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A review of things you need to know before you go home on Wednesday; some minor rate trimmings, dairy prices tumble, barely believable jobless rate, more used imports, gold jumps, swaps and NZD hold, & more

A review of things you need to know before you go home on Wednesday; some minor rate trimmings, dairy prices tumble, barely believable jobless rate, more used imports, gold jumps, swaps and NZD hold, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
Resimac have trimmed their 3, 4 and 5 year fixed rates. More here.

TERM DEPOSIT RATE CHANGES
General Finance and Christian Savings have trimmed TD rates. More here.

LEVELING OFF
QV says housing values are now flattening around NZ, and starting to decline in Auckland, Queenstown and Dunedin. They say average dwelling values are still well up on a year ago but that annual growth rate is starting to tail off.

UNEXPECTED RETREAT
Dairy prices took an unexpected tumble today in the latest auction. This correction essentially wiped out most of the strong July gains.

LOCKDOWN PLAYS HAVOC WITH JOBS DATA
There was a barely believable labour market release from Stats NZ today for the June quarter. Despite the heavy hit the economy took in the April-June quarter, they report that the jobless rate fell (yes, fell) to under 4%. And the youth unemployment rate fell to just 14% and its lowest since before the GFC. If you find these results less than credible, then they say their Household Labour Force Survey shows the numbers of people unemployed dropped from March (124,800) to just 108,200 in June. All this happens because the participation rate fell and they say many people just left the labour market. At the same time the level of under-employment rose sharply. Also revealing was that actual hours worked were -9% lower in June 2020 than June 2019. More here. Just to give an indication about how 'rosy' this report is, the RBNZ was expecting this jobless rate to be 7.0% in their last MPS review, and yesterday, the consensus of economists polled was for a 5.8% jobless rate.

SMALL BUMP IN THE ROAD
There were 11,975 used imports registered in July (compared to 8,200 new cars in the same months). This is the same as for June but -6.4% lower than for July 2019.

'DEFYING THE ODDS'
The ANZ World Commodity Price Index gained +2.3% in July from June with strength in the dairy market driving the index back to its pre-COVID-19 levels. But as above, this may not last into August. Year-on-year, the USD index is -1.7% lower, and in NZD is unchanged from a year ago.

COVID-19 LESSONS REINFORCE THE VALUE OF PLANNING FOR CYBER SECURITY INCIDENTS
In an incident management report, the National Cyber Security Centre lists five steps to help business leaders and cyber security professionals strengthen their organisation’s ability to manage and respond to cyber security incidents. They are; define roles and responsibilities; identify threats and assets; have a plan; logging, alerting and incident automation; maintain awareness and report progress and continually improve.

MORE PRECIOUS
The price of gold closed in London at a record high US$1978/oz. Then in New York it closed up at US$2019/oz. In subsequent trading in our time zone it went even higher, up to US$2032/oz but has slipped back closer to the closing New York prices now. Silver's gains have been relatively higher.

TIGHTENING GRIP
Victoria has confirmed new 725 new coronavirus cases today and 15 deaths (both records). NSW has confirmed 12 today. Queensland has confirmed one, and has closed all entry from NSW and the ACT (it already is closed to Victorians).

EQUITY UPDATES
A late end-of-session surge saw the S&P500 end up +0.4% in New York. But it isn't a signal that markets in our time zone have responded to. The NZX50 Capital Index is down -0.3% in late trade, undermined by the Aussie banks and FPH. The ASX200 is down -1.0% in afternoon trade. Shanghai has opened down -0.4%, Hong Kong is flat. Tokyo has opened down -0.6%.

SWAP RATES UPDATE
Swap rates were probably unchanged today, possibly soft at the long end. 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 is down -3 bps at 0.82%. The China Govt 10yr is slightly softer at 2.96%. But the NZ Govt 10yr yield is -2 bps lower at 0.72%. The UST 10yr has fallen -5 bps to 0.51% today, a new record low.

NZ DOLLAR HOLDS
The Kiwi dollar has run just a little firmer today, now at 66.4 USc. And against the Aussie we are down -½c at 92.5 AUc. Against the euro we are also unchanged at 56.2 euro cents. And that means the TWI-5 is little-changed at 69.5.

BITCOIN STAYS FIRM
The price of bitcoin is also little-changed at US$11,170. 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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83 Comments

11
up

Everyone is struggling to cope with the fact that things are not as abysmal as expected. Also many, employees, businesses and banks like to paint a worse than actual picture of the future in the hope of getting more free money from the government and sadly, the government will probably oblige

24
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John Key included, apparently

35
up

Yeah, he was very predictable in his 'advice'. The man wants the government to relax border restrictions to soften Covid-19's economic blow.

Our border restrictions and other recent developments are really threatening the man's legacy : heaps of low-value tourism and hospitality businesses under existential threat, government drafting a plan to refocus export education sector on high value and low volume, employers forced to hire Kiwis over foreign workers at better wages, the nation's sentiments towards China turning sour... oh, the sorrow.

So there is no faith in our border quarantine system? Is it just for show and we got lucky?

Nice rant.

It was a nice one and accurate as well.

Yes Advisor, he should be stripped of his knighthood because of the relaxation of border controls, alone. National and China are sharing a single bed and all the shuffling that goes with it.
No expansion of the tumble of dairy prices in this report.

His policy prescription? Let lots of rich yanks in, provided they build a house...
So friggin typical of the guy

21
up

Here's some stats from today to show everyone how close to the edge we are:
- There are 452,000 New Zealanders on wage subsidies.
- Despite this, in the last quarter, the number of people not in the workforce rose by 37,000.
- the number of employed people fell 11,000.
- hours worked fell a record 10.3 percent.

The total number of hours actually worked in the June 2020 quarter fell 9.3 million hours (10.3 percent) compared with last quarter and decreased 8.2 million hours (9.1 percent) compared with a year ago. These were the largest decreases recorded since the series began in 1986.

Things really will be "that bad." It's going to be a disaster not only for the economy but for our society. All our government has done is delay the storm. And its probably made the eventual damage worse than it could have been. But I suppose there is an election to be won.

Food for thought....

https://youtu.be/Cp0hiFVm1U8
Peak Prosperity...
And some challenging Danish research numbers....

Puts a big spanner in the things.

Of course the lockdowns cause far, far more damage than CV but when people are scared, all reason is lost

10
up

Reason is not lost... other factors come into play. We are not simply there to service an economy ...especially one where (if other nations are any guide) those most likely to benefit from relaxing the rules are also those likely to be least affected by Covid19.

12
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Some people are struggling the realise that monumental debt with reduced income cannot continue forever. Either will the current debt forgiveness. The banks and JK are underlining that.

Popcorn.

Calls to flood NZ with more foreign cash and students is something no one in NZ ever voted for. Good that election will allow NZ taxpayers to underline that.

Double popcorn.

Did you read what J Key had to say Yvil? I don't like the guy but he's certainly clued up in picking the direction of markets. He pretty much said we are screwed.

10
up

You had to wait for JK to tell you that?

Nope. Not at all.
But I think it's telling that he said that. And some people who post on this website love the guy yet are often saying the economy will be ok...

He also said this...

"Why don't we let in rich Americans who want to build a house in New Zealand? Who cares? They're in Mangawhai or somewhere, they are going to create thousands of jobs.

"Why do we care if someone who lives in New York wants to spend $10 million building a house in Auckland, using NZ craftsmen and NZ tradespeople?"

Well John...

That is actually true. Big money small footprint foreigners are actually more fun to have here than freeload campers with no money, and minimum wage work visa foreigners working for foreign owned businesses aren't much fun either.

It's not that its necessarily a bad thing. It's more that it's such a non-transformational thing that is consistent with his policy as PM to grow the economy with low quality immigration and tourism.
Such an uninspiring person.

No real shocking news today................... well no new problems at least

Great news today, BAU to infinity, get out there and spend some money.....
Excuse me if I just kick back for a while longer before jumping in...

Who on earth buys silver for goodness sake , there are so many substitutes that its has little real value . Its only unique property is that its heat conductivity is better than other metals ,but thats not enough to make people hoard it

18
up

Me and loving it! Whoop whoop...

Ditto !

Gold all time high, silver needs to double to get there.

Whooping and self back slapping. Not behaviour one expects from precious metal investors in my experience.

Grabbing some silver is completely outside the square for me. I did hundreds of hours of research and then stand my ground when I approached my wife about it and argued my case. Yes I am bloody happy that I can report back to her and say that we have made $10k from that. Yes I am bloody stoked that I have made a good call so far.
As I am now an investor, I dont mind saying that I think it will go further and don't mind recommending it to others as this is an investment site.
Screw the stiff upper lip.

Well you might not understand the space then. As a PM investor, you have to be prepared for anything. It's not like having a good night at Sky City. You need to understand that silver in particular is highly manipulated by the likes of JPM. And whether you like it or not, the ruling elite sides with JPM, not you.

As I said I did my research. JPM not able or little chance of market manipulation from now on due to the price difference between paper and physical.

JPM inherited Bear Stearns enormous short silver position in 2008, but now own 133m oz. Maybe they'll let it run this time ...

JPM is the largest owner of physical silver in the world. They're not done yet.

Kezza,hopefully you didn't do too many 'hundreds of hours research'...otherwise your hourly rate won't work out well...

12
up

Silver has a plethora of industrial uses. You also need to go and read up on the history of money...and no that paper/plastic stuff you hold in your wallet is not money.

Hmmmm I wonder why they called it the pound sterling?

Gold and silver will come into play the more money is printed to play with so feel free to mock it but smart money is getting out of fiat and into anything that can protect against zero interest on bank deposits and overvalued equities.
It is the same story that has has played out before but this time the amount of money printing to prop everything up is off the scale.

Perhaps it's also the same story that was being told 10 years back ( Yes. back when money was being 'printed' ad infinitum) when silver was at NZ$60 and proponents were enthusiastically calling for $100. What happened? It went..... back to $20. C'est la vie. Perhaps this time it's different!

Its called a cyclical bear market within a secular bull market.

Interest rates....

Once the crisis was over, it seems people believed everything was fine and the excess money went into property and shares, triggering the largest bull run in history.

That track by Backman Turner Overdrive comes to mind - ‘you ain’t seen nothing yet’.

Silver is for fools. Now silver mining companies on the other hand.....

Silver companies could be nationalized to stem the economic fall out.
Wasnt it 5% you stated you made today? Silver went over 7% and that is not the actual price you can get for physical on something like Trademe.

https://www.facebook.com/GeoffSimmonsNZ/videos/592726891613109/?t=4

TOP Party explaining how higher taxes will increase house prices.

Any younger generation voter would be wise to take a good look at TOP. make up your own minds, ignore the following rants.

Yep, if another 10,000 vote for TOP they may get close to the 1% mark.

That doesn't appear to be a critique of their policy.

Untill they gain traction it isn't worth reading what they have to say as it is a wasted vote.
Gareth Morgan too fresh in my memory for me to contemplate reading it.
One policy I do know of is that they want to bombard the entire country with poison.
They may have a few good ideas but there are some outrageous as well. Second election and better chance than average that it will be their last.

I have seriously heard about 10-20 people say they would vote for them, but it's "a wasted vote". I believe if everyone who actually wanted to vote for them did, they would be well past the 5% threshold. However the story of "wasted vote" told by the other parties ruins their chances.

They will only increase house prices if we continue to think the market can deliver housing at moderate prices. It can't, and it won't.
If the government builds homes that FHBs can buy then it doesn't matter what 'the market's is doing...
In fact, mass house building for FHBs, as per the 1950s,would pretty much prevent further house price booms...
TOP are just another variant on neo-liberalism.

John Key has just issued a dire warning

Got a link mate?

26
up

John Key and Mike Hosking..2 people that I never will take advice from

Because… they are both prominent, successful people? Do you rather take advice from an unknown, broke person?

Key uttered a complete falsehood today.

"Auckland is the engine-room of growth"

Total bollocks. But reported by Radio New Zealand - who probably don't know any better. Delete probably.

My admiration of success depends what the success was based on.
Success based on right wing unbalanced rants for a dumb right wing audience? Not admirable in my eyes.

please mike hosking can not even agree with himself in the morning, yesterday he contradicted himself all morning in his rants, one minute lockdowns are bad destroy the economy, next minute victoria should have locked down faster to get the virus back under control.
he has no idea what comes out sometimes, he just opens his mouth and sees what will come out.
thats why 1/2 the people listen to him because his is stupid and makes you laugh

@ sharetrader...it is the other 1/2 that worry me,the ones who see him as the font of all knowledge.

Yep. The minute Key gives advice means he’s either pumping something or shorting it.. but Kiwis loved the doubling of household debt during his tenure.. why?. - because house prices went up and more slaves were created of the young and the recently arrived migrants. - what was the name of the money lender in the merchant of Venice?

I see the GOVERNMENT purchased 12,000 pigs during the lockdown

I wonder why in the face of such supposed over-supply the price of my breakfast bacon cuts remained so stubbornly high ............... Bacon has not moved a cent in price at Pak n Save since the lockdown started ?

We might have bought more pork ( not the flying kind ) if the price was lower

It was the ears they were after to turn them into silk purses.

That's because NZ pork is mostly sold through independent butchers who weren't allowed to open through lockdown. The supermarkets wouldn't take it, and the pig farmers were faced with having to shoot and dispose of their market ready pigs. I'm sure the food banks were happy to have it.

Good point this. I went to my local New World this evening and looked for New Zealand Free Range Bacon (yes I hate the idea of cages). Nothing. All I could find was "Made in NZ from overseas and NZ ingredients" - the NZ ingredient apparently being salt.

I'd have loved one of those carcasses, but also challenge our supermarket chains to support free range homegrown - there's more than me that will pay an extra dollar or two for the privilege.

Why would supermarkets but NZ grown pork. Way cheaper (huge margins) to buy imported with no restrictions on how they're housed and feed.

Hence the reason to buy only free range NZ pork if you have any conscience at all. The way pigs are treated in 'industrial farming' is abhorrent.

Yeah, well - given his biases he's hardly likely to praise. Why should we take any notice of someone from a country which has hardly covered themselves with glory, in their covid response?

Because he is a journalist, not the government of Australia.

So he reports the facts? It looked like opinion to me...

i have been watching the news from across the ditch and there is no way any australian especially right wing will ever give any credit to NZ.
alan johns said this tonight,
"dont get me started on NZ draconian lockdown they have now destroyed their tourism industry."
Alan you dope that is because the whole world shut borders not just NZ and airlines stopped flying, countries all over the world banned everyone except citizens even australia, in fact australians have to ask permission to leave their country now we can still leave if a country will take us.
Australians can never give NZ credit it is just not in their DNA that we might do something better than them
check out the carton coming out tomorrow in the australian showing melborune in ruins because of the shut down and its people gone back to farming and comparing it to NZ as a put down

Alan Jones and Mike Hosking would make the perfect couple.
They could whisper right wing sweet nothings into each other's ears all day, all night.

A surge of employers adding previously unemployed to the payroll.

We have big problems, nobody is up in arms about that 3200000$ to keep that chch killer in jail for 2 years. But no money to give to that nice person who needs new hip.

14
up

Sir John Key has lost the plot.
I can't believe I voted for him back in 2007. See! We all make mistakes...
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12354064

And this attitude is ingrained in the national psyche.

10
up

Stupidity - on;y gets away with it because the media is equally stupid. None of them know (or are prepared to acknowledge) where we are in the global trajectory - but I'll give you the tip, we've topped-out.

15
up

With all due respect (you seem very smart), this was clear from the moment he entered NZ politics. He is the classic charlatan: full of his own self importance and incredibly self serving. History won't remember him well.

12
up

Some of us didn't see through his veneer, at least at first.
Should have listened to my mother, she thought he was slippery from the start...

12
up

Yes BW as I say above so typical of the idiot.
I voted for him in 2007 too...he personally promised to me that he would solve the housing crisis...ha ha ha!!!

I wrote him a letter in early 2017 outlining how his actions (or lack thereof) over those 9 years had been to the detriment of the majority of kiwis. He resigned not too long after...I’d like to think that letter was partly responsible for him jumping ship.

He did help his current employer however by blocking RBNZ calls for DTI measures to slow excessive credit growth into non productive speculative house swapping!

I have just seen the future - USA to stage a strong, focused attack on an Iranian target/s in the next 2-3 weeks.

Days to the General Election: 19
See Party Policies here. Party Lists here.