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 Heretaunga Building Society cut term deposit rates.
MORE THAN EXPECTED, LESS THAT WHAT'S COMING
GDP fell by -1.6% in the March quarter, reflecting the impact of the Covid lockdown. The result was weaker than expected, but the difference most likely reflects temporary adjustments to account for the lockdown period. More here. Infometrics headlined their review "You ain't seen nothing yet".
HUGE WRITEDOWN
Our national airline has issued a forecast of earnings for the year to June 2020, in which it expects an 'underlying' loss of $120 mln and other 'significant item' losses of more than half a billion dollars.
BUYERS STILL THERE FOR FARMS
There were just 91 farms sold in May 2020, well down from the 126 sold in May 2019, but probably not surprising given the lockdown. You may even think is was impressive given the lockdown. Finishing properties sold particularly well in the circumstances (23), as did demand for dairy units (12 - which isn't much different to the 14 sold in May 2019). Also selling well were arable farms (16). But year-on-year prices are all well down on a per hectare basis. Sales of horticulture units came to a virtual halt (just 4 in May).
LIFESTYLE BLOCKS A TOUGH SELL
There were 386 lifestyle block sales in May, about half the 725 sold in May 2019. Prices of those that did sell were +3.6% higher than a year earlier, although the low sold numbers may have skewed the median prices somewhat. It is not possible to tell which way. But sales took a lot longer to achieve. Regional prices moved around a lot. Auckland (+16%) and Bay of Plenty (+16%) achieved good year-on-year gains while Hawke’s Bay (-25%) and Otago (-20%) suffered steep declines.
RESIDENTIAL INVESTMENT SHRINKS
Today's release on the March National Accounts gives a a look at the 'progress' we are making (or otherwise) in new residential investment. The track record has been spotty with the best recent gains happening in March to December 2019 averaging a +4.3% rise. That had been signalled by the 2018 building consent data. The March 2020 data shows it falling away with a -4.6% drop.
NO PROGRESS
For all the trouble with trade and trade wars between the US and China, Beijing just can't find virtually any support for using the yuan in international trade transactions. In May 2020 only 1.2% of them were in the Chinese currency, almost unchanged in two years. Meanwhile the proportion of transactions in US Dollars rose and over the same period it grew from a 43% to a 46% share. The main loser however was the euro.
A HOUSING SALES BAN?
In Australia, it is being revealed that RBA economists considered advising their federal government to halt home sales in response to the pandemic disruption and as concerns rose around the prospect of a housing crash. That didn't happen obviously, but that officials were considering it seems extraordinary.
TOURISM'S PLIGHT EXTENDS
Qantas has cancelled most of its international flights for the next four months as Australia remains closed to tourists. New Zealand is the exception.
LABOUR FORCE EARTHQUAKE
Australia shed -227,000 jobs in May, with the unemployment rate reaching 7.1% and its highest in twenty years. Part-timers have been especially hard hit. When the losses in April are added, it means the country has now lost more than -824,000 jobs over the past two months. Worse, their participation rate is falling sharply, meaning another -420,000 left the labour market since March.
NZ GREEN INVESTMENT FINANCE MAKES FIRST INVESTMENT
Minister for Climate Change James Shaw says the first investment made by New Zealand Green Investment Finance will see it invest $15 million to electrify vehicles, generate renewable energy and upgrade energy efficiency, thereby cutting emissions, at Wellington’s port. Green Investment Finance was created to support New Zealand’s transition towards a net-zero-emissions New Zealand by 2050.
AUSTRALIA UPDATE
COVID-19 infections are rising faster in Australia. In Australia, there have been 7390 cases (+20 since this time yesterday), 102 deaths (unchanged) and a recovery rate of just over 93% (up).
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 8,329,200 and up another +176,000 from this time yesterday. This is also rising at a faster pace than recently. (And a reminder, when this tally exceeds 10 mln, we plan to give up reporting the number daily.) American cases rose by +27,000 since yesterday to 2,162,900. That is a much larger daily rise. Epidemiology advice is being ignored in many states. US deaths now exceed 118,000. Global deaths now exceed 448,000.
EQUITY MARKET UPDATES
The gains we noted this morning on Wall Street vanished at the end of their trading session and the S&P500 closed down -0.4%. Shanghai has opened -0.3% lower, Hong Kong is down -0.9% at their open, and Tokyo is down more than -1%. On the ASX200, they are down -1.0% in mid-day trade and the NZX50 is down more than -1.4% in late trade.
SWAP RATES UPDATE
Swap rates were almost certainly unchanged today (at least as at 3pm). 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 up +1 bp at 0.28%. The Aussie Govt 10yr has dipped another -3 bps to 0.88%. The China Govt 10yr is little-changed at 2.88%. The NZ Govt 10yr yield is soft, down a bit more than -1 bp to under 0.84%. The UST 10yr is down -2 bps since this time yesterday at 0.71%.
NZ DOLLAR HOLDS
The Kiwi dollar is unchanged from this time yesterday at 64.4 USc. Against the Aussie we are firm at 93.9 AUc. Against the euro we are also marginally firmer at 57.3 euro cents. That means the TWI-5 is still at 69.2.
BITCOIN STABLE
The price of Bitcoin is basically unchanged yet again, today at US$9,403. 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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58 Comments
When you're broke, just put up the price of your goods to make more money and save your balance sheet ( what's left of it!)
Forget about the fact that your turnover will collapse - it's the price of your valuable product that matters.
(NB: Expect Jim Boult's constituents to commensurately adjust the tariffs of their lodgings as well)
An announcement by Air New Zealand it will increase flights during school holidays came hours after it emerged a one-way ticket from Auckland to Queenstown for the same period would cost $409.
A ticket on the exact same flight two weeks later, outside of the July school holidays, was $79.
High cost of air fares just the start for CPI increases/inflation?
https://www.interest.co.nz/charts/prices/consumer-prices-index
Yes and I've noted our runaway house prices appeared to start at the same time as our 2% inflation targeting as well - who'd have thought. You don't measure inflation correctly so keep driving interest rates to zero and everyone goes silly on lending mortgages for houses, creating the mother of all debt/price bubbles.
I enjoy Doug Noland’s weekly commentary – unfortunately he’s a fairly rational guy trying to make sense of (or yelling against) irrational Central Bank/ market behaviour.
““Moneyness of risk assets” has been fundamental to my global government finance Bubble thesis. Dr. Bernanke collapsed interest rates, forced savers into the securities markets, and repeatedly employed the government printing press (QE) to backstop the markets – in the process nurturing the perception of safety and liquidity for stocks, corporate Credit, government bonds and derivatives.”
“Cash is Trash”
https://worldoutofwhack.com/2020/03/14/the-loss-of-moneyness-doug-nolan…
Your link seems to have changed. I went to Wikipedia to read about the Mau Mau - interesting reading and it ends with ""On 12 September 2015, the British government unveiled a Mau Mau memorial statue in Nairobi's Uhuru Park that it had funded "as a symbol of reconciliation between the British government, the Mau Mau, and all those who suffered". This followed a June 2013 decision by Britain to compensate more than 5,000 Kenyans it tortured and abused during the Mau Mau insurgency.""
I am not sure which link has changed - they have not for me.
In respect of the veracity of Wikipedia entries, please note the following:
So what is Truth? According to Wikipedia’s entry on the subject, “the term has no single definition about which the majority of professional philosophers and scholars agree.” But in practice, Wikipedia’s standard for inclusion has become its de facto standard for truth, and since Wikipedia is the most widely read online reference on the planet, it’s the standard of truth that most people are implicitly using when they type a search term into Google or Yahoo. On Wikipedia, truth is received truth: the consensus view of a subject.
That standard is simple: something is true if it was published in a newspaper article, a magazine or journal, or a book published by a university press–or if it appeared on Dr. Who.Link
First time it went to an article which from memory was about concentration camps in Kenya. Since then someting on Twitter about God being English. Probably a bug on my mouse. I thought you had a made a point. Didn't really need a 'what is truth' discussion - there are facts and then selection and interpretations of facts. I thought your point was about the hiding of facts especially by governments that find them embarassing. I wasn't disagreeing but pointing out the UK govt has now 60 years later admitted fault. IMHO one expects a govt to behave to a higher standard than possibly fanatic or self-interested rebels. The discussion is about getting meaning out of history.
Lapun,
It just so happens that I am currently taking a course on The Controversies of Empire from The University of Exeter. The Kenyan 'problem' is one of the issues covered. The British government went to great lengths to cover up what had been done and destroyed many documents. Fortunately, a few damning reports finally emerged. Compensation amounted to 3000 pounds and only to those still living.
"COVID19: Two women let out after National MP lobbied for release."
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12341059
Yes Minister
Nope you're right my bad, it says they weren't tested for 3 days!
That said, if people are given dispensation to travel on compassionate grounds I'm sure the MoH would have instructed them to get tested first. Whether they get themselves tested or not is up to the individuals. Otherwise send the police after them?
And the errors keep coming...
Covid-19 border botch not a 'witch hunt', Prime Minister Jacinda Ardern says
https://i.stuff.co.nz/national/politics/121874669/covid19-border-botch-…
This is what happens when you forget about Ministerial Responsiblility (hold that thought).
PM has hit the panic button and called in the Military.
https://www.google.com/amp/s/www.dailymail.co.uk/news/article-8429991/a…
Jacinda Ardern's massive blunder: Military is called in to deal with COVID-19 after two infected travellers let out of quarantine early drove across the country 'kissing and cuddling strangers' before testing positive
She needs keep out of it, let military man fix the problem, he may or may not want to fit the exact mis step. Remember there will be nothing to see, the quarantine process is a mess, no structure, no performance measure, no reports or audit logs to see, it's a complete floater. PM needs to stop sticky breaking, otherwise the military guy will walk away.
Any involvement now by PM should be limited to sacking Ministers, restructuring Cabinent and adjusting mp list.
By forgetting Ministerial Responsibility, or not understanding it she has orchested the current situation. The lame & injured Health Minister is now lashing out, lashing out looking for payback.
https://i.stuff.co.nz/national/politics/121874465/claims-in-parliament-…
Health Minister David Clark has alleged in Parliament that National MP Chris Bishop lobbied for the early release from quarantine of two sisters who later tested positive for coronavirus.
Clark is too emotional to see the self destruction here. It doesn't matter what lobbying happened, the lobbying and crap process and quaratine test procedure have nothing to do with each other. As young people would say this is a real dm bro.
And remember this week has been wasted on this, Monday PM would know positive tests coming, so it's a week wasted from the economic plan.
Wallace Rolling could have done a better job, and be nicer about it all too!
https://www.dailymail.co.uk/news/article-8271483/Jacinda-Ardern-urged-s…
Dude, take you blue blinkers off for a second.
Bishop is scum of the earth if these allegations are true. He should have been nowhere near those two sisters asking them to be set free.
But then as bomber Bradbury so nicely puts it, he is 'A former cancer pimp'.
And then Woodhouse 'somehow' just happens to know all about it in order to smear the govt.
Both them should have their citizenship revoked if this stuff is true.
I'm sure this would be judged at an all time low even if it was American politics. Most kiwi's probably like to believe our politicians, even when in opposition are a long way above that. Apparently not.
Nah, you're incurably tribal if you think an MP lobbying to help his constituents is wrong just because he isn't on your team. The problem here, the only problem here, is that the quarantining system wasn't robustly ensuring that testing was carried out as required before MOH released them. No amount of diversions on your behalf for the government will alter that, and the opposition has done a service to NZ in bringing to light, again, the poorly run system and showing, again, the omnishambles that is the Coalition doing anything. Coalition are forever hiding their screwups aided by their friends in media. Voters need to see how badly they are doing their job.
Alas not Foyle, voted blue multiple times, would happily do so again if I thought their MP's could be trusted. Pretty hard to do that at the moment though.
But are you saying that you agree that agree with Bishop lobbying for these two covid imports to be released from quarantine?
I'd argue the public service folk dealing with these people would be more than appreciative if he minded his own business and let them do their jobs. Which in all honesty they seem to be struggling with at the best of times.
Muzled
If they could be trusted....
How does PM (or any of them) square this?
It's been revealed the military official who was yesterday announced as the new head of NZ border controls has in fact been in charge of isolation facilities & repatriation for at least the past month...
MONTH...
- Checkpoint.
Yes muzled the truth has now emerged: It was NATIONAL MP's CHRIS BISHOP who lobbied the Ministry of Health for the two Covid-infected sisters' being allowed to break quarantine in an Auckland hotel to attend a funeral in Wellington. Already the likes of the right-wing 1ZB's Heather Duplessis-Allen on the drive show was joining with National MP Michael Woodhouse to try and put the blame on anybody else they could think of but CHRIS BISHOP, the true culprit. This is inexcusable by Chris Bishop.
If I was the current dictator of NZ, I would sentence the following people to the following punishment:
Chris Bishop...................................summary execution by firing squad.
Winton Peters................................5 years hard labour for prematurely encouraging the opening of our borders with Australia and not pulling
his weight as the leader of a coalition partner in helping with the oversight of the quarantine compliance. Jacinda Adern...............................to step down as leader of the Labour Party and be subject to a probationary period of 2 years.
Michael woodhouse......................5 years hard labour for egregiously lying to protect Chris Bishop.
Even RB lay off staff ...
https://i.stuff.co.nz/business/300037872/reserve-bank-restructures-digi…
"A HOUSING SALES BAN?
In Australia, it is being revealed that RBA economists considered advising their federal government to halt home sales in response to the pandemic disruption and as concerns rose around the prospect of a housing crash. That didn't happen obviously, but that officials were considering it seems extraordinary."
Wow. Certainly extraordinary. In my experience, when markets are closed, there is general panic when they open up again. Look at a recent example, when US share markets closed after 911 in 2001, and the subsequent re-opening.
Rayshard Brooks shooting: Atlanta officer charged with felony murder -https://www.theguardian.com/tv-and-radio/2020/jun/17/rayshard-brooks-ch…
Prosecutors said Brooks, who was black, posed no threat when he was gunned down and that the white officer kicked him and offered no medical treatment as he lay dying on the ground.
AJ care to comment?
"Mr Brooks, keep breathing for me" x2. https://www.youtube.com/watch?v=Da1ArUdWhyM&feature=youtu.be Highly political charge also.
Easy to be an armchair critic. My Brooks was placed in detention but assaulted Police in escaping from them. That is aggravated assault, a crime punishable here by 3 years imprisonment, plus the lesser offences of assaults Police and resisting arrest on top of the drink or drugged driving. He then discharged a taser at the pursuing Police officer. I'm assuming it is a Taser and not a police firearm, you can see a flash in the video. I'd say borderline in terms of the threat he posed, but the arrest was being lawfully conducted and they were entitled to conduct it. I don't think murder will stick and I don't think it warrants the media beat up. Leave that one to a judge or jury I'd say.
Feel free to join the Police if you like Frazz, maybe that would balance your inconsistent thinking. Perhaps you can do a better job. You seem to be pro lockdown anti civil rights, but then pro civil rights when particularly when it comes to ethnic minorities.
In announcing the charges Brooks revealed disturbing details about the incident. Howard revealed that Rolfe knew the taser Brooks took from him was not functional, as it had already been fired twice and thus was of no use when he shot Brooks twice in the back as he was running away.
The detail underscores that Rolfe was apparently aware he was in no physical danger when he fatally shot Brooks. Cameras also captured Rolfe kicking Brooks as he was on the ground struggling for his life.
“I got him!” the district attorney quoted Rolfe as saying.
I don't support nor deny this possibility Boatie. However, I have seen predictions that USD could fall up to 35%.
https://www.fxstreet.com/news/yales-stephen-roach-calls-a-35-drop-in-th…
Beijing just can't find virtually any support for using the yuan in international trade transactions.
Meanwhile the proportion of transactions in US Dollars rose and over the same period it grew from a 43% to a 46% share.
Long-dated dollar assets are “funded” by short dollar liabilities, largely in eurodollars augmented by currency swaps and derivatives positions. Stress in dollar funding, including volatility in funding expectations, feeds outward into margin calls, collateral adjustments and in general rising liquidity costs. Link
Demand for dollars via FX swaps
Aggregate data on the use FX swaps and FX forwards can be obtained from the BIS derivatives statistics.2
The BIS OTC derivatives data (OTC data) show that the total amount outstanding at end-June 2019 neared
$86 trillion (Graph 2, first panel), with FX swaps accounting for an estimated three quarters of this total.
Not surprisingly, the US dollar is almost always one of the two currencies exchanged (89%). Roughly three
quarters of outstanding positions had a maturity of less than one year, but turnover data show that the
modal swap matures in a week or less. Link
While G-SIB eurodollar emitting banks are generally registered US primary dealers most are domiciled in jurisdictions beyond the US Federal Reserve's regulatory purview.
Only 448,000 global Covid deaths so far........If this is the best China can come up with then it should withdraw from the competition. The 1351 Black Death record still stands at 60,000,000 deaths and although not for want of trying it doesn't seem that China will make the cut, this time round anyway. Although there maybe some hope yet as another seafood market has just been shut down in China as the result of a further outbreak.
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