A review of things you need to know before you go home on Tuesday; some TD rate cuts, trucks still rolling, business confidence sinks, rents up, swaps on hold, NZD recovers, & more

A review of things you need to know before you go home on Tuesday; some TD rate cuts, trucks still rolling, business confidence sinks, rents up, swaps on hold, NZD recovers, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
None today. Update: BNZ has matched Westpac's 'special' rates. Plus they have cut their unique 7 year rate by -50 bps to 5.20%.

TERM DEPOSIT RATE CHANGES
HSBC has cut its already low term deposit rate offers. The highest rate they now offer for a $10,000 TD is 1.90%. For $100,000 it is now 2.05%. These are now the lowest of any retail bank. Heretaunga Building Society has also trimmed their TD rates. Update: BNZ has cut most of its TD rate by between -5 and -20 bps.

ACTIVITY RISING
The Auckland property market is nearing its peak selling activity period. Auction numbers passed 200 in Barfoot & Thompson's auction rooms last week and sales rate was steady at 55%.

B-A-U FOR NOW
After adjusting for seasonality, ANZ's Truckometer indexes slipped in February from January, but are still showing acceptable growth year-on-year. In fact, as they say, truck activity in the country is pretty much still business-as-usual. But there are some specific regional signs of an export pullback and they highlight the Bay of Plenty. It is worth clicking through to see those BOP pullbacks (ie, via the Port of Tauranga).

BUSINESS CONFIDENCE SINKS
The fallout from the coronavirus supply and demand shocks are now getting very local. The preliminary March read on the key activity indicators in the ANZ Business Confidence survey all fell from February levels. Pricing indicators also dropped. Firms’ own activity intentions are the lowest since 2009. Export intentions, at -21.5%, are at a record low.

RENTS RISING
Median rents
for a 3 bdr house have risen to a new all-time high in February, according to the data filed with new bonds at MBIE. Sharp and unexpected rises in Wellington and Christchurch are behind the move up. Auckland rents are little-changed.

OFFICIAL EXPLAINER
RBNZ Governor Orr has today laid out how the regulator would approach moving into "unconventional monetary policy". Details here.

FACTORIES FLAT OUT
In data that isn't so relevant anymore, Stats NZ reported that manufacturing activity was up +4.0% in the December quarter on strong meat and dairy processing. This is one of the final pieces of data that feeds into next week's GDP release for Q4 economic activity (GDP). But of course you can see the impact of 2020 data on Q1 GDP using our GDP Live tool.

TRADE UPDATE
Using provisional data, Stats NZ now says our two way trade with China has taken a big hit from coronavirus, with exports (-13%) and imports (-22%) both down compared to a year ago. So far the trade disruption is only with China, and not noticeable with other countries yet.

HIGH & STAYING HIGH
We have updated our bank leverage data tables through to the end of December 2019. This data is sourced from the RBNZ Dashboard series via our Key Bank Metrics tool. The high overall leverage has made zero progress since December 2018. Progress and many banks is cancelled by relentlessly higher leverage at Kiwibank.

NEGATIVE AGAIN, BUT LESS SO TODAY
The NZX50 Capital Index is currently down more than -2% although that counts for a recovery because this morning it was down -4.9%. In Australia, the ASX200 is down only -0.3%, also recovering from a very sharp opening loss. Shanghai has opened slightly positive, up +0.2%. Hong Kong is up +1.0%, but Tokyo is down sharply again, down -1.2% in early trade. In the end, Wall Street closed down another -7.6% at its low point for the day as investors switch from stocks to bonds.

LOCAL SWAP RATES HOLD
Wholesale swap rates haven't moved much today, about at record low levels but firming slightly with a steepening tone. The 90-day bank bill rate however is up further, up another +3 bps to 0.87% as markets continue to unwind their local rate-cut bets. In Australia, their swap curve has risen and steepened today too and it is a bit stronger there than here. The Aussie Govt 10yr is up +10 bps at 0.68% after yesterday's very sharp fall. The China Govt 10yr is also firmer, up +5 bps to 2.63%. The NZ Govt 10 yr yield is now up to 0.91% and a +6 bps recovery. The UST 10yr is staging a bit of a comeback as well. At one point today this yield got down to just 0.34%. But is has been all up since then and is now higher on the day at 0.68%, and rising.

NZ DOLLAR RECOVERS
The Kiwi dollar has risen as the greenback has sunk, now at 63.2 USc and up more than +1c. Against the Aussie we are back up to 96.1 AUc. Against the euro we have recovered to 55.5 euro cents, although there is still some way to go to get back to last week's levels. That means the TWI-5 is higher at 67.8.

BITCOIN DOWN
Bitcoin is now at US$7,939 and down -3.3% from where we left it yesterday. But it is off its interim bottom. 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 ».

Our exchange rate chart is here.

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41 Comments

Share prices of the Aussie banks charging today. All up 3%+ except for ANZ. Not really sure what the drivers of this are. Even Qantas up 5%+. Not sure I can really figure out the reasons why.

Frightened markets exaggerate movements in both directions.
When there are no buyers, who knows where a good bid is? Whatever you think, take 20% off and see what happens. "Yours!" most likely.
Same when the panic subsides. The offer could be anywhere higher at the slightest hint of support by 'them'. So add 20% to your offer and see if that gets hit.

Those are mostly bots and algorithms mate

At about 5pm on the NZX : ANZ down 19 cents
Westpac neither up nor down

Incidentally, Auckland Airport up 6 cents; Spark up 3 cents

I would add that I would expect the Government to step in and nationalize any bank which finds itself in a liquidity crisis......the shareholders would have to take a 'buzz' cut. If and when things normalize the Government would then become the top-ranked secured creditor and would have to be repaid first. Letting any bank go to the wall would destroy general confidence in the banking system once and for all.

Herd of traders?

Herds of traders, roaming their paddocks...

roaming their paddocks...looking for a quick buck...

Heard of chickens?

Flock

Brood

just a wild guess but maybe the australian super scheme is propping up the market,after all they own a big piece of it.they wouldnt want quantas dropping out of the index triggering a sell by index funds.

Hope, thoughts and prayers.

Last to leave the party usually has the biggest hangover!

All of Italy is in lock down. BBC Coronavirus: Italy extends emergency measures nationwide
"Italy has extended its emergency coronavirus measures, which include travel restrictions and a ban on public gatherings, to the entire country". https://www.bbc.com/news/world-europe-51810673

Trump is in denial and is not being tested even though he flew last weekend in Airforce One with a passenger that has since been quarantined after testing positive.
What is his "market"going to do if he ends up on a respirator as well?

President Pence would put a big spanner in the election planning.

Yes, Though he's always been a bit clueless. High time for his to actually start to listen to his advisors, Oh wait he got rid of all the good ones - Rex Tillerson must be laughing now. :)

Wait wut? But Trump just said at the weekend that he is has a "natural ability" for science, that people are shocked by how much he knows, that maybe he should have become a scientist rather than a president. He said his tests were beautiful, I mean, not perfect, like the letters were perfect, but pretty close. Plus, as we all already know, he has all the best words.

Trump - listen ????

This plague could take down the Mafia once and for all; this would be a good outcome for Italy.

Historically organised crime thrives in these sort of conditions.

Not if the criminals are dead!

The markets dropped so much yesterday - its no surprise they are up a little bit - which is good to see. Don't want further panic!

Radio news today said that petrol could fall up to 4 cents per litre. What - after oil drops about 30% we get about 2% off petrol??

The Australians reckon they could be getting petrol around $1/litre.
https://www.abc.net.au/news/2020-03-09/the-oil-price-plunge-petrol-price...$1-litre/12039762

Fuel -10c since yesterday in non-central parts of the capital.
Waitomo and Pak n Save are usually the first ones to slash 91 prices with others slowly following suit.

NZX50 is down 6.2% over the last month, 2.6% today. Not exactly a precipitous fall ....... so far.

Yes many shares on the NZX are still very highly priced, even after these falls. I consider many stocks still 20% overpriced.

Theoretically you are right, based on historic views of what a 'proper' P/E is but we are in uncharted territory where a fair number of yields are at levels that historically would be considered only adequate but in an unprecedentedly low interest rate environment they look plump. Take, say, the power utility companies with 4-7% yields and think about what is going to drive down the price (setting aside an economy wide catastrophic melt down). Sure there is potential downside if industry retrenches but looking through the next few quarters of recession it's a reasonable bet they will remain attractive at around present pricing.

Point 1. One of the great things that's happened in Tauranga this summer has been the disappearance of the log trucks off our roads. We don't miss them. Point 2. Don't believe anything the BBC tells you.

I did have a look at the ANZ Truckometer Report - and indeed the BOP pullbacks were quite revealing - though for me, it was pages 4 & 5 that provided the ultimate clarity.

You surely mean yesterday's ANZ "Weekly Focus"report. Pages 4 and 5 of the Truckometer Report comprises general publication disclaimers that are always the same......but not news.

Guilty - pages 4 & 5 comment was tongue in cheek – previously I’ve never really paid that much attention to the report – however having looked at it, it may be of more interest moving forward.

Just somewhat amused that 40% of the report is made up of legalise, small print “disclaimers”.

Thank AJ. That had to be what was afoot - biggest game of poker you ever saw.

Rents rising... Well done everybody, jolly good show! Those poor people getting paid far too much anyway.

The NZX50 must be the world's most resilient market. Wall Street down nearly 8%, NZX50 down less than 2%!
Must be a reflection of the strength of the NZ economy and it's ability to weather the future storm. Watch tomorrow as Dow futures suggest a 3%+ bounce in the American market and.... lets guess what the NZ bounce will be.... 4 or 5% ??

How much do they reckon CHRISTCHURCH rents have gone up?
Personally we have put up rent on all our new tenancies over the past few months, and had absolutely no difficulty getting them either, with multiple applications.
Went up between $20 and $48 per week which all landlords should be doing to cover the increased insurance and rates as well as government intervention regulations.
We didn’t alter any for existing tenancies, so it just shows you how caring most landlords actually are!

As a former landlord, about 40 years ago, I have never wanted the experience of a trashed house again. I have a nice empty unit in a nice area which was occupied by my unwell sister. I'm more than happy to leave it empty while she makes up her mind whether she will live in it again.
I certainly will not involve myself in letting again. I hope The Man 2 you have full tenants insurance. Tenants might seem harmless and pleasant but you never know what their friends or their children's friends are like.
But I have an ambivalent attitude to letting: I have a repugnance to the very concept of renting per se. To me it all smacks of the old feudal society and slavery; it should be relegated to history.
The people who take up landlordism see it as a passport to wealth but it is really a method of achieving wealth by people who don't seem to be capable of enriching themselves in productive ways that benefit society as in business where they could employ people,etc. There is no way a person who indulges in landlordism can feel at peace with himself and feel empathy for his fellow human beings.

What about hotel owners, motel owners, campground owners and all the other accommodation owners that are providing much needed shelter and somewhere to live and sleep and store people’s personal belongings? Are they able to be at peace and feel empathy, or is it only for certain industries and occupations. You should be attacking those vultures the undertakers and funeral parlours...with that intelligent logic..

I think the GDP Live tool is fascinating – the next few months should provide a great test environment/excellent opportunity to tweak or hammer out the algorithms/inputs etc that give it the oomph.

Some of the US models are pretty sharp.

Trump promising some big support packages tomorrow.

The Dow futures are looking up 850+ points, lets see what debt fueled assistance is coming...

Voting opens in around 5 states , I think .