A review of things you need to know before you go home on Wednesday; more retail rate cuts, dairy prices hold, food prices up, CPI dusty, swaps unchanged, NZD firmer, & more

A review of things you need to know before you go home on Wednesday; more retail rate cuts, dairy prices hold, food prices up, CPI dusty, swaps unchanged, NZD firmer, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report today. Update: ANZ cut almost all its fixed mortgage rates, including taking their one year fixed rate down to 2.79%.

TERM DEPOSIT RATE CHANGES
SBS Bank cut most rates today.

UP, BUT NOT STRONG
Dairy prices rose +1.0% at the latest GlobalDairyTrade auction from the prior event. But they are now -16% lower than the same auction event a year ago.

FEW DEALS I
Farm sales fell to their lowest April in at least 15 years and probably longer. Only 62 sales were recorded in the month. Average prices/ha held for those sale however, suggesting most of the April sales were actually negotiated in an earlier month.

FEW SEALS II
There were also some lifestyle block sales in April, with 195 recorded and substantially down from the 541 in the same month a year ago.

A NINE YEAR HIGH
Food prices rose +4.4% in April from a year ago. In fact, that is the fastest rate of increase since September 2011. Fruit and vegetable prices increased by +2.7% in the year, meat, poultry, and fish prices increased +6.2%. Grocery food prices increased +4.2% and non-alcoholic beverage prices increased +4.7.

INFLATION'S PULSE WANING
Food prices were relatively easy to calculate in April, but the same can't be said for tracking the prices of most other consumer goods. ANZ does an unofficial survey and their's suggests CPI inflation is now running at +3%. But current data is "dusty" they say. "Lockdown measures meant many goods and services were not traded in April, so we’ve had to estimate some prices – a challenge also faced by Statistics NZ as it compiles the CPI. Volatility in the data is a certainty, but the dust will settle over the coming months, and when it does, we think the revealed inflation pulse will be very weak."

HOUSE PRICE INFLATION EXPECTED TO BE ZERO
The RBNZ runs an inflation expectations survey every quarter and the current one shows that most people think it is running at +1.7% (unchanged from a year ago). Actually, it was running at +2.5% in the March quarter. The same survey shows people expect it to +2.2% in a year, and +3.0% in two years. More interestingly, those surveyed see zero house price inflation this year.

VERY BIG JOB LOSSES COMING
Not only did Fletchers signal that at least 1000 of their New Zealand staff will be culled soon (plus 500 in Australia), a union for Air New Zealand workers says it expects the airline to cull another 1300 workers. The emergency public funding held the line for a short while, but it is about to end and the cutbacks are likely to be widespread and deep. The Fletchers move is a warning for upcoming construction. The Air NZ move shows tourism isn't returning anytime soon. Big layoffs will doom retailers who relay on consumer demand. Both those two companies are laying off high-paid workers.

HEARTLAND PLEASED WITH FITCH AFFIRMATION
Fitch Ratings has affirmed Heartland Group Holdings and Heartland Bank's 'BBB' credit ratings, and the 'BBB-' rating of Heartland Australia Group with stable outlooks retained. Heartland says a number of other NZ financial institutions have either had their rating downgraded, or their outlook revised from stable to negative, by Fitch. Thus Heartland is "pleased with this recognition which it attributes to its differentiated strategy, higher relative margin on resilient asset portfolios and strong cost management through delivery of products to its customers by lower cost digital platforms."

A NEW CAMPAIGN
SBS Bank has signalled that it is going after Heartland's reverse mortgage business with an aggressive marketing campaign.

LOCAL UPDATE
We now have had nine straight days where there are effectively no new cases. There are 1503 Covid-19 cases identified as either confirmed or probable. Twenty-one people have died giving a death rate of 1.4%. There are now only one people left in hospital with the disease, and they are not in ICU. Our recovery rate is now just on 96% with 35 people known to be still fighting the infection (-5).

AUSTRALIA UPDATE
In Australia, there are now 7072 cases (+4 since yesterday), 100 deaths (unchanged) and a recovery rate of just on 90%. 45 people are in hospital there (-5) with 12 in ICU (-4). There are now 572 active cases in Australia (-6).

GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 4,897,500 and up +96,200 from this time yesterday. Now, just under 32% of all cases globally are in the US, which is up +20,300 to 1,528,600. US deaths are now exceed 92,000. Global deaths now exceed 323,000. Spain, Italy, France and Germany have all now crushed their curves, and are now opening back up for business. The US, the UK, Canada and Mexico haven't crushed their's, but heck, they are opening back up anyway as well. We are all going to have to live with the dodgy consequences (Canada and Mexico show how hard that will be.)

DEEP DECLINE COMING
In Australia, the construction industry is warning that new home building will fall by almost -50%, putting half a million jobs at risk over the next year.

DEEP DECLINE HERE
April retail sales data in Australia shows them falling -18% after the period of stockpiling in March. And they are down more than -9% year-on-year. Annual retail sales changes are usually just a few percent.

EQUITIES UPDATES
The vaccine enthusiasm yesterday faded badly at the end of trading today, with the S&P500 tailing away to be down -1.1% at the close. That isn't a lot in terms of the recent volatility, but it all happened in the final few minutes of trading. Shanghai has opened down -0.4%, Hong Kong is down -0.2% in early trade. But Tokyo is up +0.7% so far. Meanwhile, both the ASX200 and NZX50 are down -0.2% in late trade.

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 has stayed down at its record low 0.25%. The Aussie Govt 10yr is unchanged at 0.95%. The China Govt 10yr is also unchanged at 2.72%. The NZ Govt 10 yr yield is still at 0.67% although earlier the RBNZ fix was at 0.65%. The UST 10yr has slipped back to 0.69% today after having risen to as much as 0.74% in-between..

NZ DOLLAR UP
The Kiwi dollar has held on to all of its sharp overnight gain to be now at 61 USc. Against the Aussie we are marginally higher at 93.2 AUc. Against the euro we are firm at 55.8 euro cents. That means the TWI-5 is up at 66.9.

BITCOIN FIRM
The price of Bitcoin is a little firmer at US$9,756 and up +1.6% 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 ».

Our daily exchange rate chartis 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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41 Comments

Trump has officially flown the cuckoo's nest with one. BBC Trump says US topping world virus cases is 'badge of honour' that the US has the world's highest number of confirmed Covid-19 infections.

The US has 1.5 million coronavirus cases and nearly 92,000 deaths, according to Johns Hopkins University.
16th globally in terms of tests per 1,000 people, ahead of South Korea, but behind the likes of Iceland, New Zealand, Russia and Canada. https://www.bbc.com/news/world-us-canada-52733220

Truth be told....No....Not I said Florida...(never mind Trump)....there is a lot of em out there.

How would you like to employ this enterprising lady David...or any Bank.........Good with figures....Truth be told...is her mandate.

https://www.msn.com/en-nz/news/world/florida-scientist-said-she-was-fire...

Given Florida has almost 3 x as many elderly as NY I suspected there was data manipulation going on to hide it's Covid 19 death rate given it's half pai lock down. It will become harder and harder to cook the books as more die.

USA is ahead of both Germany and Canada in tests per 1,000. BBC data source is only tests in the last 10 days, here is all tests done:

https://www.worldometers.info/coronavirus/#countries

Consider also that the US is much, much larger than Iceland and NZ. We always win at the per capita game. Using these metrics to denigrate the American response is not honest or meaningful.

Trump will find any way he can to spin the numbers in his favor though I doubt that he could spin the 93,533 dead from the coronavirus. And get your facts right ST, the BBC is using the same source data as the World Meter which incidentally has the BBC listed as one of its trusted media outlets. :)

Here you go: https://www.worldometers.info/coronavirus/about/

Trump supporter as just virus canon fodder to him!

Sorry, I mistook you for someone with a rational thought process. The USA has a higher per capita testing rate than Germany and Canada, two large countries with respectable healthcare systems. It would be a decent stretch for anyone to say the US are behind the pack in this. To insist that "Trump will find any way he can to spin the numbers in his favor" and that he has "officially flown the cuckoo's nest" in light of this only speaks to your TDS. It's pretty tiresome, CJ.

LOL ST, You're just a deranged Trump supporter and I caught you out with the data. Plus haven't you taken your hydroxychloroquine today as advised by your Toddler and Chief. Even Fox news Trumps only media supporter had to fire back at Trump over that one! :)

Trump fires back at Fox News host https://edition.cnn.com/videos/business/2020/05/19/trump-hydroxychloroqu...

Almost every CJ099 comment is about Trump.

Wow you're still here Zachary perhaps you should take his medical advice too since you're still his supporter. And perhaps you can explain what on earth you see in him to actually want to vote for someone like that? Oh wait you would vote for National's Simon Bridges too! :)

Disclaimer: Oh by the way no one should take unproven medical advice!

If youre at the point of mocking people based on their political views the biggest idiot is you. Dont like Trump? That's ok, but don't take others down merely for holding a different view than you.

Buzzfeed sounds more like your thing than interest.co.nz

Um. The data from the last 10 days is kind of what matters. It's about testing relative to the size and growth trend of the outbreak. If I drop testing to zero for a week I may still have good testing numbers on average across the full timeline of the pandemic, that doesn't tell you anything about how well I'm doing right now.

Yeah, they are best in terms of big countries! Oh except for Russia... Spain... Italy... Switzerland... oh except for all those other countries...

Trump cherry picks data and you support him, then denigrate anyone for calling him up for cherry picking. There's only one person claiming they are the best in the world at everything when all data points to that being bulls*(t. But apparently everyone else is deranged for telling the truth?

More in Australia.
Queensland thinking is border closed until September.
- that would be the Oz rescue of the ski season here done.

https://youtu.be/5zn9IiG1qsE
Sky news.

Just on that. I used to spend winters skiing in Japan. Aussies revived much of the ski industry in Japan. Got to know quite a few who ran businesses and had invested there. Many of them from 'hot places' like Brissie, Perth, and the Gold Coast.

I have not been snowboarding for years but and a few others will be this year - buy local!

not surprised they are keeping NSW and VIC out, they both still have community transmission
A day student at St Ignatius' College, Riverview, has tested positive for coronavirus. The school’s administration will close the school for deep cleaning.
15 minutes agoby Mary Ward, Matt Bungard and Jenny Noyes

The RBNZ runs an inflation expectations survey every quarter and the current one shows that most people think it is running at +1.7% (unchanged from a year ago).

A second linker (2.5%, 20/09/35s) gets priced with a negative yield at today's RBNZ LSAP open market operation window.

Andrew, I don’t know the reporting news agency, but even if half of what they say eventuates, there can be only one conclusion and it’s not a good one.

already started on Australia

Wow that statement around 500,000 jobs in Australia's construction industry at risk can't be quickly looked past. That is massive. Sounding more and more like Ireland....where will all those construction workers go and what will they do?

And if we see inflation rising quickly, will central banks be forced to raise rates at a time that we have record unemployment? Sounds like we'd be heading for new highs on the misery index (high unemployment and inflation).

Both at the same time would be just brutal.

It certainly puts the Fletchers 1,500 into perspective!

Lots of Kiwis heading home if that happens.

Yes to jobs at Fletchers eh?

For the Kiwi dole.

As I recall government proposed pushing people into trades within the recent budget. Are jobs available for those people when they qualify?

"Big layoffs will doom retailers who rely on consumer demand"

Maybe the can cannot be kicked as far as the election?

I think the lack of consumer stimulus in the budget likely spelled the end for many staff. Having been out shopping a few times in the lower north island since level two the shops and malls I visited are deserted.

There's probably more online spending than in-store...but it's tough to keep spending when job security is an issue, or when the Reserve Bank is pulling your income down.

[Fed's] Powell thinks he's got to convince you he's flooded the world with money because that's all he's got. And the bond market knows he's empty; which is why he lied his ass off on 60 mins. Link

Jacinda is talking about a 4 day week, they don't understand the destructive power of deflation.

https://www.theguardian.com/world/2020/may/20/jacinda-ardern-flags-four-...

A Wellington white table cloth service restaurant has just moved to a 4 day week - Wed-Sat.

Maybe restaurants could just turn into wine bars and continue to sell that $15 bottle for $65 ….to those that value that kind of service.

11
up

They don't understand employment beyond public servants getting 5 weeks public holiday a year and paid 100% during lockdown, regardless of output or hours. You're either a grubby farmer or a white collar Wellingtonian, but there's no inbetween.

she has grabbed that idea from Perpetual Guardian
https://www.stuff.co.nz/business/110076890/new-zealands-fourday-week-ide...
i know our management will never endorse that as they are very set in their ways.

Come on - I was working a negotiated 4-day week in 1980 (PKIU, NSW). It was where the world was headed, and should have headed, until the neoliberals wanted ever more. In hindsight, 1980 will probably look like the high point of humanity.

If there's anyone writing the histories....

Here is a very topical piece about innovation & Matt Ridley's take on it all.

https://youtu.be/uazaIWuhJPs
Hoover Institute.

And Ridey's good read book - read it before AJs Friday good one.
https://www.amazon.com/How-Innovation-Works-Flourishes-Freedom/dp/006291...

Speaking about innovation...

https://i.stuff.co.nz/technology/121575074/covid-tracer-what-use-is-the-...

A great shame, its like they have discovered a poor early version of Instagram - without the pictures, or the note writing function.

4.4% food inflation. I wonder what we could put that down to. Are there supply chain issues already? Or is the money printing starting to be felt on the street? Or are the supermarkets using a situation to their advantage?

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