Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
None today.
TERM DEPOSIT RATE CHANGES
Kiwibank ended its TD 'specials', reducing their 200 day rate by -10 bps to 2.65% and their one year 2.70% rate to 2.60%
DAIRY PRICES HOLD
Dairy prices slipped a marginal -1.2% today at the GDT auction although they rose +0.5% in NZD terms. It was a creditable result in the current risk-off economic environment and may be an early indicator demand from China is starting to resume.
GOING UP NATIONALLY
Average dwelling values are rising throughout the country according to Quotable Value. They were up +5.3% nationally in the year to January, the highest year-on-year rise in twenty months.
GOING UP IN AUCKLAND
Major Auckland realtor Barfoot & Thompson's sales numbers rocketed up in February (the most for a February since 2015) and overall stock numbers remain low, but prices were a tad weaker. However, median prices were up just +2.4% year-on-year. Barfoots has 1000 fewer listings at the end of February 2020 than February 2019.
STILL RISING
The number of building consents issued nationally in January were +2.7% higher than the same month a year ago and that makes it nine consecutive months where a year-on-year rise has been recorded. In fact, they have been up in 14 of the prior 16 months. Consent issuance went off the boil in Auckland however. The growth in residential consents is moving steadily towards townhouses and apartments, although the majority is still houses.
DOWNHILL FROM HERE
ANZ reports: "The ANZ World Commodity Price Index fell just -2.1% in February but there is more downside to come. The impact on export prices of the recent coronavirus outbreak in China is only partially captured in this month’s data. We expect further downwards pressure on commodity prices in March. In local currency terms the index lifted +0.9% in February as the lower NZD helped offset weakness in commodity prices."
PETROL PRICES EASE FURTHER
Petrol prices continue to ease lower, both nationwide and in Auckland, continuing a trend that started at the end of December. This is despite currency-driven rises in crude oil prices. The oil company component of the pump price (refining , distribution, marketing) is now running lower than its long run average of 49c/L, now at 44.1c/L. Meanwhile, taxes are taking NZ$1.13/L in Auckland and just on $1.00/L in the rest of the country. The Government continues to use its bully pulpit to redirect high-price angst away from their tax levels.
FINAL FLING?
The Australian economy grew faster in Q4 than most analysts were expecting. It grew +2.2% pa and above the 2.0% rate expected and well above the Q3 rate of +1.8% pa. Of course, all this was before both the bushfires and coronavirus. It won't be repeated for a long time.
EQUITY UPDATE
Wall Street took today's US Fed rate cut as a signal the authorities have no idea how to deal with the Covid-19 supply shock. The S&P500 end the session down -2.8% and that was after a healthy +1.2% rise before the Fed announcement - so the post-Fed fall was a sobering -4.0%. Today, the NZX50 Capital Index fell sharply at the open today but has clawed its way back to 'even' in late trade. The ASX200 is down -1.5% and falling, ignoring the good GDP result. Shanghai is flat at the open, Hong Kong is down -0.3%, Tokyo is up +0.3%.
CORONAVIRUS UPDATE
The latest compilation of Covid-19 data is here. There are now 12,856 cases outside China, a rise of +2095 in one day as the numbers jump in South Korea, Italy and Iran. 10166 are in those three countries (80%). A week ago that outside-China number was 2930 so it is still quadrupling in a week. An odd and unique feature of Covid-19 is that very few children succumb.
FIERCE FALL
China's slowdown is less about how their factories have been affected than how their giant service economy has retrenched. More evidence came today from the private sector Caixin services PMI which dived to a fierce contraction of 26.5 which is from the February level of an expanding 51.8. This is even more fierce as the official Government services PMI which fell to 28.9. The difference hardly matters, it is almost a complete stop - apart from the FIRE sub-sector. That is the only bit still working, it seems.
LOCAL SWAP RATES RESUME SHARP FALLS
Wholesale swap rates fallen heavily again today. At present, the two year is down -9 bps to just 0.65%. The five year rate is down -7 bps to 0.75%, and the ten year is also down -7 bps to 1.04%. All these rates fell sharply yesterday too after the cutoff of our article. The 90-day bank bill rate is down -11 bps to 0.77% as markets gets convinced the RBNZ will join the rate-cutting party. In Australia, their swap rates down another -5 bps across the curve after their RBA rate cut. The Aussie Govt 10yr is down -10 bps at 0.71%. The China Govt 10yr is also lower, down -5 bps to 2.78%. The NZ Govt 10 yr yield is lower too, back down -4 bps at 1.03%. And the UST 10yr yield is down a stunning -20 bps today, now at only 0.95%, the first time in history a global benchmark has been below 1%.
NZ DOLLAR LITTLE-CHANGED
The Kiwi dollar a little firmer than at this time yesterday, now at 62.9 USc. Against the Aussie we are noticeably weaker at 95.1 AUc. Against the euro we have stayed lower at 56.3 euro cents. That means the TWI-5 is little-changed but low at 68.1.
BITCOIN UP
Bitcoin is still yo-yoing, up +3.5% today at US$8,821. The bitcoin price is charted in the currency set below.
This chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
75 Comments
Covid-19 isn’t the only infection embedded here, as National shows every symptom of continuing venal subservience to CCP influence. Notably, Jian Yang – whose cv originally scrubbed his 15-year role in CCP military intelligence and the CCP's elite Luoyang spy school - has been reselected for a list MP spot.
Bridges must have enjoyed the trip Yang set up for him last year, meeting the attested head of China’s secret police. It shows Yang’s initiative too – MFAT only became involved at the last minute. So down to business. First, drop the ban on property purchases by foreign residents. Next…
‘Between 2008-2017 [Guardian, 23 Jan 20], National received at least $1.3mn in donations from figures associated with the CCP’s United Front Work Department. No other political party received this level of China-connected funding. Dr Yang is National’s main fundraiser among the New Zealand Chinese community.’
True! but swing voters like myself may differ. I am certainly uncomfortable with how in the pocket National are with the CCP. Bridges, Key, Collins all taking backhanders.
I cant even consider voting for them, Im not overly happy with Labours performance but what other real choice to I have?
I too have counted myself - business owner and investor, small c conservative, family-oriented, a patriot, etc - as a natural National voter. But I see nothing to support in the party as it is. I find it without a credible idea of genuine benefit to the country, and the opinions it chooses to offer in place of an idea as contemptible. The craven engagement with CCP / United Front operatives is beyond disgraceful. Indeed I find it hard to believe. Right now, we have an instagram post for a Prime Minister and - bar one or two ministers - a fifth form class for a government. But unless we speak out, those at National's helm will continue to traduce and fail the crucial values of our country - we are on notice in Five Eyes, and stand to lose any credibility as a trustworthy partner for democratic allies - let alone support and build a society and economy to meet the needs of our children.
Specifically me. Which I put in social media comments and a letter to my then National MP a year or two ago. However Dr Jian Yang only has to make a considered announcement (preferably in English) about the mysteriously high number of organ transplants achieved by some Chinese hospitals or the way Uighur re-education involved a massive investment in barbed wire, security fences, etc while not actually increasing the expenditure on teachers. Or he might explain what criteria a country uses to reject international arbitration about ownership of remote reefs. Simple application of Kiwi values and standards to a critique of the Communist Party of China could very easily get me back into the National party fold. Just tell us what he actually believes.
The politicians no longer represent the nation or the party members, it seems. Under MMP they no longer need to. Party Central controls the choice of politicians, not the local party members. Hence the prevalence of weak, spotty and compromised apparatchiks with little experience, in each party.
National is a disgrace. So are Labour, the Greens, and New Zealand First. It was our Dear Leader Helen Clarke who opened the door, and since then they all line up to perform ritual obeisance to the Emperor.
I find the whole existence of Yang in the political arena appalling. Could you imagine this happening in Japan or Vietnam (OK, maybe not the best examples but I think it's quite clear that someone with such a background wouldn't stand a chance to get so close to political power in those countries)? Both NZ and Australia seem to be horribly compromised and the public generally apathetic towards the whole situation. As for the wingnut divison of National supporters, they seem like they would rather ignore rather than justify this. So much for being the foot soldiers of the free world philosophy.
The National China thing goes back quite a way - Jenny Shipley was rewarded with a seat on the board here of the China Construction Bank. I just wish we had a credible alternative to both Labour and National. NZers need to wake up and smell the roses on this before the rot really sets in, if it hasn’t already.
https://www.auckland.ac.nz/en/news/2020/03/04/sir-peter-gluckman-leads-…
Good start, good group ---------- but not looking at the Limits to Growth, so fiddling while Rome burns. Pity - we're pretty much out of time already already
Suprise! It's even more deadly than they thought.
https://www.businessinsider.com/who-confirms-coronavirus-global-death-r…
Ouch let's hope that's not right.
I just went 2 x 2 x 2 twenty one times then x 0.03 and the number is pretty big. That's if we dont go into wuhan lockdown mode in next 3 weeks. 3 weeks after that we have some pretty full cemetaries.
To be fair it's still a big number using 0.02. Four times the annual road deaths just hitting x 2 fourteen times and using old 0.02.
I'm hoping all those that cry "stop overreacting" are the smart ones but I'm not hopeful after some comments and expressions from people that should know more than me. It's all ducks. Calm and reassuring on top. Paddle like crazy underneath.
Agree the WHO came out today and said death rate 3.5 per 100. It seems our news gets figures that are days behind what overseas news is reporting. I guess they are trying to keep the sheeple calm before getting fleeced and a virus that according to many people in NZ is no worse than the flu.
An (In)Opportune Moment To Review What September Repo Might Have Been Rehearsing
Several staff members at FRBNY have just published a paper on last September’s repo rumble. There are, actually, several good points contained within it starting at the top with the very problem everyone should have been lasered-in on all along:
Moreover, frictions in the interbank market may have prevented the efficient allocation of reserves across institutions, so that although aggregate reserves may have been higher than the sum of reserves demanded by each institution, they were still scarce given the market’s inability to allocate reserves efficiently.
It’s the official way of asking the question I asked from the very beginning: WHERE ARE THE DEALERS?!
I just talked to a machinery salesman and he told everything has completely stopped, he works for a national company and business has gone to zero since christmas. He said it was going to get tough anyway with the problems in the dairy sector but after coronavirus everyone has gone to ground , his business has effectively ended.
Aj a friend told me today her grandee's job just disappeared. She was going to do a carpentry apprenticeship but all the work has dried up. Rural NZ. Usually the farmers keep the business busy but with this drought we have shut up shop. I was going to say they. But its we. I had some things planned but I will sit tight for now too.
mainstream media in NZ run with which every propaganda they prefer, some of the reporters are so biased its makes you wonder.
so yes apart from the reporting on this site, the more you hear from everywhere the better to make up your own mind.
i personally think we are in for a short sharp recession and i work in an industry that can confirm there is next to nothing coming or going from NZ and companies in this industry are already trying to get people to take holidays (even unpaid leave) as we are below after xmas / Chinese new years levels of freight.
the next monthly airfreight volume that david posts will be shocking, space is evaporating daily as airlines park up planes and cut capacity
Air NZ announces further flight cuts in wake of coronavirus outbreak
"In line with other airlines around the world, we're having to make swift capacity reductions and we appreciate the understanding of authorities in the various ports we fly to as we work through these necessary, short-term changes.
https://www.stuff.co.nz/travel/travel-troubles/120022653/air-nz-announc…
Yes because our mainstream news is for the masses who cannot handle news right now that a virus with a kill rate according to WHO today 3.5 per hundred is in NZ.
They will slowy change the narrative over next few weeks but by then it will be to late.
China has been shut down for what the flu and now they are blocking people from countries with it to stop reinfection yet told us to open our borders.
any day of the week.
This country's mainstream media are sloppy, unintelligent and biased, and sold out long ago to monetarism.
Actually that whole sentence kind of sums up modern NZ, not just the media.
So maybe we get the media we deserve.
Remember half of the population have IQs below 100, and we have a few of them posting regularly here.
About 5% of the population have IQs above 130, that's not enough to sustain intelligent media outlets in a tiny country, it is in a large country.
Is there much of a correlation between IQ and common sense? I prefer the advice of the sub 100 IQ person who is well informed and thoughtful over the opinions of those who have no problem with academic exams but regurgitate whatevr they last read. IQ merely measures the speed and efficiency of a brain - wisdom is different.
In the face of a global slump, a stock market rout , and a potential collapse of many companies with debt ................. Auckland house prices continue to rise ?
It will not be long before Companies like Air New Zealand , Qantas , Flight Centre and travel businesses cut headcount to survive .
Crazy
It’s an expensive business getting “rid of” employees in NZ – and can be a bit of a performance bringing them back on again.
In many States in the US it’s quite painless cost-wise to quickly drop head count in a slow down – and then pick them back up as things improve – enabling a relatively dynamic response to economic swings and roundabouts or individual business circumstances.
The US model is rather effective but brutal – I wouldn’t recommend it.
Cathay Pacific has asked the majority of their staff to take unpaid leave as a method of coping with the cash bleed.
Some airlines employ staff on a fixed period contract (e.g 2 year contract basis). If some of them are coming to the end of their contract, it is likely that those aren't getting renewed. This gives airlines a little more flexibility in the management of their labour in downturns. The airlines in the Middle East operate in this way as does Singapore Air I believe.
'Bedford said Seattle faces a stark choice — take aggressive actions to slow down the spread of the new coronavirus now or face the type of outbreak that engulfed Wuhan’s health facilities and led to a lockdown of the city that remains in place six weeks later.
Seattle is effectively in the position that Wuhan was on Jan. 1, when it first recognized it had an outbreak of a new virus, but did not realize the scale of the problem or the speed at which the virus was spreading, Bedford said.
https://www.statnews.com/2020/03/03/washington-state-risks-seeing-explo…
This is why clear comms is a must.
https://i.stuff.co.nz/national/health/120011337/coronavirus-gps-warn-of…
The lady felt unwell.
People are advised to call ahead (so they can be isolated and health professionals can PPE cloth).
She went to 2 medical centers unannounced.
(No comment on how MoH has messaged media centres).
Now several front line medical operatives will likely quarantine for 14 days.
Still falling unwell the lady sent kids to school (collective school roll 5,000).
And had a day trip, return plane trips to Palmetston North.
The lady's partner is showing symptoms.
This is a terrible state of affairs.
Failure in communications.
Govt messaging should have clearly communicated information to this lady, so that.
She knew how to approach med centers and why.
The risk to medical operatives.
The risk of her as a transmitter (her partner is ill).
The risk of children to school.
The great risk of domestic air travel when she fells unwell.
This is not the lady's fault. This demonstrates the failure of govt. to effectively communicate an important health message.
How much further, how many more worked examples do we need until there is a reset and competent people brought in to run things?.
A couple more unaware infectious folk visit medical sites/hospitals, and our front line staff get taken out, bye bye health system.
On the TV news tonight: Family travel from Italy to New Zealand with the parents having aquired the virus. They had sent the children back to school as soon as they returned to NZ. That's all the details I know at this time. Can anybody update?
We need to deal seriously with these idiots to set an example. When and if they survive, they should be placed in stocks in the town square so we can throw rotten tomatoes at them. They must be real dummies. They were reported as NZers but I wouldn't be surprised if they were immigrants of some description.
On the radio some ignorant Ministry of Education tart boldly ranted that these children did not have the virus, could definately not have spread the virus while they were at school as they didnt have symptoms. And you cannot spread the virus if you dont have symptoms.
Stupid stupid woman.
to be fair she arrived back in NZ from Italy on the 25th February, the government only started to tell people coming from north Italy to self isolate on the 2nd march, and a lot of people coming through are just given a pamphlet and told if you fell unwell ring Healthline.
very little screening or checking going on at the airport so many holes a swarm of mice could get through that cheese
Maybe. But fair to whom?
It sounds like we are both making the case for poor govt communications, me content and you time.
You also raise the issue of how aware should the travellers have been?
Look at this BBC map of Italy, dated 26th February, reporting 25the February.
https://www.bbc.com/news/amp/uk-51625733
Italy has put the 11 towns in Lombardy and Veneto - areas which attract tourists for their ski resorts - into lockdown.
The 24, 25 and 26. The virus was front and centre in Italy. How could international travellers remain unaware.
Nobody is looking very good in this example.
Thinking about the plane. The planes ALK -Palmerston Nth and return.
Or two planes, they don't get much of a clean in turn around,
So who had the same seats like less than an hour later? Those following passengers may like to know.
Domestic plane turn around, re use much quicker than international. Often you will be on a plane and see litter from the previous flight.
P.S. people feeling unwell, gotta stop going to work!
Medical centres do not have anywhere near enough PPEs, and never will.Imagine a centre with say 12 staff in a winter flu epidemic seeing 40 coughs/colds xc per day,having to change all gear (which is made in Wuhan) after each patient,
We still do not have dedicated assessment centres outside of regular EDs, GP clinics; as in UK where people are told DO NOT GO TO GP ED etc, ring this number and get advice
In NZ 79 yo is still waiting for advice 2 days later after ringing Healthline
We have had months of warning.
" Dr Kate Baddock, chair of the New Zealand Medical Association, said it was extremely important for the protection of both the public and health workers, that people who displayed symptoms phoned Healthline.
"What should not be done is the person should not just front up to a medical centre. They risk everybody if they do that."
But no resource now, and Jacinda help us when winter hits.
John Authers
"The G-7’s finance ministers and central bankers talked in the morning, produced a statement that the market found disappointing, and then the Federal Reserve announced an emergency interest rate cut. It only had 10 trading days to wait until the next meeting. This is important; by doing this now, the Fed burns its chance to leave some monetary ammunition ready for later emergencies. It also runs the risk of looking as though it has lost control.
That is what appears to have happened. Bond markets continued to push yields lower into historic territory, and didn’t take a break from the unrelenting pressure. It is difficult to put together a continuous history of 10-year rates, but Robert Shiller, the Yale University Nobel laureate economist, has collated data going back to the immediate aftermath of the Civil War, in 1871. The following chart uses information from his website, with the final plot coming from the latest 10-year yield, of 0.999%. Many things have happened to the U.S. since Alexander Hamilton dreamed up the bond market — sub-1% bond yields had never happened until Tuesday:
Normally, markets find it impossible to say no to this; cheap money is irresistible. Yet it appears that they aren’t satisfied. Bloomberg’s financial conditions index, which takes into account nine indicators, actually tightened Tuesday after the news, thanks in large part to a further fall in share prices. An emergency cut is intended to deal with extreme financial conditions (everyone knows that they cannot deal with the real world problem of viruses and contagion). These were supposed to ease sharply. The fact that they tightened suggests that the Fed has thrown away its shot, and failed to bring calm.
The long-term outlook is now of drawn-out deflationary stagnation. We can see this from another amazing development — the drop in the 30-year yield to a negative level in real terms. In other words, its yield is less than the average inflation rate that can be derived from the inflation-linked bond market. Nothing like this has ever happened before. As the charts show, markets have been negative for a while, but the apparent certainty that deflation awaits has taken over very quickly in the last few weeks. '
Global Times
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20m
Chinese scientists claim that the #COVID19 virus has probably genetically mutated to two variants: S-cov & L-cov. They believe the L-cov is more dangerous, featuring higher transmitibility and inflicting more harm on human respiratory system.
https://www.globaltimes.cn/
AJ, 4 u - from this morning.
The World Bank has committed $12bn (£9.4bn) in aid for developing countries grappling with the spread of the coronavirus.
The emergency package includes low-cost loans, grants and technical assistance.
The action comes as leaders around the world pledge to shield their countries from the economic impact of the outbreak.
It follows warnings that slowdown from the outbreak could tip countries into recession.
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