A review of things you need to know before you go home on Friday; many rate cuts, confidence bounce, housing debt falls, bank deposits jump, swaps little-changed, NZD firm, & more

A review of things you need to know before you go home on Friday; many rate cuts, confidence bounce, housing debt falls, bank deposits jump, swaps little-changed, NZD firm, & more
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Here are the key things you need to know before you leave work today.

Westpac has cut all its fixed rates from two to five years fixed. More here.

Banks are moving en masse to cut term deposit rates. Today we got reduction advises from Westpac, ASB, HSBC and RaboDirect. NZCU Baywide also cut its TD rates. And TSB and Heartland cut savings account rates. Not one rate change was a rise.

ANZ's Roy Morgan consumer confidence survey bounced back up to nearly an equal number of optimists as pessimists (100). ANZ says: "Consumer confidence bounced 12 points in May to 97.3, still well below par. The net proportion of households who think it’s a good time to buy a major household item recovered 36 points to -15%. The bounce is similar to what we’ve seen in Australia as fiscal and monetary policy measures ease the immediate pressure. But tough times lie ahead."

TSB launched a virtual bank today, saying the COVID-19 crisis has proven customers can still get personal, human service, but more conveniently via a video call. (Nearly 20 years ago, ASB launched BankDirect, but it clearly was ahead of its time and didn't last.)

A new $60m, 27,000 m2 store set in West Auckland (Henderson) will carry more than 10,000 product lines and create up to 180 new jobs. It opened today with 90 staff.

Housing debt fell -$590 mln in April from March, the first month-on-month fall, probably since 1991 when the RBNZ's C5 series began. Year-on-year, housing debt rose +6.4%.

Consumer lending took a very large dive in April, as you might have expected. It fell almost -$1.1 bln at banks and fell -$260 mln at non-bank lenders from the previous month. Overall, year on year it is down +12%

Household deposits took another huge jump in April, although not by quite as much as they gained in March. They rose +$4.5 bln in March from February, and then another +$3.7 bln in April. These are the two highest monthly rises ever. And they clearly show customers are not put off at all by the very low term deposit interest rates on offer at present. Overall, April household deposits rose +7.3% year-on-year. Term deposit levels slipped slightly, but transaction and savings account balances - both at-call money - was where households are holding their additional resources.

The latest update of the RBNZ's Dashboard reveals that ASB and Kiwibank made small improvements to their Net Interest Margin in March 2020 from December 2019, while all other main banks were unchanged. They are all unlikely to hold these levels when the June quarter data is reported however.

There were zero cases again today, leaving the total at 1504 cases identified as either confirmed (1154) or probable (350). But 7 more people with the disease were confirmed as recovered overnight, taking that total to 1481, so now only one (yes, one) person is left with it in New Zealand.

In Australia, there have been 7165 cases (+25 since yesterday), 103 deaths (unchanged) and a recovery rate of just under 92%. 27 people are in hospital there (-3) with 5 in ICU (-1). There are now 467 active cases in Australia (-4).

The latest compilation of Covid-19 data is here. The global tally is now 5,803,400 and up +113,200 from this time yesterday. Now, just under 30% of all cases globally are in the US, which is up +21,500 to 1,720,600. US deaths have now reached 102,000. Global deaths now exceed 360,000.

The US consumed more renewable energy than coal in 2019, something that hasn’t happened since 1885. Now Aussie coal mines are cutting back output as prices retreat. Going the other way, rising iron ore prices are making some rich Aussies even richer.

The S&P500 was up +0.8% in afternoon trade - until the US President said we will make a 'major' announcement on the China trade relationship tomorrow. Then it fell fast, ending the day down -0.2% and a net -1% movement. There may be more volatility tomorrow. European markets ended last nights sessions up more than +1%. Shanghai has opened flat (+0.1%), Hong Kong has opened down -0.4% and Tokyo is down -0.5%. The ASX200 is down -1.1% in early afternoon trade, probably affected by the same uncertainty as Wall Street. If it stays at that level it will post a weekly gain of +8.8%. The NZX50 Capital Index is unchanged today and heading for a weekly gain of +1.9%.

Swap rates moved little yesterday, and may have not moved much again today. We don't have wholesale swap rates movement details yet but 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 holding at 2.70%. The NZ Govt 10 yr yield is up +6 bp to 0.78%. The UST 10yr has fallen -3 bps to 0.67%

The Kiwi dollar is at the same level it was at this time yesterday, now just on 62 USc. Against the Aussie we are also holding at 93.4 AUc. Against the euro we are marginally softer at 56 euro cents. That means the TWI-5 is little-changed at 67.5.

The price of Bitcoin is up another +3.3% today from this time yesterday at US$9,504. 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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"There were zero cases (of Covid) again today . . . "
The Covid control strategies in NZ seem to have been effective.
Compared to the UK, on a proportional population basis we would have had 20,000 cases of Covid and 2,800 deaths . . . and proportionally we would still be getting over 150 new cases and over 10 deaths per day.
UK has had case rate 14 times us, and a death rate 140 times us with both still climbing in the UK and yet still had the shut downs with social and economic pains.
We now need to avoid a second wave.


I agree. It’s also concerning Aussie are still having roughly 5 cases/per day on a proportional population basis. If this continues there will be no trans Tasman bubble anytime soon.


Australia have community transmission in the two main states, so no bubble with Australia anytime soon unless we are willing to risk importing cases again

Hoskings and Mr Peters say we should have had the Trans Tasman bubble opened yesterday...

I hope most people see that mr Peters position is just a cynical tactic to distance himself from his coalition in the hope of picking up more votes in September.

He will lose as many with that tactic

It's great to see our strategy succeeding.
The UK is however simply more densely populated, and probably political tastes more dissenting than us. They will continue to have it tough.
We now have it easy, as we should have had it this easy from late February - lock and quarantine our border, build one hell of a wall. Push people to keep on getting tested.


mike H was holding up Sweden as a country that was a success whilst not shutting down, unemployment already at 7.6% death toil higher than neighbours and nowhere near herd immunity, they picked wrong and are now paying for it and the government are doubling down
they have a population double ours at 10 million and have over 4000 deaths


I think when the Cost-Effectiveness Analyisis is completed the 'Herd Immunity' approach will be viewed as the worst performing of all reasonable strategies. Worse even than carte blanche.

Herd immunity without targeted infection of the least at risk 60-70% (ie under 50's) is a terrible strategy. Such an approach would kill less than 1 in 2500, possibly far less as you could do the infection optimally with minimal number of virus particles (for smallpox and measles level of exposure makes 10-20x difference to mortality), ensuring people are in best health beforehand. For Sweden that would be about 4000 dead - less than what have died there to date with their random chance approach.

Would you line up with your family for the government to purposely infect you with Covid-19?

The virus was far more widespread and far less deadly than governments panicked over.

One in five people in London now have antibodies.

The disease is virtually eliminated in that part of the UK due to the increased immunity of the population combined with fairly relaxed social distancing.

I think history is going to judge the more draconian lockdowns poorly once the economic and social costs come home to roost.

"The virus was far more widespread and far less deadly than governments panicked over." References, please - which studies have found this?

You don't remember us all needing to be locked down because the virus kills 3% of people and 15% need hospitalisation. Panic!!!

Turns out that was off by an order of magnitude and very many people don't even know they have it.

I'm sure you know how to use Google.


You don't remember healthcare services being overwhelmed, freezer truck morgues and satellite images of mass graves? We have no clue of the mortality or orders of magnitude yet. Only a bias drunk fool would be confidently crowing they understand this pandemic at this early stage. Calm down and wait for the data to come in and stop staring at your alt-blogs for confirmation of your belief system.

Yeah I remember the media driven hysteria (acknowledge the health system was overwhelmed for a few weeks in northern Italy).

What are you talking about, the data is already in, we have reliable antibody tests, hospitalisation numbers and death numbers.

We know pretty well what percentage of people die, what percentage of people need hospitalisation and the profile of the people most at risk.

And it's nothing near the original doom and gloom scenario we were peddled.

Screw your brain back in, calm down and do the math.

Ah, I see - the standard cop-out when evidence is sought - "find it yourself". The sure sign of someone posting way above their pay grade!

I'm not your personal assistant. Somebody as purportedly clever as you is capable of looking up some widely available statistics and reports.


the Uk were a failure when it came to handling covid 19,
"The absolute number of excess deaths in the UK is the highest in Europe, and second only to the US in global terms,
and history will condemn boris and his government for his response

How many of the excess deaths are caused by the panic rather than directly by the virus?

And how do you stop panic exactly? Cease the freedom of the press? Control the flow of information? Or are you living in some parallel fantasy universe where people don't panic? Or did you not see women punching each other in supermarkets over their toilet roll hoards before any lockdowns or restrictions were announced?

That's a good question for which there is no one answer. On a personal level it's best not to spread more panic.

What we do know however is that an awful lot of people started avoiding the health system due the virus and a proportion of the excess deaths will be attributable to that.

Which bias is it again when you start taking isolated extreme events like morons fighting over toilet paper and extrapolate that more widely?

You'd think in such a dire shortage you'd just use the shower anyway right?

Well, sure, but then, I didn't punch people over toilet roll. My point is, people aren't predictably rational and panics can start for all kinds of reasons. I think a novel virus is a prime candidate for unleashing panic and there is ample evidence for that from before governments instigated responses. We have panic about 5G, chem trails, stock markets, tulips. Hells, there was even a Satanic Panic, where people legitimately believed Satan and his helpers were corrupting the fabric of society. We're a panicky lot.

One of the things often ignored is that the lockdowns and restrictions actually may have calmed the panic. People stopped hoarding. When the restrictions were lifted, we didn't see the return to loo roll and sanitiser hoarding (and this is true of all countries post-restrictions). We could have had a scenario where the panic escalated, but that is also not considered, because it didn't happen. What didn't happen is hard to quantify.

My original comment was about governments panicking, which in some cases, has resulted in lockdowns far stricter than was needed even after the facts became clearer, resulting in more economic and societal harm.

Do you have any evidence for your claim that 20% of a population being exposed is sufficient for herd immunity? I've heard estimates of more like 70% to actually eliminate a disease. Of course 20% being infected will help slow things down, but if the lockdown is relaxed cases will rise once again.

I didn't make that claim. But you are correct more antibodies slows it down. As a result London has an R rate of only around 0.4 and very few new cases. Lots of headroom to relax restrictions.

Perhaps I overread. Nonetheless, current death rates are based on the lock down that was in place 3-4 weeks ago, which even in the shambolic UK was fairly tight. The UK is now in the position where it must either continue with fairly strict conditions (probably stricter than NZ now has and certainly stricter than we will have in a couple of weeks), or relax more and accept several more waves perhaps as deadly as the first.

London is further ahead than the rest of the country, but for example a recent (~a couple of weeks ago?) study from Spain found 5% of the population as a whole had been exposed. Could be a dozen more waves like the one they experienced before herd immunity, if they don't persist with restrictions for many months yet. I suspect the rest of the UK will be similar, almost certainly under 10%.

Brock appears to be interested only information or sources that confirm his bias. London has restrictions so the R0 does not represent the free-roaming virus. We need to reassess that in due course, with data on infection rates and antibodies with looser restrictions...if the R0 remains low, then we can make some assumptions but its much too soon at this stage. As with everywhere in the world, a prudent sensible response is to not underestimate a novel virus. Certainly not one that so easily overwhelms treatment capacity. The next step for the Northern Hemisphere must be to try and manage the virus so that they do not have subsequent waves peaking at the same time as flu season. Lockdown fatigue is a genuine phenomenon. People just can't maintain restrictions for months on end without relief. I think realistically, countries will have to loosen restrictions, let the virus build back up again (but within the capacity of their recently increased healthcare capacities) in order to be able to implement stricter protocols again over the Northern Hemisphre winter, or face a much higher second wave death toll at flu season. Unless we are very lucky and the virus dies out before then.

I didn't claim 0.4 was a "free roaming" rate and I'm well versed in the UK statistics and what the restrictions are both in theory and in reality because I'm currently there on the ground and living through it.

Yeah the antibody levels are lower in the regions (which incidentally is where the problem is now) so the nationwide average is lower.

https://www.spectator.co.uk/article/herd-immunity-may-only-need-a-10-per... The risk of infection is not homogeneous, many people have livestyles with minimal contact (older suburban or rural), while some have huge contact (younger, urban), the infection tends to hit those with the most contact soonest and once they recover they have immunity and R0 for society therefore rapidly drops even without behavior modification. But as we have all clearly seen people choose to reduce spreading behaviours as well even without govt intervention, so the Ro drops further still.

There’s no evidence to suggest that immunity is long standing. It certainly isn’t for common colds and influenza

Do you know why that is? In influenza's case, it's because the virus mutates quickly. Covis 19 doesn't mutate quickly - reports say it has a large genome, which includes an error correction mechanism.

indeed and a carefully inserted cleavage site far removed from anything hitherto encountered in nature is almost certainly artificial in origin (thanks China!) https://nerdhaspower.weebly.com/

You really do have a problem with reality don't you. Forget the facts, the expert opinion, lets stick with the Trumpian view that someone's got it in for us all in the West - Grow Up!

SARS-CoV-2, the virus that causes COVID-19, is approximately 30,000 bases in length, a little over twice the size of influenza and a little over three times the size of HIV, however I don't believe it has any form of mutation repair mechanism.
There are many different strains circulating now as the virus mutates as it moves around the world, see the graphic at this page for an idea of the scale, https://nextstrain.org/ncov/global
New Zealand, due to its location was one of the last places to be infected but received infections from multiple locations, Aus, Italy, China, Iran. Zoom in on NZ on the map in the link above and see the different coloured lines coming in to the country.
The Spike protein which sticks out from the surface of the virus and is involved in the process of the virus infecting the host cell, and is therefore the most likely target of antibodies (both host immune system-derived and those being currently manufactured) has different mutations in different strains. If an antibody's effectiveness is reduced by any of these mutations then it won't be effective against that strain. Therefore it is possible that immunity gained through a previous infection may not protect against future infection by a different strain. In much the same way that the annual flu vaccine has three or four different strains based on those most likely to hit in each year. I read a paper that came out about a month ago that had detected 14 different mutations of the Spike protein circulating round the world.
As NZ had strains from multiple global locations it was likely that multiple forms of Spike protein were circulating. Thanks to the lockdown hopefully now there aren't any which will stand us in good stead for any future outbreaks with regard to vaccines/treatments.

There is no evidence to suggest it isn't either.

I'll tell you what isn't going to work long term though. Fortress New Zealand and living in total fear of just one case slipping through.

obviously you are not in NZ as we are not locked away in fear, people are out and about shopping, visiting places, free to move throughout nz,
this long weekend many are travelling all over enjoying themselves
we are only a couple of weeks away from zero restrictions within nz.

Within the fortress.

Crossing your fingers isn't the best strategy Brock.

As opposed to hiding under the bed?

Can't get under the bed for all the cash I've been taking out the bank!

I seriously can't believe we are still going over this conversation again and again. Ground hog day.

I agree that NZ has been successful (mixture of good judgement, alert decision making and luck) and my old home the UK has been the opposite but you should not compare like with unlike. The UK is dominated by London and public transport is essential. I have no idea what the figures are but Scotland or Denmark would be better comparisons.

We will be safe as long as we keep the border closed.
We will be broke further if we keep the border closed.
When we open the border, the second wave is sure to come.
This is why we should have employed a less strict measure, and maintain the confirmed cases not trying to eliminate the Covid.


How many cases did NZ really have on 25th March when Level 4 came in? How many were incubating? Where were they?
No one knew. So we did, what we did to find out, and it looks like it's worked.

if you look back the government and health department was not intending to wipe it out but control it, BUT we have wiped it out so now we are in a much much better position than many other countries, i fully expect on the 8th june it to be announced we will move to level 1.5 , level 1 with a couple of limitations still in place

If we opened the border with Taiwan they would be more nervous than NZ. With a modicum of luck the 2nd wave hitting us will occur after a vaccine has emerged or the virus has mutated into something far less dangerous. Mutations can go either way but the worse you feel the quicker the go to bed and stop spreading it so milder tends to win.

I always felt it was a great shame BankDirect was run so poorly, it could really have given CBA a massive lead in banking. Unfortunately, as I suspect because it would have competed with ASB, it always seemed to be operating in a straightjacket. It has parallels to Fuji with digital cameras I think.

Yeah it always had the same interest rates as ASB too. Why limit yourself to internet only when you can get the same deal with branches too.
I would consider an online only bank if they let me keep some of the savings.

If we had closed borders it would be a fine thing. We have managed borders at best.

Any named evidence sources beyond "independent houses"?

Food prices in China have rocketed (higher) and inflation, not the official CPI obviously, but the analysis and calculation of inflation that independent houses make, are talking about an inflation rate that is closer to 7.5% to 8%, even some people say 10%,

Was listening to BBC's HardTalk in regards to Covid-19 having plunged the world economy into a deep recession. Apparently China and India are not doing as well as they would like us to believe. https://www.bbc.co.uk/programmes/w3cszbx9

EU High Representative for Foreign Affairs and Security Policy Josep Borrell said on Monday.“First, we live in a leaderless world where Asia will be increasingly important – in economic, security and technological terms. Analysts have long talked about the end of an American-led system and the arrival of an Asian century. This is now happening in front of our eyes,” he told a videoconference with heads of diplomatic missions in Germany. Link

Volkswagen Goes On Billion Dollar EV Investment Spree In China To Compete Directly With Tesla

The NZ Govt 10 yr yield is up +6 bp to 0.78%.
This price service claims the closing price today is 0.835%. A significant fall in price from a low yield recorded at 0.498% on 13th May, which translates to a 3.3610% clean price loss - ~76.67% annualised. Are the RBNZ's QE interest rate reduction endeavours at risk? Our banks' not so pristine credit ratings may warrant an upward revision of deposit rates.

Household deposits boomed and household debt dropped for the first time in 30 years.

Guess where a lot of that printed money went? Surprise surprise... to the banks!

Bank direct - launched by asb to test the concept of internet banking. I was a customer in 1999 and still with them when it finally rolled back into asb a few years ago.
It was to avoid contaminating the asb brand if it didn't work. I would disagree that it failed. All the things it offered are now standard for all the main banks. It became obsolete as asb added all the bankdirect functionality to itself.

Small correction. Housing (mortgage) debt last fell on a monthly basis in November 2010. This month is the largest percentage fall since records began and appears to be only the second time of declining outstanding mortgage debt.
Remarkably , although "new ' lending declined approximately 3 billion over the April month, the aggregate, given the switch to interest only and deferrals, fell by much less, which will keep the banks extremely contented.

If a great big new store opens somewhere does it really create extra (new is the wrong word) jobs? Isn't all that happening is a shift of jobs?

The spend in other stores in the wider area decreases, probably resulting in less jobs in those other stores, probably some of them closing.

These relocated jobs probably have little or no effect on employment rates once wider effects are accounted for. They'd need to result in new export dollars, higher value outputs, or efficiency gains to add value to our standard of living. Otherwise it's just part of the shuffle and churn and tagging bs words like economic benefits while ignoring the negative side of the equation.

Must be some studies on this somewhere. Too lazy tonight to look. Someone enlighten me.

There were some studies undertaken by NZ education institutes stating that inflated dollar consumption claims made by new convention and sport stadium sponsors are offset by less spending locally and elsewhere if attendees travel to an event from out of town

Doens't matter where you buy your beer or wine then?

With NZs population growing by close to 100k PA in recent years (although likely temporarily lower atm) those were/are extra jobs that serve the growing population. However as those jobs don’t result in high-value export dollars and are mainly low-wage service jobs, unless there is serious efficiency gains, I suspect such jobs act to lower GDP per capita and make us all poorer - similar to tourism.

Nido's website isn't even working. That doesn't seem clever, on the eve of it opening.