Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
SBS Bank has cut most 'special' home loan rates, and also their Standard rates.
TERM DEPOSIT RATE CHANGES
Rabobank, First Credit Union, and NZCU Auckland all cut term deposit rates
"WE ARE READY"
Cabinet decided NZ will move to COVID-19 Alert Level 1 on Tuesday as officials are no longer aware of any active cases in the country.
HASTENING THE PULLBACK
The COVID-19 lockdown appears to have had a bigger impact on commercial building projects than residential construction, with the value of new building starts dropping -4.2% in the March quarter compared to a year ago. But the actual impact of this data applies just to the last two weeks of the quarter, so weakening confidence of construction firms was already starting to show and the lockdown has hastened it. Q2 won't be pretty and there is little evidence that those early (pre lockdown) negative 2020 trends are going to turn around.
A KICKSTART?
But it is not all grim. BNZ's economists say: "We think the move to Level 1 will provide the economy a significant boost. For the vast majority of us there will be little difference in our day to day activity as we emerge from Level 2 but we think the confidence impact will be tangible. Confidence has a huge impact on both consumer spending and investment activity. And there is already some evidence of household expenditure picking up in excess of our expectations."
CO-OPERATIVE BANK ANNUAL PROFIT DROPS
The Co-operative Bank posted a -30% drop in March year net profit after tax to $6.7 million as the Covid-19 crisis made its presence felt. Bad debt expenses surged to $8.2 million from $3.6 million with a $6 million increase in collective provisions reflecting the likelihood of increased future loan losses stemming from Covid-19. The bank says it's supporting more than 2500 loan payment deferrals, equivalent to about 8% of its home loan and personal loan customers.
SURPRISING REFUND
Insurer Tower says it will be refunding customers $7.2 mln, due to the lower cost of car claims during the COVID-19 lock-down period, because "it's the right thing to do". Know any other insurer who has done that? We would like to know.
LOCAL UPDATE
There were zero new Covid-19 cases again today in New Zealand, and finally there is no-one left with it in the whole country. We are now at sixteen days with zero new cases.
AUSTRALIA UPDATE
In Australia, there have been 7265 cases (+5 since this morning), 102 deaths (unchanged) and a recovery rate of just under 92% (unchanged). 25 people are in hospital there (+7 since this morning) with 5 in ICU (+2). There are now 523 active cases in Australia.
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 7,006,400 and up +150,500 from when we checked this morning. This is rising at much faster pace than recently. American cases rose by +15,000 since this morning to 1,940,500. US deaths now exceed 111,000. Global deaths now exceed 403,000.
EQUITY MARKET UPDATES
The move to Level One has brought a big rise in the NZX50 Capital Index which is up +2.6% so far. Australia is on its Queens Birthday public holiday today. In early trade, Shanghai is up +0.3% in very early trade, Hong Kong is up +0.6% and Tokyo is up +0.9%.
SWAP RATES UPDATE
Swap rates may have changed little today, with any firmness only at the long end. 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 still unchanged at 0.26%. The Aussie Govt 10yr is up another +10 bps to 1.17%. The China Govt 10yr is down -2 bps to 2.87%. And the NZ Govt 10yr yield is up over 1% today for the first time since April 9 at 1.01%. The UST 10yr is up another +9 bps since this time Friday to 0.90%
NZ DOLLAR FIRM
The Kiwi dollar has continued to rise, up marginally to now just on 65.2. Against the Aussie we are also firm at 93.6 AUc. Against the euro we are firm at 57.8 euro cents. That means the TWI-5 is up to just under 70.
BITCOIN FIRMS
The price of Bitcoin is firmer from its open this morning at US$9,728, a 2.4% rise. 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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71 Comments
"NZX 'making enquiries' about Air New Zealand statement to stock exchange"
So, when does Air NZ drawdown on its Government Facility of $900million? Probably when it has shrunk itself to an old Fokker Friendship and one pilot. (That's what the Government money will end up buying!) Until then, it probably doesn't have to adhere to any of the clauses in the facility. You know, like trying to preserve jobs.
There's something not quite in the spirit of the 'Team of 5 Million' going on here...
(As I've suggested before, investment bankers will have looked this deal over and said "Righto. How do we make money out of this" and there's $900 million reasons to find the loopholes....).
America bails out the wealthy, ag
ain
https://wolfstreet.com/2020/06/07/the-wolf-street-report-america-convul…
FHB'ers want to buy but fewer will be able to afford them with less work.
On the flip side a better economy will give them a better income but house prices will increase.
On one hand we could keep overseas people / companies out, stylifing the economy further to benefit FHB'ers and on the other hand we could let people / bussiness in that benefit all of NZ.
I would rather the economy us not be held to ransom for the sake of a few.
There are two issues. 1) How much prices might come down, and 2) stopping rentier speculative non-value-added growth from happening like it did in the past.
I would would settle for no price drop if the legislative changes were made so none of the second was allowed to happen.
Easy enough to do.
The point is that the economics of jobs is not linked to how much house prices have to increase by.
The best housing jurisdictions have plenty of jobs and affordable housing.
So now what do we do with the construction sector that are now out of work and adding to unemployment and deterating the economy further when it is already in hard times? Kiwi Build Two... Labour has already proven that they can not get it done. Private enterprise can and will do it and a by far less cost than any Govt can do.
There will be price drops, people out of work means less money in the system which effects almost everybody.
There is no point in building more unaffordable housing because as you say if there are more unemployed which there is regardless because of CV19, it will be now even less affordable.
It's easy enough to change legislation so that at whatever level the housing gets to, then it can not speculate away again, or go bust in the future, just have a stable priced housing market.
At least 1/3 the value of presenting housing is what is known as non-valued added pricing, which is caused by monopolistic noncompetitive pricing, mainly on the value of the land. What that means if you have a mortgage that is greater than 2/3rd of the value, then that extra % above this, you are paying debt on thin air.
And yes the Govt. should keep out of the actual building.
Starting to see for lease signs appearing more and more around Christchurch today also took a stroll at Northlands in Papanui and noticed a lack of shoppers compared to pre lockdown and also nearly every shop had a sale sign like it was boxing day yet no shoppers looks like very tough winter ahead.
Becnz, when you close down business for a few months p, what else would you expect?
People are not going to be spending on things that they don’t need while their jobs are a bit risky!
They will be paying their mortgage or rent first or they won’t have a necessary roof over their heads!
It’s OK though, we have such a great bunch of Financially successful people running the country.
Agreed but the way main stream media report that everything is great unemployment will stay below 10 percent/houses selling better than ever but from my view I can see alot of problems already.
I will be intested to see how reporting season goes for big business and how many more large layoffs over next 3-5 months even with government funny money trying to keep it all going.
Lets see what the next update is that will show what is the new future.
We just had a lockdown so they should have said we just had our biggest days ever due to massive demand from shoppers who have not spent much for over a month but instead just the same as last year ?????
How about rephrasing that?
Now we can get back to the economic trend which was going to continue downward, as it had been for 10 years (obviously) and for 50 years (if you knew what to look for).
And do something about learning to live in a maintainable fashion. (Which has nothing to do with growth, of course). But we're not going to do that. are we? Full steam ahead and shut up that man pointing to the iceberg.
I think at least some people have changed. I find myself thinking, do I really need it , before buying something. I also tend to think , where can I spend my money that will help with local jobs etc, rather than how much money can i spend in total . And finally , the debacle surrounding recycling atm(the lockdown just compounding what we already knew , no market for plastics and paper products) makes me cringe to buy anything made / wrapped of such.
i would hope future govt spending / assistance is done in a similar manner , jobs / businesses saved per $ spent , rather than continuing to dole out more money. And I think we are going to need a huge mental health spend / effort.
US is in throws of a major political/civil disorder crisis, on top of an economic and jobs crisis, on top of an ongoing epidemic that they haven't got under control, with an election looming in a few months between two terrible septuagenarian candidates who both lack the brains or judgement to do an effective job. I'm not surprised if there is flight from USD to safer harbours, though not sure NZD is a better bet at the moment.
Im hoping Biden gets in. Full stop.
It will be interesting to see who he choses as a running mate. Unfortunately he has limited his choosing field by a large margin saying he is going to choose a women, just for the sake of it, not necessarily the best candidate. Hopefully for the country the best candidate will be a women.
I also hope he will surround himself with good people who can run things if need be. Under trump, anyone that had an IQ better than a 10 year old has been fired. ( I apologise to 10 year olds).
The USA has totally lost its moral compass under trump, along with many other things including whatever respect they had in the world. They need to try and get that back. Biden is the only choice. Nothing to do with party lines. Simply MUST get trump out if they want to crawl back onto the world stage and salvalge some iota of respectability within and without the country.
Bring out the IQ America.
Yeah, I'd tend to agree. All the "checks and balances" have not been so effective when one party has captured every part of the government and appears happy to abuse that power. It seems to have fomented a rather precipitous decline in the institution of the republic. Biden may not be a great candidate, but you would hope that the Democrats might bring back greater respect for the republic itself and look to build it back up.
Looking at the real economy ... I found out my pilates studio was a casualty of Covid today. Walked up and down Parnell Road and there is a lot of empty space where businesses once were. Another Flight Centre gone, another two cafes gone. Things are slowing down for sure.
China exports back into contraction
https://www.cnbc.com/2020/06/07/china-may-exports-slip-back-into-contra…
China's biggest export market is the EU, look at the graph at the bottom of this article, thank god things are going swimmingly well in the good old US of A.
https://alhambrapartners.com/2020/06/04/ecb-doubles-its-qe-or-the-more-…
As a result, China posted a record trade surplus of $62.93 billion last month, the highest since Reuters started tracking the series in 1981, compared with the poll’s forecast for a $39 billion surplus and $45.34 billion surplus in April.
China’s trade surplus with the United States widened to $27.89 billion in May, Reuters calculation based on customs data showed.
what do you think about this article?
https://www.zerohedge.com/economics/eu-economy-traveling-along-same-wor…
Interesting discussion going on: https://edition.cnn.com/2020/06/06/us/what-is-defund-police-trnd/index…
I don't agree with entirely defunding (the extreme end of the spectrum they're discussing) but it does look like (especially in cases where they spend money on military hardware) some money would be better allocated in American society to addressing some of the underlying issues (and away from some of the more predatory police practices). Policing in USA does not seem much like policing here.
Social Investment, y'know.
Scott Adams at 45 min in
https://www.youtube.com/watch?v=b1934V1Npmw
He's constructed an argument based on some interesting assumptions:
1. Race is not a factor. Only poverty is.
2. Police violence is only caused by resistance to police.
He also claims no one has suggested specific answers, only empathy, and no one can or has tried to define the problem or has tried.
He doesn't back up his claims, and appears not to have checked out what research IS available into racial bias and its effects - either economic or in policing. (Broadly I'd intuitively agree that poverty is likely to be a primary cause, at which point access to opportunity and even active denial of opportunity over the last decades is relevant to consider - beyond such obvious examples of the past as Black Wall St, segregation, access to banking etc.).
His ideas conservative / progressive comparison is odd too, requiring willfully ignoring policy discussions.
I agree there are problems with cancel culture. Douglas Murray's book The Madness of Crowds highlights some of these issues (although weirdly one of the issues he discusses in his intro he appears not to have checked out in any depth).
You've all heard of Tamir Rice...But how many of you have heard of Daniel Shaver?
Daniel Shaver was discussed plenty on reddit, for example. Do these people writing this sort of stuff not realise how much wider cases of police brutality / shootings are actually discussed? Missing research, perhaps.
A little request for an article. Could Interest do some digging on the 'shovel ready projects'. The announcement seems to be a long time coming, these clowns in govt, especially Twyford and Jones need to be held to account.
The news needs to be shifting massively to the economic crisis now that the health crisis is over.
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