US industrial production fades but China's rises even as electricity production stalls; China's retail sales surprisingly weak; UST 10yr yield at 0.71%; oil and gold unchanged; NZ$1 = 65.4 USc; TWI-5 = 68.5

Here's our summary of key economic events over the weekend that affect New Zealand, with news the world's largest economies are struggling to stabilise.

In China, they reported surprisingly weak retail sales in July, and an unusual decline.

Rents were weak too. Rents in 20 major Chinese cities fell -2.3% in July from the same month year earlier, the fourth consecutive month of decline in a market that’s been buoyant for years. But it is a trend that is corroding the fortunes of millions who bought apartments for rent. Now they face mortgage payments that aren't being covered by rents, and vacancies are rising.

They also reported electricity production fell more than -4.6% in July from June and was up only +1.9% year-on-year. In China's terms, these are very weak results.

And they reported stable industrial production. It was up +4.8% year-on-year, the same as in June, and the same as for July 2019. But for the first seven months of 2020 it was lower than the same period in 2019.

In good news for Australian iron ore demand, China's crude steel production jumped more than +9% in July to over 90 mln tonnes. Iron ore prices are higher yet again and now well over US$100.tonne.

And a survey by the American Chamber of Commerce in China has found that almost 90% of American companies had no plans to leave China, despite sour American-Sino trade relations. In fact, they are finding trading conditions quite good compared with their home markets.

American industrial production is, in contrast, still shrinking fast, down -8.2% in July form the same month a year ago, but at least that is better than the June shrinkage of -11%. The real weakness is in the production of business equipment; that is down -14% year-on-year.

And that is quite the contrast with Canada where industrial production is rising, and fast (although admittedly this data is for June). Canada seems to be a winner with the new NAFTA trade pact.

American retail sales rose in July, but by less than was expected. The +1.2% gain in July from June was timid compared to the +8.4% rise in June from May, and less than the expected +1.9% rise. And without a +24% jump month-on-month for purchases of electronic goods (almost all of which are imported) it would have been even weaker.

American consumer sentiment is staying low, down almost -20% from August a year ago. And the number of Americans who say they can’t afford enough food for themselves or their children is growing and is likely to get larger as some government benefits have expired.

Wall Street ended last week on a flat note. But the S&P500 posted a modest +0.4% gain for the week. The futures market suggests a soft start tomorrow. Shanghai ended with an unchanged weekly result. Hong Kong was up +2.7% for the week. Tokyo was up more with a +4.3% gain for the week. The ASX200 had a +2.0% weekly rise. Bank shares were responsible for most of this rise. But the NZX50 Capital Index had a weekly loss of -1.7%.

The latest global compilation of COVID-19 data is here. The global tally is 21,528,000 and that is up +517,000 since when we last checked this time Saturday and no slackening of the spread. Global deaths reported now exceed 772,000 (+11,000).

A quarter of all reported cases globally are in the US, which is up +93,200 in the past two days to 5,543,000. US deaths are now just over 173,000 and a death rate of 522/mln (+6/mln). And the net number of people actively infected in the US rose overnight to 2,462,700, so more new infections than recoveries.

In Australia, there have now been 23,288 COVID-19 cases reported, another 545 since we last checked on Saturday, and still very much concentrated in Victoria. But there were cases recorded in other states too. Australia's death count is up to 396 (+21). Their recovery rate is now back up to 60%. There are still 8812 active cases in Australia (-211) indicating a turning tide and more recoveries than new infections.

The UST 10yr yield is holding at 0.71%. Their 2-10 curve is +6 bps holding at +56 bps. And their 1-5 curve is slightly flatter at +16 bps, while their 3m-10yr curve is steeper at +62 bps. The Aussie Govt 10yr yield is unchanged at 0.93%. The China Govt 10yr is still at 2.97%. And the NZ Govt 10 yr yield will start the week at 0.67%.

The price of gold is holding today at US$1,945/oz. That locks in a -4.3% fall for last week. Silver is down too and a net -7.6% fall for the week.

Oil prices are softish today. They are now just on US$42/bbl in the US and the international price is now still under US$45/bbl.

And the Kiwi dollar fell on Saturday to 65.4 USc and has held from there. Against the Australian dollar we are softer at 91.2 AUc. Against the euro we are down too at 55.2 euro cents. That means our TWI-5 has dipped to 68.5 which is where it was when we were about to go down Level 1 at the beginning of June.

The bitcoin price is up +3.2% from this time on Saturday at US$11,854. 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 ».