A review of things you need to know before you go home on Friday; many rate cuts and payment deferrals, petrol price drops, landlords want a public bailout, swaps slip, NZD firm, & much more

A review of things you need to know before you go home on Friday; many rate cuts and payment deferrals, petrol price drops, landlords want a public bailout, swaps slip, NZD firm, & much more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
We missed noting that TSB cut most home loan rates, including its two year rate to 3.35%. SBS Bank reduced many fixed rates today.

TERM DEPOSIT RATE CHANGES
TSB and a range of other banks have cut term deposit rates. Details are here. SBS Bank has made cuts too, too late for that article but recorded in our rate tables. We have also heard that more cuts will be coming on Monday.

WESTPAC JOINS IN
Westpac now says customers can now apply for a six-month deferral on principal and interest repayments on home loans and personal loans. Payments may be deferred, but interest will still accrue and need to be paid in the future - just like the 'assistance' offered by other banks.

AND NOW CREDIT CARD RATE CUTS, SORT OF
ANZ has cut the interest rates on its low-rate credit card, for the period 1 April to June 30. Only their Low Rate Visa (and Business Visa) is being reduced, down to 9.95% from 13.90% for purchases. And then they say they will go back up to 12.90% after that. But readers should note that Kiwibank already had their Low Rate Visa at 9.95% and are not saying this rate will rise on July 1.

'DOWN, PRE-LOCKDOWN'
ANZ reports: "Consumer confidence fell 16 points in March to 106. Given the country only went into level 2 alert at the end of the interviewing period, this is just the start, presumably. The proportion of households who think it’s a good time to buy a major household item plummeted from 41% to 16%. Even if consumers wanted to spend, their ability to do so is now severely curtailed."

BIG FALLS
Local petrol prices have fallen hard, in response to the sharp falls in crude oil prices. The discounted national U91 price is now down to $1.71/L, a level that it was in May 2006. For Auckland, the average discounted price is $1.84/L and the level we first had in May 2008. It is a pity there is nowhere to go when prices are this low.

WOE IS ME
The Property Council warns of commercial property foreclosures as some tenants stop paying rent - seeks Government assistance for landlords. Unfortunately for them, being a landlord isn't an 'essential service' and of course the buildings will still all be there available for occupancy whether they go bust or not. The case to protect them from creditors will be very hard to make, given they took a calculated risk with their leverage when they purchased. They like the "willing buyer/willing seller" mantra when they buy cheap, but not when the pressure turns on them.


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COVID-19 NUMBERS JUMP ALARMINGLY WORLDWIDE
There are now more than 368 cases identified in New Zealand, with another 85 new cases today, including six important clusters. Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 530,000 of officially confirmed cases, up +62,000 from this time yesterday and accelerating over the week. There are now 448,000 cases outside China and almost all of them are in five core countries. In fact, China is no longer the epicenter - as we predicted earlier in the week, the US now has the most cases and their numbers are growing exponentially, at a frightening rate. They are up from 14,250 a week ago, to now 83,800 today, six times higher in one week. Many other countries have caseloads exploding too, like the UK which is up to 12,000 and more than 500 deaths. Australia is now over 3000 cases, and 13 deaths. The pace of global infection is accelerating quickly and global deaths now exceed 24,000. New Zealand is about to get its first Covid-19 death, from the eight people in hospital with the virus.

'ESSENTIAL'
The Government has allowed Imperial Tobacco to remain open and producing cigarettes as an 'essential service' - a decision that has caused outrage.

MORE CHUNKY RISES
In New York earlier, the S&P500 was up +6.4% earlier today, a second day of major gains and all juiced by the stunning stimulus being unleashed by the Fed. So far, investors are ignoring the equally stunning rise in joblessness and the frightening rise in the virus transmission. Locally, the NZX50 Capital Index is up +1.6%, largely on the back of gains by F&P Healthcare, Spark and some electricity companies. The ASX200 has given up all earlier gains and is now lower. The main Asian markets have all opened higher.

LOCAL SWAP RATES STOP MOVING
Wholesale swap rates are little-change today, if anything, down -1 bp. The 90-day bank bill rate is also down -1 bp. Low change may become the pattern now we are in lockdown mode. In Australia, their swap curve is down -2 bps across the curve. The Aussie Govt 10yr is down -5 bps to 0.92%. The China Govt 10yr is down -4 bps at 2.68%. The NZ Govt 10 yr yield is down -1 bp to 1.09%. The UST 10yr is down -4 bps at 0.82%.

NZ DOLLAR FIRM
The Kiwi dollar has rising over the past 24 hours as the greenback comes under pressure. The NZD us up almost +2c to 59.7 USc. Against the Aussie we holding at 98.3 AUc. Against the euro we are rising too, up +1c to 54.1. That means the TWI-5 is now up to 66.3.

BITCOIN STAYS UP
The price of Bitcoin is firmer, now at US$6,814 and up a minor +1.3% 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.

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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78 Comments

It doesn't matter what mortgage rates are for those that won't be buying. (Yes. It's ONLY Australia, whose economy is still somewhat open,but....)
"This is deadly': 1000 auctions pulled as floor falls out of market" (AFR - and that's not the Ceiling that's given way)

The RBNZ needs to cut a further full percentage point. Given the RBNZ's woeful forecasting history, why wait to go negative .Monday morning is good. For the banks , given the majority of mortgages are two years fixed, the banks should not profit from any economic downside , and allow all existing mortgage holders, the majority of whom are two year fixed to benefit prior to term.
Cash, given the current circumstances , should we be using it.

I think you missed the 'oo' after the m cowpat :)

Sorry , edited. Blame daughters. Moo
Weekend reading
http://mural.maynoothuniversity.ie/1884/2/N206-10.pdf

19
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They've already got a 6 month mortgage holiday. Won't anyone think of the savers? Time for the over-leveraged to take their losses on the chin and start again.

A local house (Dunedin, very good area) went on the market today. RV $845k, $600k asking. This house would have sold for at least $100k over RV in January.

Dunedin should see a major price fall given the huge rises over last 5 years which has be built on debt not major improvements in the local job market they have lower income than Christchurch but higher house prices???.
Also I have been watching jobs on trademe drop from 1985 two weeks ago to 1337 today for Christchurch not looking good for house sales or rentals.

I'm a first home buyer who moved back to Dunedin last October with 350k in my bank account expecting to be able to buy a house with a very little mortgage... Man was I shocked at the prices here! We eventually put in an offer for a run down old character home in Mornington that ended up selling for 700k, 50k over what we put forward. All I can say now is that you never know what worse luck your bad luck has saved you from!

Back from Nanjing, Walnuts! Can't say I blame you. Good luck.

Thank you kindly and yes good timing on our move back!

We moved from Welly a couple of years ago. Dunners is amazing.

StuckAtHome, I believe absolutely, that the RBNZ has shown scant regard for savers for considerable period. Whether it be the OCR setting, deposit insurance or your "cash is safe with us " mantra. However New Zealand is an economy primarily based on housing, its banking system based on housing mortgages Indeed in August 2019 , having slashed the OCR, Governor Adrian Orr "hopes that the low interest rate will get people spending." This unfortunate sad institution is very unlikely to change, with 1.3 trillion in compressed wood chip to worry about Savers be damned.
The next stage will be to crush the NZD.

Just more from that sector seeking to be protected from risks they willingly took on. Craziness. Confiscate money from pensioners who saved to fund speculators who gamble.

The main goal is to keep everyone in debt and working that makes more profit for the banks etc.

12
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I doubt a commercial property glut would do much damage to the already 'bent-out-of-shape' global economy.

Maybe its a good time for the government to bailout (instead of bailing out) a few motels around the country for cents on the dollar and repurpose them into state housing.

Good state housing idea

32
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"The Property Council warns of commercial property foreclosures as some tenants stop paying rent - seeks Government assistance for landlords."

Outrageous nonsense, have they no shame ? After years of superb returns things go to custard and within A FEW WEEKS off they chime wanting to suck on the govt teet. They can f... right off.

Analysis shows that account registrations on Japanese crypto exchange Bitbank exploded by 40% two weeks ago (same time as Bitcoin crashed). Bitbank is one of the original exchanges in Japan and regulated by the Japan Financial Services Agency. This is quite interesting considering Japanese hold high private savings relative to the rest of the world.

16
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The US is primed to completely shit itself.
Maybe that is what China wanted?
Viral warfare, not guns to ruin them financially.

14
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Last time I was in Walmart I struggled to find something not made in China. The economic effects of a shut down here or the US or EU is the same. Closed Chinese factories and huge problems for the CCP.

Yep China won't get off lightly at all.

And there wont be an instant turn of the tap in regards to exports from here to china i imagine.

It would benefit the NZ consumer a lot if much dairy, meat etc didn't end up on a slow boat to China. We might actually have affordable produce for low income families.

NZ meat and dairy domestic demand is single digits compared to production. Pork gets very affordable during big lotto draws due to the lack of an export market.

David, I might be starting well back here but I struggle to understand your fuel prices. Akl Full price vs discounted is 2.04 v 1.84 but on GASPY all I see is fuel around AKL at mid to high190s with maybe 6 cents off with the loyalty card.

Question - what does discounted mean?

Fuel prices don't matter when we're all in lockdown

It's a help for those essential workers that are still working. And us non-essential workers that still have to get about to various places.

10
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I'm not sure what's worse - the bloody virus or the inept global leadership.

10
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Australia is one that really worries me. They think they have lockdown but SFM spends Wed arguing whether hairdressers are allowed 30min with clients. Setka the most evil trade union official in Australia is keeping multi story building sites open and get this, my niece who works as a nurse in hospital operating theater in Brisbane is having takeaways for her birthday . Niece by marriage I should add.

Shut it down FFS Scotty.

Ha ha 'niece by marriage I should add'

The going is getting tough on Oz, ain't it about time ScoMo went on hol to Hawaii?

"The Government has allowed Imperial Tobacco to remain open and producing cigarettes as an 'essential service' - a decision that has caused outrage."
Indignation from the predictable quarters, but hardly an outrage.

Why make unnecessary work for Police, there would surely be unlawful deaths if tobacco was restricted in supply. Lol. Heck the peace in my neighbourhood didn't last 12 hours before there was a domestic across the road.

It is an outrage when butchers shops can't open - my arteries need clogging!

No indignation from Wellington MP Chris Bishop, a quick scan of his CV explains that!

Just me or is Fisher & Paykel looking like a bubble? P/E now through 70.

Most of the NZX is in bubble mode I guess the last few pumps this week before final deflation back dow to 8000 next and then 7000 6000 5000 maybe even 4000 if this keeps going like 1929 graph.

The Ruby Princess tourist supply chain is intertwined. Cruise liner wine tour bus drivers also work as school bus drivers. Potentially expose school children to keep those tourist $ coming a few weeks longer.

The cost for 1 months extra tourists = 100 billion not very smart Jacinda we should have closed at start of Feb.

Yeap.

I think the word "Lessor" and "Lessee" are more appropriate than "Landlord" and "tenant" for commercial properties, as many will assume "landlords" want a bailout for housing rentals (Edited: such as VoiceofReason below)

Is that not the logical direction this is taking?

"It is a simply huge failing. ...But they – all of them – Health, Treasury, Reserve Bank, ministers, and countless other agencies could, and should, have been a great deal better prepared and ready to act firmly. They owed that to New Zealanders. They let us down."
https://croakingcassandra.com/2020/03/27/hopeless-and-complacent/

More from this post:

Much of the stuff governments and their agencies do really doesn’t matter that much in the scheme of things. The crisis that currently sweeps over us, sweeping away civil liberties, even Parliament, casting hundreds of thousands onto the welfare rolls and probably slashing GDP by a third or more, destroying countless businesses really does. Our government – and probably most of their overseas peers – failed us badly, simply wasting very scarce time, whistling as they kept their spirits high, even as the boat was about to go under.

It's a great piece from one of the best in NZ. Pathetic performance from the govt and its agencies.
I was noting on this website, as early as early February that a huge economic crisis was on it's way.
Why couldn't the collective brains of govt work that out and plan? Totally asleep at the wheel.

16
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I think we can all agree that governments didn't take the pandemic seriously enough early enough, world wide. And were not prepared, save perhaps South Korea (their dress rehearsal not to much earlier). Actions have been reactive, for sure.

But what is particularly maddening here in New Zealand is that the RBNZ had spent the last couple of years gleefully thrusting the OCR lower to prop up property bubbles, leaving us precious little leeway and too much debt when this white swan hit. The silly belief in a "new normal" turns out to have been a belief in Santa Claus. It was stupid to devalue NZ's savings and pump up asset bubbles while diminishing the stocks that would be needed in a crisis.

The Banksters and powers that be have every reason to do all they can to save the status quo, as they benefit most from the status quo.

Herein lies the problem. The government is just a public relations arm of the real money power operating in most of the world.

100% agree rick - with the caveat that you can’t really blame the governor for using his only tool (Interest rates) to try and achieve his only goal (Inflation). Isn’t it really the finance ministers fault?

And didnt have the brains to realize that if you inflate wages everything else follows, all you needed to do was turn the cheap migrant labour tap off

I'm not surprised South Korea can act so fast when you have North Korea as your neighbour, you are primed as a matter of course.

10
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So why was it? Remember too, several economic / financial commentators (I won't mention names any more) saying as late as mid to late February that the economic impacts would be moderate at worst.

Are they dumb?

Were they bowing to vested interest?

Were they blinded with wishful thinking?

Why ??????????

To be fair it wasn’t that long ago it was a problem only in China that they seemed to be getting under control. Even now the death rate in China is a very tiny number. To put it into perspective their road toll is 100,000 per year but they have only had 3000 virus deaths in total.
It wasn’t until the Italians got it that it started to look like a real threat.

It's been clear that China was lying massively about the scale of it since I started to pay attention in third week of January.

Oh Noes - the Racing Industry is suddenly not quite as Essential as t'was Yesterday (h/t David Farrar over at Kiwiblog).

Glass half full: more Pet Food.

Go long cats.

That the stock markets are going up is your sign this will implode. Not even close to the worst of this virus yet fools are buying.

Govt should force banks to freeze all loans, this mortgage holiday thing is BS. By doing that the banks will profit from this virus

I don't think it's a matter of 'profit'.

I think you'll be quite happy for the system to remain intact, so they can go back on the teat.

Just remember it's keystroke-born digits they 'loan' to you (covered by laws they pushed for) and in return they want a real pound of your flesh. That's because they want to buy real Beamers, not virtual ones like the virtual wealth they conjured up.

I agree entirely.
Ergo freeze banks until we are back to level 0

It was clear that we were at the end / close to the of the up market. If you were mortgaged up that was your own fault. That is investment.

The NZX50 actually ended down 0.79% and I am actually glad ( and I hold shares). At one point earlier in the day it was up a @ 3% but dropped all afternoon - profit taking I suspect. I'm hoping that it will make people take note and scale back their "irrational exuberance".

It was a good chance today to sell off your holdings before the main collapse which may be called in the future as the April fools day collapse as only fools would still be holding any stocks after all the chances to offload but still hold because mainstream news tells you to ????

I haven’t really been keeping track of stocks but generally this would be a good time to buy not sell. Sell should have been done months ago.

1. By fools if you mean the Fed you're spot on
2. The whole point of this charade called human life on this planet is for the banks to profit. I thought that that was clear from the last 12 years, possibly more but I was too high to notice.

ANZ share price continued downward and ended up 7.2% lower. Now approx 60% lower than its peak in 2015.

Maybe so, but the profits for the mortgage holidays will happen in several years time, adding months or maybe years to people's mortgages...

Sure. ANZ's profits have been supernormal. Mind you, so they should be when the cards are stacked in your favor and you can lend money into existence. Something will obviously be giving now.

It turns out the jobless claims in NYC are a 30 sigma event. Watch the entire animation.
https://twitter.com/lenkiefer/status/1243166718924554240

BOOM!

Weird how the death rates are so different around the world. UK 500 / 12000, aus 13 / 3000. Summer weather?

Uk's cases HUGELY under reported.

.

I think deaths give a good way of estimating the true numbers of infected - using an approximately 1 in 70 death rate seen in countries like Korea with best testing and falling number of new cases. Iceland is perhaps even better info with a huge testing program (they are set up for genetic testing there due to fantastic genealogical records that medical researchers mine for info) that caught a whole lot of infections that other countries likely would have missed and may indicate far lower risk of death than thought - though it will be a few more weeks before we know for sure (as cases progress through 2-3 week mark where death normally occurs).

The Ministry of Health's own 2017 plan has, as Phase 2 (see P10) this useful statement:

Phase:Keep It Out - Border management
Potential Trigger: Sustained human-to-human transmission of a novel influenza virus overseas in two or more countries
Specific Objectives: Prevent, or delay to the greatest extent possible, the arrival of the pandemic virus in New Zealand

Now, if the Wise Ones had actually followed it.....coulda, shoulda, woulda....

From the top, no rent paid while the stores are closed. Be a nervous time for the rentier class, particularly the leveraged. https://www.theage.com.au/business/companies/retail-carnage-hundreds-of-...

Retail stores were already in decline competing with online stores. The GST applied to overseas online purchases possibly helped retail stores a bit but this virus will most certainly finish them particularly those in the malls.

I mean who’s going want to visit a crowded mall like Sylvia Park?

Online will suffer too, can't buy anything from a new zealand based company, but can buy whatever you like off ali express, amazon , ebay etc.

As a commercial property owner of an office premises in Albany I am lucky I don't have large mortgage . Our tenant has notified us he will pay for April and move out taking his business home.

The bank has agreed to a 3 month payment holiday from May ,so we are good until August 2020 and if needed they have indicated this could be extended to 6 months .

I always understood the risks of investing in any asset class and the risks of losing this and any other revenue stream such as dividends and interest , so I have no issue with this

I just need to figure out plan B and implement it and so far plan B is to buy time from the bank