Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
ASB cut most of their fixed rates. More here.
TERM DEPOSIT RATE CHANGES
ASB made deep cuts to their term deposits, positioning them as the lowest of offer of any bank. More cuts from at least one other bank are coming on Monday.
EDUCATION SECTOR GOES COLD-TURKEY
The number of work and residency visas being issued is picking up again but new student visas are almost non-existent.
A KAURI ISSUE
There was another Kauri bond issued today, a $500 mln issue by a Norwegian local government funding agency. Kauri bonds are NZD issues by entities outside New Zealand. They are becoming less popular and as at the end of May there were $21.7 bln on issue, down -12.8% on a year and down -18% in two years. They were more popular when New Zealand interest rates stood at a premium to the main bond markets. That is not the case today.
BETTER THAN EXPECTED
In Australia, retailing has moved through a number of dramatic phases: an +8% rise from stock-piling in March; the lock-down driven -18% plunge in April; and now a +16% rebound, including an element of catch-up, in May. But after all this, Aussie retail sales look to be -0.4% below their pre-Covid-19 levels and in the circumstances that isn't too bad. Of course, with specific retail categories, the variations are still extreme. The cessation of overseas travel spending is helping. But weak income growth and fragile confidence will continue to weigh on future results.
"UNDER ATTACK"
Australia is claiming that "China's government" has escalated "malicious" cyber attacks against Australian businesses and government agencies including critical infrastructure. The claim coming from a careful public announcement by their Prime Minister. Although he did not name China, he confirmed it is when answering reporters' questions.
AUSTRALIA UPDATE
COVID-19 infections are rising faster in Australia. In Australia, there have been 7397 cases (+7 since this time yesterday), 102 deaths (unchanged) and a recovery rate of just over 93% (up). There are now 418 active cases in Australia (+20).
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 8,463,500 and up another +134,000 from this time yesterday. This is 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 +26,200 since yesterday to 2,189,100. That is a larger daily rise. Epidemiology advice is being ignored in many states. US deaths now exceed 118,000. Global deaths now exceed 453,000.
EQUITY MARKET UPDATES
The S&P500 yo-yo'd during the day, ending unchanged. Heading into tomorrow's final session, the S&P500 is up +2.4% for the week and all of that happened in the Tuesday session. Asian markets have opened little-changed. Shanghai is up +0.4%, Hong Kong has opened -0.1% lower while Tokyo is us +0.3%. The ASX is so restrained, up +0.9% in midday trade and also heading for a weekly gain of +2.4%. The NZX50 Capital Index is up +0.5% so far today and heading for a weekly gain of +3.5%.
SWAP RATES UPDATE
Swap rates were likely higher today 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 up another +1 bp at 0.29%. The Aussie Govt 10yr has dipped another -2 bps to 0.86%. The China Govt 10yr is up +2 bps at 2.90%. The NZ Govt 10yr yield is up strongly, up +6 bps to 2.90%. The UST 10yr is down -1 bp since this time yesterday at 0.70%.
NZ DOLLAR SOFT
The Kiwi dollar is softer from this time yesterday at 64.2 USc. Against the Aussie we are also softer at 93.6 AUc. Against the euro we are unchanged at 57.3 euro cents. That means the TWI-5 has slipped slightly to 69.1.
BITCOIN SOFT
The price of Bitcoin is a bit softer today, down -1.1% at US$9,301. 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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62 Comments
"The NZX50 Capital Index is up +0.5% so far today" Maybe, but good to see that at least one firm has it head screwed on the right way around!
"Air New Zealand shares are more than 100 per cent overvalued, says one of the country's largest share brokerage firms. Forsyth Barr reduced its target price per share for Air New Zealand ...."
I'm beginning to believe that the pricing of global share markets is more about how much money is floating (sloshing) around in the system with nothing better to do, than it is with what the companies listed on these markets are really worth. The P/E's seem wildly over valued to a dummy like me.
The Fed has been keeping that dead cat from bouncing back down to earth by unscrupulous means..... Brrrrrrr. Its just like the RBNZ keeping house prices from crashing by lowering the OCR but eventually reality bites. The markets will start dropping soon, already probably have, and the housing prices are already dropping at a big rate. $680k to $620k in one month is VERY BIG. Cash is king in times like this. Keep safe and don't let a spruiker ruin your life, don't give them that pleasure!
Basically everyone agrees that shares are overpriced. It's become a game of chicken, because no one wants to miss out on the gains from 'all those other idiots' piling in to buy the dips, especially when there's so little profit to be made elsewhere. There was a survey of US hedge fund managers recently where 85% agreed that equities are overpriced; but also that most of those same managers had recently been moving their funds into more equities. You don't keep customers if you miss the hype train. Obviously, it's going to end really well.
Still largely based on conservative forecast earnings. So those companies that have reported reasonable yet unspectacular results have rallied as investors including myself, are chasing good dividend yield. Those that are maintaining or reinstating their dividends will do well. Honestly I would rather have a good property investment to shares that gyrate on a daily basis when the latest sentiment dives.
And I bet Houseworks has never had a property trashed by what looked like good tenants. The insurance company won't come to the party because they'll claim that each instance of damage was 'a separate incident' to which the excess must apply. For instance, if every fixture in the bathroom is damaged: eg the shower curtain rail pulled from the wall leaving a big hole in the plaster, the new vanity basin is crazed, the bath porcelain chipped in several places, the toothbrush holder ripped from the wall, the once-new lino damaged, then your insurance company will say that these are 5 separate instances of damage and that your excess, say $500, will apply separately to each of those instances of damage meaning you will have to fork out $2500 before the insurance company will pay a cent.
A friend some years ago had a hole burnt right through the lounge floor of an Onehunga rental when the tenants roasted a pig in the fireplace.
A good rental property? Be careful what you wish for.
Market price volatility in the share market scares many people.
Due to low historical market price volatility for real estate (both residential and commercial), many purchase residential real estate for their peace of mind (and most do it with high levels of leverage).
Sad that we've now lost a bobby just doing their duty. https://www.stuff.co.nz/national/300038459/live-police-officer-dies-in-…
You can't help but wonder if the shooter has succumbed to the rhetoric/propaganda doing the rounds on MSM.
As a side note, one of the predictions I made ten years ago is that one day a simple speeding fine will cost a Police Officer their life. People take it for now, but in a severe economic downturn the stakes will be so high for someone under pressure they will do something stupid in the heat of the moment.
When I was growing up in the UK my father instilled in me "Never hit a policeman. If he dies, they'll hang you".
Ronald Ryan found that out to his detriment in Melbourne some years back.
Whatever it is, there has to be a deterrent to protect those that protect us.
I'm now more than happy to see the recent aborted trial for the police to carry guns be carried into operation. They have to protect themselves. In fact, I will go on record to say that if National resumes its scrapped plans for a new high-security prison I will vote National for the first time in my life. The government is looking more and more like a feather duster on law and order.
There was another Kauri bond issued today, a $500 mln issue by a Norwegian local government funding agency. Kauri bonds are NZD issues by entities outside New Zealand.
They were more popular when New Zealand interest rates stood at a premium to the main bond markets. That is not the case today.
The RBNZ recently noted:
FX swap market funding. Banks sometimes borrow money from offshore and swap the debt back to New Zealand dollars. In recent days the cost of performing this swap has exploded. Left unchecked, this could have caused an increase in the cost of funding New Zealand banks, which in turn could have led to higher interest rates in New Zealand. The RBNZ has essentially offered to facilitate some of those swap arrangements, which will keep the cost of overseas funding contained.Link
Xccy basis swap quotes at the time were:
3y NZDUSD xCCY is trading at ~NZD BKBM+36/USD LIBOR
5y NZDUSD xCCY is trading at ~NZD BKBM+40/USD LIBOR
The NZD swap lender (supranational Kauri bond issuer) who is in receipt of the USD Libor basis points wants the discount to USD Libor financing to facilitate the trade - nothing more - the general level of NZD interest rates is immaterial. Our local NZ banks are USD swap lenders, but are subject to a NZD leg liquidity premium, hence they pay the positive Libor basis.
This BIS primer might offer some insight.
More FX basis swap news - the basis in this case has moved deeply negative due to USD funding shortages out of Japan, hence raising the USD funding costs to the YEN swap lender, since the USD swap lender is in receipt of the basis.
Japanese banks could also be acting to raise USD for Chinese counterparties, as they have in the past, given Hong Kong is in turmoil.
Re US central bank liquidity swaps:
There are a couple of important points to takeaway from the unexplored details of this sordid little tale. First, weening doesn’t necessarily mean much. I write this because, surprise, surprise, after writing last Friday how swap lines were still at full volume (for GFC2) first Europe’s central bank along with England’s and now Japan’s are finally beginning the weening process. Link
Asked whether the attack came from China, Mr Morrison did not name the foreign state but emphasised the level of sophistication of the intrusion.
"What I can confirm, with confidence, based on the advice, the technical advice that we have received, is that this is the action of a state-based actor with significant capabilities," he said.
https://www.smh.com.au/politics/federal/morrison-reveals-malicious-stat…
Just for Though:
Any news of war be it physical for land (With Tibet, Taiwan, India, Hongkong ...) or sea (South China Sea) where possible or Economy war (Australia, USA......) or Biological goofups or Cyber Attack (Australia, India....) - One country name stands out : China.
With small countries : Try to catch them in Debt Trap ( Africa, Maldives, Sri Lanka.....) or by throwing money / obliging political leaders like in NZ (Rock Star Economy) and Pacific Islands.
Could be a US false flag operation with Chinese fingerprints deliberately left behind?
Imagine the surprise in the US state department and in the halls of power in Australia, then, when Pompeo appeared to leave open the possibility of suspending some forms of information sharing with Australia, a steadfast American ally, over the state of Victoria’s possible future involvement with Xi Jinping’s Belt and Road Initiative.Link
Vault 7 was the name given to cyber attack tools developed by the CIA’s Center for Cyber Intelligence (CCI), and published by WikiLeaks in March 2017. It was the largest data breach in Langley’s history, with long-lasting consequences. For example, Chinese cybersecurity companies recently used Vault 7 evidence to show that the US has been hacking China for over a decade. Link
"UNDER ATTACK"
Australia is claiming that "China's government" has escalated "malicious" cyber attacks against Australian businesses and government agencies including critical infrastructure. The claim coming from a careful public announcement by their Prime Minister. Although he did not name China, he confirmed it is when answering reporters' questions.
https://www.google.com/amp/s/amp.abc.net.au/article/12372470
It is clear who has done and not to forget that they are doing the same in India :
https://www.timesnownews.com/india/article/amid-border-tensions-china-t…
Is this what world want after Corona Virus - Cyber War.
It is almost certain that it is China. May not even be official channels. Possibly just overenthusiastic nationalists.
However, I'm very surprised that China would do such a thing or allow such a thing. Because it serves no useful purpose. Its just provides additional training for the IT security guys in Oz who will study what this was about and learn all sorts of stuff.
But it beggars belief that there is no switch where companies can just switch off the internet. If I was in charge, thats what I would have. A big red pushbutton with a normally closed switch which is latched opened when the switch is pushed.
Except then you stop the flow of your customers orders into your system.
We are supporting one of our customers that is under attack. They had a new shiny $80m production facility with zero production for a week, not sure if its back up and running yet, lastI heard they were still trucking product from queensland down to melbourne because the qld plant was stil running
Is the Stock and Housing market on Cliff to leap forward to Higher peaks or to fall from the cliff?
Fundamentals does not support the leap but fed and government does not want it burst and are just short of giving more money/deposit to people to buy more stock and house - do anything and everything to see that the bubble should continue (moment it burst government will lose vote and be out of power be it NZ or USA-so print as who cares not going from personal pocket)
https://www.marketwatch.com/amp/story/guid/3C46413E-B016-11EA-BAAD-B305…
Lost decade ahead for sharemarkets?
https://www.businessinsider.com.au/stock-market-verge-lost-decade-dalio…
Big problem when people are arriving to checkin into quarantine hotels they do not cross check against flight lists.
This is why the homeless man just checked himself in and could also mean people arriving can skip the process and just go home and no one would know.
The system is a total joke and I fear we will soon pay the price for this.
"Bank Of England Announces An Additional £100 Billion In Stimulus" + "The UK inflation fell..." = "Well, this is all going very well, chaps!" (Or, to put is another way "Stock-market legend who called 3 financial bubbles says this one (looming economic disaster) is the ‘Real McCoy,’ this is ‘crazy stuff’ "
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