Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
None to report today.
TERM DEPOSIT RATE CHANGES
Rabobank has raised its 3 month TD rate to 2.45%, a +15 bps increase. That is by far the highest rate for that term from any bank.
LOCAL ONLINE WINNING
January was a soft month for New Zealand’s online retail spending, with total spending down -1% on January last year, according to the BNZ/Marketview monitoring. The decline is driven by a large year-on-year drop in spending at offshore sites, which was down -12% on last January. Local online sales were up +7% on that basis. Online retail now accounts for 8% of all retail sales.
MILK SEASON UPDATES
Fonterra said today that its forecast Farmgate Milk Price range at $7.00-7.60 per kgMS and its forecast full-year underlying earnings guidance of 15-25 cents per share remains unchanged, despite the coronavirus clouds. It has also revised its forecast milk collections for the 2020 season down from 1,530 million kgMS to 1,515 million kgMS. That is almost a -1% reduction when an increase was originally expected. DCANZ reports that overall industry collections were up +1.6% in the year to January. For the current season, the industry collections are down -0.7% to January. Also today, A2 Milk reported very strong results to December 2019. (Their key supplier Synlait Milk didn't have such a good time of it however.)
'SOUND THE ALARM'
ANZ's business sentiment survey results were out today. They report headline business confidence fell -6 points to -19 in February. A net +12% of firms expect stronger activity for their own business (down -5). Survey responses received after the COVID-19 outbreak hit the headlines (about a third of all responses) were more negative. Agriculture sector own activity collapsed from +16 to -30. Manufacturing own activity also fell sharply, from +24 to +4. The construction sector lifted strongly from 10% to 22% of firms expecting busier times ahead. Retail sector pricing intentions soared to the highest level since mid-2008.
BACK UNDER 1%
Another $250 mln April 2025 in nominal bonds was tendered today by Treasury and $700 mln was bid. Only nine bidders were successful, leaving 19 with nothing. To win you needed to bid a yield of only 0.967% pa and that essentially ends the recent trend of rising yields. Fear will do that.
CORONAVIRUS UPDATE
The latest compilation of Covid-19 data is here. There are now 3332 cases outside China, a rise of +400 in one day. A week ago that number was 1097 so it has more than trebled in one week.
WE HAVE A PLAN - IN FACT THREE
How the NZ authorities will deal with the economic effects here has been outlined today. The response has been planned for three scenarios.
PETROL PRICE IRONY
The Government revealed today how it would 'reform' the petrol market to help consumers. But none of those proposals involved any rolling back of the recent taxes imposed. Governments like higher petrol prices so long as they raise them, but not otherwise. In fact they want to penalise others who raise prices. Actually, if pump prices fall, new taxes will probably be introduced to cover the change.
RBNZ'S NEW PAYMENTS SETTLEMENT SYSTEM UP AND RUNNING
The Reserve Bank this week launched a new "future-proofed" payment settlement system, replacing New Zealand’s inter-bank settlement system and central securities depository. The new platform replaces a 20-year-old system with two separate systems, ESAS 2.0 and NZClear 2.0. The new platform comprises the Real Time Gross Settlement and Central Security Depository. RBNZ Assistant Governor Mike Wolyncewicz says the successful changeover is the result of months of rigorous testing, which has featured cooperation from the system’s key users.
GANGBUSTERS! SMILING BANKERS!
Overall new mortgage lending in January rose to $4.7 bln which was +16% higher than in January 2019 (and a remarkable +27% higher than in January 2018). The growth is coming from first home buyers where they borrowed +27% more in January than the same month a year ago - and high LVR lending also rose faster than system (+18.7%). For investors, their appetite rose +31%. It was existing homeowners who couldn't keep up the pace, only (?) borrowing +9% more.
WEAK, & TO GET WEAKER
In Australia, new capital expenditure declined in the December quarter, falling more than expected. Investment in buildings and structures is now looking far weaker than for equipment and plant. Subsequent events aren't going to improve this either, of course.
EQUITY MARKETS UPDATE
After being up by as much as +1.6% in the morning session, Wall Street couldn'y sustain an odd optimistic streak. In the end the S&P500 fell -0.4% on the day. In our session, the NZX50 Capital Index is currently flat, the ASX200 is down -0.6%. At the open, Shanghai is actually up +0.3%, Hong Kong is down -0.6% and Tokyo is having another very bad day, down -1.5%.
LOCAL SWAP RATES DOWN AGAIN
Swap rates are down again, with the two year down another -2 bps, the five year down -3 bps and the ten year down -4 bps. The 90-day bank bill rate is also down -1 bp to 1.08%. In Australia, their swap rates are currently down a little less than us. The Aussie Govt 10yr is soft at 0.90%. The China Govt 10yr is also soft at 2.86%. The NZ Govt 10 yr yield is softer, down -5 bps at 1.14%. And the UST 10yr yield is unchanged near its record low, now at 1.32%.
NZ DOLLAR STILL QUITE SOFT
The Kiwi dollar has slipped further, now at 62.9 USc. Against the Aussie we are firmer at 96 AUc. Against the euro we are softer too at 57.7 euro cents. That means the TWI-5 is now lower at under 68.9.
BITCOIN SINKS
Bitcoin is another -6.9% lower today at US$8,599. The bitcoin price is charted in the currency set below. Other cryptos are even weaker, most main ones another down -11% (Ethereum) to -14% (bitcoin SV) on the day.
This chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
32 Comments
Just in case, when you do have worried about your health. .say want to check about certain cancer? - do tell us if at that moment in consultation room, you proudly can ya da ya da all the time boasting your RE wealth. Some of us for one, being asked by specific RE developer to change their calculated remaining life span in exchange with the entire RE owned. Sadly, we can't.
If the government's virus management plans include opening the door to several thousand foreign tertiary students, the plans are worthless. All offered rationales for this necessity are mendacious or lazy handout-seeking. The universities need to cut their financial cloth like any other business, and the agents, frankly, should be left to go to the wall. New agents need just a mobile phone. The vast proportion of these students come here in hope of residence, not for any superior education. And surely universities, supposedly at the cutting edge of things, know about distance learning.
Or maybe here - I Believe this island is still for sale.
https://i.stuff.co.nz/life-style/home-property/64246021/40-million-isla…
It was in the top 50's when I was there as well. Now I'm almost ashamed to say I studied there. You're right though. I'm in SE Asia at the moment and everyone I speak to re immigration to NZ has talked to me about student category visa as a means to get residency. No talk about the 'quality' of educational institutions.
Before the Asian immigration boom NZ produced 3 Nobel Prizes in Chemistry: Ernest Rutherford (split the atom), Maurice Wilkinson (co-discoverer of DNA) and Alan Macdiarmid ( co-discoverer of new properties in materials without which our modern technology wouldn't exist).
These giants of science were produced from a far smaller population than we have now. So what has happened? We have had decades now of the Herald parading the Asian duxes in the sciences in our top schools yet no more Nobel prizewinners. Can someone please explain?
Yes but socialism sounds nice, we need to re-brand it the way they brand others, eg left wing extremists are called "activists", rightwing activists are called "extremists". Religion is branded as causing wars, whereas the biggest murderers of the last century, both of their own people and of others, were lefty atheists ie Mao, Stalin, Hitler and Pol Pot, in that order. Whereas socialism sounds like the human impulse to help those less fortunate, but secretly seeks to pervert that natural goodwill into a transfer of power into malevolent hands.
Oligarchic collectivists is too wordy and describes the process more than the intent, which is State Control by the Murderous Few. Which is too long. How to expose the deadliness of the result from the innocent sounding slippery path? We need a powerful cartoon name. The "I won't steal from you, honest" Robbery Parties? Give me everything you have, or else, parties?
US market futures won’t let up – Dow currently down 400+ points, S&P down 50+ points – US-10YR below 1.30%.
Under the hood there will be various highly leveraged plays facing mayhem – leading to further mayhem as unwinding pressures come to bear – and counter-parties run scared.
The financial crisis that just keeps on giving.
Yes, what a rapacious company Z Energy is: why should Z Energy earn an extortionate 3.2 cents a litre of petrol sold. This is blatant usury. These ratbags are making an outlandish profit of 3.2 cents a litre out of their selling price of $2.20 per litre. Simply outrageous!
Good on you Labour, get on with it; they should only be making 0.2 cents a litre. Put the other 3 cents a litre into a tax to boost human baby farming which is poised to become our largest industry........and no qualifications needed here, in fact the more stupid you are the better.
Confirmation that Iran doesnt care about coronavirus
https://www.bbc.com/news/world-middle-east-51651454
their numbers are a joke, claiming 40 of their 139 cases have recovered within a week?
They seem happy to "take the hit" 2% of 80 million people is 1.6 million. worse than Hitler!?!?!?
Islamic fatalism is terrible for getting people to behave safely and responsibly. Qadar is the concept of divine destiny in Islam. It is one of Islam's six articles of faith. So many believe that everything is pre-ordained and nothing they can do will alter Allah's will (plan) to maim or kill them, so no point in taking care, and anyway death will be rewarded with paradise so all good.
Pandemic step aside – is this the real reason for the US market sell-off.
“Trump said that he believes the stock market will recover its steep losses and said that fears a Democrat could win the election contributed to the sell-off.”
https://www.cnbc.com/2020/02/26/trump-says-quite-a-bit-of-sell-off-is-f…
Grant Robertson said today that in the face of a Corana Virus induced downturn, the government may need to introduce some fiscal stimulation. Here is a novel idea. Why not build 100,000s houses. There are a whole heap of people who really need them, so that would be a sensible sort of economic stimulation, wouldn't it. If push comes to shove however you can almost bet that they will not do this. They will waste money on just about any other rubbish that we have no pressing need for.
Mindless cretins
House building requires skills. To do it competently takes brains, training and years of practice learning thousands of little tricks and techniques, and is made harder in our age because far fewer intelligent people have any background in practical hands-on labour. You don't just magic up 10's of thousands of tradespeople on a whim.
You missed that buddy, open the border tap, from China, unlimited tradies for about couple months, targeted the build numbers,.. you name it, it can be done - the question is... what is the catch? but at least, with that scenario your building part of the impossibility questions can be answered - ... BUT at what price? - that is, where we all have to ponder..
At this critical point in the training of building tradespeople, you have to ask why the government would close down the proven and working in work trades training scheme. and introduce a totally new and unproven tertiary institution based system. I would have thought that it would make more sense to run both systems until the new system is up to speed and proven, and the demand for new tradespeople has reduced and stabilised. Or are they putting the interests of the polytechnics and their own political reputations ahead of the needs of the country? In any event It would not be hard to pour in a whole lot of apprentices and supplement them with temporary overseas trades people. If we went down the track of large scale importation of prefabricated dwellings, the labour and skill demands would be much lower.
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