American mortgage rates tumble; factory orders fall; S&P500 dives; California declares an emergency; Australia faces a -½% GDP hit; UST 10yr yield at 0.91%; oil drops and gold jumps; NZ$1 = 63 USc; TWI-5 = 68.2

American mortgage rates tumble; factory orders fall; S&P500 dives; California declares an emergency; Australia faces a -½% GDP hit; UST 10yr yield at 0.91%; oil drops and gold jumps; NZ$1 = 63 USc; TWI-5 = 68.2

Here's our summary of key economic events overnight that affect New Zealand, with news the investor mood yo-yo is still in full evidence.

First up, American mortgage rates tumbled to an all-time low, with their 30 year fixed rate now at 3.29% (plus points).

And American factory orders fell -½% in January and that now makes it a fall in five of the past six months. Year-on-year, January orders showed zero growth.

Job cuts haven't yet become widespread in the US despite the economic wavering, but they have in one industry - tech. More than 10,000 tech job cuts were announced in February in the US compared with virtually zero in the same month in 2019. Large companies are pulling back and many more tech start-ups are folding. It's a development that may be leading many other industries.

In fact, equity markets are falling sharply again as the swift spread of the coronavirus in the United States led one state to declare an emergency, while airline stocks were hammered by crippled travel demand. Airline closures are starting.

The S&P500 is currently down by -3.4% in mid-afternoon trade, reversing yesterday's gains and continuing the yo-yo trend. Equity investors show all the signs of confusion, unlike their bond counterparts who have consistently been strongly risk-averse. Overnight, European markets fell about -1.5%. Yesterday, Hong Kong (+2.1%) and Tokyo (+1.1%) closed sharply positive, and Shanghai came in with a +2.0% gain. The NZX50 was up +2.0% and the ASX200 up +1.1%. But these gains seem unlikely to be repeated today.

The latest compilation of Covid-19 data is here. There are now 16,472 cases outside China, a rise of +2491 in one day as the numbers keep on jumping in South Korea, Italy and Iran. 12,690 are in those three countries (77%). A week ago that outside-China number was 3337 so it is still quadrupling in a week. Inside China, the growth of reported cases has stopped. But global deaths are now up to 3305 and 3014 are in China (91%).

The WHO says most countries are not doing enough to combat the spread of the virus, and that "the experience of ... China continues to demonstrate that this is not a one-way street." Inside the US, even if the Federal authorities are not really engaged, one state, California, has declared an emergency. This is big news as it is their largest state and accounts for 12% of the nation's population. An initial clinical study suggests some key data on its likely impact if it gets into the general population. It would not be good.

And one 'environmental' trend that may get undone is the use of reusable food containers - safety in foodservice may require the return of one-use disposables.

The January trade surplus in Australia came in much better than expected at +AU$5.2 bln (when +AU$4.8 bln was the expected level). But this was not as good as the record AU$8.1 bln in June 2019. In the year to January, the Aussie trade surplus was AU$68.4 bln (and a hugely impressive +4.6% of GDP) and far above the +1.9% of GDP in the year to January 2019.

But the good times won't last. The Australian Treasury estimates that the global virus emergency will take twice as much out of the Aussie economy as their bush fires did, and sapping it of -AU$34 bln or -0.5%.

The UST 10yr yield is down yet again, now under 0.91%, a new record low and down another -6 bps overnight. The 2-10 curve is more positive at +34 bps. Their 1-5 curve has turned more positive at +17 bps. and their 3m-10yr curve has turned less negative at -2 bps. This is still a market in the middle of a confused transition. The Aussie Govt 10yr is up +2 bps at 0.76%. The China Govt 10yr is also lower, down -2 bps at 2.74%. The NZ Govt 10 yr is up +4 bps at 1.08%.

Gold is risen sharply today, up +US21 to US$1,663/oz.

US oil prices are lower by -US$1 to just under US$46.50/bbl. The Brent benchmark is at just under US$50.50/bbl.

The Kiwi dollar starts today firmer at 63 USc. On the cross rates we are also firmer at 95.5 AUc. Against the euro we little-changed at 56.3 euro cents. That means our TWI-5 is marginally higher at 68.2.

Bitcoin is up, gaining +4.8% since this time yesterday at US$9,101. The bitcoin rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Our exchange rate chart is here.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.


US 10 year bond rate falls so the stockmarket plummets. US economy is not booming.

overnight and 14 day Repo balloons to $US 187 Billion this morning, up from yesterdays $111 Billion, FED is plugging the gap in liquidity and now at 1.07% interest rate

The drastically excelerating Repo and stock plunge containment actions are proving to be non effective. They are throwing all they have at it and it continues to spiral downward. Guess we are going to find out if the Fed can own everything and it still ticks along or the whole shooting match falls apart.

It's not so large today compared to yesterday. Latest TOMO/POMO Fed operations

We had two weeks of drops on Fridays and now two weeks of drops on Thursdays and Fridays, followed by Fed pump ups on Monday to try and contain. It gets worse everytime.
Im guessing they know ot's going to drop Thursday / Friday and do a bit of containment but keep some back for Monday.

There has been 108bln of accepted deals for 5 March , 87bln with maturity of 1day, 20bln 14 days

he UST 10yr yield is down yet again, now under 0.91%, a new record low and down another -6 bps overnight. The 2-10 curve is more positive at +34 bps. Their 1-5 curve has turned more positive at +17 bps. and their 3m-10yr curve has turned less negative at -2 bps. This is still a market in the middle of a confused transition.

A major part of any yield curve is inflation expectations. Nominal growth particularly toward the longer end of curves sets the agenda for trading. But further out there are several confluences that may cause distortions. For Economists, these are conundrums.

There are times, however, when curve dynamics remain pretty simple. These are not usually the best of times. As my colleague Joe Calhoun points out, it’s backward in convention. In other words, what Wall Street may call a bull steepener case for the bond market is actually bullish only for those bonds contained within the curve. For everyone else, particularly the macro economy, this change works out over time decidedly bearish.

This bear steepener in reality (bull steepener in bond trading) is perfectly clear. The short end drops quickly with the long end following if at a slower rate. Nominally, the whole curve shifts lower but because the short end is moving fast the curve steepens while it shrinks. Traditionally, this is the recession signal.

If curve inversion suggests a good probability of economic contraction ahead, this bear steepener indicates that it’s close or even already arrived. The short end falls largely because authorities panic and begin the frenzied process of reducing benchmarks and such or just trying to flood money markets with what they perceive as excess liquidity in the hopes of somehow staving off the looming macro bear turn. Link

The retreat into 10 year bonds is something else. I'm assuming shorter term bonds are being bought up by the Fed to stop the 10y-2y from inverting.


The Australian economy will be fine. The RBA will just juice real estate some more. Works like a charm every time.


The data on chinese mineral demand would suggest Aussie's goose is well and truly cooked for atleast the next 2 quarters.

The problem is they are running out of juice


Let's see how hard the housing market falls in Aussie and NZ when those millions of workers in 'at-risk' industries start falling behind on their mortgage and rental payments. There is no soft landing in sight!

What about when some of the people here on temporary work visas no longer have a job and have to leave?


A couple of weeks ago a Public Health Professor from the University of Otago said, "it is probable 60% of NZ's population will be infected in the next 1-2 years". It seems no one is talking about what might happen in NZ should (when) widespread community transmission occurs. I'm not wanting to watch the world burn but the course of events seems reasonably predictable for the next little while. Can anyone provide reasoning as to why it won't be widespread in the coming months and the country to go into slowdown?


Not a sausage except for Jacinda and MoH.

I wonder if Jacinda will double down and confirm our world class hospital statement next week when no beds are left or will they just bail out Maui/THL campervans businesses and have mobile beds.
That was 2012 so I guess our bed ratio may even be below 2 now.


The government is running a don't test don't tell policy, this will almost certainly result in outbreaks as if you don't test you don't know. The guy from peak prosperity pointed out this goes case case case cluster cluster outbreak!

So far I have been very disappointed in the New Zealand governments response to this but I also think they certainly don't have enough resources to remotely cope they could only do about 550 tests a day here ramping up to 2000 a day at best.

So far they have been reacting and running way behind the ball they're not making forward progress and are rapidly being pushed back against the try line.

That stacks with the German total doubles over night.
'We have a pandemic plan that we follow.. equals.. blame the book we are following.

but that is the way our whole health department runs, just look at the disaster that happened with measles, how long did it take to ramp up mass vaccinations, they could have nipped that much earlier with getting into the schools early and vaccinating

Yeah I remember the time measles infected 60% of the population and we all died. Another big nothing burger, we should be focused on the real emergency, the climate emergency crisis. Many councils in NZ have already declared a state of climate emergency, while none have declared a state of flu emergency.

Councils would all declare flu emergencies if it meant meetings now and flu epidemic in 2050.

Brilliant. Everything's a crisis except the real crisis.

On the up side there's nothing quite like a global financial crisis to rapidly drop emissions - just check out those satellite images of China!

As are most western countries. Reactive rather than proactive. They know if they close down cities and borders the economic consequences will be hard so they are taking a lets look like we’ve got this but in reality we are hoping it won’t be too bad. Fingers crossed.


They gave up before they even started. Failed to plan, failed to act, planned to fail. And in doing so have chosen to let 10's of thousands of kiwi's die.
What was their rationale? Was it a deliberate choice, non-comprehension or just paralysis? Probably nearing point where the only things they could have done (testing and quarantining) will no longer make a big difference.


There was never any chance of avoiding it, it is a pandemic (regardless of the WHO playing politics on calling it one). Slowing its spread was the only realistic approach. ~20,000 international arrivals per day at Auckland alone, even if you cut that down to 25%, you can't quarantine them all.

It's not Her fault, why are these people with a contagious virus, so determined to fly all over the word and spread it as far as possible? If you get the flu - stay home, don't go gallivanting all over the world.

You are infectious within a few hours but symptoms don’t appear for 14 to 28 days. Those feeling ill should not travel.
Presuming we’ll be cancelling our holiday to the UK and Spain in July!

I had family due to arrive from the UK early April (via Qatar). They have already cancelled.

Totally disagree. Tourism is ending as we speak. No one wants to get sick away from home. We should and could have been quarantining all arrivals from a month back - would have only been small numbers of kiwis returning home. Not hard to stick 10000 people in a tents for 2 weeks, military are set up for it.

A strong effective leader would have done exactally that. It isn't too late at present but we'll srick to the pandemic book. I'm guessing that it was written by National and Labour will shift the blame onto them. The time for politics is over but still it continues.

Lol, except its 20,000 a day normally, even if you reduce it to 10% of that, its 2,000 a day, 5 days and there goes your 10,000 people in tents, and of course there are some that take more than 14 days to show symptoms. Its the equivalent of trying to bail out lake Taupo with a bucket.

At currrent figures correct but most people wouldn't get on that plane if they knew they jad a two week stand down. That would drastically drop the incoming numbers.

I said at 10% of current figures...

Yeah, hard to do. We're screwed!

The Coaltion have a cunning plan to solve a financial dilemma. Make noises about how well they are doing but in reality do as little as possible. Since COVID19 kills off those 60+, super annuants will die off in there thousands. With this saving they'll be able to solve child poverty and enable them to have two square meals a day instead of one. I fall into the super annuant class so will be able to contribute to a reduction in the super bill. There was an article about the number of super annuants in the 100k+ bracket. The tax take on these will be lost but I'm sure there'll be someone to take their place who is not on superannuation.

I've been calling it the Boomer Plague for months.

And the Kiwi Build disaster is over as well.

If this volatility in the markets keeps up at some stage those dreaded words are going to be uttered when The Fed intervenes - "That's done. Could do more!" (meaning that the market will absorb all the buying that The Fed does, and then keep selling, as those that want out, get out)

The Flybe closure is not related to the virus.

I wonder how Virgin Australia books are going at moment.

That new Virgin cruise ship had lousy reviews. Double whammy

Covid19 was the final nail in the coffin.

Time to start taxing clouds. "Our research supports the idea that clouds and albedo, which ultimately determine the SW radiation, are variables of the utmost importance for current climate change, in agreement with previous research about the changes in stratocumulus or energy imbalance in the last four decades for example. An increase in cloud coverage of 0.1 would, on average, lead to a 7% increase in spectrally integrated global average reflectance of shortwave radiation."

Reported for fake news!
It is clinically proven fact that increases in a trace element of the air from 0.03% up to 0.04% means we only have 12 months to save the planet.

I heard the ridiculous theory that the concentration of a gas molecule currently at a concentration of 0.000407 might increase as the climate warms and decrease as the climate cools. Outrageous. I mean who do these "scientists" think they are, generating alternative "scientific" hypotheses that can be disproven?

Popper’s early work attempts to solve the problem of demarcation and offer a clear criterion that distinguishes scientific theories from metaphysical or mythological claims. Popper’s falsificationist methodology holds that scientific theories are characterized by entailing predictions that future observations might reveal to be false. When theories are falsified by such observations, scientists can respond by revising the theory, or by rejecting the theory in favor of a rival or by maintaining the theory as is and changing an auxiliary hypothesis. In either case, however, this process must aim at the production of new, falsifiable predictions.

Karl Popper: Philosophy of Science:


Has the dead cat bounced? US stocks are still trading higher than in only October 2019. They haven't fallen far at all.

On another note, no one should be seriously using the word containment anymore. I'm no fan of this incompetent lot, but we could shut down the entire economy and borders and this thing would still spread. The most realistic outcome is that we are all rather likely to contract it, just like a common cold. Keep going about your daily life with better hygiene habits than usual. That's all we can do.

The cat is still falling and is ages from the ground, this lift in sentiment is merely the market irrationally trying to convince it's self that the ground and indeed gravity doesn't exist and therefore everything is fine...

Where're a long way from a dead cat and the inevitable bounce as it hits the pavement, this speaks more to the height of the building than whether the cat is falling or not (it certainly is).

The only thing stopping the dead cat is the massive fan below it amd it's running out of steam.

I more imagined a gaggle of reserve bankers blowing until they're blue in the face.

Absolutely..... bottom up management will be key over the next few months. Just stocked ip on isopropyl alcohol and aloe vera gel to make handwash.

Turkey has got a bloody nose in Syria, Putin didn't back down

the people of the EU won't like this, the world changed in a day

I listened to Ben HUnt last night. Looks like the death rate from coronavirus for men over 50 is 1 in 100.

The 50-59 age group has a death rate of 1.3% with men 50% more likely to die than women so roughly 1% 50-59 female and 1.6% 50-59 men.

It rises rapidly after that:
60-69 - 3.6%
70-79 - 8.0%
80+ - 14.8%

Thought I’d repost this: IMO - CHINA has deliberately released this virus to firstly mortally damage Trump's administration, and secondly in the hope that it will bring America to it’s knees. CHINA cannot accept or stomach another 4 years of a Trump Administration due to the hard-line America First policies undertaken against China to stop it from stealing US intellectual property and undermining the whole US economy.
Of course, the protesters would say - "they would never allow a number of their own people to die". RUBBISH!! Mao Tse-tung is credited (if that's the correct spelling) with causing directly and indirectly the deaths of 70 MILLION of his own people during his brutal regime. Good luck to the Socialists/Communists!! And CHINA is now at it again with the Muslim Uighur people. Companies such as Nike are using Uighur slave labour in China right now. And they aren't the only ones.
The Chinese Communist Party has absolutely NO SCRUPLES or concern for anyone's welfare except their own and the inexorable advance of the Party's interests. NZ and Australia should remember this in their on-going trade relationships with China.

when there's no one left it all will be mine, mine.


Never attribute to malice that which can be adequately explained by incompetence.

Your comment influenced me to reading the wikipedia article "Great Chinese Famine". I don't recommend reading it unless you have a strong stomach.

Dude 700 people a day die from road deaths in China. In a month they have had around 3k deaths, and its looking like their numbers won't that fudged comparing them to other countries data. People need to chill out. You'd think a group of people had contracted ebola and gone round spitting on everyone the way everyone's acting.

Assuming NZ doesn't go into complete lock down like parts of China did, what happens if/when we have widespread outbreaks?

Nothing, people will stay at home with the flu.

and the government and businesses will have to come to an arrangement about sickpay. If not then there will be a huge amount of financial hardship, bills, mortgages and rents not being paid. Landlords - how are you placed if this happens and your tenants suffer financial hardship? Do you have a plan? What action will your rental manager take?

Given global nature of the problem I wonder if govts will coordinate to impose a variety of freezes on mortgages and other interest payments? Maybe also rent holidays - or deferred payments. Effectively trying to establish some sort of financial stasis while epidemic runs it's course.

They will bacially have to annd it is rigjt in line with their hug the poor people MO.

Hug the poor people, lol. More of a shield the rich Ponzi.

We all get to worry like crazy that our parents / grandparents will make it through this. And whether we will have a job.

Conspiracy theory. Come on mate. Small pox, Spanish Flu, etc, were killing people from god knows when. It is much more likely that this virus is produced by Nature and not in a Lab. I read somewhere that Iran's government is accusing USA for making and releasing this virus to harm Iran and China! absolute garbage off course.
I am not rejecting your factual statements about the CCP's mentality and attitude. But, having these qualities does not equal to truth of your story.

Errrrm. But by any of that rationale, it's *just* as likely that the virus is a US black ops strategy against China. Businesses are already questioning their reliance on China within the international supply chain and looking elsewhere. This virus is highly negative for China's reputation and is undoubtedly going to majorly slow the Chinese economy and undermine trade connections.

"The Chinese Communist Party has absolutely NO SCRUPLES or concern for anyone's welfare except their own and the inexorable advance of the Party's interests."

Sounds a lot like big business, which your reference to Nike would confirm.

Hence we will go broke sooner.

We’ll know when the factories are open as the pollution levels will shoot up again. At the moment it’s looking pretty clear over China.

Have you seen any up to date satellite images on this? All I keep seeing are the same images from 25th February being circulated. I'd be interested in something current., create a log-in and fill your boots, it's free gratis the European Space Agency.

And how do you get Nitrogen Dioxide imaging from there? Sentinel 5 reads for Nitrogen Dioxide and I can only see access to Sentinel's 1,2 & 3?

sorry, try this one, just did a quick search and looks like there's something from yesterday, probably won't be over the same locations as what you could have seen though as the satellite only has a 29 day repeat cycle

Think it is (very slowly) starting to get back to work, lots of non-official indicators of increasing activity:

Secured Overnight Financing Rate Data -SOFR falls to get the Fed's lower rate directive - trades at 1.23%, above IOER set at 1.10% while the moribund EFF Fed Funds rate remains in range at 1.09%.

What panic is people actually seeing around this virus. Would be good to get a snapshot of whats going on around the country:

I will start. I work in a bank branch in Taranaki and we have had customers come through who wont touch any surfaces, who put money on the counter then step back to talk to us 'to be safe', complain that the local supermarkets are running out of emergency items and a lot of general conspiracy theories with my favorite that this links to the gun ban because they don't want people to be 'prepared'.

Guessing it's largely 'boomers' doing this?
That is for a good reason.
1. They have herd their parents and grandparents telling tales of past issues. I remember my granparents saying save for the next depression.
2. They are the ones that are on the high proberbility of dieing list.

They have lived through hard times and know them well. I'm not a boomer and I still remember Rob Moldon stating 'tighten your belts, It is going to be another hard year.. Immagin Jacinda going live and stating that now days..

so what happens when there is a live case in your area? total panic people will do a voluntary shut down like it or not.

that's ironic as money is one of the dirtiest items you could touch

One of our family businesses sources product from China that is used in NZ's building industry. We placed a largish order yesterday after frank discussions about delivery lead times. They assured us there is no delay, that the product will arrive, as usual, on time. We spend millions with these guys each year and they know we can get the same gear from Europe so don't believe they would risk spinning us a line of BS. Our experience of trading with Chinese factories has been 100% positive. The resourcefulness of the chinese people is underestimated by many commentating on the country's ability to bounce back from covid.

You are far more likely than usual to lied to by Chinese suppliers. They are in survival mode. They are also subject to huge supply chain disruption in sourcing the stuff they need to make the stuff you want. You might be right, but wouldn't bet on it. Will building industry grind to a halt if essential components have patchy supply for a few months?

I wouldn't be handing all the bucks over before it was delivered. A lawyers trust account maybe.
The Kiwi building game is going to drop hard and be propped up by infrastructure projects. It won't be a month untill projects will be cancled due to uncertianty.

Thats not the case, they have too much of the stuff they need to make the stuff you want at the moment. Just not the factories and labour to make it due to them being under quarantine.

'We also know that the two things about this virus which makes it very dangerous and almost impossible to stop. The first is the very long, unusually long, suspiciously long latency period when someone can carry the virus and be highly infectious without showing any symptoms at all. The second is that Covid19 is easily transmitted and very highly infectious.' From your link above.
Despite this our MoH states that there is basically no chance of infection from people who do not show systoms. Then a person sitting withon 2 m of the 1st infected person tests positive.. The powers that be in NZ are making a hash of this!

Kezza. MoH is citing the Chinese experience from its large data sample, in stating asymptomatic covid19 carriers are not infectious. It assumes there will be no variation in ethnically different population profiles. Hopefully MoH has carefully considered the dead hand of the CCP in manipulating information and is aware of its own reputational risk and potentially mortal damage to the coalition re-election prospects if events prove this position to be incorrect.

We all know that China isn't telling the truth and if Labour is following those stats they are well and truely gone forever.

Hi Aj. We got less than 10ml the other day. Its blowing like 40 bastards out there now. Next weeks rain is disappearing into the ether. Hmmm. Hows the Bay?

Gee I think Wall st is feeling my pain, Dow -4%

Only painful if you need to sell.

People who might need to sell in the next 12 months or so.
1) FHB looking to use Kiwisaver as deposit on a house purchase
2) people who are nearly retiring and need some funds for retirement

I recall people who retired from 2009-2012. Many of these people need to live of their investment funds (which were invested in shares) and they were forced to sell shares at lower prices (compared to the pre-retirement prices) in retirement.

3. Those who are effected by the down turn amd need bucks. That's fairly much everyone.

we got a few mls last night, as long as it's from the east it gets to us, this is just a little at a time but some green showing. I was going to go to the Fielding sale today to see whats happening, will keep my hands firmly in pockets.

Good to hear you are getting a bit of rain. Easterlies are useless here.

That rain forecast is very disappointing because a couple of days ago it was looking like a low would form over the North Island from the remnants of that Australian cyclone and give us a deluge. Now it looks like a few showers. Sigh.

Yes. It was quite the tease Doris.

Don’t forget to keep an eye on other news stories as a black swan event could appear from nowhere and take us all by surprise. Get rid of your debt too.

Here a list of three and a question.

1. From yesterday, why not test the assumed source of no.3. confirmed case. The data about virus family, the recovered person's viral load (gene sequence would be useful too). Plus confirm in country person to person transmission. Be great to know viral load of kids too. Medical case data is invaluable for future research.

2. Here we have confirmed case no.2 saving how unfair feelings and treatment has been.

3. Here we have medical operative claims they are put at risk with poor communication, poor support from medical employers.

What's the hygiene/ sanitizing protocol for cleaning up areas where virus cases have been. For example deep clean of aircraft, medical centers, employment areas etc.

It's interesting that every constituency has issues, yet the PR is happy days, full PC.
This is no way to run a ballroom.

After alluding to the possible origins of certain persons returning to NZ having contracted Coronavirus whilst on holiday, I was justifiably sinbinned from writing further comment for the rest of Wednesday. Fair enough. It was hard to take but I deserved it.

But what I didn’t expect was the late night visit from the PC police….they tried to extract information from me as to the origins of my alleged anti-PC opinions. They also went through my computer to see if they could find any evidence that I had received any anti-PC literature.
Of course, I resisted their strong-arm tactics and pleaded innocence. They said they were going to keep a close watch on me from now on and they’re sure I’m hiding something. They said to expect them back at any time.
I held the curtain aside a little and saw them walk to their car and depart. I breathed a sigh of relieve and found my hands shaking as I made a cup of tea.
Bugger this I thought as I stirred in the sweeteners.
Meanwhile the night fell down upon the cooling evening and I thought of making a clean break, but where would I go? I flopped down on my bed and thought through my options. I felt myself drifting off with my destination still unresolved…….zzzz…..zzzzz……zzzzzz…….zzzzzzz……WHOOMPH…..the bloody cat just landed on my stomach and now I’m wide awake and worrying again.
I hope to keep the readers up-dated with any new developments.

Seriously?? The police (or some other agency) came to your house after a comment on this site?

Yes indeed, and what's more I'm sure there's someone surveilling me from a car with tinted windows across the street.

Starting to sound like the UK.

I don't take anything that poster says at face value. lonewolfnz mk2 IMO.

Pretty sure streetwise was indulging in a spot of "creative writing".

Yep, I'm guessing the same now.

yeah, but thats business as usual for that poster IMO.

Yes it's true, name of the policeman was Hercule Poirot

The UST 10yr yield is down yet again, now under 0.91%, a new record low and down another -6 bps overnight.

Interest rates have nowhere to go but up no matter how low they keep going. The bond market, like repo problems, are all dissected from this other, deeply unscientific perspective. Central bankers start, not end, with the premise that the world is fixed and awesome – and then seek to validate this predetermined conclusion.

But, because it is a faulty and ultimately incorrect conclusion, it takes some real mental gymnastics and tortured logic to get back to it. Repo is nothing more than technical factors. Falling bond yields are really a good sign, even more negative term premiums. The BOND ROUT!!!! is still penciled in for tomorrow.

No, seriously:

A growing chorus of strategists and money managers is voicing concern as investors charge into government debt at seemingly any price.

The fear is they’re exposing themselves to interest rate risk like never before, risking a precipitous slump on even a modest bump in yields. One breakthrough in the fight against the illness, or a sign the global economy is recovering faster-than-expected, might be all it takes.

That wasn’t written in March 2018 nor March 2019. It was published yesterday, of all days. And here’s the kicker, “The moves highlight belief in some corners that policy action will stoke growth, creating upward pressure for stocks and bond yields.” Link

"Interest rates have nowhere to go but up no matter how low they keep going." This could be a fallacy. Once banks get a taste of charging people for storing their money with them (negative interest rates), it is easy to see that they'll just keep on doing this for their shareholders. They'll call it providing and charging for a service (storing money - don't mention that it's not actually real money, only electronic credit). Its how the rich get richer when nothing else works!

Guessing people will go PM's and PM's mining stocks, over staying put in the bank

You are not wrong.

From the point of view of orthodox policy, it has been the needs of monetary policy that drove everything lower and by extension upside down. The yield curve has only steepened in the 21st century, and yet the economy of this period has been slower and weaker (in sustained fashion) than at any point since the 1930’s. It sets up an inversion to where the yield curve gets steeper the more the economy slows, which by mainstream definitions can’t be the case.

To solve the “equation” we merely have to frame all references to the nominal. Thus, the steepness of the yield curve itself is a byproduct of monetary policy effects on the shorter rates. For policymakers that has meant R*, the assumed natural rate of interest.

We have to keep in mind that R*, or R-star as it is sometimes notated, is not something that can be observed directly, but despite that limitation is immensely important to monetary policy. It is supposed to define the balance between inflation and deflation; if monetary policy can get “real” rates below R* it is thought of as stimulative. Conversely, if the “real” policy rate is above R* monetary policy is believed functionally restrictive.

Given that framework, if R* is falling then each time the Federal Reserve or any other central bank wishes to “stimulate” it must do so with lower and lower short-term rates in order to get the policy rate underneath where it assumed the natural rate has fallen. Once at the Zero Lower Bound (ZLB), policy is constrained in nominal terms leaving authorities to undertake unconventional policies so as to push “real” rates down where they are calculated to be stimulative.

According to calculations performed by the San Francisco branch of the Fed, R* is indeed falling and has been doing so for decades. As a result, each time the US economy is confronted with cyclical economic weakness such as the Asian flu (which resulted only a near-recession) or the dot-com recession, the “required” monetary policy response has been that much more so. The result is what we see of the yield curve, where it steepens due to the weight of policy on the front end essentially pulling it downward.

But is this really true? There isn’t a whole lot of sense in this formulation. You can see at times that it amounts to reverse engineering rather than defining an internally consistent and logical explanation of the last thirty years, starting with the fact that economists have no idea what might have caused R* to decline in the first place. Further, the bond market just doesn’t work that way, as again interest rates define opportunity rather than being anchored almost exclusively to monetary policy.

A more common sense explanation would be the opposite direction for the chain of causation: the economy slows in structural terms causing the bond market to reduce in its overall nominal framing, where cyclical weakness is therefore more pronounced over time leaving the Fed not to “stimulate” with lower and lower policy rates but to announce in review what has already happened. In short, they are calculating a lower R* as a result of being unable to square reality with the orthodox parameters of how orthodox theory posits reality is supposed to be.

R* is just the plugline or balancing factor that attempts to make sense of why neither ultra-low interest rates after the dot-com recession nor QE in the aftermath of the Great “Recession” failed to work as they “should” have. For policymakers, policy rates went low and lower but since no great recovery resulted, especially from the QE’s, it is merely asserted that R* must have been that much lower still. From this view, QE was surely powerful “stimulus” but it didn’t appear to have worked, therefore R* was just that much lower than QE got the policy rate to. If “real” policy rates had been pushed down to -10%, the still lack of recovery would have left Fed officials claiming R* surely was -10.01%.

This reverse engineering is actually quite common and necessary for a philosophy that is so often backward. What comes first is the lack of growth, leaving economists to calculate an R* based on wherever interest rates happen to be due to their reactionary efforts trying (and inevitably failing) to do something about it. We can observe this relationship in any number of important ways:... Read more

R* equates to the neutral rate in NZ. How much further will the OCR have to fall now that our 10 year government note yield has dropped towards it's current 1% setting? Remember the RBNZ has cut this official rate in half three times since mid 2008.

Interesting prospect for the cashless society spruikers

more like quintupling


Much more news worthy.
The death of Jeannette Fitzsimmons. A politician with a brain that thinks, very rare. The loss of her and Rod Donald from the greens was huge, certainly the sort of politicians I'd vote for even when not liking some policies, simply due to trust.

Out of the Values party, through Alliance then taken up with Greens.
Her honesty and awareness will be missed.

From the TVNZ tribute to her this quote struck a chord """What is stopping us, as a species and particularly as a Parliament, from seeing the truth that climate change, which has now entered the public consciousness, is only a symptom of a much greater issue?
The planet is full – its capacity to absorb our wastes and generate our resources is already overstretched and even mining the last national park and Antarctica and damming or draining the last river will not allow us to continue using even more."""

Europe's winter 1.5 degrees the warmest recorded. One stat proves nothing but maybe climate warming is seriously kicking in. We can adapt to warmer weather - Auckland will be like Brisbane and Dunedin like Auckland etc. But can we adapt to plastic pollution in every drop of water? The extinction of most of our natural environment? Our govt will not get us all into electric buses overnight but why no effort to control waste - three years and only a measly partial ban on pastic bags! Bring back a green party thinking green.

My daughter is in California, yesterday she visited Walgreens, the pharmacist told her that all drugs come from China often via India, they just had two corona cases in her town, he said they be out of drugs in under two months. It will take months for supply to correct. Think on that.

India is stopping export of several generics.
Because lack of precursors and require of local population.

I heard figures a few weeks back that was I recall well into 90% plus pharm produced in China.


Vitamin C Saves Wuhan Family from COVID-19

China Using Vitamin C Against COVID

We can all agree that 50 tons of vitamin C pretty much qualifies as a megadose. We can also likely agree that trucking 50 tons of vitamin C, straight into Wuhan, full in the face of the COVID-19 epidemic, qualifies as news.

Most of the Vit C is made in China.
Wouldn't it be wiser to stock up on Vit C rather than bog-rolls?

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