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A review of things you need to know before you go home on Wednesday; Auckland in L3 lockdown, RBNZ responds with larger QE target; constructions woes revealed, gold keeps falling, swaps fall, NZD weakens, & more

A review of things you need to know before you go home on Wednesday; Auckland in L3 lockdown, RBNZ responds with larger QE target; constructions woes revealed, gold keeps falling, swaps fall, NZD weakens, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
The Police Credit Union cut its 1 year fixed rate to 2.75%.

TERM DEPOSIT RATE CHANGES
No changes to report today.

BACK IN LOCKDOWN
Auckland region is now in Level 3 lockdown, and the rest of the country is back at Level 2. This follows the identification of one family who tested positive from community transfer.

MORE, BIGGER, FASTER
Today the RBNZ increased its QE program sharply to $100 bln from $60 bln and it says it has additional instruments in 'active preparation' to deal with the growing crisis. It also says it want to see lower and flatter interest rates.

SHARP FALLOFF
Readymix concrete production in Q2-2020, the period of the first nationwide lockdown, dropped sharply to levels first seen almost two decades ago. It is a sharp reminder of the challenges the construction industry faced, and now with new restrictions it is likely to be impeded in Q3 as well now.

HOME FOR THE SAFETY, BUT NOT STAYING
About 7200 kiwis returned to this country in the second quarter of this year after an extended stay overseas. But early estimates suggest only about a third of those will remain in the country long term.

HOUSE SALES IN THE TIME OF COVID
The return to Level 3 in Auckland will severely crimp how real estate agents can show and market properties. The REA has released its Guidelines for Level 2 and Level 3 on how agents can act.

FASTER ATROPHY
The return of work-from-home rules in Auckland will further undermine public transport in the City. It was already on the ropes, never having recovered after the first lockdown. July 2020 bus patronage is down -25% and train patronage is down -28% compared to the same month a year ago. And 2019 patronage was lower than 2018. It is a huge financial risk for Auckland Council to keep these services running if patronage isn't supporting them. Hard decisions lie ahead.

'AN AIR OF PANIC'
The pandemic spread in Victoria has had an obvious crushing of consumer sentiment there. But it has also affected NSW sentiment badly too. Australian consumers are clearly fearful of the COVID threat and uncertain about how it will play out. And that will have some bearing on their decisions near term. But there also looks to be an air of panic in the Westpac-MI consumer sentiment survey that Westpac says is out of proportion with what still look to be manageable virus-related risks outside Victoria. "That could disappear quickly if feared outbreaks in other states do not materialise and the situation in Victoria eases." But Aussie consumer sentiment will be hostage to virus outcomes for some time yet.

HOW MANY EGGS, IN HOW MANY BASKETS?
Readers who are interested in New Zealand's trade ties to China, the risks and opportunities, will be interested to read this Report for the NZ-China Council.

SLOWING WAGE GROWTH
In Australia, wage growth in the June quarter was the slowest since records were kept.

GOLD'S SUDDEN DROP
The price of gold fell sharply in London last night (down -US$92 to US$1940/oz). Then it went lower in New York by another -US$30 to US$1910/oz. Now in Asian markets, it is lower yet again, now down to US$1890 and a further -US$20 fall. All up that is a drop of -7% on just one day. Silver has fallen more than -15% in the same time.

EQUITY UPDATES
The S&P500 fell away sharply at the end of trading today, down a net -0.8% after being up +0.6% earlier in their session. Shanghai has opened down -1.3%, Hong Kong down -0.4%, while Tokyo is up a modest +0.2% in its morning session. The ASX200 is down -0.5% in early afternoon trade. The NZX50 Capital Index is down -1.4% near the close, but at least that is better than the -2.6% at the start of the day.

SWAP RATES UPDATE
Swap rates were little-changed before the RBNZ MPS today. Update: But after, they declined with the two, three and five year swaps down -6 bps. The ten year was down -4 bps. The 90-day bank bill rate is marginally lower at 0.29%. The Aussie Govt 10yr is up +5 bps at 0.92%. The China Govt 10yr is marginally softer at 2.99%. And the NZ Govt 10yr yield held at 0.78% prior to the MPS. But there strong market pressures that are pushing it lower after the MPS, down -5 bps to 0.73%. The UST 10yr is also much higher today at 0.655% and a +7.5 bps rise.

NZ DOLLAR SOFT
The Kiwi dollar has moved lower after the lockdown news and is now at 65.5 USc. And against the Aussie we lower as well at under 92 AUc. Against the euro we are lower at 55.9 euro cents. And that means the TWI-5 is softer at just under 69.

BITCOIN LOWER
The price of bitcoin is lower again today, now at US$11,305 and down -4.7% from this time yesterday. 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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End of day UTC
Source: CoinDesk

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48 Comments

For reading I have provided the RBZ monetary statement . Imagine winning 430 million in Powerball next year.
https://www.rbz.co.zw/documents/mps/Monetary-Policy-Statement-17-Februar...

Which all goes to show how pointless this 'money printing' is/is going to be.
Swapping Gold for Bread? The New Normal!

Got me a good one there, Cowpat - I'm like, "OK OK, I'll take a quick look, click the link...scroll scroll, table of contents, scroll, hang on, Zimbabwe? Uch"

17
up

Auckland public transport falling in patronage for 2 years running? Makes it harder to justify the huge subsidies and special lanes. Greens and other anti-car fascists Who Know Best™ will inevitably respond with nobbling cars users still further (when you are losing the race you need to hobble the competition). Autonomous taxis that can save us from their lunacy are probably still a few years off.

At least it might save the stupendous waste of money spent on under utilised cycle lanes. It'd be interesting to survey how many dollars/Km/user has been spent already

Such information will never see the light of day while the Zealots are in charge.

Haha very true. Maybe Hoskings could do some Investigative Reporting.. get some practice for a new job

Two people who refuse to accept that the past was unmaintainable and that the future will not resemble the past.

Change the record PDK, you're less relevant be the day

Au contraire

https://www.youtube.com/watch?v=1rVNuQeEKRs

Time you did some learning

Great link, thanks!

he can't ; it is the only one he knows.

Hook maybe I’m an “anti car fascist” because I sometimes like to cycle to work instead of driving (or maybe I’m just saving the country some money on a potential obesity bill). Either way how do you propose I should do so safely, because it definitely doesn’t feel too safe at the moment! A cheaper option would include significantly lower speed limits for example? Keen to hear your alternative solutions!

I cycle to work too. I do not however consider that the great majority of people who prefer cars should adjust to accommodate my needs ; the opposite is true.

http://www.cyclewaynewzealand.co.nz/news.php?ln=Another-$330m-to-be-spent-on-NZ-cycleways&LID=886951309

Another $330m to be spent on NZ cycleways
June 2015 and New Zealand Transport Minister Simon Bridges announced that 41 cycleways around the country will be getting what he called the "biggest investment in cycling" in NZ's history.

The funding comes from several sources - the National Land Transport Fund, the Urban Cycleways Fund with various local government authorities helping out as well.

Almost two thirds of the $300 million will go to the 3 main cities of Auckland, Wellington and Chirstchurch.

No it’s only fallen back to where it was 2 years ago due to COVID. it wouldn’t surprise me if many things have fallen further behind than that. Before COVID public transport had very high growth.

why did it fall in 2019 then?

I believe that part of the problem is crime.
To be a lone woman and to travel on the South or West Auckland train late at night would be like playing Russian roulette.

The gold chart over the last month looks like a good old crypto pump and dump.

Verily. Have yet to hear from the usual "BC good, everything else just Boomer dinosaurs investing" crowd

The gold chart over the last month looks like a good old crypto pump and dump.

Depends how you look at it. Price still higher than GFC-period all-time-high. For the gold old timers, no big deal. More emotional torment for the Johnny-come-latelys.

March crash in BTC was more severe. Some of us just said 'meh.'

You called the exuberance a short while back JC

It should be noted that gold has risen by a third this year, driven by the economic shutdown, cheap dollars flooding the world, $20 trillion dollars’ worth of governments’ stimulus programs based on debt, and low bond yields.
Nice to see both gold and silver on sale - by the dips I say.

HOW MANY EGGS, IN HOW MANY BASKETS?

Perhaps not surprising that a report over 50 pages long fails to mention the ethical issues of growing trade with a government who run internment camps when it is published by a trade body whose role is to develop China trade.

It is funded per the website in part by those listed below. It is hard to believe mainland money isnt involved.

Note the National MP Jian Yang , Labour MP Raymond Huo and Jenny Shipley

Also note the great and the good from Fonterra, meat and dairy businesses etc.

All with skin in the game.

MEMBERSHIP OF THE NEW ZEALAND CHINA COUNCIL (AS AT 30 JUNE 2019)
Executive Board
Rt Hon Sir Don McKinnon, Chairman, NZ China Council
Rt Hon Dame Jenny Shipley, former Prime Minister of New Zealand
Mark Averill, CEO and Senior Partner, PwC
Tony Browne, Chair, NZ Contemporary China Research Centre
Bruce Cameron, Chair, Zespri
Danny Chan, Deputy Chair, ACG Colleges
Peter Chrisp, Chief Executive, New Zealand Trade & Enterprise
Stephen England-Hall, CEO, Tourism NZ
Paul Goodwin, Managing Director, Institutional, ANZ Bank
Grant Guilford, Vice Chancellor, Victoria University of Wellington
Arthur Loo, Partner, Loo & Koo
John Loughlin, Chair, Meat Industry Association
John Monaghan, Chair, Fonterra Co-operative Group
Cathy Quinn, Partner, Minter Ellison Rudd Watts
Chris Seed, Secretary, Ministry of Foreign Affairs and Trade
Martin Thomson, Chair NZCTA, Partner DLA Piper
Advisory Board
Sam Brosnahan, Future Leaders representative
Dave Bromwich, President, NZ China Friendship Society
Naisi Chen, Future Leaders representative
Simon Draper, Executive Director, Asia New Zealand Foundation
Charles Finny, Chair, Education NZ
Jennie Hu, Founder International Artists' Residency
Raymond Huo MP, Labour Party
David Lei Wang, Chair, China Chamber of Commerce in New Zealand
Richard Leung, Chair, NZ Chinese Association
Fran O'Sullivan, Columnist, NZ Inc
Andrew Sayers, Hong Kong New Zealand Business Council (HKNZBC)
Steven Wong, Chair, United Chinese Association
Helene Wong, Writer
Dr Jian Yang MP, National Party
NZIBF Financial Contributors
Malcolm Bailey, Chair New Zealand International Business Forum (NZIBF)
Kirk Hope, CEO Business New Zealand
Andrew Morrison, Chair, Beef and Lamb NZ

Telling that you didn't point out Mr Huo as well. This is a trade council not a branch of Amnesty International
If it wasn't for the "hand wringing brigade" we'd have signed an FTA with Russia too. It was so close

Not really Hook, comment was amended whilst you were typing.

Haha.. still interesting you pointed out Yang before you read further and found Huo - "bugger.. better update things" LMAO

Point isnt the party politics it's the infiltration of pro CCP figures and Chinese money into trade bodies and lobbying etc. Its something we collectively need to publicize and weed out.

How many of the non-ethnic Chinese on that list speak Mandarin and / or have actually studied the culture?

Yes, so very much a vested interest report with lack of balance.
Not worth any attention.

Of course it's a vested interest report.. it's a trade council for crying out loud.. sheesh!!!

Only 7200 kiwis returned?

The rent seeking vampires (RSV) were pushing a very different narrative.

Ha!
And it says only a third are likely to stay long term.
RSV is a good term, we should all use it widely from now on. After all, they have been throwing around the derogatory 'DGM' without any editorial ramifications...

The rent seeking vampires (RSV) were pushing a very different narrative.

Tony Alexander had a running narrative about the cashed-up expat retuning to spend a king's ransom on property.

He's the RSV God. They worship at his feet.

As I have said before US Treasury yields are indicating Deflation gold is indicating Inflation they can't be both right. Btw if UST yields go down the value goes up. There is an inverse relationship.

Good luck to all gold/silver bugs and robin hooders. They won't know what hit them. USD place to be as I told you.

You're assuming gold owners are holding primarily as a hedge against inflation.

I think you’ll find that inflation not deflation is beginning to rise in the US.

I think you’ll find that inflation not deflation is beginning to rise in the US.

That wouldn't surprise me. The CPI isn't going to tell you much.

Not sure that the US dollar is the place to be, it’s overall trend is down. The gold and silver pull back is largely due to the rise in the US dollar - a temporary blip before it heads down again.

I would not be suprised to see gold above 2000 usd on Friday it is still in its channel upwards but got a little ahead of its self the same a silver.
Nothing goes straight up.

I like how there is a huge "Buy silver bars"advert in the middle of all this stuff about even more QE and the RBNZ "says it wants to see lower and flatter interest rates.". Because business must be really constrained by not being able to get cheap finance...

20
up

Air NZ, New World etc all coming out with the nauseating patriotic crap, 'kia kaha', 'team of 5 million' and all that. Pass me the bucket!

I detest this nonsense.

.. now .. be kind !

or else it's you and your families, and what the dogs leave, the pigs will finish

"It also says it want to see lower and flatter interest rates." re RBNZ

Edit.

I think they actually said they wanted lower rates across the economy. On page 24 (see link to ppt presentation) they seem to have referenced a parallel move down in the curve as an indicator of success. It does not show flattening.

What's clear though is that if they continue this course of action and we do see negative OCR we are likely to see a good 50bps fall across the curve and likely a similar swaps move (hence mortgage rate reduction).

https://www.rbnz.govt.nz/monetary-policy/monetary-policy-statement

Translation, it wants to see even higher and more steeply increasing house prices.

Days to the General Election: 24
See Party Policies here. Party Lists here.