Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
None to report today, yet.
TERM DEPOSIT RATE CHANGES
None here either.
WHAT LAND AGENTS THINK
A CoreLogic survey has revealed that two-thirds of real estate agents think house prices will fall, and a quarter think they'll fall by more than 10% in 2020.
BACK TO BUYING ALMOST 20,000 NEW CARS A MONTH
In a sign of the times, new car sales were weak in June (down -15%) while used imports sold strongly (up +7%). The net is a year-on-year decline of less than -3%, which is far stronger than many may have expected. "The stark contrast between registrations in the new and used car markets hints there is a shift in preferences towards second-hand vehicles as peoples’ earnings have been reduced," observed Infometrics. One reason used car sales were weak is because rental car demand has evaporated with the tourism market. In the whole month only 45 cars were sold into rental fleets (10 Skoda Scalas and a handful of others). Despite the pullback, the rise and rise of SUV sales is still happening with 72.5% of all new passenger cars being SUVs, the highest proportion ever.
FINANCE DIRECT ANNUAL PROFIT FALLS
Finance Direct has posted March year profit after tax of just $1,000, down from $355,000 last year as operating expenses and staff costs increased $370,000 to $2.69 million. The non-bank deposit taker had total assets of $15.9 million at the end of March, and $12.7 million worth of secured debenture stock.
CHANGES IN BNZ EXECUTIVE TEAM
BNZ says Christine Yates, its chief customer officer for private banking, wealth and insurance, is leaving the bank effective July 22. Her responsibilities are being divvied up with Paul Carter taking on oversight of private banking, alongside his role as chief customer officer and oversight of partnership banking. Daniel Huggins, BNZ's executive general manager for customers, products and services, adds oversight of wealth and insurance.
A MUCH FASTER REBOUND
Chinese service providers signaled the sharpest increase in activity for over a decade in June. Their service sector PMI rose from 55.0 in May to 58.4 in June, to signal a substantial increase in service sector activity. Furthermore, total new orders rose at the quickest pace since August 2010 and new export work expanded for the first time since January. Firms widely reported that overall market conditions had continued to improve following an easing of measures related to the coronavirus pandemic.
REBOUND SALES
Australian retail sales rose +16% in May from April and marginally better than expected. Year-on-year they were up +5.5% after the -9% year-on-year drop in April.
END OF THE BOOM?
The iron ore price seems to be topping out at just under US$100/tonne and market chatter is that it is downhill from here. The top has been called many times recently, so this may be a false one too. But with the world in recession and supply still strong it is hard to why it has stayed so elevated for so long. Excessive Chinese inventories aren't helping either. The same could be said for bulk shipping, but the Baltic Dry Index just keeps on rising, defying expectations. However, a supply of ships (and especially crews willing to risk stranding) is shrinking fast and is keeping this demand elevated.
EQUITY MARKET UPDATES
The S&P500 ended its Wall Street session up another +0.5% with another late dip to end the week. Their week ended early on Thursday ahead of their national holiday and it was a good week for equities which were up +4.0%. That added +US$1 tln in capitalisation, trimming the year to date losses to -US$810 bln. Shanghai has opened strongly, +1.4%. Hong Kong has opened up +0.6%. Tokyo has opened up +0.4% also in very early Friday trade. The ASX200 is also up +0.4% in early afternoon and heading for a weekly gain of +2.5%. The NZX50 Capital Index is up +0.6% and about to book a weekly gain of +4.1% largely on the back of F&P Healthcare which will end above $20 bln in capitalisation, and A2Milk which will close with a capitalisation of $15.6 bln. Meridian Energy at $12.6 bln is the only other NZ company with a capitalisation in the clouds this high..
SWAP RATES UPDATE
Swap rates are probably unchanged 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 0.31%. The Aussie Govt 10yr is down -3 bps to 0.91%. The China Govt 10yr is up 3 bps at 2.92%. The NZ Govt 10yr yield is down -4 bps to 0.96% after yesterday's strong rise. The UST 10yr is little-changed at 0.67%.
NZ DOLLAR FIRMER
The Kiwi dollar is still rising, now at 65.2 USc. Against the Aussie we are also firmish at 94.1 AUc. Against the euro we are up at just under 58 euro cents. And that means the TWI-5 is now up over 70.
BITCOIN SOFT
The price of Bitcoin is softer and down to US$9,109 which is a slip of -1.6% since this time yesterday. 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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38 Comments
Granny Herald shines the light on gold and the experts question whether or not it's safe. Gold being discussed around the water cooler suggests we really are in strange times.
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
Looks like it's about a 7% round turn (buy and sell) in the retail market, with a minimum commission of $75.
https://www.goldbroker.com/bullion/buy-gold
Morris and Watson buy and sell bullion locally - better rates than buying Perth Mint IMO https://morrisandwatson.com/bullion/
Can’t see their buy price or even the sell price on coins to calculate margins. I’m a bit disillusioned with precious metals. For full easy saleability coins are best but there are big margins above the metal prices with Silver being even worse than Gold and there are physical supply constraints. So it’s difficult to get what you want and at a price that’s reasonable. I’m leaning more to SS Rolex Sports watches. Classic models have strong demand and it’s a lot easier to cross a border with $20,000 on your wrist rather than Seven 1oz Gold Coins in your pockets.
Strange times or back to what it should be?
Gold is the enemy of central banks. You cant create it out of thin air. With the exception of between 1971 and now gold has been actual money for the last 5,000 years. It is the only asset without any counterparty risk.
The cynic in me says people will be directed to gold to keep them away from the silver though!
Perfectly acceptable for NZ to sell it's gold.. only when it was high and buy back at a lower price but get more of it.
We're sitting on zero, while quite a few (most countries) have been buying up.
Any idea which Govt sold it, if we ever had any in the first place?
I'm guessing Labour unless it was the Nat's when the GFC and Chch earthquake bill's were coming in.
It's not just used cars that will be in demand, it will be used-used cars. I believe that second hand dealers are already now scouring South America, Africa, and Russia for good quality used-used cars. Apparently Columbia has a plentiful supply of used-used Japanese cars of 1970s vintage.....they were originally imported second-hand from Japan in the 1990s. Apparently, they can be picked up for under $50 by the NZ dealers, but they do come with a full tank of gas. After shipping costs they are estimated to retail in NZ for no more than $10,000.
New Zealand is doing ok, for now. However, around November I doubt America will. I expect their coinage and small notes will START to look worthless. Most mints (Denver, SanFran, etc) will probably stop producing them.
And yes November 2020, 4 months away. That's the trajectory I'm thinking at the moment. I guess I'm saying .. hyper inflation / money devaluation starting in America this year.
Not sure of the implications for us Kiwis if this happens.
Everything means everything will depend on the Unemployment data in October.
If less than 10% will be not as bad BUT if more than 10% than every percent above 10% will play havoc and will only know once wage subsidy ends.
Government may have another round of subsidies but most probably this time will target regions/ sectors affected by border/travel restriction who are unable to operate for no fault of theirs - instead of many businesses that have started operation and making a fortune out of it by manipulating.
BBC Coronavirus: Why has Melbourne's outbreak worsened? "About 300,000 people were ordered back into lockdown this week amid a military-assisted operation to "ring fence" 10 postcodes at the centre of the outbreak.
The problem has escalated in the past fortnight - there are now 482 active cases in the state of Victoria.
The numbers remain below Australia's March peak, but what's concerning to authorities is that local transmission is now the key source of infections." https://www.bbc.com/news/world-australia-53259356
They're having a bit of a shocker in Victoria. It doesn't help that the security guards were banging those in lockdown.
I'm in Sydney, and a supermarket in the next suburb over had to be shut down yesterday due to a staff member testing positive. Heres the thing - he arrived from Bangladesh a few weeks ago to Melbourne, tested positive, was put in isolation for two weeks, let out after two weeks WITHOUT BEING TESTING, crossed the border into NSW where he lives and returned to work, only to test positive.
I just want a rotisserie chicken FFS.
I think in the post-Covid world the quality that will be most in demand for all politicians, public sector and private sector workers alike will be common sense. But how does one measure this quality; it won't be discovered by a currently used personality test.
If there is anybody out there who works in the 'human resources' field, please explain how you will measure this now most important quality.
A current example of a politician who lacks common sense is Winston Peters: just a week or two ago he was all over the media clamouring for NZ to open its borders to Australians and implying contempt for the closed borders policy. Neck minute Covid spikes again in Melbourne. We haven't heard another peep from Winston on this subject since. ( Instead he is trying to parry awkward media questions about NZFs connection with big business (Talley's) contributions to the NZF Foundation in return for stymieing Stuart Nash's attempt to get cameras on all commercial fishing boats.)
Hi all. Saw an interesting docu. Fort Knox. Every few years reporters are allowed in and are shown only one vault.
What if the other vaults were all empty. It would have allowed Uncle Sam to get double the value of the physical gold. ie sell it offshore and pretend they still have it at the same holding value.
Leased it to gold miners, via investment bankers, to sell forward to finance operations and settle final sale price minus costs. A self defeating vicious circle, but it creates a long term short which needs to be covered at some point - China and Russia are persistently seeking the trigger price with constant purchases..
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