US pandemic aid agreed but vote uncertain; US Fed passes bank stress tests; huge Russian hack; England faces isolation; China goes for growth; NSW shaken; UST 10yr at 0.95%; oil firm and gold soft; NZ$1 = 71.4 USc; TWI-5 = 72.8

Here's our summary of key economic events over the weekend that affect New Zealand, with news the pandemic is getting a dangerous new surge after incompetent management.

First in the US, investors wonder whether pandemic infections and worsening economic data will actually result in a Federal coronavirus aid package. A breakthrough last night on the Federal Reserve’s emergency lending powers clears a path for Congress to approve a roughly US$900 bln pandemic aid package, leaving lawmakers hours to finalise the agreement and vote on it. The latest snag is over a last-minute Republican bid to curb the Fed’s ability to restart pandemic relief programs and fight future financial crises, and is part of their effort to hobble the incoming Administration. It appears it has been partly successful, and may be more so as the vote result remains uncertain.

The updated Federal Reserve stress tests on banks has resulted in banks being allowed to restart share buybacks (a tactic that pumps up the share price), but with limits, and there will still be restricted dividend payouts. These stress tests showed that large banks had strong capital levels under two separate hypothetical recession scenarios.

The pandemic spread remains out of control in a number of countries, including the US where 'Operation Warp Speed" seems to be bogged down by Trump Administration incompetence. Distribution is chaotic and contested by the wealthy who want to be first in line, they have fewer doses than expected, they are paying more for them than other countries, and crony Administration friends are getting wealthy out of the chaos. That out-of-control situation in the UK is even more dangerous because a new mutation is spreading faster, caused by politicians there making incompetent decisions for the holiday season. They are about to get an even bigger surge, just like the Americans did following Thanksgiving.

Taking advantage are the Russians who it is now clear have hacked vast areas of the US Federal Government. There only seems to be one person in denial, their President, who always turns a blind eye to Russian cyber warfare. Even Trump poodles can't deny the Russian involvement.

Microsoft said it found malicious software in its systems related to the massive Russian hacking campaign, adding a top technology target to a growing list of attacked agencies.

In Europe, there is still no Brexit agreement, so a hard separation seems the most likely result. That will just compound the British woes as their pandemic crisis bites. Borders with the England are being closed, even internal ones, as the country is being isolated for multiple failures.

In Canada some good news; their October retail sales numbers came in better than expected, up +7.5% from the same month a year ago. And that is much better than the September +5.6% rise.

In China, all eyes are on their Central Economic Work Conference, and it is clear that Beijing is going full-steam ahead with stimulus (or what they call "necessary support") to try and embed their recovery. They are worried about growing imbalances. However, they seem to be targeting an +8% growth goal for 2021.

And staying in China, demand for coal is high and rising in their winter due to demand for extra electricity, and as their economy booms especially in steel making and for building materials. They are now ignoring their recently-touted GHG climate goals. The price of iron ore and coal rose even higher over the past week, enriching the miners. But pushback on those high prices is starting to get serious now.

In Australia, the NSW community transfer outbreak of COVID has authorities on edge and other States have closed their internal borders. There is a desperate scramble on to trace infected people who are on the move for the holidays. It is an event that took billions off their share market on Friday. It is a sudden development that has thrown many businesses into chaos

On the international scene, and in a review of hundreds of global CFO comments at their earnings call, Bloomberg has noticed that an outsized number of them are planning to shrink their workforces in commercial office space. The trend is so large, they say, that it threatens the valuation of commercial real estate and that will have an international knock-on impact in 2021.

And the World Bank has released an audit of its rankings system for "ease of doing business", the one where New Zealand is scored #1. It turns out in earlier years, managers pressured staff to improve the rankings for China, Azerbaijan, Saudi Arabia and the United Arab Emirates.

The latest global compilation of COVID-19 data is here. The global tally just keeps on rising, now at 76,532,000 and up +1,353,000 in two days. At this rate, we will top 100 mln in a month. It is very grim in Russia, the UK, Eastern Europe, Brazil, Turkey and Indonesia. It does seem to be easing further in Europe, notably in Belgium, although not in the UK, Sweden, or Germany. Global deaths reported now exceed 1,690,000 and up +23,000 since this time Saturday as death rates spike everywhere.

But the largest number of reported cases globally are still in the US, which rose +434,000 in two days to 18,104,000. The US remains the global epicenter of the virus. The number of active cases is still surging and now at 7,229,000 and that level is up +174,000 in two days, so vastly more new cases more than recoveries. Their death total is surging now and exceeds 324,000, up +5000 in two days. The US now has a COVID death rate of 975/mln and approaching the disastrous UK level (990).

In Australia, their Sydney-based community resurgence is from an as-yet untraced border breach from an American strain. There have now been 28,171 COVID-19 cases reported, and that is +77 more cases over the weekend. Parts of Sydney are in lockdown. Other states have closed their borders. Now 120 of their cases are 'active' (+50). Their fast reaction might just be effective but the impact will linger. Reported deaths are unchanged at this stage at 908.

The UST 10yr yield will start today little-changed at just under 0.95%. Their 2-10 rate curve is unchanged at +82 bps, their 1-5 curve is still at +29 bps, while their 3m-10 year curve remains at +86 bps. The Australian Govt 10 year yield will start today firmer at 1.01%. The China Govt 10 year yield is unchanged at 3.32%, while the New Zealand Govt 10 year yield is holding at just under 0.97%.

The price of gold is -US$3 lower today at US$1881/oz. It is up +2.7% in a week. Silver is down less today at US$25.70/oz.

Oil prices are staying up at just on US$49/bbl in the US, while the international price is to just over US$52/bbl. Rig counts are still rising, both in the US and internationally.

And the Kiwi dollar is a little firmer today at 71.4 USc. A week ago it was 70.8 USc. Against the Australian dollar we are marginally firmer too at 93.7 AUc. Against the euro we are holding at 58.3 euro cents. That means our TWI-5 is now at 72.8 and a small rise from where it was at this time last week.

The bitcoin price is more than +US$1000 higher today than where we left it on Saturday. It is now at US$23,745, a +4.5% gain from then. In a week it has risen +25%. 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 ».