Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Kiwibank cut its fixed six month rate, but only to 3.55% which these days is nothing very special.
TERM DEPOSIT RATE CHANGES
Kiwibank however cut term deposit rates across the board. And HSBC did so too.
SHARP PULLBACKS
Credit card balances are staying low. You may recall that they crashed lower in April, down -21% year-on-year to $5.8 bln. The May level rose slightly to $6.0 bln but that is still -17% lower than the same month in 2019. This is a category already under pressure from BuyNowPayLater schemes (BNPL), but COVID-19 has shoved the decline much harder. Credit card billings in May on NZ issued cards was down -20% from a year ago, a less-worse result than the -48% fall in April. Spending in New Zealand on cards issued overseas was down -55% in May.
USING CREDIT CARDS TO SURVIVE?
Updated credit card data for April shows an unusual jump in proportion of card balances incurring interest. In March it had fallen to a near-record-low of 58.7%. But in April it jumped back up to 61.9% and ending a long decline from 71.6% back in 2010. BNPL schemes get paid by credit card transactions so if the BNPL customer is in trouble, the amount due ends up with the banks on the underlying credit card.
STILL UP
The number of Code Compliance Certificates issued for new dwellings in Auckland took a dip in April but were still up on April last year. There were 910 CCCs issued in April as the level 4 restrictions began to bite in earnest, but that was still up by +15% on April 2019 and was also a record for the month of April. More than 14,000 new houses were completed in the past year in Auckland, about the level may analysts say is needed per year. But of course that doesn't catch up any of the prior shortfall.
UP SHARPLY
The RBNZ's balance sheet is on the move, principally due to the LSAP program. As at the end of May 2019 it had assets of about $28 bln, a similar level for the past ten or more years. But the COVID-19-induced LASP has added $+$27.2 bln in juts ten weeks to May 31 and taking the central bank's balance sheet up to $51.2 bln suddenly. This is a holding at 16% of GDP. (That compares with the US Fed's 33% equivalent level.) Since the end of May they have purchased another $3.5 bln of NZGBs and LGFAs, raising that level to 17.5% of GDP.
UNDERMINING NZ'S PRODUCTIVITY
The Government is screwing the scrum with some very large subsidies for NZ Post. First it bolstered its equity with a $150 mln injection. Then Budget 2020 included a taxpayer subsidy of $130 mln to keep its dying home letter delivery from failing. Now the company is starting a "10-year plan for parcel growth" costing $170 mln so that its network can double its parcel-processing capacity from 95 mln parcels to 190 mln parcels in ten years. The private companies who compete with this type of subsidisation probably aren't happy the taxes they pay being used to prop up a State competitor so they can deliver services below cost to compete with them.
SPECULATION SWIRLS
A2 Milk today confirmed it is talking to NZ dairy companies about buying in to their opertaions to boldster thei supply sources. The latest probably involves the Gore processor Mataura Valley Milk.
AUSTRALIA UPDATE
COVID-19 infections are rising faster in Australia. In Australia, there have been 7463 cases in total (+33 since this time om Friday), 102 deaths (unchanged) and a recovery rate of just over 93% (up). There are now 465 active cases in Australia (+47 from Friday).
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 8,926,100 and up +84,000 since when we checked this morning. This is a rising pace. (And a reminder, when this tally exceeds 10 mln, we plan to give up reporting the number daily. And at the current rate that may be by before the end of the week.) American cases have risen by +11,000 since we check this morning to 2,278,600. That is a larger-than-usual daily rise too. US deaths now exceed 120,000. Global deaths now exceed 468,000.
EQUITY MARKET UPDATES
The S&P500 futures trade which earlier suggested Wall Street will open tomorrow down -1.3%, now indicates just a -0.3% fall. Locally, the NZX50 Capital Index has started the week -0.5% lower in late trade. The ASX200 was down sharply at its open, but is back up +0.2% in midday trade. Shanghai (+0.3%) and Tokyo (+0.1%) have both opened flat, but Hong Kong is down -0.5% in early trade.
SWAP RATES UPDATE
Swap rates were likely flatter 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 up another +1 bp at 0.30%. The Aussie Govt 10yr is holding at 0.87%. The China Govt 10yr is little-changed at 2.91%. The NZ Govt 10yr yield is marginally softer at 0.87%. The UST 10yr is holding at 0.69%.
NZ DOLLAR HOLDS
The Kiwi dollar is little-changed at 64.2 USc. Against the Aussie we are marginally firmer at 93.8 AUc. Against the euro we are also up slightly at 57.4 euro cents. That means the TWI-5 is holding at 69.2.
BITCOIN UNCHANGED
The price of Bitcoin is little-changed at US$9,379 and now day twelve in this very quiet period. 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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52 Comments
Oldbloke. It is not acceptable for the tax payer to pay $3300 per person to quarantine people then not have correct procedures to ensure the safety of the rest of NZ. This kind of management is the standard for Labour and unlikely to change, making a crap situation worse.
Oh dear, and do you think this disfuctional National lot would have done any better? I supported MMP because I thought it would be the end of all this "you're shit we're great" nonsense. Times like these are times to work together... and National hasn't shown an ounce of willingness to do that.
What an incredibly stupid and ignorant thing to say .
Asymptomatic cases have been let in while testing was not done at the border - very clear from the current rate of positive , asymptomatic tests in quarantine.
A dozen or so cases that have been let through will only translate to hundreds of new cases through community transmission by about end of July only at which point we can reasonably hope to detect them with current levels of testing.
Reminiscent of " there is no community transmission ( well ..because we are not testing anyone but overseas arrivals )" line MOH stuck to - right up to level 4 lock down . We will be back in lock down by August.
Yes it is for two reasons:
1. Victoria has community transmission occurring.
2. Australian states have porous borders.
There is no way the NZ public will accept any Australian bubble right now either in whole or by state. I can't see it happening as they don't have a goal of eliminating it like we do. So tourism operators are in for an extended tough time unfortunately.
There are a few possibilities here.
1. credit is being extended in other forms e.g. trade finance
2. folks have used the lockdown where they couldnt really spend much to pay down cards a bit
3. general purchasing levels are down yoy ~ there is some evidence of this on stuff like car sales but bigger items are unlikely to go towards cc debt levels
We probably need retail sales numbers for the June quarter and some measure of credit excluding mortgages and cc debt to ascertain where we stand.
Productivity - undermined?
Productivity is energy efficiencies. Or someone being screwed down wage/renumeration-wise. Which is still cost per energy, in a way.
You advocating a race to the bottom, DC? The implication is that you're advocating inequality. Because someone has to benefit from the screwing-down of others......
The unemployed, under-employed & unemployable numbers are quietly growing around the planet. Countries & their state sectors are doing a very good job in trying to hide the real numbers, including the big boys in the USA & China, but there is enough data out there to find the scarcer facts if you go looking for them. I'm pretty sure our people are doing similar things but, as you say, it's anecdotal at this stage. The state can be very creative if it has to.
I'm with you, some scary numbers are about to turn up.
https://wolfstreet.com/2020/06/21/aeromexico-denies-having-initiated-a-…
https://pbs.twimg.com/media/EbFEusvUMAElH5c?format=jpg&name=medium
I've not gone silent, my article still stands on its merits. Police were breaking the law, that is pretty clear. Think about that a bit more, Police were being criminals. Doesn't matter what your opinion of lockdown, as the law was written at the time the (some) Police were committing criminal acts. They have no excuse, we all got trained in the law. Note that I don't think any commentators on interest.co have legal training so their opinions are pretty much worthless on this issue.
Losing a bobby is a completely separate issue. That is a tragedy for a young man just doing his duty serving the community. Doing their duty to society is something mostly foreign to these money grabbing pages.
Seven of the eight Australian States and Territories don't have a problem and re-opening is proceeding as planned. New South Wales hasn’t had a community transmission case for 14 days and Queensland for 26 days. All of the other states and territories either never had community transmission or haven’t had such a case in a very long time. Tasmania is the shortest with 45 days.
https://covidlive.com.au/
Today Todd Mullah is demanding 10,000 students be let in - pronto
Doesn't say how, who, or where they would be managed in isolation or quarantined
For those who haven't heard, there are 900 "kiwis" due in by plane next 2 days
Current quarantine and managed isolation facilities are already chocka
Probably because they are just the family members of non-resident migrant workers already in New Zealand, and those holding non-resident work visas who are wanting to move here. These are the group of people the Labour Govt is currently processing through the borders.
Source? The Air India flights are repatriation flights...
https://www.immigration.govt.nz/about-us/covid-19/border-closures-and-e…
Who may travel to New Zealand without first seeking approval
If you belong in one of these categories you may travel to and enter New Zealand without first seeking approval:
New Zealand citizens, permanent residents and residents with valid travel conditions (excluding people granted a resident visa outside New Zealand and who are travelling to New Zealand on that resident visa for the first time).
Partners, dependent children (aged 19 years or under if they hold a temporary visa or 24 and under if they hold a resident visa) of New Zealand citizens or residents who hold a visa based on their relationship with a New Zealand citizen or resident partner or parent.
Diplomats who hold a post in New Zealand.
"BNPL schemes get paid by credit card transactions so if the BNPL customer is in trouble, the amount due ends up with the banks on the underlying credit card."
Completely incorrect - Afterpay states that over 85% of their customers pay their accounts with DEBIT cards. In addition, 70% of their customers use credit cards LESS as a result of using Afterpay. One in two BNPL users stopped using their credit cards altogether in 2019. And for the first time, debit card use overtook credit card use in November last year (in Australia).
Expecting more than 12% ....
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
NZTA learns all about anecdotal evidence.
New crash statistics released show the New Zealand Transport Agency (NZTA) had little evidence to back up its controversial plan to close the Arthur's Pass highway.
On Friday NZTA backtracked on the unpopular new policy, which closed State Highway 73 (SH73) to all traffic in icy conditions, after meeting with local residents and businesses earlier in the week.
A week before the meeting NZTA had doubled down on its decision, saying it would meet residents but would not be reviewing the policy until the end of winter.
https://i.stuff.co.nz/the-press/news/mid-canterbury-selwyn/121895002/nz…
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