Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
First Credit Union cut its standard home loan rates, and launched lower 'special' rates, the only credit union to offer competitive 'specials'.
TERM DEPOSIT RATE CHANGES
Kiwibank has cut term deposit interest rates across the board. They are as low as any other large bank.
A RECORD LOW, BUT NO SURPRISE
The service sector slipped into hibernation in April according to the BusinessNZ PSI. It recorded its ever biggest contraction with the index sinking to 25.9, down more than -11 points from March. (A PSI reading above 50 indicates that the service sector is expanding; below 50 it is contracting.)
VANISHING TRAVELLERS
Auckland Airport said that its passenger traffic virtually disappeared in April, down -98% from the same month a year ago.
ANZ NZ BOSS SAYS CUSTOMERS GETTING CONFIDENCE BACK TO BORROW
CEO Antonia Watson says ANZ NZ is beginning to see customers who deferred loans resume payments. Speaking in a Trans Tasman Business Circle Zoom call, Watson said people are getting the confidence back to borrow again, which she expects to flow through to term lending and the Business Finance Guarantee Scheme.
FITCH LOWERS OUTLOOK ON FINANCIAL INSTITUTIONS' CREDIT RATINGS
Credit rating agency Fitch has lowered the outlook on a series of NZ bank, credit union and building society credit ratings. Although it has affirmed the actual ratings, the lowered outlooks "reflects significant downside risk to our base-case expectation for the economic downturn as a result of measures by the New Zealand government to contain the spread of the coronavirus," Fitch says. It has lowered the outlook at TSB's 'A-' rating to negative from stable, lowered the outlook on The Co-operative Bank's 'BBB' rating to negative from stable, and downgraded Co-op Bank's subordinated debt rating to 'BB+' from 'BBB-.' Fitch has lowered the outlook on SBS Bank's 'BBB' rating to negative from stable, and downgraded SBS' subordinated debt to 'BB+' from 'BBB-'
First Credit Union, Credit Union Baywide and the New Zealand Association of Credit Unions have had the outlook on their respective 'BB', 'BB', and 'BB-' ratings lowered to negative from stable. And the outlook on the Wairarapa Building Society's 'BB+' rating has been lowered to negative from stable.
A FAVOURED REGULATOR?
The FMA 'empire' is on track to double in size. Budget 2020 allocated very significant funding to the regulator, taking its 2018/19 public funding of $36 mln in a series of generous steps to $61 mln in the 2022/23 fiscal year. The FMA also gets license and audit review fees from industry, but these amount to much less than $1 mln / year. (For perspective, the total annual operating cost of running NZ's largest independent bank (TSB) is $25 mln/yr. The total operating cost of running NZ's largest trading bank (ANZ) was $1.6 bln, with almost 60% of that personnel costs.) (More perspective: the RBNZ is limited to $52 mln/year, but that agreement is due to expire soon and is being updated.)
RBNZ APPROVES ICBC NZ BANK REGO
The Reserve Bank says it has registered Industrial and Commercial Bank of China Ltd (ICBC) to provide banking services in New Zealand, making ICBC New Zealand's 27th registered bank. Incorporated in the People’s Republic of China and majority owned by the Chinese government, ICBC will operate in NZ as a branch. A NZ subsidiary, the Industrial and Commercial Bank of China (New Zealand) Ltd, has been registered to provide banking services in NZ since November 2013 as a locally incorporated subsidiary. The branch is expected to expand and complement banking services provided in NZ by the subsidiary, including facilitation of wholesale banking services.
HIGHER DTI LENDING
There has been a greater tendency for banks to lend to higher DTI borrowers. The March data shows a noticeable shift compared with the same month in 2019. The shift in Auckland was even more pronounced. More here.
MORE THAN 5 MLN NOW
The Stats NZ population clock has ticked over the 5 mln benchmark now. Data from the latest Census, and newer ways of counting migration have combined to bring the threshold slightly earlier than earlier expected. It took just 17 years to go from 4 mln to 5 mln. The next million milestone is far harder to estimate given the coronavirus interruptions.
THE RAINS RETURN (AS THEY ALWAYS DO)
In the past six months, Australia has been getting its share of rainfall and more, turning the tide on its drought and bringing back irrigation-dependent agriculture.
LEADING A LAME PACK
Japan slipped into recession in Q1-2020, just the first of most countries to do so. But at a -3.4% annual retreat rate, it wasn't as sharp as Q4-2019 when their economy shrank at a -7.3% pa rate as China pulled up lame. (Analysts were expecting Q1-2020 to come in at -4.6%.)
FALLING MARKET
In both Sydney and Melbourne, live auctions as back for residential property, but with them is a rush to sell. The level of asking price cuts doubled in Sydney, trebled in Melbourne as job losses and income risks rose. Buyers sense lower prices. Listing portal Domain has data that indicates prices could retreat -10% in short order.
LOCAL UPDATE
There were zero changes to any coronavirus infection levels today. There have now been a total of 1499 Covid-19 cases identified as either confirmed or probable. Twenty-one people have died giving a death rate of 1.4%. There are still only two people left in hospital with the disease, and neither are in ICU. Our recovery rate is now just over 95% with 45 people known to be still infected. As the health crisis seems to have passed for the moment, let us know (in the Comments section below) whether you need these summaries to continue. Obviously we would report if there is a new outbreak here, but at 45 residual cases, that is now insignificant.
AUSTRALIA UPDATE
In Australia however there are still hundred of people battling the disease and caseloads are still significant in Victoria and NSW. There are now 7060 cases (+15 since yesterday), 99 deaths (+1) and an improved recovery rate of just under 92%. 50 people are in hospital there (+4) with 16 in ICU (-1). There are now 580 active cases in Australia (-4).
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 4,713,100 and up +27,000 from when we checked just this morning. Now, just under 32% of all cases globally are in the US, which is to 1,486,500. There are now rising infection levels in IL, CA, TX, VA, NC and AZ. US deaths are now exceed 90,000. Global deaths now exceed 315,000.
EQUITIES UPDATES
Equity markets in New Zealand, Australia, Shanghai, Hong Kong and Tokyo has all opened the week with across-the-board moderate rises.
SWAP RATES UPDATE
We don't have wholesale swap rates movement details today yet but early suggestions are that they are just a little bit soft. We will update this later in the day if they show a significant movement. The 90-day bank bill rate is down -2 bps to 0.25% and a new record low. The Aussie Govt 10yr is unchanged at 0.91%. The China Govt 10yr is also unchanged at 2.70%. The NZ Govt 10 yr yield is still at 0.65%. The UST 10yr is little-changed today at 0.64%.
NZ DOLLAR LITTLE-CHANGED
The Kiwi dollar is stable today, still at about 59.6 USc. Against the Aussie we are marginally lower at 92.4 AUc. Against the euro we are soft at 55 euro cents. That means the TWI-5 is at 65.7.
BITCOIN FIRM
The price of Bitcoin is holding at US$9,829 and up less than +1% from where we opened this morning. 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 ».
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43 Comments
For the record, today's RBNZ LSAP operation in the the 3.00% 20/09/30 linker delivered a -0.052% yield, thus locking in a redemption loss in today's dollars unless significant deflation revalues the buying power of these same dollars. And if inflation rises the RBNZ will owe the bond selling agent more in terms of a higher OCR. Hardly a winner except for the entitled minority bond trading rentier class. Will this LSAP programme survive negative cash interest rates?
Of interest Tony Alexander had the results of a survey of valuers out today. Not surprising, the main theme was “ . . . with so few transactions they (the valuers) generally struggle to as yet gauge the extent to which prices have or will alter”.
Other themes from the valuers were:
- There is a feeling that the main price effects may not be seen for up to six months.
- No real evidence exists as yet of properties being dumped by vendors desperate to sell at whatever the market will bear.
- A number of buyers in negotiations before lockdown have stepped back, waiting to see what happens with prices, or concerned about their personal financial situation.
RBNZ have estimated 9%; they would have modelled this related to economic stability decisions. Reports from two banks, Westpac and BNZ, estimates of 10 and 12% respectively; but again, modelling related to needs of lending and refinancing.
Other than making uninformed baseless guesses, it is a wait and see.
Went to first open home in a while last weekend and noted a very obvious absence of the boomer investor variety. Just a few young professional families. Hopefully start to see some opportunities for first home buyers (recognise the inaccuracies of a sample size of one open home)
Was at Grindz Cafe in First Ave, Tauranga this afternoon catching up with an old mate. We sat in the sun for just over an hour & during that time we watched about a dozen youngish chaps in hi-viz jackets all put large suit-case like stuff into their flash new utes. The huge Farmers new retail/appartment/other shops/town houses redevelopment site looks to be down sizing.
The gold price is at record highs in all currencies, except for USD. It's often said that people should hold 5-20% of their wealth in gold, depending on who's telling the story. Mind you, looking at recent past performance, wouldn't have hurt being all in (if you're speculating of course). Very rarely do you hear financial advisors recommending gold. No margin in it for them, unless they're selling you some kind of gold fund.
Times have certainly changed. A savvy investor of the 90s would hold 10% gold.
Its wealth outside of the system. Its insurance so that your past efforts dont amount to zero. Its stood the test of time.
I wouldnt be paying much attention on what the silver and gold prices are as so many bullion dealers have sold out or selling at a premium.
Gold is the money of kings
Silver is the money of gentlemen
Barter is the money of peasants
Debt is the money of slaves
'A savvy investor of the 90s would hold 10% gold'
Masher you're Spruiking. As I recall the early 90s gold price was lower than today but so was the exchange rate meaning that an investor would have probably made no gain and as gold cant generate income it would have been a dead loss. Those who invested in equities or property or even fixed interest would probably be better off than a so called savvy gold investor.
35 percent... well many kiwi stocks are up 100 to 150 percent since the pandemic. Sold down by frightened gamblers who swallowed the lies and lost their heads. I have not made 100 percent across the board but am up more than 35 percent ...in two months. Some might say 'Wait for the second wave', I am a sceptic when it comes to the hype around this disease. Some of the scares came from govt who want people to run into their arms.. and that's worked to a T
4 to 5 million is the fastest million ever added to NZs population. 17 years ago NZ wasn’t projected to hit this milestone for another decade or so. The question is, other than increasing total GDP can someone please demonstrate that the benefits of such rapid population growth (only surpassed by poor developing countries and failed states) outweigh the downsides?
I for one would love to see existing Coronavirus stats format kept.
Do it until 0 active cases in NZ (hopefully) :)
The consistent daily format helps really consume what's happening in an otherwise noisy landscape.
And hey, if Bitcoin gets a slot, Coronavirus NZ should :)
A thoughtful article from the chronicler of American urban life: Joel Kotkin. Presaging a new book, he sees a New Feudalism a'chuggin' down the tracks towards us. That will be no news to some.....but generally bad news to what Kotkin terms 'the middle orders' or the 'third estate' - our SME's.
If there are 100 essential items with 100 suppliers and 101 customers then the price will be limited by what the poorest customer can afford. If 2 customers have work visas expire and they leave the market changes dramatically such that if the suppliers are rational they will take whatever they can get and it doesn't matter how much money they have spent creating the item. Rental market has some eleasticity - renters choosing to live at home or squeeze extra people in - but the loss of foreigners in Auckland CBD will hit the rental market very hard - I have already dropped the my rent one the one apartment I own by 15% - I can afford that but I can't afford to have the place empty.
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