Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Westpac was the next to cut rates, launching a low 2 year rate. But they were trumped later by ASB who went lower. And later still, BNZ offered all their Classic rates below 3%, a first for any bank. And finally, Kiwibank launched a 2.65% one year rate, a new all-time low. It has been quite the day for mortgage rate cuts.
TERM DEPOSIT RATE CHANGES
No announcements today from any bank - but expect a slew of cuts next week as banks move to protect their margins after some aggressive mortgage rate cuts. In the non-bank set, First Credit Union cut rates across the board.
SME/MICROs FLOCK TO NON-BANK LOAN SCHEME
The Government's IRD administered Small Business Cashflow Loan Scheme has lent more than $824 mln to more than 47,000 SMEs so far. It is a total that will grow. In fact, next week we may be reporting a total in excess of $1 bln.
IT'S NOW MULLER & KAYE
The National Party has changed its leadership just four months out from the election. This comes after some very poor poll results.
STABLE ON THE SURFACE, UNSTABLE BENEATH
March quarter retail sales results are out - and they are now pretty much irrelevant. For the record, they were up +3.4% year-on-year, the same increase reported for Q4-2019. Large rises for supermarkets, pharmacies and online traders more than offset steep falls for things like petrol, restaurants and travel.
5 DOWN, 5 UP
Fitch Ratings have held Australian credit rating at AAA, but downgraded its outlook to 'Negative". They say GDP will fall -5% this coming year, and then rise by about the same amount the following year.
AUCKLAND COUNCIL IN A TOUGH SPOT
The Council today said it is facing revenue reductions for public transport, regulatory revenue, water charges, fuel tax receipts, revenue from events and community facilities and dividends from Auckland International Airport. This has been exacerbated by the current drought situation and associated water restrictions. It says that will involve lower revenues of at least $550 mln. It is deferring or cancelling many projects, and raising many fees. Rate rises will be very hard to push through.
OVERSEAS VOLATILITY HURTS KIWISAVER
RBNZ monitoring of the value of KiwiSaver balances (T43) reveals that for the first time ever, that value has decreased. At December, the value was $65.5 bln. As at March 2020 is was down -$2.0 bln to $63.5 bln. Interestingly, the investments in New Zealand fell the least, those overseas the most. The overseas components have fallen five separate times over the years.
LOCAL UPDATE
There was one new case today (inside an existing isolated family group) taking the total to 1504 Covid-19 cases identified as either confirmed (1154) or probable (350). Twenty-one people have died giving a death rate of 1.4%. There is still only one person left in hospital with the disease, and they have now been moved to the ICU. Our recovery rate is still just under 97%, with only 28 people known to be still fighting the infection (-2).
AUSTRALIA UPDATE
In Australia, there are now 7095 cases (+14 since yesterday), 101 deaths (+1) and a recovery rate of just on 91%. 41 people are in hospital there (-2) with 9 in ICU (unchanged). There are now 509 active cases in Australia (-26).
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 5,102,400 and up +106,700 from this time yesterday. Now, just 31% of all cases globally are in the US, which is up +25,000 to 1,551,700. US deaths are now exceed 95,000. Global deaths now exceed 333,000.
EQUITIES UPDATES
Earlier today, the S&P500 ended its session down -0.8%. At their open today, Shanghai (-1.1%) and Hong Kong (-3.7%) are very much lower in their final sessions today, Tokyo (-0.4%) marginally lower. The ASX200 is heading for a -0.4% slip and the NZX50 Capital Index is headed for the same. That means the NZX50 will end the week flat. The ASX looks like it will end the week up +2.0%.
SWAP RATES UPDATE
We don't have wholesale swap rates movement details today yet but early suggestions are little-changed. We will update this later in the day if they show a significant movement. The 90-day bank bill rate is marooned at its record low 0.25%. The Aussie Govt 10yr is -4 bps lower at 0.89%. The China Govt 10yr is also down -5 bps at 2.65%. The NZ Govt 10 yr yield is little-changed at 0.63%. The UST 10yr has slipped back to 0.65% today and down -1 bp.
NZ DOLLAR SOFT
The Kiwi dollar is just a little softer today, now at 61.1 USc. Against the Aussie we are also marginally softer at 93.3 AUc. Against the euro we are little-changed at 55.8 euro cents. That means the TWI-5 is down to 66.9.
BITCOIN DOWN
The price of Bitcoin is lower by -4.5% today, down to US$9,053. 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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29 Comments
I think Japan, and latterly the western continental Europe, shows the long-term effect of low interest rates. Their banking system earns nothing on loans and, as a direct result, banks will not lend. We are already a long way down that path.
The good news is that it's easy enough to get out later but you have to wait for all the neoclassical economists to retire.
Best comedy of the week. Phil 'Stoner' Twyford saying government agencies need to be held to higher standards.
Bit rich coming from 'Mr Non-Delivery'
https://www.rnz.co.nz/news/political/417248/caa-review-crown-agencies-n…
Worldwide, COVID-19 cases are starting to trend up again, highest number ever reported today at 106k. I expect this will get worse as countries "open up" without the virus under control. Brazil is booming, India looks like it's going/gone crazy already and they are just catching up with testing. Russia has an unbelievably low death rate, which surely will be reviewed...
Don't worry though because stock/housing markets could never fall (never be allowed to fall?)
I'm not so fussed on $10k + per employee sum at 0% for one year as it jumps to 10% after that time. Now if they were prepared to lend $1m at 0.25% for 20 years now that would be a deal. They would collect OCR as interest rather than nothing, there would be plenty of time for repayment and it would be an income producing asset on the government's books.
If they really didn't want the money back they could take up Steve Keen's idea to give everyone $100,000. This would have a requirement for debt repayment and people would get to keep anything left over. That would create quite an economic rebound and create less paperwork and management than loans.
funny trump news conference this morning, he does put a smile on your face
Trump said: "I tested very positively, in another sense, this morning. I tested positively toward negative, right?
"No, I tested perfectly this morning - meaning I tested negative. But that's a way of saying it: positively toward the negative."
Michael Reddell has a neat comparison between the HYEFU in November, to the BEFU this month. Results are:
- GDP less by (rounded) $128 billion over 5 years
- Core Crown revenue down by $50 billion over the same period.
- Crown expenses up $70 billion
- Crown debt up $135 billion
...there is a great deal of lost income/output ahead of us, even on these (relatively optimistic) Treasury numbers. Which is really where monetary policy should be coming in......
The new Haves vs the Have nots. UK to issue immunity certificates. We are going nowhere for a while.
https://www.dailymail.co.uk/news/article-8346179/Immunity-certificates-…
David, your bond market end of day yields are letting the rest of the commentary down day after day ~ and its been like this for months.
"The NZ Govt 10 yr yield is little-changed at 0.63%."
This is absolute rubbish.
The 2033 issue is trading at 67bps. 2029 is about 48bps. Implied 10 year is about 50bps
You need one of the banks to get their FI team to provide you with EOD indicative pricing for govts and swaps.
I will celebrate with you when this situation finally changes and your crusade (can we say that word these days?) is successful.
Actually on Crusade: They were never known to themselves as Crusaders, the Muslims of the time attest that the Europeans called themselves Holy Warriors, whereas the Muslims called them "Frankish aggressors". 'Crusaders' is a term first used in an historical account in some Germanic text much later on.
“The wage subsidy has lulled 1.6 million people into this false sense their job is just going to be magically waiting for them when this is all over."
https://www.stuff.co.nz/life-style/food-wine/drinks/121596083/coronavir…
Looks like the Auckland Council is in financial trouble- why dont they start by taking a (samari) sword to their executive salaries. It would be good practice for all councils throughout the country. Just, maybe, they wouldn't have to levy their ratepayers to ransom with excessive accounts.
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