A review of things you need to know before you go home on Tuesday; another rate cut, record NZGB issue, consumer sentiment lower, UK visitors bring coronavirus in, swaps unchanged, NZD up, & more

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

MORTGAGE RATE CHANGES
No changes announced so far today.

TERM DEPOSIT RATE CHANGES
The Co-operative Bank has trimmed term deposit rates again. 

VERY EASY MONEY
If you thought bank term deposit interest rate offers were low, and are miffed that no-one seems to want the funds you have, at a decent rate, at least be satisfied you as a taxpayer are getting a good deal. Today, the Treasury launched a new April 2024 bond with a 0.5%pa coupon via syndication and bravely sought $7 bln. Then the syndicators were swamped with demand - $14 bln showed up competing for some of that. And those bidders pushed the yield down to 0.43%. That funding came in so easily, that Treasury have decided not to cut back on future bond issues, effectively raising the 2019/2020 bond program to $29 bln from $25 bln.

IN A LIQUIDITY ZOMBIE ZONE?
It is worth thinking about the economic implications of this $14 bln bid. That means there was nearly 5% of GDP of private money not willing to invest in private opportunities in New Zealand, preferring the safety of almost no yield (and the potential of capital gain from lower future interest rates). The Government has picked up half of that to "invest" in make-work infrastructure projects, many with political priority and few with meaningful productivity benefits. But the other $7 bln will languish, awaiting future Treasury issues. It seems unlikely it will be invested in the productive private economy and time soon. And until that attitude changes, we will be stuck in a zombie zone.

CONSUMER SENTIMENT DOWN, BUT NOT OUT
Consumers aren't as restrained as investors, it seems. Westpac reports: "With Covid-19 pushing the economy into a deep recession, consumer confidence has fallen to low levels and households have wound back their plans for spending. Given the extent of the economic downturn, the decline in confidence this quarter was surprisingly moderate."

INFLATION UPTICK BUT WEAK
ANZ reports: "The ANZ Monthly Inflation Gauge lifted 0.2% m/m in May – a partial rebound from last month’s 0.8% fall. Another 0.2%pts was trimmed from the annual measure, which is now running at 2.8% y/y. There were still a few residual measurement issues in May, with some services having not resumed at the time we usually capture prices. The dust will settle on these data over the coming months, and when it does we expect the inflation pulse to be weak."

SHOWING YOU THE MONEY
In the May 2020 Budget, the Government committed to spend at least $129.1 bln in the year starting on July 1. That will be about 44% of expected GDP. $54 bln will be in just three 'Votes'; Education, Health, and 'Social Development', all consumption spending. We are continuing our Budget analysis and summaries, and you can see in useful detail how that $54 bln will be spent. For example, did you know that National Superannuation now costs $16 bln alone or 5.5% of GDP? It is our largest single expense. All twenty DHBs require $15.1 bln, up +6.6% in a year. Our Universities need $3 bln over and above the fees they charge, secondary education costs $2.8 bln (+15.8%) while primary education takes $3.9 bln (+9.2%). And all these large sectors have active lobbyists and unions claiming it isn't anywhere near enough. Details here.

DISASTER!
Two people from the UK were given a special border exemption to attend a funeral in New Zealand. They have now been tested as COVID-19 positive, the first cases here since Level One. Contact tracing systems are getting a live workout. You would hope that border controls will be redoubled after this breach. Tearful TV pleas, and talking heads who think we have over-done the lockdown, shouldn't sway proper biosecurity.

AUSTRALIA UPDATE
Infections are rising in Australia too. In Australia, there have been 7347 cases (+12 since this time yesterday), 102 deaths (unchanged) and a recovery rate of just over 93% (up). 17 people are in hospital there (+1) with 4 in ICU (+1). They now 394 active cases. Small numbers of community transfer cases are popping up there however.

GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 8,015,100 and up another +116,000 from this time yesterday. This is still rising at a faster pace than recently. (When this tally exceeds 10 mln, we plan to give up reporting the number daily. It's in the wild, unstoppable on a global basis.) American cases rose by +20,000 since yesterday to 2,113,400. US deaths now exceed 116,000. Global deaths now exceed 436,000.

EQUITY MARKET UPDATES
After a small loss yesterday and being down -7% since last Wednesday, the ASX200 is roaring back today, up +3.8% so far in this session. The NZX50 Capital Index is up +0.9% near the end of the session here. Shanghai is up +1.0%, Hong Kong is up +2.9% and Tokyo is up +3.3%. All these rises follow Wall Street earlier that rise +0.8% at the end after a session that started down -2.4%, so a +3.2% turnaround in the session. Driving the sentiment shift is the usual lubricant - the promise of more huge stimulus from American authorities. Asset inflation is accelerating.

SWAP RATES UPDATE
Swap rates probably rose at the long end today, but unlikely at the short 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 at 0.27%. The Aussie Govt 10yr has risen +6 bps to 0.93%. The China Govt 10yr is up +9 bps to 2.86%. And the NZ Govt 10yr yield is also higher, up +3 bps at 0.83%. The UST 10yr is up +10 bps since the end of the Friday Wall Street session at 0.77%.

NZ DOLLAR UP
The Kiwi dollar is up a strong +¾c from this time yesterday to 65 USc. Against the Aussie we are lower at 93.3 AUc. Against the euro we are firmer at 57.3 euro cents. The net off all that means the TWI-5 has risen to 69.5.

BITCOIN RISES
The price of Bitcoin is higher today at US$9,472, up +2.3%. 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 ».