A review of things you need to know before you go home on Tuesday; no rate changes, post-lockdown bounces, education vouchers arrive by the backdoor, swaps unchanged, NZD dips, & more

A review of things you need to know before you go home on Tuesday; no rate changes, post-lockdown bounces, education vouchers arrive by the backdoor, swaps unchanged, NZD dips, & more
ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
No changes announced today.

TERM DEPOSIT RATE CHANGES
None here either.

POST LOCKDOWN SPIKE I
The real estate industry has just has its best June sales volume in four years, and median prices are up from May but still lower than the March and April levels. The REINZ is warning that things may go downhill from here, however. And few analysts are convinced that either sales or prices will be sustained at these June levels. The latest Barfoot auction results also suggest that the sales rate is slipping in July.

POST LOCKDOWN SPIKE II
Job ad levels
had a similar rebound in June, but they are still -40% lower than year-ago levels. The month-on-month bounceback was concentrated in the Insurance, KiwiSaver, and Advertising sectors.

POST LOCKDOWN DIVE
Plunging fuel prices have probably contributed to inflation falling off a cliff and reverting from an eight year annual high to possibly a near-22-year quarterly low.

LABOUR USES EDUCATION VOUCHERS - FOR BUSINESS
The business consulting industry has had its revenues boosted again by the taxpayer. Another $40 mln for the Regional Business Partners Network, on top of $15 mln invested since March has been announced today. This voucher scheme for SMEs has been popular with over 6000 businesses taking up the scheme for advice from 1300 "professional service providers". The idea is to add expertise SMEs wouldn't normally be able to afford to develop or restructure their businesses, or get management coaching. Business lobby groups welcomed the increased funding.

99% FEWER
Border restrictions and widespread flight cancellations caused the number of people to arrive in New Zealand in May 2020 to be the lowest for any month for more than 60 years. (In 1959 New Zealand had a population of 2.3 mln people and is more an indication of how insular New Zealand was in 1959.) There were only 5,600 arrivals in May 2020 compared with 4,700 in May 1959. There were 462,000 arrivals to New Zealand in May 2019. Most arrivals in May 2020 were short-term travellers, made up of 2,600 New Zealand residents and 2,200 overseas visitors. Provisionally there were 900 migrant arrivals and 540 permanent departures. May was the second month under full border restrictions. In April there were 6,300 arrivals.

ALL EYES ON INFLATION
ANZ's unofficial monthly inflation monitor lifted +0.3% in June from May as some 'free' public services reinstated their charges. This saw their series contract -0.5% quarter-on-quarter, suggesting some downside risk to their Q2 non-tradable CPI pick of 0.0% (out Thursday).

EQUITY MARKET UPDATES
Earlier today, the fire went out on Wall Street. After being up +1.5% just after lunch local time, it ended down -0.9% in an afternoon selloff. California reimposing a partial lockdown and shutting schools didn't help the mood. Florida's raging infection rate isn't either. Meanwhile, Shanghai (-0.9%), Hong Kong (-1.7%) and Tokyo (-0.8%) have all opened lower today. And so has the ASX200 (-0.4%, with Afterpay down sharply). And all those negative shifts make the NZX50 Capital Index's +0.5% stand out. Good rises today for Fisher & Paykel Healthcare, and Synlait Milk are the reason.

THE END OF COAL IS CLOSER
Aussie thermal coal prices continues to fall. Prices are now down to under US$50/tonne and well below the US$120/tonne peak in July 2018. Prospects aren't great for coal, especially thermal coal any more. Markets are discounting miner values. Iron ore and metallurgical coal prices however aren't suffering the same fate.

AN AMERICAN HEALTH INSURANCE CRISIS
Because of job losses between February and May of this year, +5.4 mln laid-off workers became uninsured for health risks. These recent increases in the number of uninsured adults are 39% higher than any annual increase ever recorded. The highest previous increase took place over the one-year period from 2008 to 2009, when +3.9 mln non-elderly adults became uninsured.

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 unchanged at 0.90%. The China Govt 10yr is down by -3 bps to 3.13%. The NZ Govt 10yr yield is down to 0.96, a drop of -4 bps%. (All shifts are from this time Friday.) The UST 10yr is down to under 0.62% as Wall Street goes risk-off.

NZ DOLLAR DIPS
The Kiwi dollar has shed -½c in the past 24 hours, now at 65.3 USc. Against the Aussie we are also lower at 94.1 AUc. Against the euro we are sharply lower at 57.6 euro cents. And that means the TWI-5 is down to 69.9.

BITCOIN JUST HOLDING
The price of bitcoin is little-changed but on the soft side at US$9,228. The number of 'addresses' holding at least 10,000 BTC is falling, now down to 103 and the lowest in more than a year. (10,000 BTC are worth about NZ$150 mln.) 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 »

The 'US$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
Loading...
End of day UTC
Source: CoinDesk

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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.

39 Comments

The most interesting article I saw today was the pre-print research paper out of Kings College, London on Coronavirus. This would indicate catching the virus may not leave you immune and a vaccine may never be effective. This would leave almost every management strategy in tatters.

BBC Report: https://bbc.in/2ASp9ZU

Paper: https://www.medrxiv.org/content/10.1101/2020.07.09.20148429v1

a vaccine will be effective but will need to be applied yearly same as we do now every year for influenza
https://www.health.govt.nz/our-work/preventative-health-wellness/immunis...

Probably more frequently:
"When you look at the history of coronaviruses, the common coronaviruses that cause the common cold, the reports in the literature are that the durability of immunity that's protective ranges from three to six months to almost always less than a year" - Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases.

Except for ours - but we need the whole world to do it until it is gone!

Depends, if the virus mutates we could easily need a new vaccine to be developed every 3-6 months.

Hasn't it already mutated??

I said this here a month ago but everyone is hostage to the rhetoric on propaganda. https://www.buckinstitute.org/blog/covid-19-and-the-aging-immune-system/...

Immunity is more complex than they outline, more like five stages. Vaccines go past the first two. The problem with Covid isn't those that have good functioning immune systems at level 1 & 2 (99% of the population), it is those with faulty immune systems where the complications are happening. Vaccines won't work for them so anyone hoping for a vaccine is chasing their tail. Learn a healthy lifestyle is your only defense. The government can't help you with that, some personal responsibility involved.

Personal responsibility is something we have a severe shortage of in Western society...

My own personal assessment of the data, so far is that the risk is associated with high inflammation rather than poor immunity specifically, poor immunity being a side effect of high inflammation. Immunity is incredibly important of course, but I believe that the virus gets a foothold because of the inflammation. Inflammation of course lessens the effectiveness of all systems, including immunity. All systems are finely balanced. The majority of your immunity is actual in your gut biome and the majority of inflammation is also caused by diet/consumption. This is often very poorly understood. Obesity is inflammation in the fat cells, they have been overfilled as an energy storage facility and this causes them to become inflamed, fat cells play an important role in your endocrine system. Type 2 Diabetes is inflammation in the endocrine from years of flooding your body with high and too regular consumption of insulin spiking foods, to the extent that your insulin can no longer respond adequately and because fat cells are full and inflamed. Heart disease is inflammation in your heart valves. The plaque is a side effect of sustained inflammation. And all these issues are related. How you body metabolises and stores food, whether your fat cells become inflamed and the location of your fat storage (ie visceral fat around your organs is much more inflammatory) is a huge factor in whether you develop fatty liver, heart disease and t2 diabetes. This might also be why children do not seem to suffer the severe case of virus and why middle aged and older men in particular do (men have not evolved to store fat in the way women have so become inflamed sooner and store fat around their middle and organs whilst most children have just not spent enough years abusing their body with food yet to have caused metabolic disregulation and inflammation). Naturally, all our systems lose effectiveness as we age, our endocrine (hormonal) system in particular but eating too regularly and eating insulin spiking foods, hastens the demise of this system over the decades. Dependent on your genetic profile and fat storage pattern, this might happen more quickly. Our body evolved many millennia before our modern lifestyle when we experienced sustained periods of hunger and fasting. We almost certainly did not evolve to eat 3 meals a day, plus snacks 12 months of the year, with those food stuffs often being highly refined and insulin spiking. Our modern diet often simply doesn't give our endocrine and digestive system any rest at all. Whereas, until recently, all cultures implemented schedules of seasonal fasting/feasting and limiting certain foods, along with being much more active. Activity increases endocrine function and lowers inflammation. Vit D also. Stress and sleep deprivation also effects the immune and endocrine system negatively.
It's not rocket science but from my perspective, if you want to avoid a nasty case of Covid you need to eat less often and less crap, skip meals occasionally, fast or eat light to give your digestion rest time (every now and again), don't eat massive portions of refined carbs, get outside in the fresh air and sunshine, maintain some form of relaxation and a regular sleeping pattern. This is just good advise full stop, but if you have a lifestyle disease like heart disease, fatty liver, t2 diabetes or obesity (especially upper body obesity) then this might lower your risk to Covid 19, especially if you are a male over 40.

In the west, our leading causes of death are from excessive consumption rather than malnutrition.

The Treasury has today announced that NZ$4.5 billion of nominal 15 May 2041 New Zealand Government Bonds have been issued via syndication.

The bonds, which carry a coupon of 1.75%, were issued at a spread of 31 basis points over the 15 April 2037 nominal bond, at a yield to maturity of 1.64%. Total book size, within the initial pricing guidance range of 29 to 36 basis points, exceeded NZ$8.5 billion.

Settlement will occur on 21 July 2020 and further issuance of the new bond will not occur prior to October 2020.Link

Interesting. Do you think the Treasury is doing this to provide benchmarks and encourage liquidity further out on the curve ?

Possibly, but it is certainly taking these high over subscription rates as an opportunity to lock in cheap funding for deficit spending. Banks are equally keen to be in receipt of interest bearing RBNZ reserves when they exchange these bonds in the LSAP programme, commonly known as QE. Moreover, they are also contracting their balance sheet exposure to the private sector as they build fortress balance sheets loaded with government assets.

Things still simmering in the South China Sea.
CNN reports: “US Secretary of State Mike Pompeo on Monday announced a formal rejection of "most" of China's maritime claims in the South China Sea, the latest in the escalation between Washington and Beijing . . . the top US diplomat asserted that "Beijing's claims to offshore resources across most of the South China Sea are completely unlawful . . .”
Sounds very much like US attitude towards Japan in late 1930’s.
Clearly US still believe in the old adages in terms of the resources - “first up best dressed” or “first in, first served”.
Personally; keeping an open mind and not convinced that China doesn’t have a bit of point in feeling frustrated.
Couple of good CNN videos:
https://www.youtube.com/watch?v=sr1H7kim0xY
https://www.youtube.com/watch?v=i4fx-hLaYok

As I understand it, Pompeo is merely re-stating a UN ruling on the matter from 2016. Media are just hyping it because China is a hot topic right now.

Audaxes, what degrees of difference do you think exist between forces and political leadership for both main players here? More than simmering, starting to roiling boil..

The Whitehouse looking for a diversion? Probably the only thing that could make Trump look better now would be a international conflict. I am expecting his mate in North Korea to play up , but this is probably even better.

Good news, though, is that China has been coming out asking others to respect international law, so you can surely expect them to abide by international legal rulings on the Spratley Islands after all. Surely.

Isn't this classic Chinese twostep? Soft soft hard, soft soft hard?

Having no Health insurance in the USA would not be pleasant.

The stuff of nightmares. We hear about student debt in the US - it would be interesting to know the level of medical debt.

at least you can bankrupt your way out of medical debt.

This should be "What happened Tuesday".

Yikes, how embarrassing. Fixed now. Thank you.

Investigative journo Michael West recycling corruption stories in Aussie politics. This guy Stuart Robert was a real piece of work securing IT projects under a company directed by his 80-year-old dad. Rorted over AUD 30nmio. Still an MP and is a Christian (same church as Scomo) with a peculiar sense or right or wrong. Aussie really is a swamp that needs draining.

https://www.michaelwest.com.au/stuart-robert-listed-parents-as-company-d...

Religion at the center again.

Just a smokescreen really. Pretending to be people of faith.

From what I've experienced and knowing the history of religion, it is the norm.

On arrivals during Covid-19:

"Most arrivals in May 2020 were short-term travellers, made up of 2,600 New Zealand residents and 2,200 overseas visitors... May was the second month under full border restrictions."

Full border restrictions, yet 2,200 overseas visitors as short-term travellers - huh?

Genuinely amazed!

How could that stack up given the border restrictions?

That's the trouble - you'll never know

Remember a couple of weeks ago it was explained that the smart money could, for the price of a return airfare, repeatedly travel back and forth between NZ and AU and get 4 weeks free board and meals, 5 star

Relatively cheap lifestyle, I guess, if you're stretched.

Even at A$3,000 for two weeks, as announced by NSW Premier, it's still cheap digs for Sydney!

$1,500 a week in Sydney will get you in the wealthiest suburbs.

Its cheaper than Auckland over here mate.

Ah, yes def plausible. Had missed that one - thanks @puketepapa!

Nobody is putting the dots together re what this means for the Americas Cup.

The catholic church upto it's old games. The leader of the Fijian church has apologised but then said nothing had been reported to them. That has been found to be a lie.
What needs to be done is these people need a minimum payout of a few of million each and a couple of hundred .million fine on the church.
https://www.tvnz.co.nz/one-news/new-zealand/uncovering-abuse
More to come

Your access to our unique content is free - always has been. But ad revenues are under pressure so we need your direct support.

Become a supporter

Thanks, I'm already a supporter.