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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