What happened Wednesday

A review of things you need to know before you go home on Wednesday; more sharp rate cuts, market and regulator slaps, housing confidence dives, $1 bln tout de suite, swaps stable, NZD firm & more

27th May 20, 3:59pm by David Chaston

ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
BNZ has made more cuts today. Simplicity cut their floating rate for FHB members to 2.50%. The Police Credit Union also cut rates.

TERM DEPOSIT RATE CHANGES
BNZ cut again after cutting just a couple of days ago.

BANKS RESILIENT, BUT FACE HUGE RISKS
The RBNZ released its Financial Stability Report today. They say banks' loan losses will 'rise materially from current low levels', however they should be able to cope in all but the most severe scenarios. We have additional analysis here on the risks of widespread negative equity, and here on the risks to commercial property.

MARKET SLAP
The NZX has publicly censured ASB Securities for breaches of market rules.

REGULATORY SLAP
Current and former borrowers of Whangarei-based finance company Profile Finance will receive $945,334 in credits and refunds after Profile Finance signed a settlement agreement with the Commerce Commission.

SCAM WEBSITES
The Department of Internal Affairs is warning that unofficial immigration and registration websites are fraudulently posing as official application sites. Only secure websites that end in .govt.nz are official and applications for immigration, citizenship, passports or registering births, deaths or marriages should not be done on any other.

A QUICK $1 BLN
The IRD administered SME loan scheme nears $1 billion of loan applications. And officials are seeking advice on extending the one month timeframe for loan applications to the Small Business Cashflow Loan Scheme.

WHIPSAWED
ASB says confidence in the housing market outlook has fallen to a near eight-year low, with expectations for this to fall further in coming months.

LOCAL UPDATE
There were zero cases again today, leaving the total at 1504 cases identified as either confirmed (1154) or probable (350). There now no-one in hospital with the disease. Our recovery rate is now just over 97%, with only 21 people known to be still fighting the infection (-1).

AUSTRALIA UPDATE
In Australia, there are now 7142 cases (+16 since yesterday), 103 deaths (+1) and a recovery rate of just under 92%. 30 people are in hospital there (-1) with 5 in ICU (unchanged). There are now 478 active cases in Australia (-6). There is no way the trans-Tasman travel bubble is happening any time soon.

GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 5,589,600 5,494,300 and up +95,000 from this time yesterday. Now, just on 30% of all cases globally are in the US, which is up +19,000 to 1,680,900. US deaths are now touching 100,000. Global deaths now exceed 350,000.

EQUITY MARKET UPDATES
The S&P500 ended today's session up +1.2% following a similar rise in Europe overnight. Today, Shanghai and Tokyo have opened flat after yesterday's good gains. Hong Kong is down -0.3%. The ASX200 and the NZX50 are both up +0.5% in late trade.

SWAP RATES UPDATE
Swap rates moved higher yesterday, but may have not moved much today. 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 unchanged at 0.26%. The Aussie Govt 10yr is little-changed at 0.88%. The China Govt 10yr is up +3 bps at 2.71%. The NZ Govt 10 yr yield is up +6 bps at 0.71%. The UST 10yr is basically unchanged from this morning at 0.69%

NZ DOLLAR FIRM
The Kiwi dollar has been in a firming trend and holding on to most of last night's gains, now just over 61.9 USc. Against the Aussie we are unchanged at 93.2 AUc. Against the euro we are also firm at 56.5 euro cents. That means the TWI-5 is up to 67.6.

BITCOIN UNCHANGED
The price of Bitcoin is basically unchanged from this time yesterday at US$8,848. 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 ».

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

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67 Comments

by Becnz | 27th May 20, 4:57pm 1590555458

Would be nice to keep count of all major job losses on this daily update.

by FCM | 27th May 20, 4:11pm 1590552699

I was thinking maybe Ashley B could update us Live on those each day as well. Or maybe they are like a one eyed accountant and only sees one side of the ledger.

by powerdownkiwi | 27th May 20, 4:23pm 1590553407

No - that role is already taken

by Alex13 | 27th May 20, 4:55pm 1590555338

Don't be too modest - surely your outlook is wider than that!

by paashaas | 27th May 20, 7:54pm 1590566070

are you planning to hold on to it ?

by Uninterested | 27th May 20, 7:30pm 1590564646

No, this is not his role! The govt has to take the info from both sides (it has the job losses itself, from the unemployment benefit applications), and make the calls.

by JimboJones | 27th May 20, 8:50pm 1590569430

I think if he did you would find we will have less than most of the more covid friendly countries.

by PocketAces | 27th May 20, 9:34pm 1590572064

Just in NZ or all around the world? I'd say the latter, so that the numbers can be seen in some sort of perspective and people can understand we are not alone in all of this

by CN | 27th May 20, 11:57pm 1590580639

"Would be nice to keep count of all major job losses on this daily update"

They used to monitor them here monthly.

https://www.interest.co.nz/news/job-losses-reported-2015-2016

by Houseworks | 28th May 20, 5:39am 1590601152

The person who monitored the stat was made unemployed.

by Mark L | 27th May 20, 4:14pm 1590552873

Co-operative Bank also cut it's term deposit rates. All terms under 2 years are under 2% with a 'Special' 6 month rate of 1.75% !
I like this bank but their recent 'leading the charge' on TD rates is annoying - especially when considering their BBB rating.

by brisket | 27th May 20, 6:54pm 1590562485

Entirely anecdotal, but I trust Cooperative to have a much more solid position than BBB would suggest. I base that entirely on their attitude when I switched to them, and they had a banker (actual person) seriously grill me and demand extensive documentation before granting me a $1000 credit card. As opposed to my previous bank, who were constantly offering me more credit. I suspect the bank ratings are prejudiced towards the larger banks - probably overstate the value of a fat loan book, and understate the value of more intimate customer knowledge...

by James Thrace | 27th May 20, 8:28pm 1590568081

Don't forget the minor issue of ratings agencies taking payment to provide more favourable credit ratings.

by Mark L | 27th May 20, 8:48pm 1590569301

Still doesn't explain why the CoOp thinks they can attract deposits/savers by offering only 1.75% for 6 months while Kiwibank is at 2.2%.
Are they already flush with money?

by JimboJones | 27th May 20, 8:52pm 1590569549

I’ve always wondered how it works. Do you also get a dividend every year as a part owner?

by Mark L | 27th May 20, 9:23pm 1590571404

Yep, I think it's basically a % refund on fees that you have paid - so if you have paid a lot it may be more but in my case around $10 pa.

by James Thrace | 28th May 20, 8:29pm 1590654595

It's based on the total value of your banking you hold with them. So if you just have a transactional account, your dividend will be much smaller than someone who has the full suite of products.

Co-Op doesn't have a big depositor base, but has a fair bit of lending which it jumped into over the last 5 years under the new board on the basis that lending would increase it's customer base.

Well, it did, but they also forgot to try and attract depositors as well. Their glacial pace to try and match the big 4 in mortgage rates indicates they're a bit spooked at the moment.

disclosure: I am a customer of co-op.

by ShoreThing | 27th May 20, 4:22pm 1590553366

One comment from the FSR today, when Chris was questioned about how we might get to those worst case scenarios (13% unemployment, 48% house price falls), he said:

"One thing that is crucial is what bank behaviour is; we think that if banks were to stop lending and really lead to a credit crunch, that's the sort of thing that could result in that scenario of unemployment rising to 13% and a very severe economic outlook."

So what are banks doing? Later on in the conference, Jenee (of this website) asked about the cash building up in the settlement account from an average of $8bn to now $30bn. They aren't lending it out.

by Ralph | 27th May 20, 5:38pm 1590557924

The government is the one who stops economies and the one who sets the capital requirements of banks. In fact almost all the rules of engagement are set by the government.

If banks cannot or will not lend within the mountains of constraint the government set, everybody pretends its the banks at fault. Easier to blame others through the media than look at your own mountain of red tape and regulations as to why the lending has stopped.

by RickStrauss | 27th May 20, 5:42pm 1590558135

Likewise, perhaps it'd be easier not to have a central bank feeding them cheaper money and allow them to function as private businesses that must attract and rely on deposits to fund their lending.

by Ralph | 27th May 20, 5:50pm 1590558640

Are you thinking that state owned banks would be provide a better outcome?

by ShoreThing | 27th May 20, 6:02pm 1590559331

It's not the mountains of red tape and regulations that are causing banks to restrict lending, it's that the odds of getting their money back have worsened drastically. Coupled with historically low interest rates meaning their margins are thin, it's also harder for them to sustain losses on bad debts.

by MisterB | 27th May 20, 6:44pm 1590561874

There is also Responsible Lending Codes to consider. Everyone would decry evil banks for lending money to people who cannot service debt if the interest rate ever went up, or someone lost a job, or without the 2 imaginary boarders declared on their loan application.

by Shamino | 27th May 20, 4:29pm 1590553784

Anyone seen this? https://www.oneroof.co.nz/news/37956 31 registered bidders, with 10 fighting it out!

What is going on here, is there a severe shortage of sellers? Or are people working the numbers and calculating based on 2.5% interest rates or lower

by Audaxes | 27th May 20, 5:49pm 1590558544

It is surely evident those in receipt of fiat currency for work done are always under paid in this hyperinflationary asset market.

Some market news - Rich Chinese Snapping up Luxury Homes From Singapore to Sydney

Chinese buyer inquiries for South Korean property increased 180% in the first quarter compared with the fourth quarter of 2019, while inquiries on New Zealand homes jumped 75%, according to data from Juwai Iqi, a real estate firm. Searches dropped 32% in the U.K. and 18% in the U.S.

by Graham Adams | 27th May 20, 10:42pm 1590576160

Shamino... that caught my eye too. I checked on QV and the site is 632 sq m so that might mean two units can be put on it.
A friend who is a real estate agent told me there are lots of people in their 20s out looking for houses right now, lured by the low interest rates (and the hope of them going lower). There's plenty of interest apparently for the limited stock available.

by Lanthanide | 27th May 20, 5:09pm 1590556151

There is still only one person left in hospital with the disease, and they are not in ICU.

Actually there are 0 people in hospital and in follow up questions Ashley made it clear that this is pretty much the first time since the lockdown started that this has happened.

by David Chaston | 27th May 20, 5:17pm 1590556643

Correct. Fixed now. Sorry.

by powerdownkiwi | 27th May 20, 5:35pm 1590557743

" US deaths are now touching 100,000"

My stats sat nearer 101,000.

Reminds me of Groucho Marx at a dinner party. Lady down the table answers a question re her age "Approaching 45", she says. Groucho leans forward, glares down the table and barks "From which direction?"

by RickStrauss | 27th May 20, 5:42pm 1590558172

And it was weeks ago Fauci suggested the true number was already likely to be over 100,000 too.

by Wrong John | 27th May 20, 5:12pm 1590556355

All's well in hell.

by Houseworks | 28th May 20, 5:40am 1590601241

Hell is in Level 4 lockdown right now

by sharetrader | 27th May 20, 5:25pm 1590557132

we should look at a bubble with the australian states that have had zero cases for 14 days like us
NSW and Vic have a different stradegy they are going for manage not eliminate, so unless we change you can not open to them without a 14 day isolation.
in saying that i can not see how we are not open without a 14 day isolation at a government run facility that the traveler pays for, for anybody that wants to come here,
they must have a clear test 12 hours before boarding, temp and simple medical check before boarding, wear masks on the plane leaving a seat empty is silly

by Ralph | 27th May 20, 5:49pm 1590558569

I suspect making agreements in isolation with particular states in Australia is problematic on their side.

by ShoreThing | 27th May 20, 6:04pm 1590559454

Federal government sets the rules on travel, not states governments.

by Logicthinker | 27th May 20, 7:26pm 1590564416

Accept them from the remaining states so as we can get revenue for this years skiing season,in both islands, mainly in Queenstown. If this doesn't happen then we are going see some very distraught operators who may not be around in 2021 season. Come on Cindy, give it a nudge.

by Albert2020 | 27th May 20, 5:30pm 1590557451

Wow, this is like watching a slow moving train wreck... 23% of the caucus with direct business experience doesn't really align with his narrative...

https://www.newshub.co.nz/home/politics/2020/05/todd-muller-quizzed-on-…

by powerdownkiwi | 27th May 20, 5:38pm 1590557891

Reminds me of Spy vs Spy.

Both their houses are on the wrong track, and by several orders of magnitude. So why waste the only life you have, niggling one-to-the-other?

by redcows1 | 27th May 20, 5:49pm 1590558595

I used to believe in the argument for picking on merit. Life experience has shown me that merit is very much in the eye of the beholder and if they all have the same background any given group will tend towards what they already know or are familiar with. Also adding diversity is often meritorious but often not considered by those pushing the merit Barrow.
Recently the best example of how wrong this can go is the selection process used by Fonterra to select board canidates.

by Tillers | 27th May 20, 6:34pm 1590561292

How do you get the 23%?

by Albert2020 | 27th May 20, 9:29pm 1590571779

Ummm, it’s stated in the interview

by Audaxes | 27th May 20, 6:07pm 1590559669

New Zealand sheltered its homeless during Covid-19 – but can it last?

Labour-led government has pledged $100m to keep 1,200 motel rooms available for the homeless for a year but obstacles to cementing gains remain

Tourism dollars locked and loaded by taxpayers' contribution and they never had to bother going on holiday?

by Glitzy | 27th May 20, 6:25pm 1590560708

At 100m and 1,200 rooms that's 83k per room per year ~ or slightly more than I'm paying to rent a 4 bed house in Remuera. Something is really wrong with these numbers.

by James Thrace | 27th May 20, 8:30pm 1590568254

Paying the rack rate rather than the actual rate.

It'd be a heck of a lot cheaper to just rent out houses for families (and healthier) and negotiate a long term rate with motels for the other indigents that have nowhere to go.

by scarfie | 27th May 20, 9:16pm 1590571018

Wonder who will pay for the cleanup of the rooms when they are turned into P-Labs

by CJ099 | 27th May 20, 5:58pm 1590559136

Technology is a great leveler :) BBC Twitter tags Trump tweet with fact-checking warning. "A post by US President Donald Trump has been given a fact-check label by Twitter for the first time".
https://www.bbc.com/news/technology-52815552

by ShoreThing | 27th May 20, 6:16pm 1590560191

So mega corporations are going to selectively tell us who they think is honest and who isn't - I can't see how that could ever be abused.

by brisket | 27th May 20, 6:58pm 1590562719

Well, if they’re unwilling to call out verifiable lies they’re just a propaganda mouthpiece, that’s hardly better.

by ShoreThing | 27th May 20, 7:02pm 1590562964

An equal platform where anyone can say what they like is infinitely better than a walled garden where the platform decides what truth is.

by Carlos67 | 27th May 20, 7:52pm 1590565934

Rubbish Trump is full of shit and uses it to win elections. He is already complaining its going to affect his election campaign.

by ShoreThing | 27th May 20, 9:01pm 1590570114

Way to miss the point mate. What if Twitter only marked his opponents as untrustworthy? Your assumption here is that Twitter is benevolent, I'm saying they shouldn't be the arbiters.

by Pragmatist | 28th May 20, 7:10am 1590606626

You are free {and encouraged} to verify for yourself whether the bullshitter-in-chiefs words are true or not.

by Ben72 | 27th May 20, 6:08pm 1590559728

Good bed time read
https://www.google.co.nz/amp/s/amp.theguardian.com/us-news/2018/oct/19/…

by Kate | 27th May 20, 9:02pm 1590570139

Yes, that was enjoyable :-).

by Houseworks | 27th May 20, 11:00pm 1590577251

Pretty dumb and lazy article that doesn't prove anything. References trump despite him being over 80yo

by Independent_Observer | 27th May 20, 7:09pm 1590563398

Just reading the CFFC COVID 19 Research Report May 2020... (as you do)

13% of households have had a 33% or more loss of income as a result of COVID19.

Only 53% of households income has remained stable.

17% of people said they had been temporarily laid off with no wage.

13% said they had lost their job/lost all self-employed income.

40% said their household had received the wage subsidy.

36% of households said they had noted a substantial drop in wages/self employed income.

I'm thinking that if government wage subsidies stop - this is quickly going to turn into a train wreck.

by Carlos67 | 27th May 20, 7:56pm 1590566199

And that wage subsidy just has to end.....just after the election. Anyone here still think that the unemployment rate is not getting to 20% ?

by blobbles | 27th May 20, 10:18pm 1590574713

I think you are dreaming if the wage subsidy is going to end in the next 6 months. Let's just call it a UBI already and figure out how to fund it!

by Houseworks | 27th May 20, 10:54pm 1590576865

172 percent?? Been marking your own work IO

by Albert2020 | 28th May 20, 5:45am 1590601518

You do realise the answers to those questions are not mutually exclusive.. e.g. you can receive the wage subsidy and still have a stable income. Back to school Housework’s.

by Logicthinker | 27th May 20, 11:38pm 1590579538

Just watched Todd Muller on Q & A and he certainly is a person who lets his hands (and arms) do the talking. He looked like he was conducting an orchestra. Jack tried to take him to task on several occasions but he just camouflaged his comments like any Fonterra executive would.

by BadRobot | 27th May 20, 8:05pm 1590566746

Well someone's not happy....

https://www.stuff.co.nz/entertainment/tv-radio/121643756/am-show-host-m…

by Houseworks | 27th May 20, 10:51pm 1590576694

MR is okay on The Block and shows his personality. On breakfast he is a team clown and doesnt do himself any favours

by THE MAN 2 | 27th May 20, 9:42pm 1590572540

To be fair, Ardern shakes her head around so her dangly earrings move and so people don’t concentrate so much on the BS!
Megan Woods has now taken up this practice, but then she also needs to.
Maybe Twyford should try it

by Albert2020 | 28th May 20, 5:47am 1590601671

Sounds like someone is concentrating too much on her earrings lol

by Belle | 28th May 20, 5:46am 1590601597

Up early I happened to turn CNN on and caught Governor Cuomo and his daily talk. I havn't heard such inspiring talk from an american politician in years. Whatever faults he has made, whatever history he has, which I really dont know much about, that guy knows how to give a moving speech. Apparently he had just had a meeting with Trump. I think he was pissy. He gave Washington quite the dressing down. And he made it sound reasonable. I cant imagine Biden stringing together anything remotely comparable.
Edited to say he finished by saying he had had a good conversation with Trump. Lol. Politics.

by Carlos67 | 28th May 20, 6:57am 1590605866

Biden just needs the same speach writer. You dont think these guys come up with it all on their own do you ? Its going to be a fascinating election in the USA later this year.