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Podcast: Economy Watch
Episode:

Key US data sags
Category: Business
Duration: 00:04:13
Publish Date: 2020-12-16 18:41:58
Description:

Kia ora,

Welcome to Thursday's Economy Watch where we follow the economic events and trends that affect New Zealand.

I'm David Chaston and this is the International edition from Interest.co.nz.

Today we lead with news of some sagging economic indicators in the US.

But first in Washington DC, congressional leaders said they were close to an agreement on a relief package that could be worth as much as US$900 bln. But markets have heard the talk before and now want more than talk. Legislators are attempting to complete both a pandemic aid package and a catchall federal spending measure before government funding lapses at the end of this week.

Meanwhile, American retail sales fell in November is a surprisingly large decline. A flat result was expected from October, but a -1.1% fall was recorded. Every major category was weak, but car sales were the weakest. Economists said the decline was a “warning sign” that the economy was entering a rough patch and in need of the jolt from another round of government stimulus. Holiday season retail doesn't look promising.

Meanwhile, the US December 'flash' PMIs confirm the downbeat mood. Their services sector PMI fell sharply although it is still expanding. The factory sector held at a similar expansion level.

In a departing shot, the Trump Treasury Department labeled Switzerland and Vietnam as "currency manipulators", and added Taiwan, Thailand, and India to a watch list that now includes ten countries. These are designations designed to hide flaws in US policies themselves.

Both China and Japan, reduced their holdings in October of US Treasury debt. China’s holdings fell to $1.054 tln, the lowest since January 2017, a fifth straight month of reductions. Japan, the largest foreign holder also pared back its investments for a third straight month. These reductions may have a part to play in the rising yields the US Government has to pay.

Yesterday, we reported a strong rise in electricity production in China. But it seems it isn't enough. Two provinces there have had blackouts as an electricity supply shortage leads to power rationing.

In Australia, their advance December PMI results report an expanding service sector with momentum building. Their factory sector is expanding too.

In New York, the S&P500 is up +0.2% in its opening session today, awaiting definitive action on the promised stimulus extension proposal. 

The latest global compilation of COVID-19 data is here. The 'news' is all about vaccine rollouts but the global tally just keeps on rising, now 73,697,000 and +626,000 more overnight. 

But the largest number of reported cases globally are still in the US, which rose +200,000 in one day to 17,177,000. 

The UST 10yr yield will start today at just over 0.92%. 

The price of gold is up by +US$7 to US$1854/oz.

Oil prices are marginally higher and now just over US$47.50/bbl in the US, while the international price is up by +50c to US$51/bbl.

And the Kiwi dollar is marginally softer at 70.8 USc. Against the Australian dollar we have also had a further softening to just under 93.6 AUc. Against the euro we are down to 58.1 euro cents. That means our TWI-5 is lower by -20 bps at 72.4.

The bitcoin price has risen again and is now at a new all-time high of US$20,890, a +7.9% leap from this time yesterday.

You can find links to the articles mentioned today in our show notes.

And get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston. We will do this again tomorrow. 
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