Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
BNZ has now also matched ANZ and Westpac at 2.55% for a fixed one year 'special' home loan rate.
TERM DEPOSIT RATE CHANGES
Heartland Bank has announced rate cuts across the board. BNZ also cut all TD rates of 1 year and longer.
THE GOOD NEWS BOUNCEBACK STORY CONTINUES, FOR NOW
Retail spending bounced back strongly in June from a very weak May. In fact, it was up +4.2% from June 2019. Some of the recent strength in household spending is likely due to pent up demand after the lockdown, which might not be sustained. And analysts say we should expect some easing in spending later this year as the Government’s wage subsidy schemes come to an end. Even so, the recent strength in household spending is an encouraging sign.
DEEPER IN THE HOLE
The May Crown Accounts revealed another -$3.2 bln OBEGAL deficit for the month, and a -$4.5 bln monthly operating deficit. No-one seems to care about deficit spending anymore; it is helping prop up our economy. But it is mounting and cumulative. The May result was the third highest monthly deficit in history (beaten by April 2020 and June 2011) and takes the total deficit for the past year to a massive -$26.9 bln on a full operating basis. That is -8.6% of GDP and clearly on the way up fast.
A ZIPPY DASHBOARD
All that deficit spending does seem to be aiding the economic recover. Treasury has updated its zippy Dashboard which shows us recovering but settling into a domestic economy that is about -20% lower than the average in January and February, even though traffic levels have returned to 'normal'. Export trade details are not covered in the Dashboard, but are likely to have performed better.
GST SINKS
Part of the fast rising deficit is that taxes, especially GST, is falling fast. In fact in May 2020 it dropped -29% year-on-year, only beaten by the October 2008 GFC collapse of -43%. Every month in 2020 has recorded a decline year-on-year. However there is every expectation that it will recover in June
BUOYANT AUCTION MARKET
More than twice as many homes were sold at auction in the first week of July as in the same week last year. 57% of them sold.
CHEAPER DEBT
The interest rate payable on Fonterra capital notes has been reset from 3.385% per annum to 2.47% per annum.
CRISIS COMING IN AUSTRALIA
Australia is struggling with its pandemic response. Stupidity is rife in Victoria attempting to subvert their lockdown. There were 288 new cases there today. And Queensland is opening its borders today to try and save their touism industry - to everyone except those from Victoria. We have a dangerous situation building at out cousin's place. State government chequebooks are open to stave off an economic shudder. And Australia may close its borders soon to all returnees. Most worryingly, the ICU bed occupancy is nearing capacity - and the next wave of COVID-19 patients are just about to arrive.
EQUITY MARKET UPDATES
On Wall Street, the S&P500 ended down -0.6% on the day. If it is unchanged tomorrow, it is heading for a flat result for the week. Shanghai has opened down -1.2%, to trim the strong gains earlier in the week and at the current level will end the week up about +8%. Hong Kong is also down -0.6%, and Tokyo is down -0.2% in early trade. Both the ASX200 and NZX50 Capital Index are both down -0.2% so far today, heading for a weekly change of -1.7% and -1.3% respectively.
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 softer by -2 bps to 0.88%. The China Govt 10yr has softened by -5 bps to 3.14%. The NZ Govt 10yr yield is up +1 bp at 0.99%. The UST 10yr is down -5 bps at 0.61% and all of hat move came in the Wall Street session.
NZ DOLLAR UNCHANGED
The Kiwi dollar is marginally softer today, now at 65.6 USc. Against the Aussie we are firmer at 94.4 AUc. Against the euro we are firmer still at 58.2 euro cents. And that means the TWI-5 is holding at 70.3.
BITCOIN LOWER
The price of bitcoin is lower since this time yesterday, down -1.7% to US$9,229. 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 ».
Daily exchange rates
Select chart tabs
52 Comments
The risk of letting Covid get out and about again. (From Australia). Queenstown might consider themselves lucky....
"Falls Creek and Hotham ski fields shut down due to COVID-19 lockdown. They only started operations on Monday; that's a four-day snow season. Mount Buller opened in late June and will continue to operate its lifts and ski and snowboard school until at least Sunday, to allow guests already in the resort to complete their stay."
61k infections and 960 deaths in the US in the latest stats. The increased death numbers are starting to come in line with the increased infection rate from three weeks ago. There was a great deal of talk on here yesterday that the virus was all but over it had done its dash. The figures are indicating otherwise.
ICU beds may soon be full in Victoria, is very concerning. The Ozzy public will not take unavoidable deaths on the chin well.
Absolutely correct. US hospitalization rates are soaring and death rates follow - then there is increasing evidence of the negative health effects in significant numbers of individuals who were diagnosed with 'mild' disease. The economic costs of this associated morbidity will no doubt be substantial as the virus continues to burn seemingly unchecked in the shambles arising from a premature re-opening etc. Fauci reckoned they might see 100,000 cases a day eventually - and come autumn (with a con-current flu season) that might just happen. It's bizarre that several posters on here constantly try and minimize the health impact of the virus in the US (actually perhaps not that bizarre if you look at their track record in posting on climate change denialism and other right wing tropes).
https://www.visualcapitalist.com/history-of-pandemics-deadliest/
Wuflu deaths are about half of the Asian flu epidemic of 1958, about half of the Hong Kong flu epidemic of 1968, and only about 3x the Swine Flu epidemic of 2009 that passed most of us by unnoticed. And of course so far only abut 1% of death toll from 1918 Spanish Flu.
That said only about 1-2% of world population have been infected so far, it is possible that it will eventually get 10x as big as it spreads through (mostly youthful) 3rd world.
You were doing quite well until you mentioned Fauci. No credibility after that. The economic costs do not come from morbidity. They come from governmental reactions to past, present and perceived future morbidities. Anything quoted by Fauci, Ferguson or WHO is immediately suspect.
Daily US deaths are now same as a month back (less than half of peak, and about 50% up on the minimum of a week back), but case numbers are up 3x since a month ago. So CFR is about 1/3 of what it was - pointing to more testing or younger/healthier people catching the bug. This is by no stretch of the imagination good, but not nearly as cataclysmic as the sharp rise in case numbers suggests. US data shows about a 2week lag between peak in cases and deaths for first surge, suggesting daily deaths might rise another 50% over next week, but perhaps not any further than that given new cases look to be nearing peak.
Mate you can keep guessing at this stuff as people have been doing for the last few months now but they stats keep cranking up there despite all the guesses. Maybe a few less deaths this time arround due to being more experienced but that could be off set by economy and hospital issues.
People modify their behavior by choice in response to perceived risk, many had relaxed owing to diminishing risk before this latest rise. Now mask wearing in USA is becoming more pervasive and accepted. New cases have only risen about 6% in last 7 days so seems they are near top of current surge.
Where did you get the 288 new Aussie COVID cases figure from?
I’m seeing 182:
https://www.health.gov.au/news/health-alerts/novel-coronavirus-2019-nco…
Over in Straya
New lending by both owner occupiers and investors has recorded the biggest monthly fall on record, but Prime Minister Scott Morrison says it's still too early to make any calls on any house prices.
Scomo is a master of diplomacy.
https://www.afr.com/policy/economy/home-lending-worst-on-record-but-pm-…
and about 10% as many useless Marxist ideologues being churned out by Humanities Depts would be a massive boon for the country over the next couple of generations. The country gets nothing from their creation but ever more hands grasping for tax dollars and seeking to destroy our economy with non-productive overheads added to every activity.
Is this border control enough? And is it working?
Border control measures
Only New Zealand residents and citizens (and their children and partners) are permitted to enter New Zealand. This includes the Realm countries (the Cook Islands, Niue, Tokelau), Australian citizens and permanent residents ordinarily resident in New Zealand.
People from any other countries can’t enter New Zealand at this time, unless they have specific grounds for exemption, such as being essential workers or for medical reasons. These people will need to apply to Immigration New Zealand for an exception to the border closure.
Airline and marine crew are exempt from managed isolation in some cases.
Apply to Immigration for an exception to the border closure
Under the Air Border Order, people entering New Zealand from another country must remain in managed isolation or quarantine for at least 14 days. This measure is key to preventing the transmission of COVID-19 into our communities.
The Air Border Order was updated on 22 June 2020 to further strengthen the management of public health risk from residents returning to New Zealand from overseas. It clarifies requirements around medical examinations, testing, and isolation and quarantine. It also clarifies which groups of people the Order doesn’t apply to.
Sounds like Residents (of which there are many) are permitted as well as Permanent Residents.
.
Look at where the latest cases are from. Keeping in mind Australia is often a transit destination.
https://www.health.govt.nz/our-work/diseases-and-conditions/covid-19-no…
GST SINKS
Part of the fast rising deficit is that taxes, especially GST, is falling fast. In fact in May 2020 it dropped -29% year-on-year, only beaten by the October 2008 GFC collapse of -43%. Every month in 2020 has recorded a decline year-on-year. However there is every expectation that it will recover in June
In May many companies did not raise invoice but delayed for June to avail second round of wage subsidies though had good demand/sale in May so in June the number should jump and the reason will not be demand but manipulation to reflect May sale in June.
NSW now on high alert.
ABC News
https://youtu.be/2lC9UKYYQWA
Kiwi lessions: Quarantine wanders, superspreaders.
https://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=12347…
Deadlier than Covid...Read it...It may Herald a new problem...And China has warned us.....
Covid 19 coronavirus: 'Unknown pneumonia' deadlier than coronavirus sweeping Kazakhstan, Chinese embassy
warns...Russia reported spike.....WHO involved too...So may be accurate.
Spreading the word is better than not knowing owt about it......Then maybe the Pneumonia is not spread. ...Like Covid.
Papers do some good...but then so does the Internet to spread the Word about issues...it ain't all lies, but ill prepared is more likely to spread the Illness......just like Covid did. Cashing in is better than Dying out.....as half a million Covid who died would portray.
When the chips are down there's no doubt about it.......you're better off with a left of centre government; they look after all citizens, not just the elites.
Look at the mounting chaos and absolute bedlam when the tide goes out in USA, UK, AUSTRALIA, CANADA, BRAZIL.........all have right-wing neo-liberal governments scrambling and floundering ineffectually. They will only be wanting to look after the corporates who contribute to their party coffers, until it suddenly dawns that the citizens have turned on them.
The problem with left wing vote-buying govts is that eventually they run out of other people's money, at which point you get to suffer through generations of squalid stagnation and misery. See: Greece, Argentina, Venezuela, Zimbabwe, South Africa and soon most of OPEC. The more left wing your govt the more your country will lag behind the growth and prosperity that less left wing countries enjoy (see EU for myriad examples).
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.