A review of things you need to know before you go home on Wednesday; many more retail rate cuts, housing now a buyers market, high residential building consents issued, swaps steepen, NZD firm, & more

A review of things you need to know before you go home on Wednesday; many more retail rate cuts, housing now a buyers market, high residential building consents issued, swaps steepen, NZD firm, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
Heartland Bank cut its reverse mortgage rate to 6.20%.

TERM DEPOSIT RATE CHANGES
The NZCU Baywide group all cut their term deposit rates, and their at-call rates. ASB cut is bonus saver, now at just 0.50%. Bank of Baroda cut their TD rates. First CU cut its at-call rates. SBS Bank has also cut its term deposit rates.

SUDDENLY IT'S A BUYERS MARKET ...
June listings on Realestate.co.nz were up +20% compared to June last year while asking prices were sliding.

... AND MORE HOUSING SUPPLY COMING
Consents for 3554 new homes were issued in May 2020, the highest number since May 2019. (But in Australia, these same approvals fell sharply, led down by a collapse in apartment consents.)

LOCAL GOVERNMENT BORROWING CAPACITY INCREASED
Shareholders in the Local Government Funding Agency have approved changes to increase the amount local authorities can borrow. Currently, local authority borrowers with a long-term credit rating of 'A' equivalent or higher are required to maintain net debt/total revenue below 250%. For the June 2021 and 2022 years this has been increased to 300%. For the four years after that there'll be 5% decreases with a limit of 280% applying from the June 2026 year.

KIWIBANK CEO NEW CHAIRMAN OF NZBA
Kiwibank CEO Steve Jurkovich has been elected chairman of bank lobby group the New Zealand Bankers’ Association, taking up the role for a two-year term from today, July 1. It's the first time Kiwibank has chaired NZBA. ASB's CEO Vittoria Shortt is the new deputy. Westpac CEO David McLean chaired NZBA for the past three years.

AUSSIE HOUSE PRICES SLIP
Falling house prices are not just a New Zealand story. In Australia, property values have dropped for a second month in a row and picked up in pace as uncertainty builds about the financial plunge expected in September.

HUGE WRITEDOWN
Royal Dutch Shell has written down the value of its oil reserve assets by NZ$34 bln because of lower prices and there may be more to come. They are following BP. Both are reacting to the shift to renewals. But so far Exxon Mobil has resisted pressure to take a similar writedown.

EQUITY MARKET UPDATES
The S&P500 ended its Wall Street session up another +1.5% with a late surge. Shanghai has opened up +0.9%. Hong Kong has opened up +0.5%. Tokyo has opened up +0.2%. The ASX200 is up +0.7% in early afternoon. The NZX50 Capital Index is down -0.5%, principally because F&P Healthcare has corrected lower.

SWAP RATES UPDATE
Swap rates were probably little-changed at the short end, firmer at the long end today. We don't have final 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 unchanged at 0.30%. The Aussie Govt 10yr is up +5 bps at 0.92%. The China Govt 10yr is down -5 bps at 2.88%. The NZ Govt 10yr yield is up +3 bps at 0.93%. The UST 10yr is up +5 bps at 0.68%.

NZ DOLLAR FIRM
The Kiwi dollar is nearly +½c firmer since this time yesterday, now at 64.6 USc. Against the Aussie we are also firmish at 93.5 AUc. Against the euro we are up at 57.5 euro cents. And that means the TWI-5 is now up over 69.5.

BITCOIN SOFT
The price of Bitcoin is marginally softer from this morning, now at US$9,118. 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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55 Comments

23
up

Wow !

Laboured government have managed to gather courage to criticize China :

https://www.newshub.co.nz/home/politics/2020/07/jacinda-ardern-winston-p...

Better late than Never. Hopefully this dare of speaking against China will give them more confidence to speak and stand up for NZ.

this news will soon hit social media in China.

There will be reactions from Zhao Li Jian the speakperson for Ministry of Foreign Affairs in China.

There should not be any consequences if they stop right here.

33
up

We are afraid Mr xing..... Lol

12
up

That sounds like a threat.

14
up

True reflection of China mindset.

Look around what they are doing. Threatening its neighbour for land and sea with war, where traditional war not possible threatening with economic war or cyber war and also cannot rule out biological war.

So threat from from Mr Xing is in his DNA - nothing new but should realise as now that they stand exposed so the more they try, bigger the hole they are digging for themselves.

Mr Xing is not helping China but creating more anti feeling with its tantrum/threat.

U.S. Customs and Border Protection (CBP). Finding all sorts of imports.

https://mobile.twitter.com/CBP/status/1277062666801033217

10K assault weapons parts seized—CBP officers in Louisville recently intercepted over 10K assault weapons parts arriving from China in a shipment manifested as "100 steel pin samples." Learn more via
https://www.cbp.gov/newsroom/local-media-release/10800-assault-weapons-p...

14
up

China needs the rest of the world more than vice versa Xing.

14
up

Yeah, but they are acting as if they don't.

If you are weak, act strong.

Do you think these threats strengthen your cause here? I would love the ability to just block your CCP proganda comments.

20
up

We should welcome his comments. It gives us an insight into the world of CCP supporting Chinese people in NZ.

Good point. Frustrating as they are.

Exactly. It's also fun responding to his often poor arguments.

Would the consequence be all Chinese Kiwis who unreservedly support the Chinese Communist Party will leave NZ? If so probably a very small minority but sufficient to alter the financing of our political parties.

We are ready from any consequences Mr CCP. (Xing.....M......W.....)

10
up

might be because they have not donated for this years election, national have no qualms about taking the money, even sending the bag man to pick it up
https://thespinoff.co.nz/politics/19-10-2019/john-key-just-met-the-most-...

10
up

I had wondered whether NZ might try to quietly stay neutral but this is definitely picking a side. If Labour and NZ first take this stance and National continue to take a very pro-China stance, it may very well become a major election issue.

15
up

Would probably sway me.

17
up

It would be objectionable if they remained silent on this. China is taking the piss.

12
up

Finally Ardern shows some guts.

13
up

I wish she would show some in respect of Julian Assange's incarceration, if not there can be no expectation of a free press. I have little hope, given the treatment Nicki Hager endured.

Worrying times : https://www.theguardian.com/world/2020/jul/01/hong-kong-protesters-arres...

And as you read further down, it seems to now that you don't have to be a HK resident or even in the 'SAR' for the rules to apply.

"Heartland Bank cut its reverse mortgage rate to 6.20%." Meantime their Term Deposit rates have dropped to the range 1.60 - 2.05% and their Direct Call (savings) account is now down to 1.0% - that's quite some margin they've got running there.

Very healthy. I suspect demand might be running hotter in the future.

yes so do I, especially if the elderly have their term deposit returns dry up

yes good margin with solid security (the house)

As many are not aware of, today is the 23rd anniversary of Hong Kong returning to China, as well as the 99th anniversary of the formation of China Communist party.

Some to celebrate tonight.

24
up

Correct celeberation for some but for many many a long journey of suffering and fight to liberate themselves from........

20
up

Celebration. For the most murderously destructive regime in the history of the world, with some 60million dead as a result of their totalitarian ideological insanity. Monsters are real, they rule China.

Monsters are real And no country can claim to be free of them.

But to sanctify its bombing campaign, the Clinton administration waved a magic wand and made the KLA’s atrocities disappear. British professor Philip Hammond noted that the 78-day bombing campaign “was not a purely military operation: NATO also destroyed what it called ‘dual-use’ targets, such as factories, city bridges, and even the main television building in downtown Belgrade, in an attempt to terrorize the country into surrender.”

NATO repeatedly dropped cluster bombs into marketplaces, hospitals, and other civilian areas. Cluster bombs are anti-personnel devices designed to be scattered across enemy troop formations. NATO dropped more than 1,300 cluster bombs on Serbia and Kosovo and each bomb contained 208 separate bomblets that floated to earth by parachute. Bomb experts estimated that more than 10,000 unexploded bomblets were scattered around the landscape when the bombing ended and maimed children long after the ceasefire. Link

The sources for that 60M figure are generally vague and contradictory.

globalsecurity.org

Does it matter if the true figure is only 30M - people still died because of the regime's ineptitude. You sound like an apologist for the CCP.

By numbers you are probably right but many of those deaths were stupidity - telling peasants how to plant heir crops! I reckon Genghis Khan led the most murderous destructive regime. Look at his treatment of Baghdad for example.

Bit hard to 'celebrate' in a Tiger Chair.....

And remember there is a transition over 50 years.

13
up

SUDDENLY IT'S A BUYERS MARKET ...

Not yet BUT should be September /October.

FHB should not fall for FOMO nor such news as still time for house price to reflect in asking.

" the Local Government Funding Agency have approved changes to increase the amount local authorities can borrow."
What a surprise!
Sure, keep the debt see-saw balanced ( Private Debt down, Public Debt Up), but this has a hint of the real end game.
Debt on the Private Balance Sheet goes to saturation point, and Debt on the Public Balance Sheet ( that can be infinitely more) also at saturation point.
Debt HAS to be kept growing, or The Game will stop - with calamitous consequences.
So. One way or another we are ALL about to get loaded up to the max with debt, whether we want it or not.

Yes the more I've been thinking about the current financial system at the highest macro level, it really is a ponzi that requires continuous debt growth to sustain itself. If it doesn't, it will simply implode - it will fall like a house of cards.

Brent Johnson talks about it in this video with George Gammon:

https://www.youtube.com/watch?v=Qtdcw-NzMVE

Pretty sure Auckland is behind this. This will help them through the current financial crisis they face.

"Kiwibank CEO Steve Jurkovich has been elected chairman of bank lobby group the New Zealand Bankers’ Association"

It's not a lobby group, it's a trade association. It does some lobbying but it also runs educational events, allows inter bank discussions, advises govt on legislation etc.

advises govt on legislation - yea that's a lobby group

Elder abuse.

https://www.nationalreview.com/2020/06/joe-biden-campaign-strategy-hide-...

Joe Biden is tragically suffering a mental eclipse and sliding away at a geometric rate. Understandably, his handlers have kept him out of sight. He stays off the campaign trail on the pretext of the virus and his age-related susceptibility to COVID-19 morbidity.

And the podcast to drive home with
https://www.nationalreview.com/podcasts/the-victor-davis-hanson-podcast/

Henry your first link by NRO contributor Victor Davis Hanson is the Martin and Illie Anderson Senior Fellow at the Hoover Instuition. But Hanson has another side, one that is well suited for the age of Trump. A longtime contributor to the National Review, he has a history of hostility to undocumented Mexican and Central American immigrants, who he claims are undermining American culture, and to African-Americans who speak about the persistence of racism, including Barack Obama, whom he has described as a leading member of “the new segregationists.” In his new book, which will be published by Basic Books, in March, Hanson explains why he thinks Trump was elected, and why he views the President as akin to a classically tragic hero, whom America needs but will never fully appreciate.“ argues that America needs Donald Trump but will never fully appreciate him

Here is the book you could read.

https://www.amazon.com/Mexifornia-Becoming-Victor-Davis-Hanson/dp/189355...

Classics professor Hanson is also, like generations of his family before him, a fruit farmer in California's central valley. He has employed immigrants, seen them flood his community during the last 30 years of mass flight from Mexico, and endured the crime associated with illegal immigrants. Hanson is immensely sympathetic to poor Mexicans, however, and the most powerful chapter here outlines the harried life of the illegal alien. But he hates to see the ordered culture in which he grew up drowned by an alien inundation whose undeserving beneficiaries are Mexico's kleptocratic rulers, for whom an open border is a safety valve expelling the potential for democratic change.

What are your views on his take on Trump then...do you agree with him?

Trump could easily been a Democrat- 20 years ago.
There are few critical analysis of Trumps rise, taking into account American society and history.

"A brilliant and bracing analysis from one of the great thinkers and writers of our time, and a farmer to boot - Victor Davis Hanson. Hanson understood the circumstances that gave rise to Donald Trump early on, how the president has made long overdue changes, and why his enemies seek to destroy him."― Mark R. Levin

Have you got other authors that also offer analysis, analysis with depth, love to read them.
VDH's books on military history are good reads.

& Bonfire of the Vanities - Tom Wolf. (life imitating art). Have you been to NYC?

Here an interesting guy...
https://youtu.be/4eOXZupYZEM
Dave Rubin & Rudy Giuliana

10
up

Apparently a dangerous swine flu is out and about in China. Their government really needs to get on top of their animal hygiene management.
2nd world country that thinks it's first world.

A human virus which has yet to be contained, if one believes ex CIA director Pompeo's claim he was responsible for “lying, cheating and stealing” to benefit the United States.
Former CIA Director William Casey said: “We’ll know when our disinformation program is complete, when everything the American public believes is false.”

I'm surprised nobody here has asked whether the poster with the Chinese-sounding label is indeed kosher?

For my picking, a propagandist would more likely try to appear one of us.

Which suggests a clumsy US attempt to besmirch. Anyone else thought this?

Nah probably a 16 year pimply student in a basement in CHCH..?

I've sometimes thought he/she could be a Chinese national that is actually anti-CCP. Their posts are so pro-CCP it's bordering on non-credible.
There are plenty of Chinese people in NZ that are quite strongly anti-CCP.

He's just messing with low IQ reactionary racial bigots

Local govt can borrow 300%!!!
Rate payers are the ones that have to pay that back, nobody else. Even at 250%, it is a ludicrous amount.
Unfortunately people are used to being completely complacent regards council rates, and all too easy for the lenders to push more debt where it is least needed. Buying a house? Be sure to check local council debt, not just last years rates.

We need an act of parliament to push all that debt onto rate payers. Let them pay it off at low interest rates that local (or better still central govt) can get, but make it crystal clear to all what the council is really spending, rather than the pretense of rate demands - then maybe voters will wake up and start electing better local politicians who care about bottom lines and expenditure.

You can tell there is no science to it by the roundness of the numbers....

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