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A review of things you need to know before you go home on Monday; minor TD cuts, home loans more affordable, more debt stress details, WIA tries for more debt, swaps unchanged, NZD firm, & more

A review of things you need to know before you go home on Monday; minor TD cuts, home loans more affordable, more debt stress details, WIA tries for more debt, swaps unchanged, NZD firm, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report.

TERM DEPOSIT RATE CHANGES
First CU, and Credit Union Auckland have both cut TD rates across the board.

MORE AFFORDABLE
The mortgage payments on a lower quartile-priced home have declined by nearly $40 a week since February, interest.co.nz Home Loan Affordability Reports show. Just so it is clear as an election metric, a first home buyer household with a 10% deposit requires 26% of their take-home pay to make a mortgage payment today (national average). In September 2017 that level was 27.3%. In Auckland, the level now is 41.1% of take-home pay to service a new mortgage now (on the same basis), compared with 49.8% in September 2017.

FHBs SIGNING UP READILY
First home buyers are taking a record share of new monthly mortgage debt. People borrowing to buy their first homes outstripped the amount of money borrowed by investors during June, an that was the highest proportion since the RBNZ started collating this data in 2013.

NEW TRANSPARENCY
New data released by the RBNZ is shedding some light on the scale and flow of debt payments that are being missed by consumers, homeowners and others with mortgages, and businesses. Mortgage deferrals peaked in the week to 10 April 2020. During that week there were over 28,000 mortgage deferrals for loans worth $7.9 bln of bank mortgage books. In the week to 17 July, banks handled 400 requests for mortgage payment deferrals. In the week to 17 July, almost 18,000 business loan missed payments occurred for loans worth $1.7 bln. Missed payments on consumer loans peaked at almost 100,000 in the week to 27 March and has been trending down since early May. The Business Finance Guarantee Scheme run through banks is only drawn to $133 mln ($750 mln is approved). But why use this scheme when the IRD scheme is interest-free and there is a widespread expectation that in the end much of that scheme will be forgiven? Businesses had used $1.5 bln of the IRD-administered scheme through July 5, and it is likely well over $2 bln by now. It seems odd that the RBNZ is providing new transparency on the bank schemes, but the IRD scheme remains very opaque. And the IRD scheme is matched by the dodgy PGF election handouts.

FMA OUTLINES SHORT-TERM PRIORITIES AGAINST BACKDROP OF COVID-19
The Financial Markets Authority says its priorities for the next three to six months include investor and customer behaviour and decision-making, fair, efficient and transparent capital markets, financial sector resilience, reintroduction of regulatory activities, treatment of customers and investors, plus scams and fraud.

BANKS EMBRACE LIVING WAGE
The banking sector's move to become New Zealand’s first Living Wage Accredited industry should be viewed as an exemplar for other industries, Workplace Relations and Safety Minister Andrew Little says. The Living Wage is currently $21.15 per hour, and will increase to $22.10 per hour on September 1. It is set by an independent group, the Family Centre Social Policy Research Unit, based on the assessed needs of a family of two adults (one working 40 hours per week, and one working 20 hours per week) and two children, adds Little. The New Zealand Bankers' Association says the move means nearly 1800 employees and contractors will move onto the living wage. All 17 member banks, plus NZBA itself, have been fully accredited.

SEEKING WILLING INVESTORS
Sometime next week, Wellington Airport (BBB) will probably make an offer of up to NZ$100 mln of 6 year unsecured, unsubordinated, fixed rate bonds to institutional and retail investors. It will appeal to brave investors thinking they are getting a discount by buying in at the bottom. It is a company already with $570 mln of debt, and claims assets of almost $1.4 bln. In the year to March 2020 it made a tax-paid profit of $28 mln and this is unlikely again in the near future. Almost all its debt is in retail bonds ($408 mln) or USPPP paper ($136 mln with a currency risk). Meanwhile, it's bank has increased in its facilities from $100 million to $170 million, but most of that remains undrawn even though it has covenant waivers from them. It sought a temporary waiver for its USPPP debt covenants. And it also put in place a $75 million shareholder support agreement, in the form of redeemable preference shares. This new issue signalled will likely be its 'easiest' funding in terms of covenants and ranking and therefore the riskiest from an investor's viewpoint.

CHALLENGING GOOGLE
In Australia, their competition watchdog has launched Federal Court proceedings against Google, alleging Google misled consumers to obtain their consent to expand the scope of personal information that Google could collect and combine about consumers’ internet activity, for use by Google, including for targeted advertising.

SAVING CONSTRUCTION JOBS
In NSW, they are shoring up new home buying demand with targeted reductions in transfer duties (Stamp Duty). From 1 August 2020 the changes will see the stamp duty exemption limit increased from AU$650,000 to AU$800,000 for the purchase of a newly built home. The stamp duty concession will also increase to cover newly built homes from over AU$800,000 up to AU$1 mln in value. There are no changes to stamp duties payable for existing homes.

EQUITY UPDATES
The NZX50 has started today on a bumpy track but it has been negative all day, currently down -0.4%. The ASX200 has also been bumpy, but around zero change, and currently unchanged. Shanghai has opened flat, as has Hong Kong. Tokyo has opened down -0.5%. Futures signals have been negative for the S&P500 all day, but have turned positive in the past few hours, signalling a +0.5% rise when New York opens tomorrow. But this off-market index is volatile as well.

SWAP RATES UPDATE
Swap rates were 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 0.30%. The Aussie Govt 10yr is firmer at 0.89%. The China Govt 10yr is soft at 2.90%. However the NZ Govt 10yr yield is also soft 0.83% although unchanged from Friday. The UST 10yr is softish at 0.59%.

NZ DOLLAR FIRM
The Kiwi dollar is rising and is now at 66.8 USc on a still-falling greenback. But against the Aussie we are unchanged at 93.5 AUc. Against the euro we are marginally weaker at 57 euro cents. And that means the TWI-5 has drifted back up to 70.2.

BITCOIN FIRM
The price of bitcoin has risen back over US$10,000 and is now at US$10,056 which is +5.2% higher than this time on Friday. The bitcoin price is charted in the currency set below.

This soil moisture chart is animated here.

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End of day UTC
Source: CoinDesk

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71 Comments

The whole world getting a Trump bump.

Congratulations to all gold and bitcoin holders. I see gold is trading well above the ATH on derivative exchanges, anticipating a new record tomorrow. BTC has done well, but the true champs have been silver and ethereum (the later up 140% this year). ETH was $90 in March this year, now $326

I purchased 1kg silver last week at $27aud per ounce. Its shown up today and the price is $33.98.

Even if its short lived, the silver crew deserve this moment. They are a resilient bunch.

Yep, both gold and silver bugs have spent a long time in the cold. Imagine the poor bastard who bought gold for $1920 ten years ago, and is only now in profit (sort of)

Yea its not uncommon to read online about people needing $40usd per ounce to break even! Seems we've been here before.

Kudos to the conspiracy nuts and doomsday preppers. They'll be sitting pretty at the moment with their stacks and ample food. Its funny how skeptics, as frustrating as they can be, more often than not end up being right.

4.4 million infected in the US. The price when they get to 100 million will be a lot higher.
At one stage silver was up 6.6% on the day.

USA ~150k dead, likely true IFR ~0.5% so more likely 20-30million have been infected.
Looks like recent rise in cases has crested, and mask wearing is finally starting to gain political and legal traction. That will inevitably reduce infection as routine use of masks by majority of population in public push R0 below 1 - over time inevitably ending the epidemic.

That has been claimed quite a few times over the last few months but always panned out to be false.
With the pro and anti mask thing, kids who just dont care, Hill Billies, Dem's, Fep, roits etc.. Masks arent going to do a thing. Too many infected for them to do a thing about it now.

The only reason I bought gold and btc was I figured the money printers would go turbo this year, which they did

After reading about economics and history I quickly found my closest bullion dealer.

ASX mining stocks are on the up too.

I wrote this morning "There's nothing new under the Sun!" and Aussie miners are one of them.
Do we remember reading about Poseidon Nickle as part of our historical exploration of the ASX?
https://en.wikipedia.org/wiki/Poseidon_bubble
Sure, it' not a PM, but it was just as fashionable in its own way.
I'll wish all those who haven't been part of a sizable correction before "Good Luck", and hope that you get out before any significant turn comes. When will that be? Right after "It's Going to the Moon" phase....just as smart Poseidon investors did.
https://en.wikipedia.org/wiki/File:Poseidon_Bubble_Australia.gif

11
up

Thank you BW. With 15 years of exposure to gold, I've kept my mouth shut around the water cooler. I'm not enthused by the populist attitude emerging and surrounding precious metals. This can be a volatile space and new-to-market participants should keep their emotions in check.

"Food for five years, a thousand gallons of gas, air filtration, water filtration, Geiger counter. Bomb shelter! Underground... God-damn monsters."

Here's is my favourite Doomsday Survivalist - Jeremiah Babe. One of the best things about him is his name.
He's been spruiking gold, silver, food and debt reduction for a couple of years (and "brass", which I suspect is ammo but I'm not sure).
Latest YouTube Tirade of Doom:
https://www.youtube.com/watch?v=E2SNdef3ha8&t=241s

Brass = bullets. Correct.

OK - thanks

Congratulations to all gold and bitcoin holders. I see gold is trading well above the ATH on derivative exchanges, anticipating a new record tomorrow. BTC has done well, but the true champs have been silver and ethereum (the later up 140% this year). ETH was $90 in March this year, now $326

Gold hit an all-time high in USD today and silver futures (USD) up 6%. Dream day really. That being said, look at USD weakness. NZD cross even stronger than JPY today.

ETH looking really good as the defi use cases are pretty much confirmed. I hold about 20% of my crypto portfolio in ETH but I only started more regular purchases in Jan 2020 (dollar cost average). As always with crypto, it's easy to look back at say "I should have bought more."

Kudos to the conspiracy nuts and doomsday preppers.

Not everyone who owns PMs is a conspiracist. To be honest, the mainstream monetarists are far more frightening than people who own gold.

Yep. On the other hand, looks like alt-coins are about to get melted down if BTC does a giant jump. ETH 2.0 (if they pull it off) will be a game changer. A "flippening" with ETH going to number 1 is unlikely, but possible.

ETH and BTC are completely different. They're not interchangeable. There is a place for both.

Nah..btc will ultimately crash. Nothing special about it. Gold backed crypto may emerge triumphant, but a nothing backed btc is doomed.

Ha..I new Rastus would pipe up at some stage - doomd I tell you! (I have been buying BTC for last 5 years)

Being buying Bitcoin for 5 years? Are you trolling or truthing?

After a few comments I've seen from Frazz today, you can't trust a thing he or she says.

As a creative newbie here Kezza you need to backup on the putdowns. And I doubt you would have any holdings of BTC or Gold.

I started mining Bitcoin back in 2012. Have a good spread of most cryptos now though.

7 years here. Only problem is I sold what would now be an enormous fortune worth of BTC way back in 2013 - lesson learned.

Ah. Gutted for you Shamino. We sold a few in 2013 but held most till near the peak December 2017 and then bought back in later. Haven't mined for yonks though. There was that once in a lifetime period when a coin geek could mine with a USB before the encryption costs went crazy eh!?

Its all good. I used BTC-E and Cryptsy back then, and both collapsed - imagine losing millions on an exchange hack? Or on Mt Gox?

It's nothing special. No practical purpose outside a store of value. Completely built on confidence and scarcity of supply. It's just something new and shiny people have fallen for. Wait... I'm taking about gold, not Bitcoin.

I assume you have a short position on CME Futures or Bitmex, and will be retiring soon off your fortunes once it crashes? The USD used to be backed by gold, then they took away the gold and left people with paper that has fallen 95% or so since WW2 in purchasing power.

Wellington Airport is in such a stupid location.

It amazes me how many people have to go into the city to leave the city, whether that be by boat or plane.

Traffic problems? No sh*t.

I really don't see any other place to put it..maybe right down the middle of Petone?

No I was thinking build it into a hill. Perhaps wipe out Stokes Valley in the process.

I completely understand your point, but a change in location changes how Wellington functions.

It would only work with a an upgraded train network was integrated into it.

Jackie from New Plymouth shouldn't be a factor in Wellington rush hour traffic trying to catch her flight to Sydney.

Kapiti airport makes a lot more economic sense as Lower NI's main airport.
There is plenty of space in and around the demarcated zone for runway expansion to accommodate longer-haul flights (beyond Australia and South Pacific). The Transmission Gully should also allow quick access to the airport for those living in the capital.

Totally agree - madness all the traffic has to funnel through the city and squeeze into a Victorian Tunnel.

But, but, but, you can't connect the train network to the airport. Outrageous! Now, what have you been smoking?

Ohakea , to serve the whole lower North Island , with a high speed rail link.

I agree 100%.

Its 5km south of the main NZ train line. I like the idea of tourists landing, jumping on a train and two stops from National Park station.

It would change a lot for Kapiti, Manawatu, Hawkes Bay, Taranaki.

Wellington airport would only cater for Wellington. If they wanted to go further than Australia they could fly/train to Ohakea.

They need a second international airport in Levin.

Home Loan more affordable ????

This is based on assumption that house price will / have not risen. If house price goes up by than any fall in interest will be set off against it, as affordability is based on number of variable.

I imagine it’s based off interst.co.nz affordability calculations which take into account house prices, interest rates and incomes.

How about a $1000 thank you from the banks to all those with a mortgage who faithfully made all their payments on time since March?
Then we can go out & stimulate the local economy.

Righto. Would you not think those that couldn't pay their mortgage need the money more?

Its now a team of 4,999,999.

It’s the forgotten faithful in the mortgagebelt I’m thinking of, kiwi battlers.
Many of whom may have had their wages dropped to 80%, or a partner lost their income, and yet have chosen to keep up their mortgage repayments at household sacrifice.
Plus, think of the bank profits that would be better served circulating, and the helicopter stimulus, while the banks would get great community kudos for being a great corporate citizen.

Why are you painting keeping up mortgage payments as some kind of noble sacrifice? The people who were able to avoid taking a mortgage holiday are better off in the long run than those who had to take one.

Sure, but have the banks ever thanked all faithful mortgage payers during/after a major crisis?
Or do the banks just take their good customers for granted?

Why should banks be thanking individuals for making particular financial decisions that make those same individuals better off though?

And making the very profitable banks better off also.
It’s the same concept as the no claims bonus from insurance companies, or the prompt payment discount from power companies, or the discount system for regular purchasers, etc. You reward good customer behaviour which further reinforces and rewards good behaviour. So it’s a win-win.
Why should the Govt & RBNZ do all the heavy lifting - the banking sector can play its part in a stimulus package as well.

I get it MB.

If you are right, the good banks will see the commercial opportunity to reward good customers, and the bad ones won't.
Now lets see who falls in which camp.

Banks and the living wage = increased fees. Something to celebrate

"In Australia, their competition watchdog has launched Federal Court proceedings against Google"

Lovely !
Anyone stuck in the past century and using Google search, please do yourself and your family a favour and use

https://duckduckgo.com/

You mean, virtually everyone?

Tried duckduckgo. Chewed through data at around 10x the rate. Don't know why and really don't care, just won't go there again.

Fun link. At least one thing is trickling down - Extend and Pretend behaviour.

Last weeks RBNZ C32 data captures the marked change to interest only mortgages over the past quarter, yet the stock and flow of mortgage debt, within the C35 data regarding scheduled interest/principal payments appears simply to table the scheduled payments as if received but given the large volume/amount of deferrals, the actual (lack of ) received amounts from the borrower are not fully captured. Worryingly, given that everything has been pulled from the hat ,the C35 data also shows a marked increase in actual repayment deficiencies.

Manuka honey coming back with positive for Roundup a known cancer causing poison.
You would think that our honey would be tested for 1080 (a by far worse poison than Roundup) but it isn't.
When ( it is not a if) 1080 is found in a honey export, there will be very little to honey exports for years after that.
Milk hardlybtrsted for 1080.
Meat hardly tested for 1080.
Not much is tested for 1080.
A ticking time bomb waiting to go off.

10
up

You off to join Jamie-Lee Ross and his mate in the nutty party?

God knows what they are spraying those nuts with.

Not a chance. Thanks for trying to make me out as a nut bar, like the typical pro 1080 bunch do....
I just dont want that shit poison dropped by the tone from the air onto our bush..
Roundup bad but somehow 1080 a by far stronger poison dosen matter after DoC waves its magic wand over it.

The Greens have released their animal welfare policy. "All animals have a right to a life free from cruelty". Hmmm. Not really consistent with using 1080 then.

1080 is a bloody ugly death. Stags poking holes in their own guts with their antlers.

I just asked a question, your posts speak for themselves.

Not sure why the hard time for Kezza. He makes a valid point about the potential impact on our exports if overseas customers decide they don't want residues of weedkiller or poison.

The honey industry are worried about Roundup showing up in the honey.

Telling those overseas customers they are just being nutty and that they shouldn't worry wouldn't get us far.

Roundup, a weed killer.
1080 a animal poison capable of killing animals the size of deer the equalvant size of humans.
BUT we are concerned about Roundup contamination.
1080 is readerly transportable from pallets laid on the ground, into the soil and taken up by plants killing insects that feed on that plant. We could therefore assume that 1080 is transported into the flowers.
Aphid study showing 1080 transported into plant killing aphids.
https://www.cambridge.org/core/journals/bulletin-of-entomological-resear...

1080 is toxic to species of all forms of life from microbes to plants, insects, birds and humans. In mammals, it causes birth defects, reduced fertility, damage to reproductive organs and other organs including the brain and heart. Anecdotal reports indicate there may also be a link with cancer but there has been no research at all on this. Claims that 1080 poison does not cause mutations arise from a study on mice, 

Glyphosate's carcinogenicity is disputed by practically every regulator. Here's the NZ review of hte evidence:
https://www.epa.govt.nz/assets/Uploads/Documents/Everyday-Environment/Pu.... The review questions the methodology of IARC in its decision, with thinly veiled accusations of IARC cherry picking evidence to fit its agenda.
What's not in that review is the evidence of a massive longitudinal study of agricultural workers from the US (i.e. of people who work extensively with weedkillers) which found only a very small effect, and that's for heavy users, not the everyday person. IARC did not delay publication of its report to include this authoritative study, using the "it's a draft" excuse, even though it would have lent significant weight to the the "it's not cancer" side of the argument. It also doesn't include a comment on how conflicted the IARC panel was which made a link between glyphosate and cancer. E.g. one of the lead science advisors left IARC to work on a multi billion dollar lawsuit.

Prag.
Is it this week or next week that you will be claiming that CV19 is finished again and then the numbers skyrocket again?
Usually every second week that you kick off again that it's a non event.
Think its next week as you had a crack last week from memory.

wtf? you're smoking some good shit man, don't lose your dealers number.

Still not reporting on the most telling indication of coming turmoil in the financial system? The movement in Gold against the US currency!!

Gold defintally a telling sign of a lack of faith.
No country can handle being so disjointed and hobbled as the States is at present for long and it is going to get a hell of a lot worse.
They can't let the full truth out for all to see, the country would shut their wallets in a second and that would intensify it..

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Days to the General Election: 38
See Party Policies here. Party Lists here.