Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Big news! Floating rates are on the way down, finally. Both Kiwibank and ICBC cut theirs today. More here. Completely in the shadow of Kiwibank is ANZ who trimmed two fixed rates, neither market-leading.
TERM DEPOSIT RATE CHANGES
ICBC cut term deposit rates. Update: And so now has ANZ with a late update, essentially trimming another -10 bps from most rates.
BIG BOUNCEBACK
Statistics New Zealand says on a seasonally adjusted basis retail spending leapt +79% in May as businesses reopened after the April lockdown. The full perspective is here. It's a bigger, quicker bounce-back than was expected but it is still a very long way from pre-lockdown 'normal'.
COMCOM FINALISES 'FIT & PROPER' LENDER CRITERIA
The Commerce Commission says it has finalised the criteria it will use to assess whether a lender is "fit and proper" under changes to the Credit Contracts and Consumer Finance Act. The criteria focuses on whether all directors and senior managers of lenders and mobile traders are competent, financially sound, honest, reputable, reliable and competent to do the job, the Commission says. The criteria will be in place from October 2021 at the earliest. Relevant individuals must be certified as ‘fit and proper’ by the Commission before the lender can be registered on the Financial Service Providers Register. Lending without certification could result in penalties of up to $600,000 for a company or $200,000 for an individual.
NEARLY 3/4 OF BUSINESSES USED WAGE SUBSIDY SCHEME
Some 71% of New Zealand businesses received support under the Government's Wage Subsidy Scheme, Deloitte says, due to the massive impact the Level 4 COVID-19 lockdown had on businesses. There was nearly 2.7 mln people in the employed labour force at March 31, and 414,000 worked for the Government in some way. Another 22,000 work for banks who are similarly insulated. So after adjusting for these workplaces, that means that only a quarter of the employed private workforce were not on the scheme. BNZ is pointing out that 700,000 of those on the scheme are about to move out of protection soon.
BRACE FOR WIDESPREAD JOB LOSSES
In their review of the BNZ-Seek monthly employment report, they make this point: "However, with the highly-expensive government wage subsidy scheme being scaled back already, business’ broad focus for the next while will likely be on right-sizing staffing levels with a view to the new future, rather than embarking on a hiring surge now that COVID-19 appears to have been eliminated locally."
COUNTDOWN
It is now 100 days until September 19, the New Zealand election day.
BETTER INSURANCE COMPARISONS COMING
AA Insurance has announced a plan. But the industry itself tightly controls these comparisons, ensuring that independent media (like interest.co.nz) can't get the detail needed to to make available trusted comparison alternatives to their options. General insurance for Kiwi households is an industry controlled by just a couple of Aussie-owned majors, distributing though a series of brands to make it look like there is 'choice'. It's the legacy of a major competition regulation failure following the Christchurch earthquake and the GFC.
TRYING TO MAKE SENSE OF A PUZZLE
In a webinar, Rob Campbell, Sharon Zollner and Andrew Bascand tried to make sense of the dislocation of equity and debt markets with the real economy and the divergence between the rebound in financial markets and the challenging economic outlook. It's a real puzzle - not to understand the economic forces, but to understand investor motivations (worldwide).
ANOTHER BILLION, HIGHER YIELDS
Another in the new rapid-fire series of bond tenders, another $1.05 bln added to public debt. And the yields the Government is having to pay, while still historically low, keep on rising. The $500 mln offered for April 2023 bond attracted $980 mln in bids and resulted in a 0.31% yield, up from 0.08% in mid May. The $350 mln offered for the April 2029 bond attracted bids of $696 mln and pays a yield of 0.73% pa, up from 0.53% in mid-May. And finally, the $200 mln April 2037 bond attracted bids totaling $490 mln and paying a yield of 1.12%, up from the mid-May level of 0.98%. It is very likely that Treasury will issue a new 2024 nominal bond next week, size unknown at this stage. This one won't be by tender, rather by syndication.
UNEXPLODED HAND GRENADE
According to data tracked by reader Stephen Hulme (Audaxes), the NZ Government now has more than $100 bln in debt outstanding and is now obligated to pay more than $10 mln in interest every day. This could get toxic is bond yields rise, and quickly. In the recent 2020/21 Government budget, they expect interest to cost the taxpayer $3.5 bln in the next financial year. That all assumes interest rates remain low.
RUSH TO SELL
In Australia, new residential real estate listings blew out in April with the eastern states adding more than 20% new stock on the market in just one month as the virus lockdown deepened.
UNDERTAKER OVERLOAD
And the head of ASIC has warned there will not be enough liquidators to deal with coronavirus-related corporate collapses.
AUSTRALIA UPDATE
In Australia, there have been 7285 cases (+15 since yesterday), 102 deaths (unchanged) and a recovery rate of just over 92% (unchanged). 20 people are in hospital there (+1 since yesterday) with 3 in ICU (+1). There are now 439 active cases in Australia (-9). A Victorian man in his 30s who attended Saturday’s Black Lives Matter rally has tested positive for COVID-19, and the worry is that protests are fueling community transfer. Their government (and its Murdoch media allies) is using the risk to discourage protest gatherings.
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 7,357,800 and up another +121,000 from this time yesterday. This is still rising at a faster pace than recently. American cases rose by +21,000 since yesterday to 1,999,900. US deaths now exceed 113,000. Global deaths now exceed 416,000 - at least, as have been officially counted.
EQUITY MARKET UPDATES
Wall Street ended down -0.5% in today's session. That followed European markets that were down about -0.7%. Asian markets have opened mixed but lower. Shanghai is flat, Hong Kong is down -0.5% and Tokyo is down more than -1.0% in early trade. Locally the ASX200 is taking a thrashing, down -2.3% in afternoon trade and AfterPay is leading the falls. The NZX50 Capital Index is down -0.9% in late trade.
SWAP RATES UPDATE
Swap rates probably held unchanged 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 back up +1 bp to 0.26%. The Aussie Govt 10yr has retreated further today by -10 bps to 0.93%. The China Govt 10yr is down -1 bp to 2.85%. And the NZ Govt 10yr yield has fallen by -8 bps to 0.86%. The UST 10yr is down -11 bps since this time yesterday at 0.72% as economic risk concerns rise.
NZ DOLLAR STILL SLIGHTLY SOFT
The Kiwi dollar has held its recent level at 65.2. Against the Aussie we are still at 93.7 AUc. Against the euro we are down slightly to 57.3 euro cents. That means the TWI-5 is still down slightly to 69.6.
BITCOIN FIRMER
The price of Bitcoin is up +1.8% from this time yesterday to US$9,938. 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 ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.