Federal Reserve Board Governor Lael Brainard speaks at the John F. Kennedy School of Government at Harvard University in Cambridge, Massachusetts, U.S., March 1, 2017. REUTERS/Brian Snyder
July 30 (Reuters) – Federal Reserve Governor Lael Brainard on Friday laid out a range of reasons for “urgency” around the issue of developing a U.S. central bank digital currency, including the fact that other countries such as China are moving ahead with their own.
“The dollar is very dominant in international payments, and if you have the other major jurisdictions in the world with a digital currency, a CBDC (central bank digital currency)offering, and the U.S. doesn’t have one, I just, I can’t wrap my head around that,” Brainard told the Aspen Institute Economic Strategy Group. “That just doesn’t sound like a sustainable future to me.”
Fed officials are taking a deep dive into the digital payments universe, collecting public feedback on the potential costs and benefits as well as design considerations with a view to publishing a discussion paper in early September.
Fed Chair Jerome Powell in comments earlier this month described the analysis as a key step in accelerating the Fed’s efforts to determine if it should issue its own CDBC.
“One of the most compelling use cases is in the international realm, where intermediation chains are opaque and long and costly,” Brainard said on Friday.
But there are domestic reasons too for a U.S.-backed digital currency, she said: the dramatic rise in stablecoins, a form of cryptocurrency pegged to a conventional currency such as the U.S. dollar but not backed by any government.
Stablecoins could proliferate and fragment the payment system, or one or two could emerge as dominant, she said. Either way, “in a world of stablecoins you could imagine that households and businesses, if the migration away from currency is really very intense, they would simply lose access to a safe government backed settlement asset, which is of course what currency has always provided.”
A CBDC could also help solve other problems, she suggested, including the difficulty during the pandemic of getting government payments to people without bank accounts, who also tend to be the very people who need the payments the most.
Reporting by Ann Saphir;
Editing by Sandra Maler
Our Standards: The Thomson Reuters Trust Principles.
Federal Reserve Chair Jerome Powell adjusts his tie as he arrives to testify before a Senate Banking, Housing and Urban Affairs Committee hearing on “The Semiannual Monetary Policy Report to the Congress” on Capitol Hill in Washington, U.S., July 15, 2021. REUTERS/Kevin Lamarque/File Photo
WASHINGTON, July 30 (Reuters) – Federal Reserve Chair Jerome Powell’s belief that the U.S. economy has “learned to handle” the coronavirus and won’t be swamped in a fresh wave of infections or by rising inflation may get tested in coming weeks as schools reopen, supply chains remain clogged, and federal unemployment benefits wane.
Data released on Thursday showed the risk ahead as the country navigates the transition from an economy dependent for the last year on federal government benefits to one where those emergency programs expire and private incomes take over. read more
The economy returned to its pre-pandemic level of output in the second quarter, according to gross domestic product data released by the Commerce Department on Thursday, a rebound that came earlier than many expected. But the report also showed personal income dropping alongside a decline in federal transfer payments and the economy growing at an annual rate of 6.5%, slightly below the 7% expected by the U.S. central bank. read more
It was massive federal stimulus, unemployment benefits and other payments that led to the “better-than-anyone-expected” outcomes during a coronavirus surge last summer, which Powell cited on Wednesday as evidence that each COVID-19 wave has had successively less economic impact.
Those government payments are disappearing just as concerns rise around the spread of the more infectious Delta variant of the virus, putting a new note of caution around the U.S. growth outlook.
Despite second-quarter GDP being slightly lower than expected and the Delta variant “a key downside risk,” Lydia Boussour, lead U.S. economist for Oxford Economics, said she continued to anticipate 7% growth for the full year as supply-chain problems ease, goods get onto shelves, and consumers continue spending.
“We still expect the economy to maintain strong momentum,” she wrote in a note.
By contrast, Paul Ashworth, chief North America economist at Capitol Economics, painted a dour economic picture in which the Delta variant becomes a drag and rising prices cut into household purchasing power. Inflation measures in Thursday’s GDP report, at greater than 6%, are the highest since the early 1980s when the Fed was battling entrenched price increases.
Ashworth said economic growth may slow to just 3.5% in the second half of the year, “with the impact from the fiscal stimulus waning, surging prices weakening purchasing power, the Delta variant running amok in the South.”
‘DEFIANTLY UPBEAT’
Powell issued his blunt assessment of COVID-19’s threat to the economy during a news conference on Wednesday to discuss the Fed’s latest policy meeting. In their statement, policymakers said the economic recovery appeared on track, that the impact of the virus on the economy continued to wane, and that the economy was making progress toward the day when the Fed could reduce some of the emergency steps taken in 2020 to nurse the economy through the pandemic. read more
Coupled with earlier changes, the Fed’s actions this week continued the central bank’s steady divorce between the ongoing pandemic and the outlook for the economy.
Epidemiologists have warned from early on that the coronavirus would not disappear – with true herd immunity a stretch goal in a country with high levels of vaccine hesitancy – but rather be a part of the social and economic background for years to come.
The Fed, in successive steps, has seemed to adopt to that view. Since April it has stopped referring to the pandemic as a factor weighing on the economy, emphasized the impact of vaccinations, and this week said, in effect, that the virus would remain as a future risk, but not a significant one.
“We’ve kind of learned to live with it,” Powell told reporters. Even with the Delta variant filling hospitals in some parts of the country, “with a reasonably high percentage of the country vaccinated and the vaccine apparently being effective … the effects will probably be less. There probably won’t be significant lockdowns and things like that.”
Whether that remains the case will be seen through the late summer and fall. Some companies already have delayed the planned return of their workforces to offices, potentially pushing out the day when downtown retail stores and restaurants see their weekday traffic return.
Powell acknowledged that, at the margins and for a while at least, the Delta surge could lead to further complications if school districts delay the reopening of in-person learning, or if sidelined workers wait a few more weeks to return to their jobs.
But for now, and absent a clear darkening of the economic outlook, it won’t derail Fed planning that anticipates continued job growth, and needs to manage the risks of potentially higher inflation as well.
Diane Swonk, chief economist at Grant Thornton, called Powell’s commentary this week “defiantly upbeat,” and listed the hurdles his outlook faces – from the Delta variant to the slow, ongoing efforts of millions of unemployed workers to match themselves with new jobs.
The new infection surge “has already delayed the return to offices for some companies to later this year,” Swonk wrote. “We are becoming accustomed to spending during outbreaks, as Powell noted … That spending has been supported by fiscal stimulus. That will wane as we enter 2022.”
Reporting by Howard Schneider
Additional reporting by Lindsay Dunsmuir;
Editing by Dan Burns and Paul Simao
Our Standards: The Thomson Reuters Trust Principles.
A U.S. dollar note is seen in front of a stock graph in this November 7, 2016 picture illustration. REUTERS/Dado Ruvic/Illustration
July 23 (Reuters) – A rally in the U.S. dollar has investors looking at a broad range of factors — from global COVID-19 infections to yield gaps — to determine whether the greenback will continue appreciating.
The dollar is up 4% from its lows of 2021 and is among the world’s best performing currencies this year, boosted by last month’s hawkish shift from the Federal Reserve, burgeoning inflation and safe-haven demand driven by COVID-19 worries.
Because of the dollar’s central role in the global financial system, its moves ripple out towards a broad range of asset classes and are closely watched by investors.
For the United States, a period of sustained dollar strength would be a double-edged sword, helping tamp down inflation by increasing the currency’s buying power while denting the balance sheets of exporters by making their products less competitive abroad.
On the other hand, dollar strength would continue pushing down currencies such as the euro and British pound, potentially giving a boost to the recoveries in those countries.
Here are several things investors are watching to determine the dollar’s trajectory.
THE DELTA VARIANT
Some investors believe the dollar – a popular safe haven during uncertain times – will rise if the Delta variant of COVID-19 spreads and risk aversion grows in markets.
COVID worries have already helped the dollar notch gains against the currencies of countries where the Delta variant is proliferating, including the Australian dollar and the British pound. Those gains could fade if coronavirus concerns ebb in coming months, however.
“We’re seeing a lot of risk factors and uncertainty across assets, said Simon Harvey, senior FX market analyst at Monex Europe. “Investors are looking at all these and saying that they’re going to find refuge in the dollar.”
GLOBAL GROWTH
While some investors are concerned the U.S. rebound is slowing, it still outpaces the bounce seen in Europe and other regions.
That gap in growth, illustrated by such metrics as stronger manufacturing sector growth and inflation, is among the factors putting upward pressure on the dollar, said Morgan Stanley’s James Lord in a recent podcast.
“There is a case still for the dollar to strengthen as we do see more divergence,” he said.
YIELD GAP
Though Treasury yields have recently slid, the gap between real yields on U.S. government debt and some foreign bonds has widened, raising the allure of dollar-denominated assets. Real yields represent the cost of borrowing after stripping out inflation effects.
The spread between the real yield on 10-year Treasury Inflation Protected Securities at “constant maturity” and those on their German counterpart, for instance, stood at 72 basis points late Thursday, up from 63 basis points two months ago.
POSITIONING SQUEEZE
Speculators’ net short positions on the U.S. dollar fell to their lowest level since March 2020 last week, according to calculations by Reuters and U.S. Commodity Futures Trading Commission data released on July 16.
“The most crowded trade in the world through the first quarter was the short dollar. We had, unquestionably, a squeeze on the way back,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.
The dwindling bearish sentiment could mean there is less fuel for further dollar gains. At the same time, “the dollar and other currencies do tend to overshoot when they are correcting, in both directions,” Schamotta said.
GOLDEN CROSS
The Dollar Index’s (.DXY) 50-day moving average is close to crossing above its 200-day moving average and forming a chart pattern known as a “Golden Cross” that is seen as a bullish signal by those who follow technical analysis.
A Golden Cross “could herald another leg higher for the greenback,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.
Reporting by Saqib Iqbal Ahmed; editing by Ira Iosebashvili and Richard Pullin
Our Standards: The Thomson Reuters Trust Principles.
ZHENGZHOU, China, July 23 (Reuters) – Workers driving construction vehicles rescued stranded residents and delivered food to those still trapped on Friday after days of torrential rain swamped the central Chinese city of Zhengzhou.
As floodwaters began to recede, rescuers in the city of 12 million used digger trucks, inflatable boats and other makeshift rafts to transport some residents to dry land and deliver provisions to others in high-rise apartment blocks.
Zhengzhou, the capital city of populous Henan province, has borne the brunt of extreme wet weather in central China this week, receiving the equivalent of a year’s worth of rain in just a few days.
The resulting severe flooding killed 12 people who were trapped in the city’s subway system. It also downed power supplies and stranded residents at home, in offices and on public transportation.
Some of the rescuers are volunteers using makeshift water craft, like the digger trucks deployed by local construction companies.
One of the volunteers, Li Kui, 34, said the demand for basic goods and foods was immense.
“We start our day at 8 a.m. and go on until 2 a.m. Besides having lunch and using the bathroom, we just go up and down the streets all day,” Li said.
Asked if he was exhausted, Li said: “Yes, but compared to the people trapped inside, they must be feeling worse.”
In other areas of the city where the floodwaters had subsided, municipal workers started the clean-up, sweeping away tree branches and clearing up other debris like marooned bicycles and scooters.
Tens of thousands of rescue workers, including the military, have been deployed across Henan more broadly. The death toll for the province from the flooding currently stands at 33. Eight people remained missing as patchy mobile phone signal and power blackouts in some areas hindered official tallying.
A man wades through a flooded road following heavy rainfall in Zhengzhou, Henan province, China July 23, 2021. REUTERS/Aly Song
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Rescue professionals from neighbouring provinces have been called in, along with specialised vehicles to drain waterlogged streets, intersections and underground road tunnels.
While the rains in Zhengzhou had eased to a light drizzle, other parts of Henan were still forecast to receive heavy rain on Friday, according to weather reports.
In Xinxiang, a city north of Zhengzhou, 29 of 30 reservoirs were overflowing, a situation the local water conservancy bureau described as “grim”.
FAMILY RESCUES
For rescuers, the task was sometimes upsetting. Local media reported that a three-to-four-old infant was pulled from a collapsed home just outside Zhengzhou earlier this week, with the body of the child’s mother found a day later.
Zhou Xiaozhong, 33, a digger truck driver from nearby Kaifeng city, picked up a mother and her two young children.
“She was crying,” said Zhou, a father of three. “I too felt like crying.”
The devastation and loss of life has sparked public criticism of the slow reaction of Zhengzhou’s subway operator, prompting the Chinese government to order local authorities to immediately improve urban transit flood controls and emergency responses.
The provincial weather bureau also came under fire for a lack of warning, despite saying said it had issued a forecast two days before the rains arrived.
A document created by an anonymous user on a Google Docs-like platform owned by tech giant Tencent (0700.HK) for people to share real-time information on the flooding in Henan had been accessed more than 6 million times by Friday.
Reporting by Emily Chow in Zhengzhou, additional reporting by Ryan Woo, Roxanne Liu and Muyu Xu in Beijing; Editing by Jane Wardell
Our Standards: The Thomson Reuters Trust Principles.
Risk appetite returns as strong earnings lift Wall Street
Euro firmer against dollar ahead of ECB policy decision
Musk hints Tesla will accept bitcoin as payment again
TOKYO, July 22 (Reuters) – The safe-harbour U.S. dollar and yen were on the back foot on Thursday, after pulling back from multi-month highs amid a recovery in risk appetite as strong earnings lifted Wall Street stocks.
Cryptocurrencies held gains after Tesla Inc (TSLA.O) CEO Elon Musk said the company would “most likely” resume accepting bitcoin for payment. read more
The dollar index , which measures the currency against six major peers, stood at 92.770 after pulling back from a 3 1/2-month high of 93.194 touched on Wednesday.
The yen traded at 129.950 per euro , from an almost four-month top of 128.610 earlier this week, and at 81.07 to Australia’s dollar , from a 5 1/2-month peak of 79.85.
“Strong earnings have swept away Delta concerns in the U.S.,” weighing on haven currencies, National Australia Bank analyst Tapas Strickland wrote in a note to clients.
“The consensus is that (the Delta strain) does not pose an immediate risk to the recovery,” delaying reopening by three months at the most as countries ramp up vaccination drives in response, he said.
Sterling traded at $1.3717, recovering from a 5 1/2-month trough of $1.35725 reached on Tuesday, despite rising Delta variant cases in Britain and confusion about the lifting of restrictions in England.
The Aussie changed hands at $0.7350, from an eight-month low of $0.72895 the previous day, even as coronavirus cases spiked despite half the Australian population being under lockdown. read more
The euro stood at $1.1789, rising off Wednesday’s 3-1/2-month low of $1.1752 ahead of a closely watched European Central Bank policy decision later in the global day.
Policymakers will implement for the first time changes to their strategy and are all but certain to promise an even longer period of stimulus to make good on its commitment to boost inflation. read more
Analysts generally see ECB dovishness weakening the euro over the medium-term.
“On balance, the ECB’s new inflation target suggests monetary policy will remain ultra‑accommodative for an even longer period of time,” which will act as a headwind for the euro, Commonwealth Bank of Australia strategists Kim Mundy and Carol Kong wrote in a research note.
“Indeed, we expect the ECB will be one of the last central banks under our coverage to tighten policy.”
In cryptocurrencies, bitcoin held Wednesday’s 7.9% jump – the biggest since mid-June – to trade just north of$32,000.
Rival ether traded slightly below $2,000 following a 12% surge.
Housing starts increase 6.3% in June; May revised down
Single-family starts rise 6.3%; multi-family up 6.2%
Building permits drop 5.1%; single-family down 6.3%
WASHINGTON, July 20 (Reuters) – U.S. homebuilding increased more than expected in June, but permits for future home construction fell to an eight-month low, likely reflecting hesitancy caused by expensive building materials as well as shortages of labor and land.
The report from the Commerce Department on Tuesday suggested a severe shortage of houses, which has boosted prices and sparked bidding wars across the country, could persist for a while. Demand for houses is being driven by low mortgage rates and a desire for more spacious accommodations during the COVID-19 pandemic.
Though lumber prices are coming down from record highs, builders are paying more for steel, concrete and lighting, and are grappling with shortages of appliances like refrigerators.
“Reports of multi-month delays in the delivery of windows, heating units, refrigerators and other items have popped up across the country, delaying delivery of homes and forcing builders to cap activity, and many builders continue to point to a shortage of available workers as a separate challenge,” said Matthew Speakman, an economist at Zillow.
Housing starts rose 6.3% to a seasonally adjusted annual rate of 1.643 million units last month. Data for May was revised down to a rate of 1.546 million units from the previously reported 1.572 million units. Economists polled by Reuters had forecast starts would rise to a rate of 1.590 million units.
Despite last month’s increase, starts remained below March’s rate of 1.737 million units, which was the highest level since July 2006. Homebuilding increased in the West and the populous South, but fell in the Northeast and Midwest.
Single-family starts rose 6.3% to a rate of 1.160 million units. The volatile multi-family homebuilding category advanced 6.2% to a pace of 483,000 units.
Starts increased 29.1% on a year-on-year basis in June.
Permits for future homebuilding fell 5.1% to a rate of 1.598 million units in June, the lowest level since October 2020. Permits are now lagging starts, suggesting that homebuilding will slow in the coming months.
Stocks on Wall Street were trading higher after a sharp selloff on Monday. The dollar (.DXY) gained versus a basket of currencies. U.S. Treasury yields fell.
BUILDERS CAUTIOUS
While lumber futures have dropped nearly 70% from a record high in early May, economists caution that higher prices are likely to prevail because of wildfires in the Western United States.
Real estate signs advertise new homes for sale in multiple new developments in York County, South Carolina, U.S., February 29, 2020. REUTERS/Lucas Jackson/File Photo
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Dustin Jalbert, head of Fastmarkets RISI’s lumber team, also noted that log prices are soaring in the interior of the Canadian province of British Columbia and duties are potentially set to increase on Canadian producers later this year.
There are also signs that the exodus to suburbs and other low-density areas in search of larger homes for home offices and schooling is gradually fading as COVID-19 vaccinations allow companies to recall workers back to offices in city centers.
A rise in COVID-19 infections among unvaccinated Americans also poses a risk to the housing market outlook.
Economists expect the housing market, one of the economy’s star performers during the coronavirus pandemic, was a mild drag on gross domestic product in the second quarter.
Still, homebuilding remains underpinned by the dearth of homes available for sale. The inventory of previously-owned homes is near record lows, leading to double-digit growth in the median house price.
A survey from the National Association of Home Builders on Monday showed confidence among single-family homebuilders fell to an 11-month low in July.
Shortages and higher input prices likely weighed on new home sales in June. The Mortgage Bankers Association Builder Application Survey, which was published on Tuesday, showed mortgage applications for new home purchases fell 23.8% in June from a year ago. Applications decreased 3% compared to May. The data has not been adjusted for typical seasonal patterns. The Commerce Department is due to publish new home sales data for June next Monday.
Homebuilders and a group of other stakeholders met last Friday with White House officials, including Commerce Secretary Gina Raimondo and Housing and Urban Development Secretary Marcia Fudge, to discuss strategies to address the short-term supply chain disruptions in the homebuilding sector.
Building permits fell in all four regions in June. Single-family permits dropped 6.3% to a rate of 1.063 million units, the lowest since August 2020. Permits for multifamily housing slipped 2.6% to a rate of 535,000 units.
The backlog of single-family homes yet to be started grew in June to the highest level since October 2006.
“Widespread anecdotal reports point to builders delaying or turning down orders to allow shortages to ease and to catch up to a growing construction backlog,” said Mark Palim, deputy chief economist at Fannie Mae in Washington.
Housing completions fell 1.4% to a rate of 1.324 million units last month. Single-family home completions declined 6.1% to a rate of 902,000 units, the lowest level since October.
Realtors estimate that single-family housing starts and completion rates need to be in a range of 1.5 million to 1.6 million units per month to close the inventory gap.
The stock of housing under construction rose 1.8% to a rate of 1.359 million units last month.
Reporting by Lucia Mutikani
Editing by Chizu Nomiyama and Paul Simao
Our Standards: The Thomson Reuters Trust Principles.
IFM, QSuper, Global Infrastructure Partners behind offer
Cash offer at 42% premium to last closing price on Friday
Offer contingent on UniSuper reinvesting 15% equity stake
SYDNEY, July 5 (Reuters) – A group of infrastructure investors has proposed a $22.26 billion ($16.7 billion) buyout of Sydney Airport Holdings Pty Ltd (SYD.AX), the operator of Australia’s biggest airport, taking a longer-term view on the pandemic-battered travel sector.
Record-low interest rates have led pension funds and their investment managers to chase higher yields. The purchase, with an enterprise value of A$30 billion including debt, would allow them to reap financial benefits when borders reopen and travel demand rebounds.
If successful, the deal would be Australia’s biggest this year, eclipsing the $8.1 billion spin-off of Endeavour Group Ltd (EDV.AX) and Star Entertainment Group Ltd’s (SGR.AX) $7.3 billion bid for Crown Resorts Ltd (CWN.AX).
The Sydney Aviation Alliance – a consortium comprising IFM Investors, QSuper and Global Infrastructure Partners – has offered A$8.25 per Sydney Airport share, a 42% premium to the stock’s Friday close.
The news sent the stock up as much as 38% to A$8.04 in early Monday trade, though it later retreated to around A$7.55, indicating market uncertainty as to whether the deal will succeed.
Sydney Airport noted the offer was below its pre-pandemic share price and said it would review the proposal, which is contingent on granting due diligence and recommending it to shareholders in the absence of a superior offer.
The airport operator’s share price hit a record A$8.86 in January last year, before the novel coronavirus pandemic led to a collapse in travel demand.
The company is Australia’s only listed airport operator. A successful deal would bring its ownership in line with the country’s other major airports which are owned by consortia of infrastructure investors, primarily pension funds.
Australia’s mandatory retirement savings system, known as superannuation, has assets of A$3.1 trillion, according to the Association of Superannuation Funds of Australia.
With record-low interest rates, funds are looking at infrastructure investments for higher yields.
“It’s the right timing to be looking at these assets which have got a 75-year life when conditions are arguably at the bottom,” said a Sydney Airport investor who declined to be named because the person’s firm was still assessing the proposal. “It’s opportunistic in that regard, but understandable.”
Australia’s international borders are widely expected to remain closed until at least the end of the year due partly to a slower vaccination programme than in most developed countries. read more
Domestic travel has also been disrupted by a two-week lockdown in Sydney during the normally busy school holiday period, after an outbreak of the highly contagious Delta variant of COVID-19. Other states have closed borders to Sydney residents.
In May, Sydney Airport’s international traffic was down more than 93% versus the same month of 2019, while domestic traffic was down 39.2%. read more
The airport has long held a monopoly on traffic to and from Australia’s most populous city, but that is due to end in 2026 with the opening of Western Sydney Airport.
Sydney Aviation Alliance said it did not anticipate making substantive changes to the airport’s management, services, operations or target credit ratings.
The consortium said its members invest directly or indirectly on behalf of more than 6 million Australians and collectively have more than A$177 billion of infrastructure funds under management globally, including stakes in 20 airports.
IFM holds stakes in major airports in Melbourne, Brisbane, Perth and Adelaide. QSuper owns a stake in Britain’s Heathrow Airport whereas Global Infrastructure is invested in that country’s Gatwick and London City airports.
Their offer is contingent on UniSuper, Sydney Airport’s largest shareholder with a 15% stake, agreeing to reinvest its equity interest for an equivalent equity holding in the consortium’s vehicle.
UniSuper, which also holds stakes in Adelaide and Brisbane airports, said it was not a consortium partner nor privy to any details outside information disclosed publicly.
“UniSuper does however, in-principle, see merit in Sydney Airport being converted from a publicly listed company to an unlisted company. UniSuper also has a favourable view of the consortium partners,” the fund said.
($1 = 1.3294 Australian dollars)
Reporting by Jamie Freed in Sydney and Scott Murdoch in Hong Kong; Additional reporting by Byron Kaye in Sydney and Nikhil Kurian Nainan and Soumyajit Saha in Bengaluru; Editing Stephen Coates and Christopher Cushing
Our Standards: The Thomson Reuters Trust Principles.
Left: The horizontal white line points to the new nova. Right: The same region of space seen four days earlier, sans nova. Image: Yuji Nakamura/NAOJ
A new nova, appearing in the northern constellation of Cassiopeia, can be seen with binoculars and small telescopes, but this transient object won’t stick around for long. Here’s how you can spot Nova V1405 Cas before it’s too late.
Amateur astronomer Yuji Nakamura from Kameyama City of Japan spotted the nova on March 18 at 7:10 p.m. local time and promptly reported his discovery to the National Astronomical Observatory of Japan (NAOJ). Astronomers using Kyoto University’s Seimei Telescope in Okayama Prefecture confirmed the nova at 4:40 a.m. the following day.
“This observation was carried out only half a day after the discovery, demonstrating fruitful collaboration between amateur astronomers and researchers,” announced the NAOJ in a statement. “Since we cannot predict when and in what direction novae will occur, discoveries by amateur astronomers contribute significantly to our understanding of the phenomena.”
Designated Nova V1405 Cas, the object was initially detected at 9.6 magnitude (too faint to be seen with the unaided eye), but it brightened significantly in the days following its discovery. As EarthSky reports, the nova is now glowing at around 7.6 magnitude, making it visible to binoculars and small telescopes and quite possibly the unaided eye (humans can spot celestial objects beginning at around 6.5 magnitude, but people might actually be able to spot the nova without equipment if the conditions are just right).
And yes, you should make the effort to see it if you can. Novae of this type, in which nuclear explosions cause the spectacular brightening of white dwarf stars, are common in the Milky Way, but visible novae are relatively rare. One of the last naked-eye novae, V1369 Cen, happened in 2013, and it was only visible in the southern hemisphere. Nova V1405 Cas is a transient object, and it will fade during the next several weeks and months.
EarthSky provides detailed information on how you can best spot V1405 Cas, but very simply, you should first locate the constellation Cassiopeia, which can be seen above the horizon when looking north-northwest after the Sun goes down (use a phone app like Sky Guide to help you locate celestial objects). Then, using the bottom two stars in Cassiopeia, draw a line to the right “for approximately the same distance as the two stars are apart from each other and start looking for a little star cluster known as M52,” EarthSky recommends. From here you should be able to spot the nova, which obviously won’t appear on star maps. Sky & Telescope recommends nightfall or just before dawn as the best times to view the new nova.
V1405 Cas is not to be confused with a Type Ia supernova, as it’s not a star that has outright exploded. This is a classic nova, involving a white dwarf and a main sequence star caught in a tight mutual orbit. The small, dense white dwarf pulls hydrogen away from its companion, and this hydrogen gets increasingly compact and hot. Eventually, nuclear fusion is triggered, causing the white dwarf to glow 50,000 to 100,000 times brighter than normal. The white dwarf survives these surface explosions, and the process begins anew.