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A review of things you need to know before you go home on Tuesday; more TD rate cuts, building consents drop, eyes on diary auction, car sales collapse, swaps at record lows, NZD firms, & more

A review of things you need to know before you go home on Tuesday; more TD rate cuts, building consents drop, eyes on diary auction, car sales collapse, swaps at record lows, NZD firms, & more
ID 22702269 © Daniaphoto |

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

No changes here today.

Rabobank reduced rates today, but even after that they still have a competitive offering. This update may be useful too.

The value of building work consented in March was down -15% compared to March last year. A much bigger drop in commercial building consents than residential building consents is of more concern because in the quarter it dropped -20%, the largest quarterly fall since 2010.

Local authorities will discuss lifting their key borrowing ratio at a June meeting. Now, 30 local authority borrowers with a long-term credit rating of 'A' equivalent or higher are required to maintain net debt/total revenue below 250%, unless a higher ratio is approved by shareholders. The New Zealand Local Government Funding Agency says it's proposed to leave this unchanged for the current June financial year, then increasing it to 300% for the June 2021 and June 2022 financial years, then decrease it for each of the next four years financial years by 5% until 280% will apply for and from the financial year ending 30 June 2026. 

There is another dairy auction tomorrow morning. ANZ economists see another fall coming and have revised down their milk price forecast for the 2020-21 season to $5.75/kg MS, down from our previous forecast of $6.45/kgMS.

Overall, New Zealand's commodity prices are slipping. The ANZ commodity price index for April shows them falling a further -1.1% in the month and -9% in the past year. A weaker NZD is mitigating some of that reduction however.

There are 1486 Covid-19 cases identified in New Zealand, with zero new cases again today. One probably cases was determined not to be coronavirus. Twenty people have died, unchanged from yesterday, almost all geriatric patients. There are just four people left in hospital with the disease (unchanged), and none are in ICU. Our recovery rate is now up to almost 88% and rising.

In Australia, there are now 6825 cases (+24 since yesterday), 95 deaths (unchanged) and a stable recovery rate of just under 86%. 70 people are in hospital there (-5) with 28 in ICU (unchanged).

The latest compilation of Covid-19 data is here. The global tally is now 3,582,500 and up +76,000 from this time yesterday which is an unchanged level of growth. Now, just under 33% of all cases globally are in the US, which is up +32,400 since this time yesterday taking the total to 1,180,300 and the only country to exceed 1 mln cases. This is a rising level of increase. US deaths now exceed 69,000. Global deaths are about to exceed 252,000. We are back looking at the Brazil numbers being reported and there is an unnerving acceleration there. Russia and India are getting a similar profile of fast-rising infections.

Inter-government work is underway to create a tourism and travel bubble between New Zealand and Australia where quarantine restrictions between the two countries are lifted. But New Zealand officials are warning it isn't imminent. Maybe within a month however.

In Australia, new car sales fell a massive -50% in April - but that was nothing like the -90% plunge in New Zealand. If fact, you have to wonder how anyone bought a new car in the month, but just on 707 were in fact registered (only 43 were hybrids/BEV/PHEVs). April was closed for business other than for the supply of essential vehicles and 3 business days at the end of the month for contactless sales. Another 332 new commercial vehicles were sold, also a -90% crash.

In Australia, almost 1 mln workers have lost their jobs since social-distancing measures to limit the spread of COVID-19 ramped up. Payroll data from the tax office shows the number of jobs slumped by -7.5% between March 14 and April 18 in a workforce of 13 mln. And this is just the start. Even for those who haven't lost employment, household finances are under pressure. These sudden changes are not only going to hurt demand in a major way, they will also change household spending attitudes for a very long time.

The Aussie equities market is up another +0.9% so far today on top of yesterday's similar rise. The NZX50 Capital Index is up only modestly near the end of trade today. Wall Street did manage to eke out a tiny gain today at the end after being lower for most of the session. Overnight, Europe took fright with some pretty major falls.

Yesterday, wholesale swap rates fell to new record lows across the whole curve. 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 up +1 bp at 0.27%. The Aussie Govt 10yr is up +2 bps at 0.86%. The China Govt 10yr is unchanged at 2.52% as they have the final day of their long weekend holiday today. The NZ Govt 10 yr yield has held, not fallen (which is new) and is still at 0.58% but still well below both the equivalent Australian and American rates. The UST 10yr meandered in a listless way today started and ending at 0.63%.

The Kiwi dollar has firmed minorly, now back up to 60.6 USc. But against the Aussie we are soft at 94.1 AUc. Against the euro we are quite firm at 55.6 euro cents. That means the TWI-5 is up to 66.5 but still in its recent range.

The price of Bitcoin is up +1.0% from this time yesterday to US$8,839. 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.


Not only is he a 'property expert', but A. Church is now pretending to be an economist.
Ironic that in the article he praises R. Douglas then suggests a number of policies which Douglas has just dismissed over the last couple of days!
You see, Douglas is a smart man, and not as ideological as his reputation suggests...
Unlike some others.

Thanks for the link Fritz, a very good article indeed


It's a pile of ideological claptrap. Dated too.

Thanks for the corroboration, Yvill. I'll give you an uptick for reinforcing my initial take.


what a pile of c--p, i started working under the Muldoon government
and lived through rogernomics which ripped the heart out of the provinces with massive jobs losses and to compare that to now is just plain wrong,

Wow so the article ranges from very good to a pile of crap.

Great to see we cover the full spectrum of perspectives on this site!

I had to laugh...

to be fair he is well qualified to talk about property investments, he did finish high school

What was the alternative? A stagnant centralised economy with the same labour pressures that almost ruined Britain in the 1970s?

Rogernomics may have been a poor option, but it was the only option.

Rogernomics may have been a poor option, but it was the only option.
it was not the only option and the slash and burn speed it was done at was the big problem, the state of where NZ was over blown to allow RD to run his program.
i have no problem with change was needed at the time and we needed to open up our economy but it could have been done at a slower pace and more orderly not slash and burn, and in that mess we lost some of our best government departments which made some people very very rich.
my feeling now looking back is the reason he moved so fast is he didnt think he would get a second term or go so it was all or nothing

He even managed to slip a Nazi in there.

This line is the best:
Instead of funding corporate welfare, reduce, or even remove, company taxes for a set period of time.

As it turns out, our budding economist wants to reduce corporate welfare by offering corporate tax breaks.


Not only is he a 'property expert', but A. Church is now pretending to be an economist.

Oh dear. Church trollies out the "socialist" exhibit early in the opinion piece. He puts on his "free market" fake Batman costume and starts preaching with conviction. It's all about removing govt from people's lives.

Imagine if you did remove the govt support (spend) and its policies right now. The country would sink. Moreover, asset bubbles is what people like Church like and believe in. Imagine if govts and the ruling elite had removed all the support for bubble economics over the past 20-odd years? What does he actually think would have happened? QUite possibly lower house prices and greater savings rates among h'holds. This would have put the nation in a far better position now and going forward. But that's not the scenario that Church is thinking about.

People like Church are a sad indictment of the lack of critical thinking among middle NZ.

I just find it funny. The guy has no degree as far as I can tell, let alone an economics degree.
Yet there he is on NZ's supposedly premium newspaper telling us all about economics.
As I say it's just comedy gold. Sadly, a lot of our sheeple will take his pronouncements as gospel.

Anti-intellectualism is rife though. A lot of Kiwi's would consider his lack of education a qualification for standing on a soap box. Property is a religion, so that makes AC a prophet.

It reminds me of a prior NZ bubble. "Welcome to 1987, where businessmen are Rock Stars, investing is the new black - and a crash in the share market is about to change everything"

Many people say that there is a strong anti-intellectual culture in NZ. I think there is, but I'd be interested in your thoughts as a migrant.
Your comments allude to the fact that you think anti-intellectualism is rife here.
Btw, what better name than 'Church' for one of the prophets (profits) of NZ's leading secular religion.

Anti intellectualism here is rife because of all the so-called intellects who run our councils, corporations and governments. Their lack of real world experience and sometimes blatant disregard for those that their actions affect, the average Joe feels that degrees are merely a oneway ticket aboard the gravy train to the endless taxpayer pot of gold.

Any evidence to back those claims up?

Would have thought the majority of uni grads would be employed by the private sector. Happy to be corrected though.

Current finance minister with an Arts degree? This is big can of worms you're trying to open, hope you're hungry...

Bill English has a degree in English literature but Nat supporters to-date worship him as the messiah of NZ public finance. The only ever real-life job he ever held before dipping his toes in politics was working at the Treasury.
ALso, I am not sure whether Trump's econ degree from Wharton makes him any good at running the US economy (perhaps into the ground).

Would the experience gained working at the Treasury not be advantageous? But yes I agree with what you say. We need people with proven experience to be in these roles. You wouldnt hire an accountant to fix your car, so why do we as a nation allow politicians to fill roles they aren't qualified for or able to competently perform?

My views on NZ's anti-intellectualism came from my Kiwi husband initially. I had no idea prior to meeting him but yeah, NZ culture is very machismo and "blokey", there doesn't appear to be much space to be a different kind of man and the "blokey-ness" is heralded as some kind of point of national pride. My husband never felt like an outsider in Denmark, UK or America (where he also spent a lot of time) but he did in his own country. I also think this is partly why the youth suicide rate is so high. A lot of them are young men who fall outside of the "Kiwi bloke" stereotype, MANY are also gay, but that rarely gets reported on. NZ doesn't have much of a gay, art or intellectual counter culture, many of those with high IQ's or artistic talent just leave for overseas although this is not as bad as it was 20 years ago. I used to think it was about population size, but if you look through history, there were thriving intellectual cultures in much smaller populations. So at a guess... maybe it stems from the historical attempt to define itself as being different from the European class system, particularly the UK? I feel like intellectualism is associated with class based old world snobbery here. I have intellectual friends from working class backgrounds from all over the world and there is no class conflict there for them but I feel like it would be an issue here. Kiwi's also appear to be intensely defensive about what they don't know.

Well I don't think a degree (let alone one in economics) makes one more qualified to talk about economics than anyone else. But you're kind of right. What credentials does he have (besides working for a property institute) to soapbox in NZ's leading newspaper? That's more a reflection of the the emptiness of NZ media.

I didn't mean to sound snobbish. There is nothing wrong with not having a degree. However I would expect someone who the Herald positions as an authority on economic matters to have one, and one in economics or commerce.

I have a degree in economics. Honestly speaking, I think the only thing it really did is prepare one with economic thinking inside a rather rigid dogmatic framework.


I can understand why the NZH is going under. Shit opinion pieces masquerading as “news”

5/5 55

aussie PM is speaking live now, 1 million out of work already

We will follow them on a similar path but most likely worse due to this never ending lockdown killing small Mum and Dad businesses.

ICYMI: NZ government preparing for 300,000 new benefit applications - leaked documents

So expect 500k

RBA holds interest .025 will RBNZ go negative ???? if so NZ will be in big trouble.

The monetary horse is dead. No point flogging it any longer. It's just a waste of time (the crucial bit) and energy.

My brother works in a senior business role for a small and very successful company in the hospo sector in London.
They are struggling. He's got very little to do, but has been kept on, getting 60% of his normal wage (so up to the govt limit, his company aren't topping up).
Thursday is a huge day for them, with announcements on the next steps on lockdown there.

Should I be less worried about councils taking on more debt?

depends how old you are, no problem if you are not the one who will have to pay it back. Screw our kids, it's their own fault for being young.


If that horrendous level of debt increase to Councils is approved, expect large increases in rates from 2023 to 2026 as councils attempt to actually pay debt down to 280% of "revenue".


Personally I don't think councils can survive in their present form. It's a matter of changing or being forced to by circumstances.

The original purpose of District Councils was to encourage the individual to participate in the decision making process as it affected them and their community.
The rules have changed. Councils are now largely environmental stewards and road inspectors. Impossible to measure performance in any meaningful way. Financial stewardship is buried under layers of consultants and advisors.
The government is demanding more and more complex governance while forcing councils to rationalise along regional boundaries. Already in progress for roading and about to begin for water and waste management. We will soon have Auckland Super City me toos' across the whole country .

now they have become unaffordable. My link above to the UK, tells us where we are going and that escape will be difficult.

(Congestion level --> last 7 days tab).

Wuhan traffic back to near zero for the last 4 days. Similar pattern in a few other Chinese cities, back to near-normal up to Thursday, then down a lot from Friday on.

New lockdowns?

Friday was May 1st which is Labour Day for China and a public holiday. This holiday extends into the following week I think. A five day holiday May 1 to May 5.

Ahh got it. Just seemed odd because the pattern was in some cities while a few I checked look completely normal. Is it different in different parts of the country?

It would still seem to indicate that when people are not going to work, they're staying home.

Has Kiwibank published it's quarterly report yet? I would be very interested in their trading update and guidance now we've seen the Australasian banks.

National Australia Bank (BNZ here) is banning income from holiday rentals, Airbnb and individual room rentals in the latest tightening of credit for property buyers

Is there a link?

Surely credit policy should remain constant throughout the economic cycle?

I sincerely hope that any increases in Local Councils borrowing powers are within a strong regulatory framework , and overseen by Treasury

It should also not burden ratepayers with long term unsustainable debts .

We have an awful track record of clueless elected officials approving projects that have cause financial havoc , the most recent being the fiasco in Managwhai