Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Westpac cut its three, four and five year 'special' fixed rates sharply, lowering them to near market-leading levels.
TERM DEPOSIT RATE CHANGES
Westpac also cut all its TD rates from 6 months to five years, all by -10 bps. These are now market lows for any bank.
A TEPID QUARTER
The December quarter of construction completed was soft. Total construction activity came in below market forecasts. Previous quarter results had been quite strong with Q3 up +11.6% year-on-year and the first two quarters were higher than that. But the year-on-year final quarter result sank to just +7.6%. The residential sector grew at about the average based on new residences. Alterations and renovation activity was weak. But the overall result was held back by the non-residential activity, big projects that can have lumpy completions. And projects continue to soften in Canterbury, dropping -11% pa, while Auckland and Wellington stood out, growing +18% and +16% pa respectively.
AML CONVICTION
Jiaxin Finance, assisted by its owner, Qiang Fu and his mother, Fuqin Che, have been convicted of offences under the Anti-Money Laundering and Countering Financing of Terrorism (AML/CFT) Act. Between April 2015 and May 2016, Jiaxin Finance and its brokers were responsible for remitting over $53 million into New Zealand for an international customer. The Auckland High Court has sentenced Jiaxin Finance to pay a fine of $2.55 mln, Mr Fu has been sentenced to pay a fine of $180,000, and Ms Che has been sentenced to pay a fine of $202,000.
US$200 BLN TO EVAPORATE
Growth across Asia-Pacific will slow to 4.0% in 2020, the lowest since the Global Financial Crisis, due to the coronavirus outbreak. A U-shaped recovery should start later in 2020 but by then overall economic damage is likely to reach US$211 bln. That's according to an article S&P Global Ratings published titled "COVID-19 Now Threatens More Damage To Asia-Pacific."
A 15 YEAR LOW
Australian retail sales were weak in January, weaker than expected, dropping to a gain of just +2.1%, the slowest January year-on-year gain since 2005. This slowdown is concentrated in January which actually shrank, all due to bush fire and drought effects. None of this January decline is due yet to coronavirus.
CORONAVIRUS UPDATE
The latest compilation of Covid-19 data is here. The tally of those infected worldwide will probably exceed 100,000 over the weekend after rising by +2781 in one day. There are now 17,621 cases outside China, a rise of +2764 in one day as the numbers keep on jumping in South Korea, Italy and Iran. 13,459 are in those three countries (76%). A week ago that outside-China number was 4262 so it is still quadrupling in a week.
RED INK EVERYWHERE
Earlier today, Wall Street closed down sharply with the S&P500 down -4.4%. In local sessions, the NZX50 is down -1.5% and the ASX200 is down -1.6%. Tokyo has opened down -2.4%, Hong Kong down -1.5% and Shanghai is down -0.7% so far.
LOCAL SWAP RATES FLATTEN AS LONG RATES TUMBLE
Wholesale swap rates have changed little today although it did flatten with the ten year down to 1.06% a fall of -7 bps. The 90-day bank bill rate is up +1 bp to 0.83% as markets scale back their local rate-cut bets. In Australia, their swap curve flattened too. The Aussie Govt 10yr is down -1 bp at 0.70%. The China Govt 10yr is also lower, down -3 bps to 2.72%. The NZ Govt 10 yr yield is now just under 1.00%, and an -8 bps fall. Update: At the close, it rose to just over 1.00%. And the UST 10yr yield just keeps on sinking, now down to an eye-watering 0.86%, a -17 bps daily dump.
NZ DOLLAR FIRMS
The Kiwi dollar is firmer than this time yesterday, now at 63.1 USc. Against the Aussie we are also up at 95.6 AUc. Against the euro we have stayed similar at 56.2 euro cents. That means the TWI-5 is up marginally at 68.2.
BITCOIN UP, THEN SLIPS BACK
Bitcoin is also higher today at US$9,026, up almost +2% although most of that came last night and it has been slipping through most of today. 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 ».
38 Comments
"Growth across Asia-Pacific will slow to 4.0% in 2020, the lowest since the Global Financial Crisis",
Oh really?
On;y by counting churn and concurrently avoiding counting draw-down, has anyone been able to count 'growth' this last decade. And arguably the last 4-5 decades.
USDJPY continues to fall. Most people don't really understand why JPY behaves as it does, particularly with Japan widely seen as a public-debt-driven basketcase. Essentially Japan is still a net creditor to the world and when SHTF, JPY is repatriated and external positions are liquidated. However, the carry tade advantages Japanese banks have been playing for years is being squeezed. A Japanese banking crisis would be disastrous for the global economy.
Yvil , I appreciate you are leveraged on housing
by Cowpat | 31st Dec 19, 6:34pm
"Forecasts for 2020
1. RBNZ and RBA will both reduce the OCR. For the RBNZ , GDP remains too weak to create the type of inflation it wants, after all ,we are an economy, for so long based primarily on housing. Our big cousins .Australia and China now a drag . NZ 10 year yield sub 1.0 percent.
5. Some bright spark will question the RBNZ forecasts and leadership."
Yvil , its not insider knowledge its about understanding low risk/ high reward outcomes, and having the "balls" to follow ones gut.
Bad news for Tool fans.
Case no.4 was there too.
https://i.stuff.co.nz/national/health/120069317/coronavirus-ministry-of…
A man who tested positive for coronavirus attended the Tool concert at Spark Arena in Auckland last Friday when he may have been infectious, the Ministry of Health says.
"We encourage all people who were in the general admission standing area to be aware of the general symptoms of Covid-19," Ministry of Health director-general of health Dr Ashley Bloomfield said. If people are symptomatic, they were asked to call Healthline's dedicated coronavirus number - 0800 358 5453.
The man was standing in the left quadrant.
Dr B
MoH
https://www.health.govt.nz/news-media/news-items/covid-19-novel-coronav…
Advice for what people can do to prepare for the months...... ahead.
Watch the video to the end, and see the exit stage right move made at the end.
From a proper Doctor
There are a variety of models including community assessment centres, telehealth or drive-through testing. Testing needs to be available quickly, which means the test is available in regional centres with every step on the specimen's journey optimised for fast turn-around. Positive results need to be rapidly conveyed to the patient and also to public health officials, who can trace their contacts and place them in isolation.
We have excellent public health professionals in New Zealand, but we have to be honest that we don't have enough for this task. We saw how under-resourced public health units can be overwhelmed during recent mumps and measles outbreaks. We need to expand this workforce now, as this is the key measure likely to prevent a large outbreak of Covid-19.
* Dr Ayesha Verrall is an infectious diseases physician and epidemiologist at the University of Otago, Wellington.
European bank stocks have been pricing the result of ECB policies and the ultimate goal to drive all eurozone banks out of business, except for a few very big ones or well connected ones (Goldman Sachs).
Shifting from Central Planning to Decentralisation https://t.co/cze1ak9IKW?amp=1
Link
Documents released by the Reserve Bank under the Official Information Act show ANZ New Zealand, ASB, BNZ and Westpac NZ with an average annual RoE of 18.4%. That tops the 16.7% of their Australian parents, and is below just Canada's big four banks with an average of 20.3%. In contrast the average RoE across five NZ owned banks - Kiwibank, Heartland Bank, SBS Bank, The Co-operative Bank and TSB - comes it at just 8.8%. Link
According to the Reserve Bank, the new capital requirements mean banks will need to contribute $12 of their shareholders' money for every $100 of lending up from $8 now, with depositors and creditors providing the rest. Link
wall street and the corona virus
https://www.mintpressnews.com/wall-street-behind-delay-declaring-corona…
Urgent! Can anybody get their hands on the Nazi Gestapo Handbook (English translation). NO! Not to execute people or send them to concentration camps. But to assist our Department of Health track down people who have been in contact with returning overseas travellers who may have Coronavirus and people who have been in contact with them, and people who have been in touch with them,and so on.
I'm told on excellent authority that there is no better guide in the world in the art of tracking down people.
I would ask you to please send it by urgent courier to the Department. You will be doing a good turn in the national interest but please don't expect any grateful recognition in return by the country.....that kudos will inevitably go to Winston Peters.
At the market close on Friday February 28, the cumulative total return of the S&P 500 Index, since its September 20, 2018 pre-correction peak, stood just 0.61% ahead of the total return on risk-free 3-month Treasury bills for the same period. Everything else – the market correction in the fourth quarter of 2018, the 2019 market advance, the speculative run to record highs in mid-February, and last week’s “trap door” market plunge – has essentially been a long, volatile trip to nowhere. Risk-aversion wreaks havoc on a market that’s priced for zero risk. Link
This case of a school student in NSW will blow Dr B's mind.
https://youtu.be/uffLrUauqLI
Sky news
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