What happened Thursday

A review of things you need to know before you go home on Thursday; more rate cuts, better local bounceback data, Govt bond tender popular, China-Australia fight gets uglier, swaps unchanged, NZD firms, & more

9th Jul 20, 3:59pm by David Chaston

ID 22702269 © Daniaphoto | Dreamstime.com

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
Westpac has followed ANZ and cut its one year fixed rate to 2.55% to match them. This was their only change.

TERM DEPOSIT RATE CHANGES
However, Westpac has cut almost all its term deposit rates today. Update: Heartland Bank has also announced rate cuts effective tomorrow (Friday).

A BETTER BOUNCEBACK ...
Preliminary July data for the ANZ Business Outlook confidence survey has shown a much stronger lift in economic activity than economists have been forecasting - inevitably raising questions of whether the improved mood will last.

... BUT SOME KEY TRADERS ARE STILL NERVOUS
The Warehouse Group has enjoyed strong trading so far since lockdown, especially online, but is warning of a likely need for asset writedowns, and it is still not prepared to give any profit guidance for the financial year ending this month.

GAME OF CHICKEN
The owners of the Tiwai Point smelter say they will close it in 14 months, but they also say lower cost power could prompt it to keep its doors open - "but the window of opportunity is closing quickly". However the Government won't provide any further subsidy.

MORE BOUNCEBACK SIGNALS
ANZ's monitoring of traffic volumes is encouraging. Their Light Traffic Index lifted +28% in June. The Heavy Traffic rose +14.5%. Overall traffic is nearly back to year-ago levels. Especially encouraging is that commercial (heavy) traffic seems to have made a full recovery whereas passenger travel is still lagging.

POPULAR AT A HIGHER YIELD
Treasury put up three bonds for tender today, seeking $950 mln. They got offered $2.2 bln. The April 2023 bond was won with a stable 0.33% yield. The April 2029 bond was won with a 0.84% yield, higher than the previous auction. The April 2033 bond was won with a 1.09% yield, also higher than the prior tender.

JOB TRACKING
Paid jobs in the week to June 7 (the latest data, based on employer monthly filings) fell by -10,780 to 2,197,170. -1890 of them were in primary industries, -3120 of them were in factories, and -6220 were in the services sector.

CHINA CPI TREND STOPS FALLING
China's consumer inflation rate is rising again and ending a four month set of consecutively lower levels. It was up +2.5% in June from a year ago. In the food category, beef prices were up +18% in a year, lamb prices up +11%. This was a slower rate of increase for beef from May, but a faster one for lamb. For most other categories of consumer prices there was an easing.

SHARP FALL
May data in Australia shows that new loan commitments for housing fell sharply, down almost -12%. This was the largest fall in the history of the series, driven by strong falls in the value of loan commitments for housing in New South Wales and Victoria. The value of new loan commitments for owner occupier housing fell -10, while investor housing fell more than -15%. The number of owner occupier first home buyer loan commitments fell -9.3%.

'DO NOT TRAVEL'
Australia has announced that its citizens should avoid being in Hong Kong, over the fear of arbitrary detention and State hostage taking. At the same time, Australia is offering a welcome mat with skilled and graduate visas to be extended for people from Hong Kong. Australia has cancelled its extradition treaty with the once autonomous city.

EQUITY MARKET UPDATES
On Wall Street, the S&P500 ended up +0.8% on the day. Shanghai has opened up another +0.9%, to build on the strong gains earlier in the week. Hong Kong is also up +0.4%, and Tokyo is up by +0.2% in early trade. The ASX200 is up +0.9% in mid-afternoon trade. The NZX50 looks like it will close down -1.4% after being down about that amount all day.

SWAP RATES UPDATE
Swap rates are probably unchanged again 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 firmer by +1 bp to 0.90%. The China Govt 10yr is holding higher by a surprisingly sharp +10 bps at 3.19%. The NZ Govt 10yr yield is up +2 bps at 0.98%. The UST 10yr is marginally firmer at 0.66%.

NZ DOLLAR FIRMER
The Kiwi dollar is marginally higher today, now at 65.7 USc. Against the Aussie we are unchanged at 94.2 AUc. Against the euro we are little-changed at 57.9 euro cents. And that means the TWI-5 is now just under 70.3.

BITCOIN LITTLE-CHANGED
The price of bitcoin is higher since this time yesterday but only marginally, now at US$9,393. 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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54 Comments

by Te Kooti | 9th Jul 20, 4:07pm 1594267636

Well the Fed have exited their repo operations as demand dwindled to zero. One sign financial markets are normalising.

by Boatman | 9th Jul 20, 4:11pm 1594267867

The Aussies would be wise to just be quiet right now when it comes to China , and quietly do what it wants instead of noisily looking for an argument .

This pseudo Sabre -rattling is not in anyone's interest ..............leave that to Donald Trump

by xingmowang | 9th Jul 20, 4:18pm 1594268315

Australia is a funny nut case.

by frazz | 9th Jul 20, 4:41pm 1594269683

Pot calling the Kettle

by antonymouse | 9th Jul 20, 4:45pm 1594269924

Hey xingmowang, I see you are liking the freedom of speech here don't you.
Imagine you writing "China is a funny nutcase" in a Chinese forum as a Chinese resident.
I wonder what would happen to you, nah I know what would happen and it ain't pretty.

by Chessmaster | 9th Jul 20, 8:17pm 1594282638

Antonymouse, Why is your comment relevant to what his saying??? He chose to live in NZ same as when your ancestors migrated from where ever.

by wortho | 9th Jul 20, 10:56pm 1594292160

Rather presumptuous that he lives in NZ? Same as your ancestors? Quite different in my mind the colonial migrants to new immigrants. Your move.

by Chessmaster | 10th Jul 20, 8:25am 1594326349

Read his post. The mouse said you "you enjoy freedom HERE". Clearly means his in NZ. Dont need to be a rocket scientist to figure that out.

Also I take it you are one of those so called "Colonial Migrants". Who in your mind qualifies as "Colonial"??Is it easier to just say you see a big difference between White and other migrants??

Also quite presumptuous of you to think that Xi is a first generation migrant?

I see 36 likes on Antonymouse's comment. Racism is live and well in NZ.

by youngdumbandbroke | 10th Jul 20, 8:57am 1594328227

Fail. We have no evidence xi lives here. And no, just because someone doesn't agree with you, it doesn't mean they're racist

by ilikewalnuts | 9th Jul 20, 4:16pm 1594268169

It's their pesky moral principles getting in the way eh

by xingmowang | 9th Jul 20, 4:24pm 1594268669

if truely moral, should return the land and resources back to the Aboriginals.

EH...

by Te Kooti | 9th Jul 20, 4:29pm 1594268957

That's not the Anglo-Saxon operating model.

by Rosenstein | 9th Jul 20, 4:42pm 1594269731

Nor any conquering people's operating model.

by Alter Ego | 9th Jul 20, 5:20pm 1594272045

I was gonna go back home, but could not endure being split into so many pieces, I would be so useful in an Operation in transplanting our bits into a land that shall be nameless....but likes to transplant itself..world wide....

True inhabitants of Homelands are of so mixed a race, it would be impossible to return us all to the land of our Fathers, Grand Mothers and way back into beyond and into infinity.

Be thankful for your Birth, your Birth Right, may not be as one sided as your Be-Littling Ancestors would have you believe on here..

Mixed races were so common in the past, it expands into the future from way long ago...but there is a total mix-up in entitlement by some, these days.

I think we should all be entitled to an opinion and stick to that.....Race is never certain, unless one takes a Blood Test and refer back to all creatures, great and small and who became Homo Sapiens....eventually.

Get the Picture....Monkeying about with facts is never easy...no matter what and who you claim to descend from...

by antonymouse | 9th Jul 20, 4:46pm 1594270008

if truely moral, should return the land and resources back to the Aboriginals.

just like Tibet!!

by RickStrauss | 9th Jul 20, 5:00pm 1594270840

So your argument is that historical injustices justify the CCP's imperialism and treatment of conquered populations?

"Hey everyone, it's our turn at empire! Oh, just kidding, we're benevolent, didn't mean to say that..."

by Fritz | 9th Jul 20, 5:03pm 1594270994

How about Tibet mate?

by Foreign buyer | 9th Jul 20, 5:13pm 1594271631

Han people have invaded many many territories and treat the indigenous people horrendously.

by Glitzy | 9th Jul 20, 5:20pm 1594272017

The CCP shill at his finest.

by Kezza R | 9th Jul 20, 8:01pm 1594281679

Xing you have been asked about the CCP forcefully sterilizing some of its minorities and murder etc.
You do not reply. That in itself is an admission of guilt.

by RickStrauss | 9th Jul 20, 10:00pm 1594288825

It's okay because they're not the "right" people.

by Hook | 9th Jul 20, 4:16pm 1594268200

Very true Boatman... I think the Aussies might want to just stick to their knitting and remember who buys a significant chunk of their resource output - including gold

by J.C. | 9th Jul 20, 4:33pm 1594269213

China is actually the world's largest producer of gold.

by powerdownkiwi | 9th Jul 20, 4:48pm 1594270107

JC - nobody 'produces'. If you keep using words incorrectly, folk get the wrong idea.

The word is 'extracts'.

by J.C. | 9th Jul 20, 5:00pm 1594270807

Yes, I stand corrected.

by Poppyc | 9th Jul 20, 5:16pm 1594271771

of fake gold too (in jest)
https://www.scmp.com/business/companies/article/3092042/explainer-how-k…

by MortgageBelt | 9th Jul 20, 4:35pm 1594269354

NZ should also be standing up to China and speaking out over its state actor behaviour.
Time to diversify our export and import base, and stand up with our allies.

by Fritz | 9th Jul 20, 4:42pm 1594269739

No, we are *too kind* to criticize a dictatorship that is not very kind at all.

by Gareth Vaughan | 9th Jul 20, 4:46pm 1594269994

FYI on Hong Kong.

New Zealand to review relationship settings with Hong Kong

Foreign Affairs Minister Winston Peters has announced that the New Zealand Government is reviewing the settings of its relationship with Hong Kong.

“China’s decision to pass a new national security law for Hong Kong has fundamentally changed the environment for international engagement there,” Mr Peters said. “New Zealand remains deeply concerned at the imposition of this legislation on Hong Kong.”

“Accordingly, the Government has directed officials to review all of New Zealand’s policy settings with respect to Hong Kong to determine the appropriate nature of our cooperation going forward.

“This will be a deliberate, considered review across all of our settings, including extradition arrangements, controls on exports of strategic goods, and travel advice.

“New Zealand shares the international community’s significant and longstanding stake in Hong Kong’s prosperity and stability. We will continue to monitor the law’s impact on the people of Hong Kong, with whom we share close links,” said Mr Peters.

ENDS

by Fritz | 9th Jul 20, 4:56pm 1594270601

Good.

by richard1965 | 9th Jul 20, 7:35pm 1594280151

FYI

https://m.hindustantimes.com/world-news/canada-s-trudeau-has-exposed-ch…

by MortgageBelt | 9th Jul 20, 4:58pm 1594270738

Well done.
WP & NZ First are going to keep Labour in power with statements/stands like this, as many conservatives will identify with this.

by RickStrauss | 9th Jul 20, 5:01pm 1594270879

And National will not match up to it, I would hazard a guess.

by Fritz | 9th Jul 20, 5:05pm 1594271111

I hope to see some serious election campaign interrogation of the foreign policy of the parties.

by GV 27 | 9th Jul 20, 6:24pm 1594275850

Works well for Labour, otherwise they'd have to defend their track record of getting literally nothing done.

by taimaiakka0 | 9th Jul 20, 5:48pm 1594273718

If Australia is wrong, should shutup but if is right and is standing against bullying and dictatorship for its souverignity should stand up and should not get, any country get away be it China or any other.

Remember that either entire world is wrong who is standing against China a rouge state or China who is terrorising its neighbour with war and where not fighting to expand physical territory attacking with econony war.

China has succeeded in peneterating political system of many country and many lobbist by throwing money who at drop of hat will stand for their (China) right in the name of Rock Star Economy instead of exposing their master.

by oldbloke1 | 9th Jul 20, 6:10pm 1594275026

The east is red.

by Rhumline | 9th Jul 20, 9:06pm 1594285608

Great song that! Dum Da Da Daaah, Dum Daah Daaahh". Some years ago when Deng Xiaoping was in full flight, I was invited to a Chinese "...celebration of our minorities" concert at the US university I was studying at - all performed by Han Chinese students dressed in ridiculous parodies of sublimated peoples 'national dress'. I asked the local democratically elected President of the Chinese Students Association (i.e. the Party watchdog and his wife) what had happened to 'the East is Red'.

He chuckled benevolently and said "...we don't do that one anymore."

by RickStrauss | 9th Jul 20, 10:03pm 1594288981

The Communist Party is like the sun,
Wherever it shines, it is bright
Wherever the Communist Party is
Hurrah, the people are liberated!

- The Song of the National List MP / Donor

by J.C. | 9th Jul 20, 5:05pm 1594271105

AfterPay up a staggering 13% today. Price up 7x since March.

Better than most crypto.

by Andrewj | 9th Jul 20, 5:22pm 1594272169

ouch
https://wolfstreet.com/2020/07/08/no-v-shaped-recovery-for-airline-tick…

by The Lark | 9th Jul 20, 6:22pm 1594275769

Moral outrage? Those so quick to jump on issues of freedom and human rights, what about Yemen, Venezuela, Iraq etc etc. The human catastrophe in Yemen is said to be the largest in the world at present, with children quite literally starving to death. Moral outrage against the English and Saudis, not here. Sanctions against Venezuela, which have destroyed its currency and led to enormous poverty. Economic sanctions are one of the worst weapons of war, and the moral outrage? Not here. To see causes that are put under your nose, and yet to ignore those which are not so readily presented, is bigotry.
It's a fool that unwittingly makes a rod for their own back.

by Lapun | 9th Jul 20, 6:35pm 1594276522

Are you claiming Venezuela would be thriving if there had been no sanctions? Were the sanctions applied and enforced by all neighbouring countries? I suspect corrupt and poor government has caused most of Venezuela's troubles but I'm a fairly uninformed layman. Similarly the Yemen has virtually no resources that western countries want - compare with Kuwait and you would deduce that western countries stop civil wars in wealthy countries and can't be bothered in poor ones. Amoral not immoral.

However you have a good point. It is expressed in Matthew 7:3
""Why do you see the speck that is in your brother’s eye,
but don’t consider the beam that is in your own eye?""

by The Lark | 9th Jul 20, 7:03pm 1594278181

The point is that England profits directly from the sale of weapons to the Saudis for their war in Yemen. The English sell the Saudis jets, then provide pilots and training, all at a profit. There is little, if any "moral outrage " in the west concerning this. I am saying that the bombing, maiming and wholesale destruction of a nation, that is morally, humanely, abhorrent, goes unnoticed, while other MSM gets a massive out pouring of rage. Venezuela has been singled out by the usa, for one very simple and clear reason, they produce a large amount of oil. For this reason alone, the usa has been able use sanctions to destroy Venezuela's economy, bringing with it the destruction of peoples livelihoods, causing massive poverty. Moral outrage in the west? None.
The usa, along with england often use sanctions to destroy nations they want to control, and have done so for decades.
Iraq is agreat example, with weapons of mass destruction being touted as justification in the MSM, for an invasion of Iraq that was not sanctioned by the UN. Moral outrage in the west? None.
I am NOT saying I agree with China, or Russia with regards foreign policy, what I AM saying is is that to jump up and down about issues that are played out in the mainstream media, because they are being spoon fed to the public, demonstrates the degree of hypocrisy that rules in the west. The killing of an Iranian general, on Iraqi soil, ruled yesterday by the UN as illegal, yet no further action to be taken, while Iran itself is subject to sanctions, destroying its economy, all go unnoticed, or ignored. There is little to no moral outrage in the west about these issues. Yet China, which has not bombed, starved children to death, is treated as if it is far far worse than countries like the usa and england.
As such, I say that such a biased viewpoint, whether through ignorance or choice, is bigotry.

by Fritz | 9th Jul 20, 8:06pm 1594281995

Great points, although there *was* actually quite a bit of moral outrage in the west to Bush and Blair's phoney war.

by Lapun | 9th Jul 20, 9:09pm 1594285762

Thank you. As an ex-POM I ought to have known about the arms sales to Saudi.
I'm still puzzled about the effectiveness of sanctions against Venezula - you claim they destroyed the economy but surely far harsher sanctions have been used for far longer and supported by more countries against Cuba and Iran with comparatively little effect. Note sanctions were used against Cuba despite no oil - the USAs fear of Venezula surely is the fear that an openly socialist country might succeed and has little to do with oil. The USA has been destablising South American countries for all my entire rather long life and usually it ends up to the USA's disadvantage. It is when those countries have healthy democratic goverments with honest institutions that they grow economically which helps the USA.
The balance of media reporting of Western excesses -v- other countries (usually Russia or China) seems about right. For example I have read about Saudi involvement in Yemen and seen it on TV many times. China's organ harvesting and its treatment of Uighurs is worse than anything equivalent happening in the US or England; when it comes to external aggression and foreign policy then your thesis has some support.

by Fritz | 9th Jul 20, 6:59pm 1594277968

Yes, valid points. The main reason I focus on China (Can't speak for others), is that trade and engagement with it is so central to NZ and so firmly within our sphere of influence.
I've never ever said that there aren't other nations doing naughty things. In fact, I've been quick to point out to people who may think I'm racist against the Chinese, that I was on the streets in 1980 as a young boy with my parents protesting against the Springbok tour (white regime), against the French and their abhorrent nuclear testing in the 80s (white regime), and in the 90s against the Yanks on the Gulf War (white regime).
So I guess you can say I care deeply about human rights atrocities, whatever country is behind them.
The bigger question is how do we respond, in a way that is consistent and proportionate? If we respond on China's behaviour, then we should also do so on the Saudi's... etc etc.

by The Lark | 9th Jul 20, 7:14pm 1594278883

That's correct Fritz, if we are going to respond to human rights issues, then we need to respond to them all, which I agree, is rather a challenging task. Of course the problem comes when our own nations has the dilemma of moral, or economic. Hence I say "making a rod for ones own back". The problem is further complicated by the fact that as a nation, we must first look at ourselves, and the moral strength of our own nation. NZ has been called out on its child poverty and high rates of suicide, so in this sense, it becomes true that before "removing the straw from our brothers eye, we should remove the beam from our own".
I see where you're coming from Fritz, and appreciate your honest response.

by Fritz | 9th Jul 20, 8:11pm 1594282293

Yep mostly agree. Although I think reference to NZ's child poverty and suicide is not quite 'apples with apples' in terms of some of the other atrocities we have been referring to.
But thanks for the correspondence, you've re-opened my eyes to Yemen and the West's complicity in that shambles, and got me to re-think my views (a re-balancing is likely!)

by Lapun | 9th Jul 20, 9:18pm 1594286289

Suicide is a cultural issue so higher suicide rates does not indicate an more evil society. Adult poverty is also a matter for a country to decide how wealth should be distributed. However child poverty is simply bad and we ought to be doing something about it.
In NZ we have child poverty partly because of drugs and parental failures but we also have child poverty simply because hard working dedicated parents have bad luck. A return to a generous universal child benefit would virtually solve the latter.

by Casual Observer | 9th Jul 20, 9:35pm 1594287332

While I don't necessarily disagree with you Lapun, what's your view on having the 7th highest child homicide rate in the OECD? On average 1 child dies every 5 weeks due to homicide. https://www.childmatters.org.nz/insights/nz-statistics/

by Rhumline | 9th Jul 20, 9:19pm 1594286395

Good points Fritz... and good to see the conversation on this website. It's easy to demonise the enemies of our friends and fail to recognise our friends (and our own) descents into darkness.

How to respond? If there's anything to learn from the past few months its about small countries exercising judgement and opposing with a unique voice. Australia has failed to learn that it stands most proud when it emerges from America's shadow.

by Foreign buyer | 9th Jul 20, 10:19pm 1594289978

Interest is becoming very woke.

by youngdumbandbroke | 10th Jul 20, 8:58am 1594328287

*the civilised world is becoming woke