What happened Thursday

A review of things you need to know before you go home on Thursday; mortgage rates go below 3%, TD rates cut too, online crims active, electricity use falls, swaps lower, NZD weaker, & much more

26th Mar 20, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
HSBC cut all its fixed Premier home loan rates, with the one year and 18 month rates going to 2.95%. More here.

TERM DEPOSIT RATE CHANGES
HSBC also cut its term deposit rates, taking its 6 month and 1 year offers down to 1.80%. These are among the lowest in the New Zealand market. Details on our TD pages here and here. Remember, the Government's own Kiwi Bonds now only offer 0.50% for any term out to two years. TSB has cut all rates for terms less than one year, and boosted its 18 month rate.

POTENTIAL STRESS RELIEVER
If you are having financial difficulties that you can't resolve with your bank, or even a full dispute with a bank, this resource could be useful.

ANOTHER CLOSURE
You should also note that "All matters set for hearing by the Tenancy Tribunal have been adjourned. The Tenancy Tribunal will be hearing urgent matters only." H/T Scarfie. Here is a link to their info page.

SINKING
We are starting to see a fall away in electricity demand. The latest data is only for Monday and Tuesday this week, but as closures started at Level 3, demand started falling about -2.5% week-on-week. Demand was also ready falling before that with the 30 day peak in the North Island on Thursday, February 27. For the South Island the impact was slower to show up, with the 30 day peak on Wednesday, March 18. Expectations are that electricity demand will fall away quite quickly from here with a Level 4 shutdown in place. Tiwai Point is allowed to continue, given the huge and unrecoverable costs that would involved in a forced shutdown (so high, it may never restart). Hydro inflows and lake storage are normal for this time of year. Update: The March 25 data is out and that shows more than a -8% demand fall for electricity on a two weekly basis.

SCREWING THE SCRUM
The $250 mln NZBG tender today for April 2025 bonds was well supported - but of course it would be with the RBNZ now in the market bidding to keep the yield down. Bids worth $702 mln were received and the average yield was 0.76% which was lower than the 0.97% achieved at the previous January 30 tender. Twenty of 53 bidders today were successful.

ONLINE CRIMINALS ACTIVE
CERT NZ has received reports of online criminals using the Covid-19 pandemic as an opportunity to carry out online scams and malicious cyber activity. Reports include opportunistic attempts to use the pandemic to trick people in to donating to a fake World Health Organisation COVID-19 Response Fund, paying a bitcoin ransom or risk their family being infected with COVID-19, downloading malware from COVID-19 maps, or entering their details into phishing websites. You need to be sceptical of anyone reaching out to 'touch' you online. Inspect the core url before you follow any link (bottom left of your browser). Be especially sceptical of links and attachments in emails - and they are harder to verify. This link is safe.

OMINOUS
Singapore's economy shrank at an annualised rate of more than -10% in the first quarter of 2020, according to their advance estimate. Year on year it is down -2.2% which in the absence of the earlier number, is also huge. Its construction and service industries are particularly hard hit. Singapore is an early reporter of such data and signals that South East Asia is in for a torrid time. Almost certainly Q2 will be worse.

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COVID-19 NUMBERS JUMP ALARMINGLY WORLDWIDE
There are now more than 283 cases identified in New Zealand, with another 80 new cases today, including six important clusters. Check out this new resource. Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 468,000 of officially confirmed cases, up +50,000 from this time yesterday and more than doubling in a week. There are now 387,000 cases outside China and almost all of them are in five core countries. Italy is up +5200 from just this morning's tally. The US is up +10000 cases from this morning, almost ten times more than one week ago. Most other countries are not exploding like these two however, but rest of the world case numbers are mounting very quickly. UK infection levels are almost 10,000. Australia is now over 2400 cases, up +40% in one day. The pace of global infection is accelerating quickly and global deaths now exceed 20,000.

LEAVING IT UP TO EMPLOYERS ISN'T HELPFUL
In Australia, it is becoming clear that many large employers aren't about to send employees home to protect them, preferring to keep the wheels of industry turning. And that is the case even when cases of Covid-19 have been confirmed in some workplaces. It is a dangerous situation there. (Aussie closures tend to be economic - as in, going-out-of-business, rather than safety based. Employee fear is palpable.)

MORE CHUNKY CHANGES
The NZX50 Capital Index is ignoring Wall Street today, up +4.2% so far in light trading. Risers number 65, decliners number 20 today. Many large companies are withdrawing their earnings guidance. Others are slashing capital expenditure projects. And deals are collapsing. Investors like that companies are protecting their short-term earnings downsides. They also like the prospects of big banks and big food producers. In New York earlier, the S&P500 was up almost +9% earlier today, but lost heart near the close, ending up a relatively minor +1.2% with the closing bell interrupting the retreat. The ASX200 is up +1.4% in early trade. Tokyo opened down by -3.2% while Hong Kong opened % and Shanghai is % at their open. Basically, everyone is just guessing. Proper analysis is not possible. It's now mostly all System 1 thinking.

LOCAL SWAP RATES SOFT
Wholesale swap rates are all about -3 bps lower today. The 90-day bank bill rate is down another -2 bps to 0.49%. In Australia, their swap curve is down a bit more than ours. The Aussie Govt 10yr is up +9 bps to 0.97%. The China Govt 10yr is unchanged at 2.72%. The NZ Govt 10 yr yield is also unchanged at 1.46%. The UST 10yr is up +5 bps at 0.86%.

NZ DOLLAR SOFTER
The Kiwi dollar has been under pressure today, down about -½c at 57.8 USc and falling later in the day. Against the Aussie we are firmer by +½c to 98.3 AUc. Against the euro we are falling faster, down almost -1c and now under 53. That means the TWI-5 is now down to 65.1.

BITCOIN STAYS UP
The price of Bitcoin is higher, now at US$6,724 and up a minor +0.6% from this time yesterday. The bitcoin price is charted in the currency set below.

This soil moisture 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 (including bitcoin) is here.

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57 Comments

by J.C. | 26th Mar 20, 4:14pm 1585192471

The following is not an advertisement for digital assets or gold. It's just an observation taken y'day (P12M performance in USD)

S&P: -14%
DJIA: -21%
Gold: +25%
Bitcoin: +69%

by Yvil | 26th Mar 20, 4:18pm 1585192695

So you're not guaranteeing the returns J.C. ?

by J.C. | 26th Mar 20, 4:40pm 1585194007

So you're not guaranteeing the returns J.C. ?

I'm not selling time shares so no guarantees. The point is that the P12M covers both periods of "the greatest economy ever" and a significant black swan event. The returns that happened are counterintuitive to what most people would have thought in March 2019. I very much doubt Mike Hosking would have singing the virtues of gold and BTC over the stock prices in the center of the free world.

by lonewolfnz | 26th Mar 20, 4:50pm 1585194642

Mike Hosking did a piece on bitcoin and its collapse and how hopeless it was right at the bottom around 3.5k. This was close to the bottom before its rally to 14k (and yes, then back to 7k, then 10k, then 7k, then 10k and so forth)

by lonewolfnz | 26th Mar 20, 4:27pm 1585193242

My wife (who has no knowledge of finance or investing at all) last night exclaimed that "bitcoin is a distaster". On the other hand, she then expanded her thinking to say "everything is a disaster, except gold". I told her than in fact bitcoin is up 110% in a year in NZD terms ($5,750 to $11,800 or so last night). It has also recovered around 90% since its plunge 9 days ago. Needless to say that was a mistake because she is now finding ideas on what to spend this on.

Having said that gold is very interesting and I hear of massive shortages for physical product. Its frustrating because I was planning to accumulate that and silver this year (and likely still will)

by bw | 26th Mar 20, 4:39pm 1585193972

I recall one of my dealers heading home to be greeted with the new that his wife had just bought a new gas oven with the proceeds of his last trading efforts. The trouble is, they didn't have gas. That made it easier for him to break it to her that he'd gone from 'making a motza' in Bond Corporation shares after they'd plunged "90%" and made a recovery; hence the stove, to doing a vote-face and going to ...worthless.
The stove went back....
None of us ever knows when it comes to trading - anything. Chocolates to Boiled Lollie etc.

by Zachary Smith | 26th Mar 20, 5:05pm 1585195529

volte-face - Need to keep standards up during these trying times.

by BadRobot | 26th Mar 20, 5:20pm 1585196401

Trying times - meh

by refactornz | 26th Mar 20, 4:47pm 1585194444

Now do the same exercise over 1 month.

by printer8 | 26th Mar 20, 5:01pm 1585195296

Hi JC and lonewolfnz
Not an advertisement against digital assets . . . . . its just a little cherry picking taken for yesterday . . . .
Last six months Bitcoin down 30%.

I think I recall Lonewolfnz middle of last year skiting on this site that he got a sneaky buy of Bitcoin buy for $US12,300 - now down 45%. Different lonewolfnz?
Just saying. :)

by J.C. | 26th Mar 20, 5:09pm 1585195768

Not an advertisement against digital assets . . . . . its just a little cherry picking taken for yesterday . . . .
Last six months Bitcoin down 30%.

Actually 26.95% using Gemini. And ANZ down 42%. Coincidence?

by lonewolfnz | 26th Mar 20, 5:37pm 1585197441

I assume much lower relative in NZD terms? Say 15 percent or so?

by lonewolfnz | 26th Mar 20, 5:18pm 1585196310

Same lonewolf printer8. I make a sneaky buy every fortnight (but fairly small). The effect of DCAing is quite reasonable. I was also buying just as much at USD $3,200. The effect of the NZD also makes it a bit more interesting.

I'm mainly a property investor but bitcoin is more of a hobby for me.

by Somebloke | 26th Mar 20, 6:57pm 1585202220

Buying bitcoin is the investing equivalent of eating only vindaloo and strapping yourself permanently to a reverse bungee.

by Tradersam | 26th Mar 20, 8:24pm 1585207477

To all you commentators re gold and bitcoin - they are both assets to hold outside ‘the system’ I can’t think of a better way to protect your wealth by having a portion of it outside the reach of Government control and manipulation. Fiat money is a currency used as a medium of exchange controlled and manipulated by Governments. Bitcoin is digital gold which along with the physical stuff provide both a medium of exchange and a store of value.

by Rosenstein | 26th Mar 20, 7:06pm 1585202790

Try Gold in NZDs for 12 months.

by J.C. | 26th Mar 20, 9:31pm 1585211473

It's even better in AUD.

by Yvil | 26th Mar 20, 4:16pm 1585192600

Looking at precedents, that's how the Spanish Flu ended after 2 or 3 (historians not in accordance) waves over 2 years, 1918-1919

"By the summer of 1919, the flu pandemic came to an end, as those that were infected either died or developed immunity"

by waymad | 26th Mar 20, 4:53pm 1585194780

Interesting sidebars from the USA, via Powerline: #thecureisworsethanthedisease and from the definitions of 'essential services' used in the USA as compared with here.

by Yvil | 26th Mar 20, 7:29pm 1585204185

Very, very interesting link indeed, I wish most would read it but given the zero thumbs up, I'm not holding my breath.

by Theoracle | 26th Mar 20, 8:53pm 1585209222

Thanks for posting. That's the approach Israel are taking and it's working without destroying their economy.

by Camel's back | 26th Mar 20, 4:14pm 1585192465

Next virus, rather than a misguided attempt to keep tourism NZ alive.
Stop all passengers from boarding who are not returning NZ citizens, immediately
All subsequent incoming passengers must be quarantined until cleared
All departures will acknowledge this risk when traveling..
NZ moves to level 1 or 2, But keeps working...

by sharetrader | 26th Mar 20, 4:39pm 1585193989

and for all returning kiwis treat them all as if they have the virus immediately

by Glitzy | 26th Mar 20, 4:54pm 1585194846

After this lockdown we need all inbound passengers tested before they get on a plane to come here. If the antibody testing kits are available in a couple of months they should be mandatory at all airports

by waymad | 26th Mar 20, 5:19pm 1585196394

Yes, atm we are looking for our car keys under the streetlights....serological testing is the obvious way to determine 'had it but didn't notice or recovered with mild symptoms' bodies, and perhaps even to try out the century-old technique of a blood serum transfusion to engender immune response....

by pandanz | 27th Mar 20, 6:46am 1585244794

convalescent plasma therapy for covid 19 - google it.
It needs planning; recovered patients need to be given plasma transfusion appointments. The treatment could be important for at risk patients which includes health workers who tend to get a larger load of virus up front which means infection will be more likely to become overwhelming before their own immune system kicks in. To be effective treatment must be given as soon as possible after symptoms begin.

by waymad | 26th Mar 20, 4:38pm 1585193907

Peter Cresswell notes that we Do know what we don't know - what is the real incidence of WuFlu in the population at large?

..we have a shortage of knowledge and of government-supplied capacity..

But as we don't test anyone who isn't actually melting or expiring, as we haven't got nearly enough test kits, swabbers, reagents or lab slots, and as we seem not to be about to vastly increase these four resources by use of the sweeping new Powerz with which Da Gubmint has equipped itself, we aren't getting to any better place for some time.

And in the meantime, the more ridiculous varieties of restrictions - surfing, climbing, cycling, beach-walking - are being roundly ignored, as befits a proud nation of Not-Sheep.....with physical distancing being perfectly observed.....or imperfectly as the case may be (ymmv, as always in a nominally Free Country....)

by profile | 26th Mar 20, 4:55pm 1585194925

Jacinda's 10's of thousands are going to die in context. From the UK: "Up to two thirds of people who die from coronavirus in the next nine months are likely to have died this year from other causes, a government advisor has said.

Professor Neil Ferguson, who is recovering at home from Covid-19, told the Science and Technology Committee that experts were now expecting around 20,000 deaths, although said it may turn out to be a lot less."

https://www.telegraph.co.uk/news/2020/03/25/two-thirds-patients-die-cor…

by sharetrader | 26th Mar 20, 5:04pm 1585195492

yes but GB want to let people catch it like the chicken pox so they can have a big part of the population immune but as Italy france and spain have shown it can overwhelm your health system.
so i prefer our strategy to slow the rate of infection

by profile | 26th Mar 20, 5:25pm 1585196732

Doing a tiny amount of testing as late as last week, and having infected cruise ship tourists wandering around smacks of a she'll be right strategy/no plan.

by gingerninja | 27th Mar 20, 11:29am 1585261768

Sharetrader, that info is out of date. GB did start out with that policy, but when the Imperial University Model came out, they immediately went with that instead. The UK has been very clear that they will try any and all of whatever the best science is. For a brief moment the modelling suggested maybe "herd immunity" whilst shielding the vulnerable might be, but then the Imperial Model showed a much more successful strategy and they immediately switched to that.

by blobbles | 26th Mar 20, 4:59pm 1585195164

Let's hope in the future (I don't imagine it's too far away), our cellphones will have built in health indicators and the ability to test our breath on the fly. Imagine that on all the worlds smartphones! Near instantaneous testing of most of the population...

by Uninformed Hillbilly | 26th Mar 20, 6:04pm 1585199054

No thanks

by dmitri | 26th Mar 20, 9:18pm 1585210727

you won't know it's there

by Audaxes | 26th Mar 20, 5:13pm 1585195996

The private sector I worked in for all my 20 years as an employee was neither efficient, productive or ahead of any curve one might wish to mention. But we bumbled through and made adequate progress on some fronts.

by OpenMinded | 26th Mar 20, 6:48pm 1585201737

Nailed it, and we all know where the glorious free market cheer leaders go for a handout when the excrement hits the rotary..... That’s right - the government!

by StuckAtHome | 26th Mar 20, 7:01pm 1585202466

Until people realise that the Govt = current taxpayers + future taxpayers!

by Glitzy | 26th Mar 20, 4:50pm 1585194607

"The NZ Govt 10 yr yield is also unchanged at 1.46%"

~ it's worth changing your source for this yield number as it's wrong more often than it's right.

by Houseworks | 26th Mar 20, 4:52pm 1585194769

I am loving the huge change in the soil moisture map from one week ago approx. We are recovering quicker than this time last year for the top of the NI but for those who have not seem much change yet, I hope it comes soon for you.

by redcows1 | 26th Mar 20, 5:23pm 1585196610

I'm still trying to decide how fast we're getting pasture back but it's green and looking better each day and we're still milking. And yes nice to see the map slowly change.

by RickStrauss | 26th Mar 20, 5:50pm 1585198237

Great to hear

by Dairy farmer joe | 26th Mar 20, 8:52pm 1585209126

Great to hear most parts of North Island are finally getting some moisture,hopefully it gets into the Hawkes Bay Aj.In Southland we have had plenty & are looking forward to forecast sunshine.How are NI farmers getting on with meat processors,my one has closed until Monday to get the 2 metre isolation gap worked out to protect staff (fair enough) but I have been told that it will slow through put .Atleast they are able to keep operating as is our our Dairy Factory.

by Doris | 26th Mar 20, 6:14pm 1585199684

The green colour is good to see.

There seems to be an easterly flow with showers forecast in the next few days which will hopefully help those in the lower NI.

by Mark Hubbard 1965 | 26th Mar 20, 5:16pm 1585196196

Man you have a glitch in your boiler plate.

'The NZ Govt 10 yr yield is also unchanged at 1.46%.'

Other than in this morning's briefing you've been reporting this fictional 1.46% for six days now: right now the 10 yr is 1.119% ... it's not a huge issue, but it does make me wonder about the other figures in these reports that I don't regularly keep up on myself.

by Mark Hubbard 1965 | 26th Mar 20, 5:17pm 1585196230

Oh, sorry ... per Glitzy above too.

by bw | 26th Mar 20, 7:10pm 1585203038

(Sigh) I guess it was always going to end this way. Mario Draghi at his best. If this isn't backdoor Nationalisation, I don't know what is.

.. the loss of income incurred by the private sector, including any debt raised to fill the hole, will need to be absorbed by government balance sheets.
Much higher public debt levels will become a permanent feature of our economies and will be accompanied by private debt cancellation...Banks must rapidly lend funds at zero cost to companies. And since they would be serving as a public-policy vehicle, the capital they need must be provided by the government in the form of state guarantees on all additional overdrafts or loans.

https://tinyurl.com/qp2alqg

by Rosenstein | 26th Mar 20, 7:12pm 1585203148

How are they going to launch a world currency when governments aren't all overly indebted? Not possible. Need something to kick start government borrowing....

by Squishy | 26th Mar 20, 7:22pm 1585203749

Wouldn't cry about electricity too much. Shareholders have got a good run up and it's a non-cyclical.

by Chris-M | 26th Mar 20, 8:17pm 1585207059

I must be missing something re the shortage of hand sanitiser. The other night I saw a company re-distilling whiskey to obtain methanol for hand sanitiser. New Zealand is a huge producer of Methanol at the Taranaki Methanex plant. It can make up to 2.4 million tones or 2.4 billion litres of it per year.
https://www.methanex.com/location/new-zealand
Where is the bottle neck? The other ingredients? I am sure that it will still work without the cosmetic niceties like lavender oil, aloe vera. Their must be more pedestrian alternatives for these ingredients.
Is Methanex refusing to sell it locally? If so, surely they have a moral responsibility to the country that supplies the resource.

by Theoracle | 26th Mar 20, 8:56pm 1585209397

Glycerin, hydrogen peroxide and ethanol. That's it.

by The best statu… | 26th Mar 20, 9:38pm 1585211937

Getting methanol mixed up with ethanol.

by Chris-M | 27th Mar 20, 9:17am 1585253848

Duh!!! Of Course.
But if it is Ethanol we are after then Lactanol make 15 million litres of it per year from milk whey. Enough to make 400,000 litres/week of hand sanitiser. If that is not enough then I am sure they are not processing all the whey in NZ, and I am sure that Fonterra will have a stock of stainless steel tanks and bits sufficient to cobble together some fermenting tanks and stills.

by Panther | 26th Mar 20, 10:29pm 1585214986

Just don't make the same mistake at the bar!

by Chris-M | 27th Mar 20, 9:04am 1585253088

Metho's of course -blindness insanity and death

by custard | 26th Mar 20, 9:14pm 1585210498

This is just such unknown territory – and what I've seen so far, suggests we simply haven't the faintest clue what we’re doing anymore.

Sorry all - but in simple parlance – we are not going to pass Go – and we are not going to collect $200.

by RickStrauss | 26th Mar 20, 9:37pm 1585211846

In retrospect, all that singing of praise for interest rates continually being pushed down and a "new normal" just seem so misguided. Turns out that there were good reasons for not blowing massive debt bubbles with nearly free money.

by custard | 26th Mar 20, 9:50pm 1585212648

Surprised – no, I didn't think so.

Surprised we’re just going to rinse and repeat – again, I didn't think so.

Will the debt junkies keep cheering it on – damn right!