Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
All major banks passed on today's -75 bps OCR cut in their floating rates. SBS Bank has done so as well, followed by TSB and the Co-operative Bank. So far however there have been no fixed rate changes. But think about those floating rates - after today's cut they average about 4.50% when the OCR is only 0.25%, and 85% of home loan borrowers are on fixed rates. By passing it all on only for floating, banks are not giving up much.
TERM DEPOSIT RATE CHANGES
Both Westpac and Kiwibank cut some TD rates. SBS Bank has also cut its one year TD rate.
BIG SURPRISE CUT
The big news today was the surprise RBNZ -75 bps OCR rate cut, and the signal that any future moves won't involve interest rates, rather their Large Scale Asset Purchase program. They also gave banks more headroom to lend more. This is the monetary policy part of the weighing against the bad economic impacts of the coronavirus border closing. The fiscal policy response will come tomorrow, and is expected to be even larger.
THE FED THROWS THE KITCHEN SINK
That was followed by an even bigger US Fed rate slash, and an aggressive restart of their QE program. This was also directly related to the economic impacts of the coronavirus infections in the US and related border closures.
AIR NEW ZEALAND SLASHES INTERNATIONAL ROUTES
The national airline has cut back its long-haul international services by a massive -85%. Qantas is readying it own huge cuts.
CALM BEFORE STORM
The service sector's activity dropped to its lowest level since 2012, according to the BNZ - BusinessNZ Performance of Services Index as the coronavirus impact started to bite in February. But it was a survey that showed the sector was still expanding. However, hardly any respondents thought things would improve - or even hold the same - in March.
MIGRATION TURNS UP
There was a perhaps surprising jump in net immigration in January, reversing a recent downward trend. In the year to January, +56,500 permanent migrants arrived, +9,613 in January alone. January and February are normally the peak months to welcome migrants, but January 2020 was a record high. In January, there was a minor net outflow of New Zealand citizens, and in the year to January, more than 6000 New Zealand citizens emigrated. This data is StatsNZ's newish 12/16 series. More here.
INFLATION STILL THERE
ANZ's monthly inflation gauge was up +3.2% in February, kept at that level by rising cigarette tax hikes.
The world is changing fast and we now need your support more than ever. Quality journalism is expensive and in these very troubled times our ad revenues are becoming very uncertain. We provide our coverage free to readers, and if you value that, we ask that you Become a Supporter. To do that, either click on the Red button below, or on the Black button at the top of this page. The level of your support is up to you. Thank you. (If you are already a Supporter, you're a hero.)
GOING VIRAL (SORRY ABOUT THAT)
The latest compilation of Covid-19 data is here. The global tally is now 167,450 of officially confirmed cases, up +56% in a week. There are now 86,430 cases outside China, a rise of nearly +30,000 in one day as the numbers keep on jumping in Italy (up +9634 in one day), Spain (up +3,464) and the USA (up +2,231 in one day from 1268). Spain is about to pass South Korea in confirmed cases. Worldwide there have now been 6440 deaths, of which 1,809 have been in Italy, 292 in Spain, 75 in South Korea and 63 in the USA. Fast rises are also occurring in Germany (11 deaths) and France (91 deaths). Europe seems to be the new epicenter. But in the rest of the world, the number of reported cases has gone from 10,404 yesterday to 17,979 today.
AUSSIE QE COMING
In Australia, the RBA is set to announce further monetary stimulus measures on Thursday to calm financial markets, including moving towards buying government bonds.
FACING MORE BIG LOSSES
The NZX50 Capital Index is down -3.7% so far today. The ASX200 is down -6.9%. Shanghai has opened down -0.7% and Hong Kong is down -2.5% in early trade. Tokyo is up +0.3%. But now it is a waiting game until the NYSE opens tomorrow - although European markets will do so before that and they will be giving real early signals.
LOCAL SWAP RATES SINK
Wholesale swap rates have crashed about -16 bps across the curve, less at the long end. The 90-day bank bill rate only fell -26 bps to 0.64%, ignoring the -75 bps OCR chop. But big official cuts probably have investors reassessing lending risks and wanting higher premiums. In Australia, their swap curve is sharply lower across their curve, down about -12 bps. The Aussie Govt 10yr is little-changed from Friday, now at 0.81%. The China Govt 10yr is also little-changed at 2.72%. The NZ Govt 10 yr yield is down -8 bps to 1.03%. Following their emergency Sunday rate cut, the yield on UST 10yrs dropped from 0.98% tp 0.67%, down -31 bps.
NZ DOLLAR WHIPSAWS
The Kiwi dollar is lower by more than -1c than this time Friday at 60.4 USc and similar to where it ended on Saturday. It fell below 60 USc after the RBNZ cut, but jumped back up to this level after the US Fed cut. Against the Aussie we are up almost +1c to 98.3 AUc as the Aussie dollar get hit harder than the Kiwi dollar. Against the euro we are down -½c at 54.4 euro cents. That means the TWI-5 is down to just under 66.7.
BITCOIN UP
Bitcoin is now at US$5,287 and up +13% from the very low level we had on Friday, but little-changed from where we saw it this morning. The bitcoin price is charted in the currency set below, and today it is worth taking a look.
This soil moisture chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
We welcome your comments below. If you are not already registered, please register to comment
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.