Kia ora,

Welcome to Tuesday'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 investors sense the infections at the heart of the pandemic may be peaking globally.

It started in Europe. Equities are racing higher today as a relief rally is based on the flimsiest of Covid-19 data - that the New York region increase in deaths is slowing. The S&P500 is up +5.8% in what can only be called a ghoulish rally. It means in one day, the value of the NYSE has risen +US$1 tln. It is very hard to see investor thinking here for such a move.

The US Fed said it will launch a new program to buy loans that banks and other lenders make through the government’s emergency small-business lending program. Cue a collapse in lending standards which the American taxpayer will underwrite.

In the corporate world there is a bit of a desperate race on by companies to raise capital if they can. The idea is to "rebuild balance sheets" - code for getting rid of the obligations of debt. But for many companies, it is far too late. Their prospects have been damaged so fundamentally that equity investors aren't in the mood. Most of the targeted investors for raising this capital are small investors, often through their KiwiSaver or superannuation funds. One company about to try this is AfterPay.

Some food prices are starting to rise as supply chain disruptions cause global shortages. Wheat and rice are showing this rising effect. Hoarding is accentuating the effect. But other commodities are falling, like corn and soybeans. We have another dairy auction tomorrow so we will see soon enough whether dairy products are being affected in this way.

There are now 1106 Covid-19 cases identified in New Zealand, with another +67 new cases yesterday and lower than the +89 increase the day before. The number of clusters has risen to 10. Only one person has died here. There are still only 13 people in hospital with the disease, three in ICU with two of them critical. Also see this.

Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 1,309,40 and up +62,000 this time yesterday. 27% of all cases globally are in the US and they are up +23,000 since yesterday to 347,000. It is a marginal slowing in the rate of increase. China's recovery rate is now 94% and they claim they only have 5400 active cases nationwide. After two and a half months, Wuhan is emerging from lockdown and isolation. Australia has now over 5800 cases, 4700 active, and while the rise in infection is slowing, deaths are not and now exceed 40. Global deaths now exceed 72,000. Death rates in Europe are frightening and keep on rising; 17.2% in Italy, 10.3% in the UK, 9.7% in Spain, 8.6% in France. But they are much lower in Germany at 1.6%. The US rate is has jumped to just on 3.0% and now exceeds 10,000. China is holding at 4.0% with 3,300 deaths. Death rates in the rest of Asia are modest by comparison at about 1.4% in their developed countries.

The UST 10yr yield has jumped sharply to just under 0.68% and a +8 bps rise in a day.

Gold is also sharply higher, up by +US$36, to US$1,658/oz.

As expected, US oil prices are sharply lower today at just over US$26.5/bbl, a -US$1.50 fall. The Brent benchmark is also lower at just over US$33/bbl. The Russians and Saudis can't agree to talk, and American crude stocks rose even higher. But this situation is very volatile and could go either way.

The Kiwi dollar has risen firmly on a sinking greenback and up almost +¾c to 59.4 USc. On the cross rates we are softer at 97.5 AUc as the Aussie has risen even more. Against the euro we are up at 55 euro cents and also a +¾c gain. That means the TWI-5 is at 66.3 and back to the same level it was a week ago.

Bitcoin is now at US$7,215 and up a sharpish +6.2% in a day.

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

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