Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes today - so far.
TERM DEPOSIT RATE CHANGES
No changes today here either.
RETAIL SPENDING HALVES
Statistics New Zealand says the impact of the lockdown saw each New Zealander on average spending about $520 less in April than they did in March. But the average transaction size jumped.
'A SMALL BOUNCE'
ANZ Business Outlook preliminary results for May saw a rise in 'forward-looking activity indicators' but levels remain very low.
BIG LOSS, THEN BIG CAPITAL RAISE, BIG SPENDING PULLBACK
Z cancels its final dividend for year after reporting an -$88 mln after-tax loss. It says it has attained some 'covenant relief' from lenders and aims to reduce costs by up to -$96 mln this year.
OFF THE ROAD
Road user charges for commercial vehicles fell -54% in April from a year ago, the biggest monthly decline on record. And that lack of activity virtually eliminated demand for replacement vehicles.
FALLING EXPORTS
The Massey GDPLive team monitoring current economic data is reporting they see total exports for 2020 are approximately -9% down on the same period last year. The downturn started to take place from the second half of February. (H/T TS)
EXPLODING TURNOVER
In the past four weeks, the RBNZ is tracking $148 bln in Government bond turnover (D9), the highest on record after a $35 bln week last week. In the same four week period a year ago, the total was only $78 bln.
HUGE DEFICITS COMING
Deloitte Access Economics predicts that the Australian Federal government will post an underlying cash deficit of AU$143 bln this financial year (-7% of GDP), AU$132 bln next financial year, AU$52 bln in 2021-22 and AU$33 bln in 2022-23 before there is any chance of a surplus. And don't forget their trumpeted surplus last year never actually arrived. So they have to suffer another US$360 bln in deficits before that will have any change of happening next.
LOCAL UPDATE
There are 1497 Covid-19 cases identified in New Zealand, with three new cases yesterday, a rise from +2 the prior day. Twenty-one people have died (unchanged). There are now two people left in hospital with the disease (also unchanged), and none are in ICU. Our recovery rate is now just over 92% with 111 people known to be infected (-12) and 83 of those are in 12 active clusters. That means 28 cases are recovering in self isolation in the community (-8 from yesterday). We will have full coverage of the L3/L2 announcement for the Government is a few minutes.
AUSTRALIA UPDATE
In Australia, there are now 6941 cases (+27 since Saturday), 98 deaths (+1) and an unchanged recovery rate of just under 89%. 43 people are in hospital there (-15) with 17 in ICU (-6).
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 4,101,500 and up +24,000 from when we check this data this morning, which is an unchanged level of growth. Now, just under 33% of all cases globally are in the US, which is up +9,000 since this morning taking the total to 1,329,200 and the only country to exceed 1 mln cases. This is an unchanged level of increase. US deaths have almost reached 80,000 (79,525). Global deaths are about to exceed 283,000. Although much faster increases are coming in four key countries (Russia, Brazil, India and Peru) there is no slowing in the UK which is has passed Spain to be the country with the second highest level of infection globally.
EQUITY UPDATES
Despite the disaster that is the US labour market, equities are higher. The ASX200 is up +1.2% so far today, and the NZX50 Capital Index is up +0.3%, held back by Z Energy. In very early trade, Shanghai is up +0.4%, Hong Kong is up +2.0%, and Tokyo is up +1.4%. Global asset prices are held aloft by "whatever it takes" money printing by the major central banks, more money chasing assets to invest in even if the returns are dubious.
SWAP RATES UPDATE
Wholesale swap rates started the week little-changed. We don't have wholesale swap rates movement details today yet. We will update this later in the day if they show a significant movement. The 90-day bank bill rate is unchanged at a record low 0.26%. The Aussie Govt 10yr is up +6 bps to 0.97%. The China Govt 10yr is up +5 bps to 2.65%. The NZ Govt 10 yr yield up +2 bps to 0.59%. The UST 10yr has also firmed today ahead of Wall Street's opening, to 0.70%.
NZ DOLLAR FIRM
The Kiwi dollar remained firm, now at 61.4 USc. Against the Aussie we are little-changed at 93.8 AUc. Against the euro we are marginally firmer at 56.6 euro cents. That means the TWI-5 has risen to 67.3.
BITCOIN FALLS SHARPLY
The price of Bitcoin is sharply lower at US$8,762 and down -$1100 or -11% from this time on Friday. 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 ».
26 Comments
BBC China infections rise as new city cluster emerges. "China reported 17 new virus cases on Monday, its second consecutive double-digit increase. Five of the new cases were reported in Wuhan, where the virus first emerged. There is growing concern over a cluster of cases in north-eastern Shulan city in Jilin province."
https://www.bbc.com/news/live/world-52612438
This is PRC theatre, new infections never stopped in China. Real question is why is PRC now starting to report some of the cases again - is it for domestic or international propeganda purposes? Do they need to soften up the populace as a lead in to another lockdown?
The 15/04/23's were bought today by the RBNZ at 0.098%
Surely a reflection of:
"The impact of sizeable and widespread job losses, weak income growth, reduced job security and weaker balance sheets will instil considerable caution within the household sector with an eye on the weaker economic prospects ahead." Link
There may be a minimum $1m bid amount at an NZGB tender however there is nothing stopping you buying a parcel in the secondary market of as low as $10k. You could try asking a bank to add your parcel to their's alternatively. It's not the money tree you think it is.
That got difficult when FMA introduced strict regulations for banks interfacing with what were once considered wealthy experienced investors being prohibitively re-categorised as mere retail clients. ANZ could no longer be bothered out of Melbourne because so few investors wanted to participate at a size level to make it worthwhile contesting the ruling. And brokers are way too expensive.
It's not the money tree you think it is.
Worked for me - I spent twenty years employed and thereafter retired for 22 years and counting.
Biggest issue is the "brokerage" the banks charge. Lowest I can find is about 30bps each trip. Given the bank isnt actually broking (its calling up their own fixed income desk and getting a retail price, not the interbank price) it's an insane fee level.
Also they try and stuff you with custody fees which can be avoided if you register with computershare (thereby also removing the credit risk of the bank who is holding your bonds too). But all in, it's a long way from trading any developed market on a low cost platform.
I was very lucky - for a long time I added my bid to the bank's bid at the Treasury tender and also had my own account at computershare and paid nothing. Coming out was totally different. Nonetheless, relentless, central bank official OCR cuts lessened the pain of exit slippage costs. But the spread was 5bps - which annoyed me as my desk in London made choice, your size quotes in USTs.
Let's hope for the sake of your integrity this hunch works out better for you than this one:
by Audaxes | 28th Apr 20, 4:37pm
The NZ Govt 10 yr yield is down a very sharp -10 bps at just on 0.73%And yet again, another QE present for the rentier bond trading cohort.
A week ago, Treasury issued $350m of the 5.5% 15/04/23s @ 0.3405% - clean price $115.303 per $100 face value.
Today, RBNZ scoops up $145m of the 5.5% 15/04/23s @ 0.099% - clean price $115.954 per $100 face value.
The later settles 30/04/20. A profit of ~$943,950 in just over a week.
Quantitative easing for the entitled. No? But underwritten by the majority.by Te Kooti | 28th Apr 20, 4:44pm
These puppies will be negative by CoB Friday.
These puppies are still trading at the same price yesterday, give or take a small fraction of a basis point - see above.
https://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=12330…
Nice to see our "friends" in the CCP still helping put wherever and whenever they can...
ICYMI: The theory COVID-19 originated in a Wuhan wet market “simply doesn’t stack up,” as evidence mounts that the virus leaked from the Wuhan Institute of Virology https://www.skynews.com.au/details/_6155573916001
More ICYMI: Coronavirus: Report says cellphone data suggests shutdown at Wuhan Institute of Virology from Oct. 7 through Oct. 24, 2019, and that there may have been a "hazardous event" sometime between Oct. 6 and Oct. 11 https://www.nbcnews.com/politics/national-security/report-says-cellphon…
I think the next 24 months will give us greater insight into the strength of bitcoin, as opposed to the next 24 hours (when the halving is supposed to occur).
What will happen tomorrow? Who knows. I anticipate with what is going on in the world at present that we will see sudden price drops any time that sharemarkets take a dive, as people look to cover their margin calls. Long term, when the dust settles, a different story however.
I hold bitcoin and a couple other crypto, but being the comic i am i refer to them as speculative safe havens.
We need to avoid falling into the trap of Groupthink over this pandemic and the Governments plans for social engineering of one form or another.
Groupthink ideas hatched by lefties huddled in dark corners (or Cabinet meetings) is even more dangerous to our future well-being than Covid -19
We need independent thinking , probing questioning, rigorous examination and debate of our leaders ideas right now, as well as into the future .
They need to focus on creating an environment for economic recovery , and forget about any of those failed wishy-washy socialist or autocratic communistic state - control ideas of the 1960's and 70's , kept us in chains
and will set us back for generations ahead .
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