A review of things you need to know before you go home on Thursday; more TD rate cuts, inflation impulse weak, job ads fall off cliff, bond demand strong, NZX50 rises, swaps lower, NZD lower, & more

A review of things you need to know before you go home on Thursday; more TD rate cuts, inflation impulse weak, job ads fall off cliff, bond demand strong, NZX50 rises, swaps lower, NZD lower, & more
ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
No changes to report.

TERM DEPOSIT RATE CHANGES
Update: ANZ has cut its TD rates for most of its rate card by between -5 and -20 bps. TSB cut most of their TD rates between -5 and -20 bps. The Cooperative Bank cut their 6, 9 and 12 month rate offers. The NZCU Firefighters CU cut all its term deposit rate offers.

DOWNHILL FROM HERE?
"The ANZ Monthly Inflation Gauge lifted just 0.1% m/m in March, keeping annual inflation in the Gauge stable at 3.2% y/y. With parts of the economy shut down, measuring prices is becoming increasingly difficult. This could introduce some volatility over the months ahead, but once the dust has settled the inflation pulse is expected to be very weak."

WEAK DEMAND
The SEEK Employment Report for Q1 2020 shows a downturn in job ads in comparison to the same period in 2019 with -11.0% fewer jobs advertised year on year. March overall was down -20%, but job ad listings were down in the last week of March a startling -76%. As big as the March drops were, greater weakness looks set to show in April’s job advertising. Brace for impact.

STRONG DEMAND
Government agency Kāinga Ora/HousingNZ is in the market for at least $200 mln, partly increasing the size of its existing 2025 bond, and partly a new 2030 bond issue. But, including interest by the joint lead managers, the arrangers say they have indicative demand for up to $1 bln ($665 mln for the existing bond and $335 for the new bond). How much of that demand is from the RBNZ's open market activity is unknown.

DRIER
The 2020 Freshwater Report shows that one quarter of monitoring sites are drier since 1972, rainfall was below average in nine of the years between 2000-2014 and river flows are predicted to decrease in the north and east of the country. Perhaps it is time to use some stimulus funding to build some resilience via water storage and irrigation schemes, given that 79% of all rainwater flows to the oceans. Of 459 monitoring sites across seven regions, almost 80% had good or excellent habitat conditions.

MORE REALTORS, JUST BEFORE THE BUST
At the end of their licensing period, the number of licensed real estate agents and office took a somewhat surprising shift up. The number of active licenses were steadily diminishing monthly until March when a flurry of licenses were turned active again. There are now 15,512 active licenses. However, the overall trend is still down. Two years ago there were just on 16,000. The average number of transactions per license is stable nationally, but did rise in Auckland. That is not likely to continue however.

CHEAPER MONEY
Treasury offered three bonds today, totaling $800 mln. They got bids for almost $2.8 mln so a cover ratio of 3.5x. Yields for the April 2023 tranche averaged 0.34%, for the April 2029 tranche they averaged 0.96%, and for the April 2037 they averaged 1.32%. All of these results reflect a declining yield. It is unknown how much the RBNZ's participation figured here or even if there was any. (There probably was.)

LOCAL UPDATE
There are now 1401 Covid-19 cases identified in New Zealand, with another +15 new cases today and less than the +20 increase yesterday. The number of clusters is still at 16. Nine people have died here now, unchanged from yesterday. There are now 12 people in hospital with the disease today, with three in ICU. Our recovery rate is now up to 55% and rising fast.

GLOBAL UPDATE
Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 2,063,100 and up +143,000 from this time yesterday. 31% of all cases globally are in the US and they are up +30,000 in one day to 638,100. The American recovery rate is over 8%. China claims its recovery rate is stable at 94%. Australia now has over 6400 cases, and haven't changed in three days now. Australia's recovery rate is 34%, also miraculously unchanged. Reported global deaths now exceed 137,000.

NZX50 STILL CONTRARIAN
Earlier today the S&P500 closed -2.2% lower compounding the previous day's fall as reality sets in for equity investors. Overnight, European markets all closed lower by a greater margin. Today all Asian markets have opened lower, but only by a small amount so far. The ASX200 is down -1.5% in mid-day trade. Ther NZX50 Capital Index is still bucking the trend, up again this time by +0.6% in late trade.

NEAR DEATH
In Australia, their Virgin airline is still in a trading halt. It is looking increasingly unlikely it will trade again.

SWAP RATES SINK FURTHER
Yesterday, swap rates fell to new record lows for all terms 1 to 5 years. Update: Today, swap rates plumbed new lows for all durations except the ten year. The two year was down -3 bps to just 0.38%, the five year was down -5 bps to just 0.53%, and the ten year was down -6 bps to 0.91%. We don't have wholesale swap rates movement details today yet. We will update this later in the day if they show a significant change. They probably fell again; everything else has. The 90-day bank bill rate is down -2 bps at 0.42%. The Aussie Govt 10yr is down -7 bps at 0.85%. The China Govt 10yr is soft at 2.54%. The NZ Govt 10 yr yield is down -2 bps at 0.94%. The UST 10yr is down -10 bps today to just under 0.64%.

NZ DOLLAR SOFTER
The Kiwi dollar has reset lower to 59.6 USc today and down more than -1c in a day. Against the Aussie we are unchanged at 94.7 AUc. Against the euro we are down -½c to 54.7 euro cents. That means the TWI-5 is now at 65.8, reset lower after the grim IMF review of our prospects yesterday.

BITCOIN SOFT TOO
The price of Bitcoin is lower from this time yesterday at US$6,642 but most of that fall happened last night. 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?

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.

68 Comments

Facts about Covid-19

Fully referenced facts about Covid-19, provided by experts in the field, to help our readers make a realistic risk assessment. (Regular updates below)

“The only means to fight the plague is honesty.” Albert Camus, The Plague (1947)

https://swprs.org/a-swiss-doctor-on-covid-19/

The Plague is a good read and a relatively short one, if anyone is looking for a book recommendation this lockdown. Certainly topical.

TheSun maybe shining its light on the Truth.......??. China may have cracked it. We are paying the price........ARE WE NOT.?

https://www.thesun.co.uk/news/11407987/coronavirus-developed-wuhan-lab-c...

I think it's important not to treat all the mortality data the same because not all countries offer the same testing or treatment protocol. For instance, Germany have a different testing *and* treatment protocol, where 5-6 days after someone tests positive, clinicians visit them at their home, takes a viral load test and if the viral load is above a certain threshold, the person is recommended for hospital admission or escalated treatment. They have tended to test more widely without waiting for symptoms.

Whereas in Italy, Spain, France and the UK many are not even tested until they are desperately ill so there is no possibility of early intervention.

the UK didnt count many of the deaths in rest homes as covid 19
https://www.newstalkzb.co.nz/on-air/early-edition/audio/gavin-grey-uk-co...

-

10
up

Nzx50 up and Dow last week ended up. Proves the economy is strong....

Tui

22
up

Dow Jones is up 15% compared to a month ago. Think about it. The worst 30 days pretty much ever in the history of the US economy resulted in a 15% increase in stock prices.
Let that sink in.
Insanity is the new norm.

That's just the FED mate. The global financial markets are the FED and the effects of what they do.

Look at their balance sheet and you will see why everything is up.

In my opinion the trouble will begin when GOOD news starts to come out.

The market is not insane. It is bipolar.

I know it's the trillions poured into the system, but it still doesn't make any sense that millions of people suddenly becoming unemployed every day doesn't collapse the whole thing.

10
up

It will. In due time. Look at this chart it shows you the stages of collapse:

http://geoeconomics.ge/en/wp-content/uploads/2018/02/4.jpg

Good chart. Cheers

Three of the Biggest Banks on Wall Street Have $7.4 Trillion In Off-Balance Sheet Exposures

In the past few weeks everyone from Fed Chair Jerome Powell to U.S. Treasury Secretary Steve Mnuchin to former Fed Chair Janet Yellen to bank analyst Mike Mayo have appeared on TV to tell the American people that the big banks on Wall Street are well capitalized. To put it in Janet Yellen’s exact words on CNBC last Thursday, “we have a strong, well capitalized banking system.”

These folks have to keep repeating this mantra to the public because the public is increasingly getting curious as to why the New York Fed has had to pump a cumulative $9 trillion in cash to these Wall Street banks, since September 17 of last year, if they are so well capitalized. Can big banks actually be well capitalized and have no liquid money to make loans – the key function of a bank? As we have regularly noted, the Fed’s trillions of dollars in cash infusions to the banks began months before there was any coronavirus COVID-19 outbreak anywhere in the world.
more:
https://wallstreetonparade.com/2020/04/three-of-the-biggest-banks-on-wal...

Yep, the average person wouldn't have a clue that in among all of this Covid-19 stuff the banks have received the mother of all bailouts.

Good luck protesting with mass gatherings being banned!

Wait till their house prices collapse, it will make even less sense then.

Sort of like wrapping a turd in a napkin before biffing it at the fan?

We're going to see in the coming months that so many people in society are either ill with money, or just plain stupid.

They are not ill with it, or stupid. They are just the herd which is in debt. They did what everyone else did.

It is human nature to follow the herd. History doesn't exactly repeat but it does rhyme.

Perhaps people are optimistic about the market?

The S&P500 ended its session earlier today up +3.1% ?
https://markets.businessinsider.com/index/s&p_500
(Oh I see! Corrected below that)

Yes. Sorry about that. Yesterday's para was pasted in in error. Shouldn't have happened. Fixed now.

11
up

We have had no rain up in the mountains so any water storage would have failed. Water storage is a very expensive option, if you can get the water to the farmer at .5c a M3 then some would go for it. I have friends struggling to get ahead with irrigation and they are basically getting the water for free probably .5c a M3 for electricity costs etc.
10 M3 a hectare is one ml of water and as Nelson has found out, these schemes can scream out of control in a very short time.
Nelson should have looked where its water is going. I imagine it would be cheaper to buy the dairy farms and change land use.
Around here we have 10 million M3 takes for some dairy farms, they struggle to make a profit anyway and other land use would still face cold years and frosts. This Spring my problem wasn't water but very cold temperatures.

The Chinese have an old saying, ' A strong tree bends with the wind'. It's that flexibility, that resilience that makes us strong.

Well, AJ, perhaps we'd better tweak them Climate Models to provide you with some more GDD, eh? But, in more serious mode, unlike models, plants don't lie, and so lack of anything that's essential to their thriving is gonna show. Water schemes are workable in parts of the country, but need good modelling, better project management, and wide buy-in from entire communities, in order to be successful. Hard row to hoe these days.....

A lot of the easy picking has already happened, what's left is all the marginal stuff. Better in the past when the Gov't arranged and paid for schemes and then gave it to the farmers.

At times farmers are their own worst enemy.
The lower Waitaki scheme could have been run for free, they were offered a tunnel after the Manapori expansion that would have been a gravity feed system. Instead the bright b*stards went with the system the power company was pushing. Power company paid for all the pumps yadda yadda and the cockies pay the power bill to run them, there's a lot of big electric pumps on that scheme....

Both posts make good points, AJ. You are bang on about resilience.

I find it interesting, though, how short-term memories are. Those smoke-darkened skies a few weeks ago - how many factor them in? We just don't think long-term enough.

Where's the government’s Debt to GDB is going to end up is after all of the invoices are compiled is the $64 question.

In the early 80’s debt to GDP was increasing and went above 20%, it peaked at 54.8% in the early 90’s and didn’t get below 20% until 2008.
https://tradingeconomics.com/new-zealand/government-debt-to-gdp

I’m sure the government are already thinking and devising a plan on how the money that is being dished out due to covid-19 is going to be recouped.

Taxation increases will no doubt be the #1 target, some suggestions.

Superannuation: Abate or means test it from $40,000 to $120,000 so at $120,000 the superannuation payment would be $0
Tax Rates: The current top tax rate is 33% above $70,000, increase it to 38%, on income above $150,000 the marginal rate would be 48%

We rely on backpackers and workers from the Islands to work in agriculture picking fruit etc, the government must get tough on those who are and a benefit and are able to work, although being a largely socialist coalition in power they probably won’t address this.

These benefit figures are to the end of December 2019.
There were 314,408 working-age people in receipt of a main benefit.
https://www.msd.govt.nz/about-msd-and-our-work/publications-resources/st...
There are 147,464 on the Job Seeker support, an increase of 10% on the previous year.

I hope I haven’t offended anyone, I’m sure we will remain on reasonable terms.

How many boomers do you think will vote for a party that changes super?

Those who have income above $40,000 won't

My income is under $40k so I don't mind. But the obvious is our super starts too early at 65 and is just a smidgen generous - they should stop the indexing for a couple of years. But if I can comment against my own benefit can we discuss our high minimum wage and having lower youth wages.

10
up

get rid of income tax and replace with an asset tax. My property mates are having a coughing fit, they will recover.

Get rid of income tax and have an across the board GST that includes all land and house transactions.

no one would ever sell anything

Cactus Kate runs over the idea of selling of $50-mio visas to foreigners in a way to boost the economy going forward. Good read and a little insight into mainland China dodginess. Actually, Portugal, Spain, and Malta have quite active programs selling investor visas that are far cheaper than NZ. I guess it all depends on which country lights your fire.

https://asianinvasion2019.blogspot.com/2020/04/why-worlds-mega-rich-will...

Current NZ investor schemes 1 & 2 aren't very capital heavy at 3mm and 10mm. Neither scheme being overly popular and one under its annual limit consistently.

The suggestion of an additional NZD50mm scheme was a poorly thought out ignorant car crash from someone who doesn't the AML requirements of Immigration or the requirement that capital should create jobs. It isnt worth discussing.

Edit ~ the last person coming here to live with that kind of loose change was Kim Dotcom. And that worked out so well for him and NZ ... so well he got his own private armed raid on his house.

16
up

What an embarrassment for NZ, to act as the long arm of the american film industry. A SWAT raid too, with helicopters and automatic weapons! I guess we don't get to break the toys out very often, so even using them on an IT nerd seemed reasonable. Shameful.

NZ does what NZ is told.

Raises some good points. But man, she has a really poor / incoherent writing style.
Curious title for her blog, too.

Perhaps those $50 million investors are the target market for the up and coming Elm Apartments in Remuera.
2br apartments starting at $2 million, 3br at $3-5 million, penthouse up to $7.4 million... All off the plan apartments.
Get in quick!

Netflix value has passed Exxon Mobil. Silver lining from lockdown

Hardly surprising given the release of Tiger King. Its must watch TV if I've ever seen it.

Ian Harrison dissects the Otago Covid modelling effort (which used an online EU-based tool) and finds the model itself wanting, and the Otago group's usage of it deficient. He's building a Better Mousetrap named (what else) CORONA. And Michael Reddell has a round-up citing both Harrison and Professor John Gibson, with the usual plea from all: "Show us the supporting papers and advice!"

Orr and Hawkesby at parliament today
Reserve Bank of New Zealand Governor Orr and Assistan Gov Hawkesby speaking, parliamentary committee.
Orr:
Banks went into the shock in a strong position
COVID-19 economic shock is a fiscal policy challenge
monetary policy is a support player to fiscal policy
Hawkesby:
monetary policy cannot offset the virus, can soften the blow to the economy
The RBNZ have slashed rates and bought bonds (as part of QE) in response to the virus impact. The NZ govmt is providing fiscal support.

More (Orr):
Haven't ruled out negative interest rates
more direct financing possible
Hawkesby:
QE program equates to 150bps of easing (says ballpark estimate)

Will the banks come out in a strong position? Share price and market cap of big four quite concerning after all the support provided to banks by both the RBNZ and RBA

Wish the average man in the street had such a great wet nurse that Orr is for the TBTF parasites that suck this land dry.

WHO encouraging governments
"reminds people that drinking alcohol does not protect them from COVID-19, and encourages governments to enforce measures which limit alcohol consumption "
I am unsure if any studies have been undertaken.

Perhaps one should issue a Call for Volunteers?

i'm up for blind study to consume the alcohol to see what happens

I'm happy to get blind drunk too.

Drink methanol like many Iranians did then.. a lot of them ended up dead.

Surely something everyone here can get onboard with?

10
up

They reveal their authoritarian intent in that phrase, "encourages governments to enforce measures which limit alcohol consumption". Translation: "You lot are scum and should be sterilised". Or am I over reacting?

That's one way to start an uprising.

Hi David, Will Interestconz be updating the key bank metrics for March 2020? Thanks

Yes. But not until May 29 when the next RBNZ Dashboard data dump happens.

Thank you.

Irrigation is the cause of a lot of farm debt. If you farm in a dry area then sheep and maybe deer only or crop.
The irrigation is the cause of a lot of this heartache.
It's is a fools errand. For anyone to suggest more of it shows their lack of knowledge on the subject.
Look at the Mackenzie Basin, what a mess!! And a very expense one at that.
I did suggest to a mate we buy a farm there for the water right. Plant is in dry land grasses and run sheep, then bottle the water from that water right and export it. Makes way way way more sense.

Those big irrigation units cost if memory serves me way over 10k a metre to install. Massively expense to run and maintain as well

You don't have to go all that way to do it, just buy into a property with existing water rights in Auckland where the Ph level is quite high and bottle that until the cows come home

However I live down that way so.... :-D

We need Iain Parker back. What if the gov't spent money into existence on infrastructure projects, rather than borrowed it into existence from banks etc?

What a great job Scomo has done for his people and their businesses. Credit where credits due !!!

Australia's health system 'cannot afford' immediate lifting of restrictions......

https://youtu.be/wmHMDEBiQyM

Now imagine, can you see Dr B doing this?

This is the FACTS about Covid-19 from the Professor of Canterbury University on China.
Everyone should read this:https://www.newstalkzb.co.nz/on-air/christchurch/canterbury-mornings-wit...
No more Business with China please NZ Govt

"" by politicizing all aspects of life including people’s health, continued autocratic one-party rule in the People’s Republic of China has endangered everyone ""

ABC reporting Australia going with the Singapore tracing App.
Start in 14 days.

https://youtu.be/SNFz-z8OAYo
Don't adjust your contrast.

This afternoon I called medical centre to book a flu vacc. Told none till 28 April.

https://www.odt.co.nz/news/dunedin/health/not-ok-pm-staff-abused-over-va...

There are "hundreds and thousands" of flu vaccine doses in the South Island and people taking out their frustration on healthcare workers is "not OK", the Prime Minister says.

Jacinda Ardern was responding to questions at a press conference today about mounting tension in the South amid an apparent shortage of the flu vaccine.

"Their region has vaccines, I checked about four days ago," she said.

This comes after the Otago Daily Times reported chaos at Dunedin medical centres administering the vaccine yesterday.

Note to PM there are not enough vaccines in South Island. Acting like there is, doesn't mean there are enough.
PM a shortage of vaccines is not OK!

Why did you bother checking?

If you are in the healthy and under 65 group, April 28 is the first day they are allowed to give you a shot.

Ha ha. 'Ere we go. OneRoof predicting a boom post-lockdown.

https://www.oneroof.co.nz/news/37809