A review of things you need to know before you go home on Monday; no rate changes, asset prices start to fall, NAB/BNZ takes a big hit, Australia faces massive job threats, swaps soft, NZD hold, & more

A review of things you need to know before you go home on Monday; no rate changes, asset prices start to fall, NAB/BNZ takes a big hit, Australia faces massive job threats, swaps soft, NZD hold, & more
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Here are the key things you need to know before you leave work today.

No changes to report.

None here either today.

Just when the RBNZ's policies were bearing fruit, consumer inflation in the year to March rose to +2.5%, the highest level since September 2011 when it ran at +4.6%. But, as ANZ notes, "that’s all ancient history now that we’re in the midst of the most significant and synchronised global economic contraction in a generation." Looking forward not back, the outlook is for a very weak inflation levels for quite some time, and probably a high risk of serious deflation. Recessions kill inflation. Depressions make it go negative.

It won't only be consumer prices that turn lower, asset prices will also. And that had started in the commercial property sector in the period to March as NZX-listed Kiwi Property disclosed in it's recent but pre-lockdown update. They had to write off $290 mln in that period, and you can be sure this is only just the beginning. Being a valuer in a down market with few reference transactions is going to be a tough gig. Further, banks are going to look at such valuations conservatively. The expectation that property prices will he 'naturally' higher in the future has suddenly vanished. Capital gains are a notion of a past era. Valuations will turn to to being multiples of rental earnings. And the future prospects for rental streams isn't looking flash.

There are now 1440 Covid-19 cases identified in New Zealand, with another +9 new cases today and the same as yesterday's +9 increase. The number of clusters is still at 16. Twelve people have died here now, unchanged from yesterday. There are now 14 people in hospital with the disease today, with three in ICU. Our recovery rate is now up to 68% and rising.

Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 2,402,800 and up +74,200 this time yesterday which is a rising tide. Now, 32% of all cases globally are in the US, which is unchanged in a day, and they are up +24,000 since this time yesterday to 758,700. That is up +36% in a week. This is a slower rate of increase. Just over 9% of all US cases have recovered so far, and only marginally improved. Australia has now over 6500 cases and little-changed over the past week, but they are claiming a remarkable jump in their recovery rate to 63%. Global deaths are now at 165,000 , up +45% in a week, with very variable reporting across jurisdictions. Countries like the US, the UK and Australia only report hospital deaths. Countries like China include community deaths as well (as does New Zealand).

The NZX50 has started the week up +0.4% after last week's spectacular +8.2% rise. The ASX200 has started this week down -1.3% after last week's +1.9% rise. Shanghai has opened up a very modest +0.2% as has Hong Kong. Tokyo has opened the week down -1.0% after last week's +2.0% rise.

BNZ's parent NAB says it is taking a -AU$1.1 bln hit because of software depreciation changes and revaluations of its 'wealth' advisory units. But it didn't spell our how these changes would impact profitability or dividends, saying that information will have to wait till it makes its formal market announcements on May 7, 2020.

And there is an echo in New Zealand. BNZ says a second review of the application of its software capitalisation policy will see its interim profit after tax cut by $109 million, up from an earlier estimate of $86 million. This comes with a change made to increase the minimum threshold at which software is to be capitalised to $5 million from $2 million. The change will be applied to both current and future software balances and is expected to reduce BNZ's capitalised software balance at March 31 this year by $151 million. BNZ also reports interim results on May 7. BNZ last year posted record interim net profit after tax of $550 mln.

In Australia, a special ABS survey has been monitoring household changes resulting from the pandemic. They report that at least 3%t of those employed at the start of March no longer have jobs,and given their employed workforce was 13 mln then, that means almost 400,000 people have lost their employment and income in just five weeks, on top of the 700,000 who were already unemployed. It could get a lot worse, with one respected think-tank saying up to 3.4 mln Australians could lose their jobs in this emergency, taking their jobless rate well over 20%.

The price of crude oil has fallen sharply again today, down -US$2.50/bbl to US$15.50/bbl. It was US$18/bbl at the start of today. That more than a 20 year low at nominal prices, and near an all-time low in 'real' inflation-adjusted terms. The US oil patch has had the legs cut out from its fundamental economics. The Brent benchmark is down much less to just under US$28/bbl but that may not last, and world prices could be on the skids too. One thing low fossil fuel prices will also do is undermine renewables pricing.

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 another -1 bp at 0.38%. The Aussie Govt 10yr is down -4 bps at 0.83%. The China Govt 10yr is up +4 bps at 2.58%. The NZ Govt 10 yr yield is down -4 bps at 0.92%. The UST 10yr is also down -4 bps today to just on 0.64%.

The Kiwi dollar has hovered little-changed at 60.2 USc. Against the Aussie we are firmer and up more than +½c to 95 AUc. Against the euro we are unchanged to 54.4 euro cents. That means the TWI-5 is now at 66.4.

The price of Bitcoin is little-changed from where we started this morning at US$7,176. 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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i picked it moving out of level 4 after Anzac weekend

Good call and smart call.

I think it would of looked stupid in hindsight to lift the restrictions the week of one of the greater mass gatherings for older generations each year.


Clearly you haven’t been to an ANZAC service for some time to see that they reflect a good cross section of ages. You are clearly not aware of how Gallipoli and Passchendaele have become a right of passage for young people’s OE. It is noticeable that families with children, teenagers (and not just school students), and young people tend to out number older people at local ANZAC services - they are not a gathering of old people.

On the basis that you haven't resorted to ad hominem (for a change), I will actually bother responding to you.
Name me another event where this many older generations attend? The number of other generations in relation to my point is absolutely irrelevant. Pandemic, killing people, particularly older people, to the point that social distancing becomes law. In light of that, its smart to hold off on going to level 3 until after ANZAC day given 1) Any gatherings would increase the likelihood of virus spread and 2) I cannot think of another event (bar elections) where the older generation, the highest risk category, is disproportionately represented.

Try any decent concert; Rod Stewart, Elton John, or any Queen, Pink Flyod experience concert.
You also seem to besotted with the notion that this is about older people. The largest cohort remains 20 to 29 and WHO has emphasised that Covid is not just the killer of the old.
This is about all New Zealanders not the elderly.

"The largest cohort remains 20 to 29 and WHO has emphasised that Covid is not just the killer of the old."

Our cohort is unique around the world due to high incidence of travel. The deaths though, well they are all "old"
In NZ:
Youngest fatality: >70 years old
Average age of deceased: 79 Years old.

You can go look up the global stats, and they show a very similar picture (Barring youngest fatality who sadly was a newborn)

This virus is primarily fatal to
a) Those over 60, and/or
b) Those who have significant on-going health issues.

It is not an indiscriminate killer like Ebola, Malaria, Measles, etc...

In the UK, Almost 90% of Covid deaths in hospital are of people aged 60+. That figure rises considerably when nursing home deaths are added.
Other points:
Why on earth did Ms Ardern hint last week at an easing of the lockdown tomorrow when it was obvious a holiday weekend would complicate things?
Simon Bridges isn’t inspiring, he looked almost shifty on TV yesterday.
Teachers. What more can you say? Someone had the nerve to mention them in the sentence as nurses.


i picked it moving out of level 4 after Anzac weekend

Talkback radio will be humming and Hosking will be foaming with his fake rage.

i listened to national party radio onezb after the announcement and the host was scathing at the decision even going as far as bullying the business people she had on whom originally agreed with decision announced to change their minds and cutting short the professor (with whom i agree with) who said we needed another two weeks but after anzac was ok as long as they kept the schools closed another two weeks.

Good we got to L3 next week.. However, eliminate does not actually mean eliminate? Huh? It sounded like a victory speech until then.

Surfs up!

"you know sometimes words have two meanings"

Yeah, but we've removed all the trees, killed the brook and the Huia is extinct.

"Yes there are two paths you can go by, but in the long run. There's still time to change the road you're on"

The oil 'price' will perhaps make the uptake of renewables mark time, but the climate-alteration from all sources will be massively reduced. And that looks like being for some time, as debt-betting is going to be reeled in (as DC points out).

Whether fracking can ever mount a 'business case', is an interesting question. Banks must see it as a sunset industry, renewables as a sunrise. It should be a no-brainer.

So it took 100 years of burning oil to get the C02 level up to 400 ppm from 300, but a little reduction in burn rate for a few months will 'massively reduce' 'climate alteration'

Powerdown not far to go with their oil pricing now. We're at $15 a barrel not far off from a million dollars a litre. Should get there soon.

Korean log stocks are going to be a near run thing with this timing.

The clock has started on the timeline for GR's 'resetting of the Economy'.

If only we knew what he, and the rest of the Utopians, actually had in mind.....and whether we'll get to Vote for it.....


completely remove or get rid of (something).

"a policy that would eliminate inflation" or say..... Covid 19

or as Jacinda would say "Elimade"

Interesting link. 20 mins in and Facebook is now determining what’s credible before we get to see it. Now that’s really concerning.
Still, hard to know what’s news and what’s fake news.

Newsroom publishes all the news that’s free. Poorest of the sites, I think.


And Simon Bridges said said the decision (to keep at L4 for a further week) will "no doubt see a rise in mental health problems and stress related illnesses".

Suddenly he's a mental health expert as well. Are there no limits to this man's astonishing talents ?

As someone who lives outside of NZ most of the time ….but locked down here in NZ for awhile....Does National not see how ineffective Simon is. I guess they have made their leader choice and must save face by sticking with him. I believe in having a prominent opposition party for checks and balances of the Govt. He is just doing his job though as required by an opposition party leader. I think he is a nice enough guy but currently however, he is an embarrassment. Not because he is National, just because he is being whiney and condescending during this time. He just is not able to get his message across in an appropriate communicative way.

I’m right-leaning myself but I can’t get excited by SB.... it’s the way he talks as well as the staid cliche messages

Looking at the NZ govt bonds it seems they are slowing resetting to fair levels below swaps. Seems the 10 year still has a way to go, perhaps well see 70 to 80bps with the next month and a flattening out to the 13 year 2033 issue.

Cheap money on the cards for a decade.

Cheap money on the cards for a decade.

Those that have recently purchased the thick end of $6.0 billion government securities employ economic models that exclude the finance sector.

“One of the challenges going into the financial crisis, for example, if you look at the big DSGE model—dynamic stochastic general equilibrium model—it didn’t include a finance sector. So the whole experience of what actually happened during the global financial crisis—the collapse of the financial system and that taking down the real economy—wasn’t an actual possibility within the major macro models that some economists were using to forecast the economy.” Link

The economy is not fragile because of the virus.
The virus exposed the fragility of the economy.

2009-2019 produced the slowest recovery in history while requiring the highest debt expansion & lowest rates in history.
And now policy markers are doubling down on the same. Link

I don't believe anything like the number of businesses or people will get back to work under level 3 that is being mooted ie 400000 as people look at the rules many will realize that they can't operate in a practical manner with these restrictions I wonder how many will find this the straw that breaks the camel's back in reality businesses will not be able to start until we reach level 2 .

Supply chains are the real issue. A mate could have kept going through level 4 but as he said, what's the point, is the steel even in the country. (Engineering firm) he waiting for everyone else to get back and only doing urgent sh*t now.

Us pest controllers have been able to work right through, our problem is there ammo coming because we are all running low so could end up having to stop. Who knows for how long....

But now is ultimate vermin season going into winter so wouldn't this help getting more work?

The work is there, the ammo to do it not so much.

Interesting! What country do we import 'ammo' from?

Indeed. Anything remotely connected to tourism (depending on who's counting #1 or #2 export earner) is gonna be 80-90% down. Events. Hospo. Then the economic multiplier effects down the pike: food supply chains, booking sites, labour supply chains, maintenance and repair firms - it's what I talked about as a Reverse Bill-of-Materials. The kicker: there isn't one, hence no way to model the slide down the bowl. We'll just have to pick up the pieces as they materialise: there's simply no way to predict how the dominoes will topple.

I agree. I don't think it will be anywhere near 400,000 either. Maybe 250K or 300K if we are lucky.
Having said that, I still think it's the right call, especially given Monday is a holiday. And since we've pursued this stringent lockdown, rightly or wrongly, 2 extra working days of lockdown is likely to be immaterial in terms of economic impact.
I thought there was a good chance we'd be another two weeks in lockdown.

The big question of course is how long till Level 2. I'm happy if it's two weeks. If it was 3-4 weeks, there truly will be massive economic carnage.

Given the rhetoric seems quite balanced now, I think it's highly likely we will be in Level 3 for 2 weeks, and then into Level 2.

Fingers crossed.

The Budget will be out near the end of Level 3 period. Depending on how well GR and the Resetters have managed to a) incorporate their Utopian moves into it and b) how well they are camouflaged under layers of Care Bears, there might well be quite another business worry, apart from WuHuFlu.......

RBNZ M1 data was also released today. The sectoral factor model which the RBNZ prefers to Stats NZ CPI measure actually fell. I note that the same economists who were so woeful in their CPI forecasts for the March quarter, without blinking or word of remiss , have quickly offered their new forecasts.

A chart from Pickering on global job openings.

NZ must act quickly, to harness F.I.RE economy funds injection from both US & CCP;
During difficult lock-down period, NZ has been assisted by Berlin style airlift by China, 4 China airlines helped in providing essential stuff. As CCP ambassador said, that NZ close border towards China is unfair, just following US - It is a time to recognise CCP help worldwide on this Corona outbreak, Open the border now ! Tourist, students, investors are all needed here, their people movement was hindered by this border closure hence their capital investment movement - NZ, use your brain if you want to get ahead in your F.I.RE economy.


We're heartily sick of Yet Mo' CCP imperialists colonising our Capitalist Blog....especially considering the origin of WuHuFlu.

Except ccp closed their own borders.

But Simon says we are crap and Australia is who we should looking at as an example of things being done the right way.

Simon is to busy looking for the pieman.

Yes, tricky stuff all round. We've been convicted of mass gatherings over 500 & will hang at dawn. Nice knowing y'all.

The most materially pertinent trading update BNZ could provide was about software charges? That's either excellent news because they have a clever plan to avoid margin crush and deal with non-performing loans or very, very bad news because no one on the bridge of the ship is awake to see the wave about to swamp them.

If you are in the stock market...sell, sell, sell. Fast, now that it has gone back up to almost highs in some sectors???