Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
NBS has cut their floating rate to 4.95% 6.95%. ANZ also advised that their business and agri floating rate business bases have all also been reduced by -75 bps.
TERM DEPOSIT RATE CHANGES
Bank of Baroda trimmed all rates of 1 year and longer by -25 bps, plus a few short rates by -5 bps.
RESCUE FUNDING IS 3:1, BUSINESS:PEOPLE
The Government has announced a phase 1 support package worth $12.1 bln, or 4% of GDP. Details here. The business support portion is $9.3 bln. The beneficiary support portion is $2.8 bln.
ISOLATION BITES
Air New Zealand says it is reducing trans-Tasman capacity by -80% between March 30 and June 30 this year.
THREE NEW COVID-19 CASES
The Ministry of Health says there are three new cases of COVID-19 in New Zealand. Two are in a Wellington family recently returned from the United States, and the third is a Dunedin man recently returned from Germany. That takes the official total to 11.
EQUITY MARKET RESPONDS
The NZX50 Capital index opened today down a sharp -4.3% mirroring international falls. But as the size of the Budget rescue package hope rose, it narrowed to -1.0% just before the announcement. After the release of the details, the overall Index turned positive and is currently up +0.4%. However it has slipped back to -0.3% in late trade
HOLDING UP
Housing market auction activity in Auckland at Barfoots has been stable for the past three weeks at a good level above 50% sales rate.
'IT WON'T AFFECT ME'
The latest local consumer confidence survey is out, this one from Westpac MM. They say: "With New Zealand wrestling with the twin headwinds of Coronavirus and drought, consumer confidence has fallen to below average levels. – New Zealand households are worried about where the economy is heading, and that is weighing on their plans for spending. – While households are nervous about the economic outlook, at this stage they are less concerned about how they will personally be affected. However, that could change over the coming months."
NO LONGER TRANSPARENT
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BNPL "ILLEGAL LOANS"?
The California Department of Business Oversight has announced a settlement with point-of-sale lender Afterpay in which the company agreed to stop making illegal loans, refund US$905,000 to California consumers and pay more than US$90,000 in administrative fees. The refunds represent all the fees Afterpay has collected from more than 640,000 Californian customers in so-called “buy now, pay later” transactions that the DBO concluded were illegal loans.
RAMPANT RISES
The latest compilation of Covid-19 data is here. The global tally is now 182,000 of officially confirmed cases, up +60% in a week. There are now 101,000 cases outside China. Four European countries account for more than half that; Italy (27,980), Spain (9942), Germany (7272) and France (6650). Also rising very fast is the USA (4661) which is up +15% from when we checked just this morning. From a low base, the numbers are rising fast in Australia too. The global official death toll now exceeds 7000.
THE YO-YO CONTINUES
Earlier today, Wall Street closed depressed, completely unimpressed by the US Fed and US Administration responses to the risks facing them. The S&P500 ended down an eye-watering -12%. Shanghai has opened down -0.9%, Hong Kong down -0.7% and Tokyo up +1% after staring the day lower. The ASX200 is currently up +3.3%. That rise is because the US Futures market is suggesting that there will be a big rally on Wall Street tomorrow.
LOCAL SWAP RATES RISE
Wholesale swap rates have risen and steepened. The two year is up +8 bps on the day, the five year is up +17 bps and the ten year is up +26 bps from this time yesterday. The 90-day bank bill rate is up +2 bps to 0.66%. The markets 'buy' the RBNZ commitment to hold the OCR at its new rate for a year. In Australia, their swap curve is flat and little-changed. The Aussie Govt 10yr is up +19 bps to 1.00%. The China Govt 10yr is up +2 bps at 2.74%. The NZ Govt 10 yr yield is up +20 bps to 1.23%. The UST 10yr has also risen during today's trading to now at 0.80%
NZ DOLLAR HOLDS
The Kiwi dollar rose almost +½c on the Government's stimulus announcement. Just prior to the release it was 60.5 USc and rose to 60.9 USc. But is has subsequently fallen back to 60.5 USc. Against the Aussie we are a bit softer at 98.9 AUc. Against the euro we are down slightly to 54.1 euro cents. That means the TWI-5 is unchanged at 66.7.
BITCOIN HOLDS
Bitcoin is now at US$5,222 and very little different from this time yesterday. 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 ».
71 Comments
Gold price (priced in AUD) down quite sharply (3%) but GDX gold miners ETF roaring ahead (9%). There is some rhyme and reason to this.
And Smartshares NZ Property ETF smashed by 8.5%. For most Kiwis, property is a no-brainer.
New Zealand households are worried about where the economy is heading, and that is weighing on their plans for spending.
WTF? House prices are charging. What happened to the wealth effect?
Keep an eye on silver it may hit somewhere between $8-10 which would make for one place plus gold approx 1000-1300 range hard to pick as no virus for 2008 bottom.
Withdraw some and be your own bank plus hold some in one of the big Aussie banks (CBA) and use it to buy at the bottom end of market which looks like it will be along down from here but could be only a month or two if this vortex keeps accelerating.
Also keep an eye on ASX gold sector starting to claw back from last weeks hammering.
Why do you think gold will plummet? Seems the only reason it's going down now is it's the only thing people are selling to cover their losses elsewhere.
First whiff of a financial crisis and/or a currency crisis and I suspect it will put a rocket under gold prices. When you don't trust that banks are going to return your deposited money or that the currency you hold will be worth anything in the future, you look for a store of value. That's what gold has been for the past few thousand years...
It doesn't surprise me at all. In modern times, silver is primarily an industrial commodity. Gold is pretty much useless (only a tiny amount is required for industrial purposes and in most situations it can be substituted with another material), which makes it an excellent monetary asset.
Share prices are crashing as risk to business caused by the virus impacts on demand for the services and goods provided by those businesses. Will this flow through to NZ house prices. Yes, less wealth means lower prices than would otherwise have being achieved. Will this cause the 70% crash DGMers have been promising those holding off buying property for the last 10 years? Unlikely, however, if Covid-19 kills maybe 300,000 kiwis you might get your wish (please don't take this as a suggestion to offer free hugs and kisses at the airport before going on a coughing tour of your local retirement villages).
@Just Some Advice, Superlife Global Property Fund has the Vanguard International Property Index in it for about 48%. That index has all the residential real estate under the sun, primarily US but also elsewhere. Any thoughts?
By the way, not trying to be rude or anything, I am only challenging your alls world views. Appreciate your insights.
Hi @guwop, I think the share prices for the companies in the NZ & Aussie Property ETFs are suffering, because people are scared or wary of shopping at the stores they lease to. Customers are more likely to stay at home and buy online if possible. Many small stores maybe might not have an online presence, therefore they will really suffer, as they have no customers coming through the door, but they still have fixed expenses to pay, such as rent.
Let's hope that gets to 0% in NZ.
There's something about this virus that we aren't being told. If it was just normal flu, why all the fuss? If it was just the figures we are given - ditto.
Seeing that chap on TV last night, relatively young guy, gasping for life, as a fish landed on a wharf, was an eye-opener.
Yes, let's hope.
I also agree that the whole thing doesn't make sense, either the figures for the flu are true and there is a massive over reaction from people and governments which will lead to massive job losses and hardship or we are not told something about this Flu and it is a lot worse than published
Interesting quirk – the perceived “over reaction” has created relatively positive results which for some then suggests the reaction was clearly an “over reaction”.
When it comes to this virus – I’ll take an “over reaction” real or imagined all day – the costs of getting it wrong are simply too dire.
What are you having trouble grasping? Are you really this obtuse?
1) You've got a novel virus, virtually identical to the prior SARS virus (not 'the flu').
2) No one has pre-existing immunity as far as we're aware.
3) It's highly contagious with a prodrome that makes it hard to detect in the early stages.
4) A decent number of people who are infected are becoming critically unwell and requiring hospitalization or respiratory support.
5) With medical support the death rate is ~2-3%. Without healthcare support it appears to increase to ~7-10% (predominantly affecting older adults).
6) If the virus is left to spread without intervention the number of cases will increase exponentially and result in the healthcare system rapidly becoming overwhelmed.
7) When the healthcare system is overwhelmed a good chunk of people will lose their lives needlessly from either the virus or from other conditions (heart / stroke / cancer) that can no longer be treated due to health resources being exhausted from dealing with the viral cases.
As per usual, your basic grasp on mathematics seems lacking. Try reading this to get a better grasp of the current situation:
https://medium.com/@tomaspueyo/coronavirus-act-today-or-people-will-die…
I heard an interview with an Australian professor who said the Covid growth rate with no isolation is 15% per day, the isolation/quarantine best case is to get growth down to 7%. The difference is enormous, after 60 days with base of 100, 7% = 5,700 cases & 15% = 380,000
The global rise includes China's reported numbers which are essentially flatlined at 80k. If you ignore China, cases have risen from 37800 to 101400 according to the below link, which does have quite a lag. Personally I find > doubling in a week rather alarming.
https://gisanddata.maps.arcgis.com/apps/opsdashboard/index.html#/bda759…
There may have been nothing in the fiscal package for us plebs but I did note that fuel was $1.76/l when I refueled today. I believe last the last time I filled it was circa $2.27/l as I recall.
Thank you to Russia and OPEC for your bickering, you might have done more for the average Kiwi than any government package ever has.
I think this is different, huge increase in China refining capacity, they are going to knock the USA and ICE out of the oil pricing business.
https://www.zerohedge.com/markets/fallen-angel-day-arrives-140-billion-…
US unemployment website
https://www.nydailynews.com/coronavirus/ny-coronavirus-state-unemployme…
The UST 10yr has also risen during today's trading to now at 0.80%
Three month UST Bills recovering from an after close yield beating.
Collateral call demand?
Again, the repo operations aren’t really repo operations; they’re auctions of bank reserves for only primary dealers who 1. First have to post eligible collateral; 2. Then are expected to relend/redistribute these reserves to the rest of the system.
If the situation is truly dire, maybe they don’t want to relend to anyone else and therefore there’s no demand for what the Fed has to offer. On the other hand, maybe there’s demand but the dealers don’t have the spare collateral, a shortage suggested by what we see in gold and T-bills, inferring further from the blowout in crap collateral spreads (especially offshore Eurobonds). Link
Latest news from TV1:
2 people from South East Asia have been arrested and to be deported for either not self-isolating or not declaring something to do with the virus. Also a woman backpacker tourist has been arrested for continuing on with her NZ jaunt rather than self-isolating.
Human nature being what it is, this is no surprise.
The inbound areas at airports should have large unmissable signs telling incomers what is expected of them and the draconian consequences of not obeying the rules, lack of intelligence being no excuse.
We're still being far too soft with arrivals.
SanFran Bay area , to shelter in place
https://wolfstreet.com/2020/03/16/lockdown-in-san-francisco-silicon-val…
Now that Jacinda has said test people we are going to see how bad it is in NZ.
I am picking we will soon have more per head of population than Australia plus we will imported hundreds of cases due to keeping our borders open to so called self isolation tourists who may not even have travel insurance and even if they did the insurance may now be void.
If we shutdown now for 3 weeks and see where we stand and then we may have a chance to control it before winter otherwise it will be chaos and spread just like Europe.
we could shut down major cities, just police arterial roads.
https://7news.com.au/lifestyle/health-wellbeing/wa-doctors-call-for-the…
And Singapore lah.
https://mobile.twitter.com/MsMelChen/status/1239604019460558848
Not cost $12 Billion.
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