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A review of things you need to know before you go home on Friday; more rate changes, Govt enters business banking, consumer confidence tanks, Govt bond yields dive, NZD retreats, & more

A review of things you need to know before you go home on Friday; more rate changes, Govt enters business banking, consumer confidence tanks, Govt bond yields dive, NZD retreats, & more

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

MORTGAGE RATE CHANGES
There were no home loan rate changes today, but the NZCU Baywide group ended its personal loan 'special', bumping up its 8.90% rate to 9.90%.

TERM DEPOSIT RATE CHANGES
There were no term deposit rates changes today, but both Heartland Bank and the Police Credit Union cut savings account rates.

BUSINESS BORROWING TO PAY THE GROCERIES
The Government has announced it will write 'viable' small businesses loans of up to $100,000, interest-free for the first year, depending on how many employees they have. The borrower will still have to pay the principal back. The scheme seems to be unsecured lending to help businesses pay bills when they have no or suppressed revenues. How such businesses can be 'viable' in such a state isn't clear. Borrowing to pay operating expenses isn't something any adviser would recommend, apart from covering an in-month cashflow timing issue with an overdraft. This new scheme imagines borrowing for up to five years. Business lobby groups welcomed the news, of course.

CONSUMER CONFIDENCE DIVES
The monthly ANZ-Roy Morgan survey is out. ANZ says: "Consumer confidence fell 21 points in April to 84.8, about where it troughed in 2008 when the Global Financial Crisis hit. The net proportion of households who think it’s a good time to buy a major household item plummeted 67 points to -51% (18% thinking it’s a good time outweighed by 69% thinking it’s a bad time). Even when retailers are able to reopen their shops, they’re going to find the going very tough, with job security front of mind for consumers."

SHARP PULLBACK
StatsNZ released March home transfer data today. As you would expect, it shows that in late March the industry went into hibernation. Included in the data was transfers to and from foreigners. Foreign owners are quitting their NZ residential properties at twice the rate they are buying them, with sales of to foreign buyers down by 85% in the last two years.

PAYMENTS NZ HAILS PROGRESS IN OPEN BANKING 
Payments NZ, the bank owned company overseeing NZ's development of open banking, has released version 2.0 of its API standards for payment initiation and account information. They leverage the latest UK open banking standards but are tailored to fit local market conditions, Payments NZ says. Meanwhile online payments provider POLi says retail transactions through POLi increased by 450% in April from March 2020.

SMARTPAY SALE TO VERIFONE OFF
Smartpay says its proposed sale to Verifone is off. Smartpay says revised terms from Verifone aren't acceptable. Smartpay has confirmed to Verifone that it considers the agreement cancelled and "has reserved its rights." Furthermore, the termination releases Smartpay from its restriction to seek other potential offers for the business, Smartpay says.

NO ACTIVITY BUT NO PRICE DROPS EITHER
According to the CoreLogic Home Value Index results out today, Australian housing values have not seen any evidence of a material decline in April, despite a sharp drop in market activity and a severe weakening in consumer sentiment. But prices did slip marginally in both Melbourne and Hobart in April.

LOCAL UPDATE
There are 1476 Covid-19 cases identified in New Zealand, with +3 new cases today, one more than yesterday. Nineteen people have died, unchanged from yesterday, almost all geriatric patients. There are six people in hospital with the disease (-1), but none are in ICU. Our recovery rate is now up over 85% and rising.

AUSTRALIA UPDATE
In Australia, there are now 6753 cases (up +7), 91 deaths (+2) and a recovery rate of just under 85%, marginally higher. 89 people are in hospital (-4) with 34 in ICU (-4).

GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 3,256,600 and up +65,000 from this time yesterday which is an unchanged level of growth. Now, just on 33% of all cases globally are in the US, which is up +31,000 since this time yesterday taking the total to 1,069,400 and the only country to exceed 1 mln cases. This is also an unchanged level of increase. US deaths now exceed 63,000. Global deaths are about to exceed 233,000.

EQUITY UPDATE
The Aussie equities market is in a serious fall today, currently down -3.8% so far. That at least a -AU$70 bln daily dump. If it holds, that will mean week will end with a gain of only +1.5% rather than the rise to Thursday of +5.3%. The NZX50 Capital Index is down -0.4% near the end of trade today, and closing in on a zero weekly change. Earlier, the S&P500 was down -0.9%. Overnight, the European markets tumbled hard, down the thick end of -2.5% on the day. It is a public holiday in both Shanghai and Hong Kong so no trade there today. Tokyo is down a very chunky -2.3% so far today, but still heading for a +2.3% weekly gain.

SWAP RATES UPDATE
Update: Local swap rates fell again today, down to new record lows. The two year is now 0.19% and -10 bps lower in a week. The five year is now 0.33% and -13 bps lower in a week. The ten year is now 0.72% and -14 bps lower in a week. 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. The 90-day bank bill rate is back down -1 bp to its record low of 0.26%. The Aussie Govt 10yr is down a sharp -6 bps at 0.87%. The China Govt 10yr is also unchanged at 2.52%. The NZ Govt 10 yr yield has crashed today down -15 bps to just 0.60% and now below the equivalent American rate. The UST 10yr is unchanged from this time yesterday at 0.62%.

NZ DOLLAR GIVES UP SOME GAINS
The Kiwi dollar has given up some of its recent gains, now back to 60.9 USc. But against the Aussie we are up more than +½c to 94.3 AUc. Against the euro we are down almost -1c at 55.7 euro cents. That means the TWI-5 is down to 66.8.

BITCOIN RETREATS
The price of Bitcoin has also given up recent gains, down -4.9% from this time yesterday to US$8,711 as the halving hype fades. 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 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.

29 Comments

The NZ Govt 10 yr yield has crashed today down -15 bps to just 0.60% and now below the equivalent American rate.
The rentier bond trading crowd are certain to line up lower yields after yesterday's Treasury tender for the RBNZ LSAP (QE) action, come Monday.

The 5.5% 15/04/23s which traded at 0.099% at the RBNZ purchase window on Monday were issued yesterday at 0.1693% and are conveniently quoted this afternoon at: 0.09/0.06 20x100 last traded at 0.06%.

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Is RBNZ active at the long end of the curve ? seems yields are getting crushed.

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Yes - but RBNZ is actively purchasing what Treasury is tendering : check purchases at this XLXS-LSAP-NZGBs tab Link

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Thank you for the link. much appreciated.

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"online payments provider POLi says retail transactions through POLi increased by 450% in April from March 2020"

Why would anyone use POLi ?
Friends do not let friends use POLi !
https://bit.ly/2VSNLJO

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AirNZ refunds

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Aw hell, thanks for that link Firstclass. Eek. Debit card it is then. Dammit I preferred POLi

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"Business lobby groups welcomed the news, of course."

Exploded in cheering like they just won the World Cup I should think.

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What do you think is going to happen to the value of your very responsibly risk-assessed bank assets if a whole lot of small businesses go under, genius?

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Chances are they still go under.. just a little further down the line.

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Some are fundamentally screwed in that their business model doesn't work anymore, but for each one of those there are a lot more that have sound businesses with a giant cashflow hole from being shut down. There are also quite a few that are still viable but require some sort of logistical pivot to stay alive (eg switching from a physical store to online store and delivery system).

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If you are a twitter freak and love a neat turn of phrase, you could not do better than...

https://mobile.twitter.com/MsMelChen/status/1256036870078763008

And.....
Up the #MilkTeaAlliance
Hands off the Mekong.

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The Aussie equities market is in a serious fall today, currently down -3.8% so far.

Is the reality of Australia's war like posture towards China finally evident to those least likely to benefit.

It is a most ludicrous and immature illusion for Australia to think it is growing bigger and taller by waging one skirmish after another against China. By placing itself as a chess piece in Washington's Indo-Pacific Strategy, Australia is still playing its part as America's "deputy sheriff." Bilateral relations between China and Australia have hit a record-low over the past three years. For almost 30 years, Australia sustained its economic growth by riding on the coattails of China's monumental development. China is Australia's largest destination of exports, largest source of international tourists and students, and one of the biggest overseas investors.

The Morrison government's adventurism to fiddle with this mutually beneficial comprehensive strategic partnership is in defiance of rational thought and common sense. It has seriously ravaged trust, confidence and shared interests, which are the bedrocks of the bilateral relationship. Canberra is treading on a hazardous path that has no prospect for a U-turn during the COVID-19 pandemic, and likely for a long time afterward. Link

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I don't know? Perhaps we could have a link to something that isn't CCP run media?

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DP

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They can keep the students and tourists, thank you very much.

Pretty sure they're still going to need the iron ore.

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So I can now borrow $100,000 to invest in bitcoins?

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I too, like to live dangerously. Perhaps put them on bitmex at x20 leverage to spice things up

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Do you employ 50 people?

Then no. Read the article.

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Hey David, didnt we have results of a political poll today revealed that had Bridges and co as popular as John Key at a homeless shelter run by Nicky Hager?

I saw it mentioned by a commenter on one of the Interest sites but cant found it now ????

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Even if they switched now, in a manner akin to Labour at the last election, who would replace him?

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ICYMI: Latest UMR polling

Labour 55
Nat 29
NZF 6
GRN 5
ACT 3

via https://twitter.com/MatthewHootonNZ/status/1255990513418682369

Ardern 65
Bridges 7
Collins 7
Peters 3

via https://twitter.com/MatthewHootonNZ/status/1255983535288053760

"I have been able to confirm with a highly reliable source that @NZNationalParty is 29% in the latest UMR poll sent to its corporate clients. This is not a bullshit whispered “private poll” but one they have put their brand to and sent to people who pay a lot of money for it."

via https://twitter.com/MatthewHootonNZ/status/1255977963155189760

However, UMR warned that the political numbers should be taken with a grain of salt.

"They [the poll numbers] need to be interpreted extremely carefully. The conventional wisdom is that natural disasters (and wars) are usually good for governments but that those effects can wear off quickly."

via https://www.nzherald.co.nz/nz/news/article.cfm?c_id=3&objectid=12328854

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It would be extremely unfair to have another party govern in the next turn and have to clean up the terrible financial mess the current government are creating. Labour has to and will have another term and crash spectacularly in 3 1/2 years. Quote me then

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Pot kettle black.

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The rate of write-offs in that unsecured SME loan scheme will be eye watering.

Edit to add: Well, for taxpayers anyway.

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I imagine the short-term loan market is about to have a bunch of 7-week loan offerings hit the market.....

It's a great piece of work, but I do hope they've got failsafes to prevent the industry just gaming the timings of the loan to completely avoid the legislation.

A great example from my late-teens, there was a generation of us drinking cheap nasty spirits, $11 for 1 litre of 22% Vodka, Gin, Whisky in the late 90's was very economical.

There was a lot of harm going on from these drinks, so they put on an decent sized extra tax on beverages in a range (14% - 30% I believe) and excluded Ports etc to not annoy the oldies.
What happened next? 13.9% for 1 litre, for $7.99, and if you visit any non-premium liquor shop these days, you'll still find Kristov Vodka at 13.9% on the bottom shelf.

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Oh yea Kristov, Mississippi Moonshine, and Bernadino. Never seemed to have trouble getting it underage.

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"The NZX50 Capital Index is down -0.4% near the end of trade today, and closing in on a zero weekly change. "

Zero weekly change,, I can live with that, it is better than a reversal. We are also a week closer to level 2 and more businesses starting up again, not this level 3 nonsense where everybody's interpretation differs. Stand behind the line, come forward again, now move back again. The shop manager wanted me to confirm the price quoted elsewhere so I showed him on my phone, I held out my phone for him to see but he insisted I place it on the door table then move back and then he picked up my phone with his dirty hands. Dumb.

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