US inflation up except for petrol; US Q3 GDP looks very weak, Japan machine tool orders stay weak; Aussie consumer sentiment waivers; UST 10yr yield at 0.67%; oil unchanged, gold recovers; NZ$1 = 65.9 USc; TWI-5 = 69.1

Here's our summary of key economic events over night that affect New Zealand, with news of 'an air of panic' among Australian consumers.

But first in the US, mortgage applications rose strongly last week, and their mortgage interest rates fell sharply to a new record low to now under 3% (plus points).

American CPI inflation rose in July, but only to 1%. That is the net of food prices that are up more than +4%, medical care that is up almost +6%, rent which is up +2.3%. Offsetting these was petrol that was down -20% pa.

US Federal Government reported a -US$63 deficit in July which was less than expected (the tax filing deadline change helped), but takes the annual deficit to more than -US$2.9 tln and easily a new record high. That is -15% of US GDP.

We are now in the middle of the Q3 for 2020 and the latest indication is that US GDP will fall at the annual rate of -20.5% in this quarter. That compares with -35% annual rate in the second quarter and a -5% annual rate in the first quarter. (Given the new lockdown here, it's not going to be flash in New Zealand either.

In Japan, their machine tool orders levels are not recovering, still down more than -30% year-on-year.

In Australia, wage growth in the June quarter was the slowest since records were kept.

And the pandemic spread in Victoria has had an obvious crushing of consumer sentiment there. But it has also affected NSW sentiment badly too. Australian consumers are clearly fearful of the COVID threat and uncertain about how it will play out. And that will have some bearing on their decisions near term. But there also looks to be an air of panic in the Westpac-MI consumer sentiment survey that Westpac says is out of proportion with what still look to be manageable virus-related risks outside Victoria. "That could disappear quickly if feared outbreaks in other states do not materialise and the situation in Victoria eases." But Aussie consumer sentiment will be hostage to virus outcomes for some time yet.

Wall Street has started today with a big gain as a risk-on sentiment returns. The S&P500 is up +1.6% so far today. Overnight however, European markets were higher but more restrained, mostly up less than +1% but London gained +2.0%. Yesterday, Shanghai ended its session down another -0.6% but Hong Kong was up +1.4% and Tokyo was up +0.4%. The ASX200 was flat (+0.1). The NZX50 fell -1.3% in the first trading session after the renewed lockdown status.

The latest global compilation of COVID-19 data is here. The global tally is 20,424,000 and that is up +272,000 since this time yesterday. Global deaths reported now exceed 745,000 (+7,000).

A quarter of all reported cases globally are in the US, which is up +60,300 from this time yesterday to 5,331,000. US deaths are now just over 168,400 and a death rate of 509/mln (+5/mln). And the net number of people actively infected in the US rose overnight to 2,382,000, so now fewer new infections than recoveries.

In Australia, there have now been 22,127 COVID-19 cases reported, another 414 overnight, and still very much concentrated in Victoria. But there were another +18 in Sydney and NSW can't seem to shake its small community transfer outbreak. Australia's death count is up to 352 (+21). Their recovery rate is now just under 58%. There are now 9001 active cases in Australia (+6) indicating a rising recovery rate but still more infections than recoveries.

The UST 10yr yield is firm at 0.67% and holding on to yesterday's rise. Their 2-10 curve is slightly steeper at +50 bps. And their 1-5 curve is up marginally as well at +15 bps, while their 3m-10yr curve is little-changed at just under +58 bps. The Aussie Govt 10yr yield is up marginally at 0.92%. The China Govt 10yr is holding at 2.99%. And the NZ Govt 10 yr yield is -4 bps lower at 0.74%.

The price of gold fell sharply in London yesterday (down -US$92 to US$1940/oz). After that it went lower in New York by another -US$30 to US$1910/oz. In Asian markets yesterday it went lower yet again, down to US$1890 and a further -US$20 fall. Now today in New York, it is back up +US$43 at US$1933/oz. Net of all that, this is a drop of -5% in two days, even if it is just a net +US$23 rise from this time yesterday. This sort of volatility for gold is unusual. Silver has fallen almost -20% in the same time, volatility on steroids.

Oil prices are little-changed today, even if marginally firmer. They are now just over US$42.50/bbl in the US and the international price is now just under US$45.50/bbl.

And the Kiwi dollar rose overnight after an interim fall and is back at 65.9 USc which is where it was this time yesterday. Against the Australian dollar we are soft at 91.9 AUc. Against the euro we are down slightly at 55.9 euro cents. That means our TWI-5 is now marginally softer at just on 69.1.

The bitcoin price is virtually unchanged from this time yesterday at US$11,540. 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 ».