A review of things you need to know before you go home on Thursday; more TD rate cuts, building consents jump, business confidence improves for now, swaps stable, NZD slips, & more

A review of things you need to know before you go home on Thursday; more TD rate cuts, building consents jump, business confidence improves for now, swaps stable, NZD slips, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
We have added Avanti Finance to our mortgage tables. They have a floating rate "near prime" offer at 4.15%, said to be a "base rate". Margins for risk apply above that, ranging from +0.0% to +1.2%.

TERM DEPOSIT RATE CHANGES
BNZ cut TD rates for terms one year and longer.

BACK AT PRE-COVID HIGHS
Outlook for residential construction remains strong with new dwelling consents bouncing back after the lockdown. The number of new dwellings consented in the lockdown-affected second quarter of this year was just three less than the same period of last year. In June, there were 3477 consents issues compared with 2887 in June 2019. In Auckland, 1439 dwelling consents were issued in June 2020 compared to 1152 in June 2019. The numbers for medium density townhouses were particularly strong.

UP IN THE MEANTIME
ANZ's business confidence survey reflected some sharp improvements, but it is still negative. They say: "Business confidence lifted another 4.6 points to -29.8% in the preliminary July read of the ANZ Business Outlook survey. The lift in own activity was much sharper, up 19.1 points to a net 6.8% of firms expecting lower activity for their firm in the year ahead. All forward-looking activity indicators lifted from June levels and the near-term jobs picture improved. NZ is enjoying a sharp bounce out of lockdown but the brunt of the economic pain induced by the closed border is yet to hit." (See the Australian news below.) Also, see this.

MORE COMMERCIAL BUILING COMING
Here is some analysis from Infometrics about non-residential consents in June: "The total value of non-residential consents grew a whopping 50%pa in the month of June [from a year ago], however, non-residential consents for the June quarter were down 17%pa, and down 18%pa in the first half of 2020. Office and warehouse consents led the charge, valued at $188m and $151m respectively. A $100m government office building consent in Wellington made the region a star performer, however for the country overall, private consents grew the fastest at 63%pa compared with 12%pa growth in public consents."

A FOUR PERCENT START
About 1500 older Kāinga Ora state homes in 30 towns and cities will be upgraded to new "warm and dry" standards (Homestar 6 standards) with a new +$500 mln funding injection into the Kāinga Ora – Homes and Communities Retrofit Program. Around 40,000 properties will need upgrading over the next 20 years. Kāinga Ora manages more than 60,000 state houses.

COVERED 2.9 TIMES
Treasury's debt office tendered $850 mln in new Government bonds today, in three parcels. The first was an April 2025 nominal bond seeking $450 mln and it brought $1.3 bln in bids and the yield was 0.37% pa. The second was a May 2031 bond seeking $350 mln and it drew $993 mln in bids, and yielded 0.81% pa. The final tranche was a linker, an inflation indexed September 2040 bond seeking $50 mln, which drew $150 mln in bids at 0.35% plus CPI. All up $850 was offered and more than $2.4 bln was bid. The RBNZ stands ready to buy these bonds in the secondary market, and their bids will help keep yields very low.

CHOCOLATE DEMAND 'MELTS'
With Covid-19 restrictions around the world limiting impulse buying and decreasing consumer confidence, global chocolate consumption has fallen significantly over recent months, according to a new report by Rabobank.

BIG APPETITES
Internationally, government financing needs have resulted in OECD governments raising a record amount of funds from the global debt markets. From January to May 2020, governments issued debt securities worth +US$11 tln - almost 70% higher than average issuance in the same period over the past five years and taking the total obligations to US$53 tln in total. The US alone accounts for US$15 tln. At the same time, taxes collected fell sharply so fiscal balances deteriorated by an average of -8% to -86% of GDP. The New Zealand's portion of this is a relatively small -36% of 2020 GDP, but up from -26% in 2019, so our deterioration has been "above average".

DARK, DARK NEWS
We have been trying to avoid reporting COVID updates in this bulletin but today Victoria reported 723 new cases. This is deeply concerning, including for what it will mean for the Australian economy, and for our trade and relationships with Australia in the immediate and medium terms. We could, for example, get a heavy new flow of people desperate to repatriate to New Zealand, and more than we can handle. New infections reported also crept up in both NSW (+18) and now Queensland (+3).

GOING BACKWARDS
There was building consent data out in Australia today too. Total dwelling approvals fell almost -5% to be down nearly -20% over the last two months, touching an eight year low.

EQUITY UPDATES
Many equity markets are positive today. The NZX50 Capital Index is heading for a +0.6% gain today. The ASX200 is up +0.7% in early afternoon trade. Earlier the S&P500 closed up +1.2% on Wall Street. Shanghai is opening -0.1% lower but Hong Kong is opening up +0.5%. Tokyo opened up +0.4% but has run out of steam quickly and is barely positive now.

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 different movement. The 90-day bank bill rate is unchanged at 0.30%. The Aussie Govt 10yr has stayed low at 0.87%. The China Govt 10yr is firmer at +2 bps at 2.96%. And the NZ Govt 10yr yield is also marginally firmer at 0.82%. The UST 10yr has slipped again today and is now at 0.57% and getting nearer to its all-time low reached in April of 2020.

NZ DOLLAR SLIPS SLIGHTLY AGAIN
The Kiwi dollar has stayed lower today and is now just under at 66.6 USc. And against the Aussie we are down to 92.7 AUc. Against the euro we are marginally weaker at 56.5 euro cents. And that means the TWI-5 has slipped to 69.7.

BITCOIN STAYS FIRM
The price of bitcoin has moved up slightly again from this time yesterday at US$11,034, a daily gain of +1.0%. 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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49 Comments

18
up

Just one man's opinion, of course...

Former prime minister Sir Bill English has issued a bleak warning to businesses to prepare for the worst-case scenario as “cracks” created by the economic earthquake of Covid-19 become more apparent. "Just like the damage caused to Wellington’s buildings by the Kaikoura earthquake, the true damage to the economy might not emerge immediately", he said. "Businesses might find by the middle of next year that they had 20 per cent less revenue as a “W”-shaped downturn took shape, and needed to ask if they could survive on that. We are heading into massive deficits. Households will tend to buckle down in the face of that and eventually government will have to tighten up as well.”

12
up

Appreciate the guarded honesty without the emotional DGM rhetoric

10
up

Victoria not the only place Covid is turning to custard.
USA seven-day moving daily average has nearly doubled over the past four weeks from 522 deaths per day to 1022 per day.
200,000 USA deaths by the time of the Presidential Elections is a really conservative estimate.

With Trump's incompetence the US had this coming, sadly. Melbourne is a worrying cautionary tale for NZ. Hopefully the quarantine slips that didn't sink us, along with watching Vic, keep things nice and tight here.

Blame Trump.. come on it was the NY Dem mayor that failed to act at the start which enabled the virus to expand at a much greater rate.
ALL of the US knew what was going on amd failed to and are still failing to act blaming each other. Most if not all of those running the show Dem's or Rep's are equally to blame.

20
up

Plenty of blame to go around - but the buck stops with Trump - he is on top of the pile.

17
up

The man who spent months making an issue of not wearing a mask and encouraging reopenings even where cases were still rising? Yeah lots of blame on him. That doesn't mean that there isn't blame elsewhere, but the errors of others do not excuse it.

10
up

Yeah...seems strange to hook straight on to some democrat mayors of certain cities. On a March 4 call to Sean Hannity, Trump:

1. Belittled WHO's coronavirus death rate based on “hunch"
2. Called coronavirus "corona flu"
3. Suggested it's fine for people w/ Covid-19 to go to work
4. Compared coronavirus to "the regular flu," suggesting he didn't get the difference.

All while his own experts were suggesting it was far more serious. He also suggested cutting funding to the agencies needed to manage the federal response to the disease: https://www.medscape.com/viewarticle/925130

Sitting at the top of the tree, he has not helped at all by minimising the seriousness of the issue while also earlier cutting federal capabilities to manage responses. Doesn't excuse anyone else's failures, but he has not responded well.

To be fair he closed the borders relatively early and was called racist by Biden for doing so.

I think they could never have had an elimination strategy, just a flatten the curve strategy and that will keep on spiking and flattening around the different states until a vaccine is on the market.

Biden likely to take office and we will see how successful he is with managing the pandemic and defunding the police, Im picking another clusterf**k...

Fair indeed.

Agree, Biden seems like another status quo candidate with not too much to offer Americans, if a sight more than Trump. He could potentially slow the decline of the USA and start to reinvigorate their role in global affairs. On the converse, Trump's actually seemed to have done some useful work in standing up to China - that standing up does seem to be spreading around the world, though, and I wonder whether Biden would dare back down on that.

Agreed. Just as JA is reaping the rewards of her government's response, so should Trump.

12
up

The fact that you go out of the way to point out it was a democrat mayor in NY rather belies your final sentence.

16
up

Absolute train wreck of an interview with shadow minister of housing. Scraping the bottom of the barrel with these people in the ruling elite.

https://www.newshub.co.nz/home/politics/2020/07/national-housing-spokesp...

16
up

Peter Principal is definitely in play with her.

But National has such a 'strong team' you see. Letting her get near power shows how bereft of talent they truly are.

kind of reminded me of Kelvin Davis interviews at the last election - except that was worse as he did not know Lab policy that was current at the time , not their past policy ..

It was. Hopefully it pushes more National supporters to ACT.

Am not sure if your comment isn't a wind up? ACT? David is that you? Seriously?

Absolutely serious. I never have and could never ever vote left and I’m not supporting National in their current state. They need to go further right. Support for ACT sends a signal.

Edit Based on the TV One Colmar Brunton poll it’s looking good. 5% for ACT. Bye bye Winston and good riddance.

Sends a signal to me, at any rate: self-centred.

Well, which party would you say we should support, out of altruism that is?

I'll be voting Green. Not because they are anywhere near where we have to be (the 1975 Values Party manifesto is the closest to my way of thinking that was ever on offer) but they're closer than most.

That said, an old mate I had coffee with this morning, pointed out that any Party which has a six-offspring leader, doesn't deserve the label Green. It's a fair comment.

What're your thoughts on TOP?

I think TOP will get my vote to encourage this kind of Issue-by-Issue, Think Tank type party without a legacy of coming from the dogma of the Left or Right (or at least, that is my perception).

OK. Well, there does seem to have been a global wave of socialism brewing for a while, and the Greens have the best board to catch it. Against that is what took the wind from Values sails in the 70s - rising unemployment in the Stagflation oil shock years, and a desire to hand the reins to the "safe hands" of Rob and the National Party. This time I suppose it's the safe hands of Labour.
If I had to bet I'd say the Greens will do pretty well (a bit better than current polling) in this election because voters who lean in that direction will feel safe that Labour will keep National out of power so they can afford to vote with their conscience rather than tactically.

It'll end up a Green Labour Govt. That will be insanely ugly.

WTF was she thinking? Clearly she doesn't have her numbers correct, come on, there is no way they built that many. She is so out of touch that she can't even think logically. She knows so little about her subject area that she can't even do a quick "wait, is this correct" sense check. And this is a viable alternative to Labour???

"We could, for example, get a heavy new flow of people desperate to repatriate to New Zealand, and more than we can handle. " - I understand that INZ are now blocking the travel of Australian citizens who live in NZ (but were in Australia during the border closure). No answer given - just a "no" unless you can argue humanitarian grounds.

Wow... US capitalism really is rotten to the core if they can get away with something as blatant as this.

I must have missed something - US capitalism? How is that linked to Oz/NZ travel restrictions?

And I think US capitalism would have been (mostly) fine if it had not been replaced by state sponsored Corporatism. The US economic system seems to be in free fall. Even the pension funds of ordinary folk have been thoroughly pillaged - this today from Robert Kiyosaki, Ted Siedle, and John MacGregor:
https://www.youtube.com/watch?v=mOV7lcSMxa8

Interesting. Putting this together with your other post just above, tomorrow we'll hear that Santander is already through the worst and it's share price will triple.

Our dollar at 66.6 US cents.

The New Conservatives will see this as a sign.

Blood tests on 6,936 randomly selected people conducted by Mumbai’s city authorities found that 57 percent of slum-dwellers and 16 percent of non-slum residents had virus antibodies. With 6000 dead in Mumbai, a city of 20 million with 60% of pop in slums that nearly have herd immunity, worst case seems like Mumbai could get as high as 0.05% dead, just 1 in 2000 dead for herd immunity. That is similar IFR to a bad flu (0.1% of infected die).

Big, big assumption on that death count. You think they have missed 95% of their cases but detected all of the covid deaths?

I don't know. They have a youngish population 30yr old mean (half the population of India is under 25, only 5% over 65) which helps, and they were early adopters of prophylactic hydroxychloroquine (which can halve the number of symptomatic cases), May had ~2000 official wuflu deaths but ~6000 excess deaths compared to a year earlier, so seems likely they are missing 2/3rd of wuflu deaths. 30k dead (0.15%) would still pretty low fatalities to achieve herd immunity in a 3rd world country

Here we go again. Stop thumping an empty tub eh? You've made your point on countless occasions and the Interest.co community has given their mixed responses. Like most others you've lectured on this site, I don't agree with your views (and the philosophy behind it). Others do and that's fine.
But constant repetition does not increase the validity of (or support for) your argument.

Also did you see the report yesterday that even asympomatic Covid19 sufferers got heart damage from it? The number was as high as 75% of people who had recovered had heart damage. That's major, even if the effect is half that.

"About 1500 older Kāinga Ora state homes in 30 towns and cities will be upgraded to new "warm and dry" standards (Homestar 6 standards) with a new +$500 mln funding injection into the Kāinga Ora – Homes and Communities Retrofit Program."

At $333K per home, they could even build new ones on the existing section.
What am I missing ?

The cost of administration ? insane price much like the cost of keeping people in a motel during Covid ~ top dollar only because its tax payer money.

Christchurch airport spent $45m buying 750ha of farmland. Those that sold could not believe their luck.

12
up

How long can NZ maintain its SARS2 elimination status with 100s of Resident visa holders arriving at the borders from SARS2 hotspots every day?
Is a 14 day isolation in a hotel, with family members together, really enough to stop the spread to the community?
Time to close the borders to all except for full citizens.

I agree. Close the border to non citizens.

What's concerning about the Melbourne situation is that it's been over two weeks since they began lockdown. They should be expecting a fall in cases if people where adhering to the advice being issued.

Time for more measures and better policing?

Agree. But mostly they'll have to cajole and rely on voluntary compliance. The police can only do so much, if you're not a police state.

That said, the level of voluntary compliance and hence lockdown effectiveness is worrying.

Why is the Bitcoin price more important than Gold to report on this journalistic column?

Gold you can see on channel 91. Maybe ask CNBC why they not show bitcoin in their bar.

UK bank results being dominated by mortgage bad debt provisions. When do the big Aus banks start the same ?

Very soon. All being discussed among the capos at the moment.

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