortunate club. The first-hit North East states all seem to have crushed their curves now, but opening up threatens those gains. A lot depends on social distancing during the holiday weekend.
In Australia, there have been 8449, another +224 since Saturday, mainly in Victoria. Their death count is still at 104 but their recovery rate has slipped back to under 88%. There are now 946 active cases in Australia (up +114 over the weekend).
Equity markets ended last week on a positive note but futures trading suggests the S&P500 will open down -0.4% tomorrow. And we are approaching the second quarter earnings reporting season. The withdrawal of a large proportion of companies giving earnings guidance over the past three months makes it hard to suggest what corporate earnings are coming. But on balance it hardly seems likely that they will support those rising share prices. But shares are priced on expectations going forward so markets will be looking for new profit guidance, and without that being positive prices are unlikely to stay high.
The UST 10yr yield is little-changed at 0.67%. Their 2-10 curve is holding at +51 bps. Their 1-5 curve is unchanged at +14 bps, as is their 3m-10yr curve at +55 bps. The Aussie Govt 10yr yield is down -1 bp at just under 0.91%. The China Govt 10yr is up +3 bps at 2.93%. And the NZ Govt 10 yr yield is down -2 bps at 0.96%.
The gold price is little-changed, down -US$1 to US$1,774/oz.
Oil prices have softened slightly over the weekend. They are now just over US$40/bbl in the US and the international price is just over US$42.50/bbl.
But the Kiwi dollar is holding firm, now just on 65.3 USc. That is a gain of more than +1c in a week. On the cross rates we are holding higher at 94.1 AUc and against the euro we are marginally firmer at 58.1 euro cents. That means our TWI-5 has risen to just under 70.2.
The bitcoin price unchanged overnight, still at US$9,039. 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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