Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes today.
TERM DEPOSIT RATE CHANGES
None here either.
GOING NEGATIVE?
Economists at ANZ and ASB now see the Reserve Bank taking the Official Cash Rate negative next year.
VERY POSITIVE
Barfoot & Thompson's auction sales surged in the first week of Level 3 lockdown. No sign of a COVID-19 Alert Level 3 slowdown in Barfoot & Thompson's auction rooms yet.
NZ GREEN FINANCE FUNDING AUSSIE IoT BUSINESS
New Zealand Green Investment Finance has purchased a 'strategic' equity stake in Australia-based IoT telco, Thinxtra. They are a network and service provider operating IoT networks in New Zealand, Australia and Hong Kong. Apparently the 'green' credentials are that IoT is thought to be enable devices that allow companies "to use less power, travel less and save carbon". Thinxtra also has other 'strategic' equity partners including an Australian government fund.
LESS INVESTMENT IN FARM TRACTORS
Farmers are buying fewer tractors. They purchased -6.6% fewer in July than the same month in 2019, and for the year to July the total was -19% less. The monthly year-on-year change has been negative for 14 of the past seventeen months, a down period as long as the one in the GFC. There are 33,300 tractors registered in New Zealand (plus many more unregistered ones for on-farm use only).
EYES ON DAIRY PRICES
NZX dairy futures suggest auction prices will be slightly soft at tomorrow's event, with WMP down by about -2%. SMP might hold. In any event, the futures market is not predicting a big change either way and not making back the -5.1% fall at the previous auction.
WELLBEING UP, TRUST UP
With the shift to "well-being" standards, StatisticsNZ has been surveying New Zealanders to quantify it. They are finding it high and improving. Overall life satisfaction remains high and up in 2020 compared to a similar (GSS) survey in 2018. Most New Zealanders are not lonely except for the obvious groups. Loneliness doesn't seem to be increasing. Overall health is good, and while mental health problems persist in some groups, those rates seem to be falling. 6.4% of people aged 18 years or older felt they did not have enough money to meet everyday needs. A further 23% said they had only just enough money. This latest study didn't indicate whether this is improving or deteriorating. Trust in our fellow citizens is rising. This survey also reported rising trust in the police, the health system, Parliament, and the media.
WELCOME THE RAIN, MAY IT BE HEAVY
Low hydro lake levels and low Auckland water storage levels are getting serious. A lot depends on the incoming wet weather over the next few days.
THE THIRD SLAP
China has said it will initiate an anti-dumping investigation into Australian wines. China is the top market for Australian wine exports. The move is widely seen as a punishment of Australia for its close links with the USA and comes after similar earlier moves with barley and tourism. So it is a ratcheting up of pressure. China only moves on items it can easily source from elsewhere, so it is one-sided pain.
EQUITY UPDATES
The NZX50 Capital Index is up another strong +1.6% so far today in late trade. The ASX200 is up +0.4% in early afternoon trade. Shanghai has just opened and is flat, as is Hong Kong. But Tokyo is down another -0.5% in their opening trade. Earlier, Wall Street was up modestly with the S&P500 up +0.3%, The Dow down -0.3% and the tech-heavy NASDAQ up +1.0%.
SWAP RATES UPDATE
Update: Swap rates fell sharply today with the two year rate down -5 bps to just 0.08% and a new record low. Other short end rates fell sharply too. The trigger was the bank economist reports that they expect the 2021 OCR to go negative. We don't have today's change in swap rates yet and will update it here if changes are significant. Yesterday they were unchanged except for a small rise at the long end. We don't expect much change today although the bank economist views that negative rates are on the way might change things somewhat. The 90-day bank bill rate is unchanged at 0.28%. The Aussie Govt 10yr is down -5 bps at 0.88%. The China Govt 10yr is up +3 bps at 2.97%. And the NZ Govt 10yr yield up +2 bps to 0.69%. The UST 10yr is down -3 bps at 0.68%.
NZ DOLLAR SOFT
The Kiwi dollar is holding at 65.4 USc. Against the Aussie we are lower at 90.7 AUc. Against the euro we are also lower at 55 euro cents. And that means the TWI-5 is softer at just on 68.3.
BITCOIN FIRM
The price of bitcoin is up +4.2% from this time yesterday at US$12,355. 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
39 Comments
I thought NZ Herald explanation of Genomic Data testing and its implication was both informative and an easy read.
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12357550
A little about the mighty Berkshire Hathaway and Warren Buffet's performance recently.
Of their top 10 holdings, the seven financial stocks have an average year-to-date total return of -23.2%, 40 basis points less than Bank of America’s total return so far in 2020. The three non-financial stocks have an average total return of 17.6%, primarily on the back of a fantastic performance by Apple.
Buffett has been invested in a number of old-school businesses that have not been able to convince the public markets of their technology prowess.
https://finance.yahoo.com/news/buffett-bets-farm-bank-america-174323164…
Brisket. What about his 20.9M (Total Investments 570M) investment in Barrack Gold back in June. Just a small investment for him but the stock is taking off as a consequence. Funny though, Buffet said he would never get into gold stocks now says its an investment that will last forever.
Source - Fox News.
Another perspective.
https://kingworldnews.com/greyerz-the-truth-about-warren-buffetts-inves…
Unemployed people are more likely to rate their overall life satisfaction poorly than employed people
Saw a couple of Stats NZ job postings a while ago for analysts to work on the "well-being" indicators - good thing I didn't give in to my temptation of applying for it.
You forgot to mention that the StatsNZ release on the wellbeing data included a very strong caveat:
"Please exercise caution when comparing data from this supplement with estimates produced from the GSS or the HES. Differences in collection method, sampled population, reporting periods, and restrictions on face-to-face interviewing, among other things, may all impact on comparability."
Negative ocr what will happen with nz dollar and inflation we are a small fish In big pond and this could cause Massive problems, Not many countries go negative seems like a very brave path that could cause a lot of pain for most kiwis and what would be the gains.
At the risk of repetition, paying off your mortgage will take away your options; your liquidity, if you need it.
You may find it difficult to re-borrow any debt you have repaid to the bank if you need it. Whereas you can drawdown of your savings if you have them squirrelled away somewhere. Sure there's a holding cost, as there is with any undrawn facility, but it might pay to have readily available cash handy if things get nasty.
If you have savings, you can pay down a loan at any time (when interest rates rise?) but getting access to funds is not as easy even if rates fall to minus 5% (NB: there'll be a reason for that, and the economy isn't good and unemployment isn't low are but two)
Good points bw.
Wouldn’t a revolving credit account which is mostly paid down give you the same access to cash if needed? Although I did read recently on a property investment site that some banks are requiring borrowers to give a good reason before they’re allowing the customer to redraw - normally redrawing is at will.
Or an offset account?
Too risky.
Banks can call it in at anytime taking all your savings on call with you.
Tricky time to try and outsmart banks.
As another poster said, people are piling into property precisely because things are so bad and because it's tangible. However still need cash flow for the cash to flow.
If the economy takes a nosedive, gold will get hammered as much as everything else. It's (1) just another market commodity that's traded (ie: it will get hammered just as much as IBM or Tesla will) and (2) it's a store of funds for times of crisis ( ie; margin calls).
It's a story as old as any market. The difference is, gold has a story that re-emerges with enthusiastic zeal just before the other markets turn. (Didn't we have a baby run-through at this a matter of a few months back?!)
Has anyone thought about the fact that these days gold's worth or value is only measured in terms of a fiat currency? So when/if all fiat currencies are valueless - who would exchange their barrel of oil, or a day's work chopping wood, or their sack of potatoes or their woolen blanket for gold?
It is worth the value of whatever you can exchange it for. You could buy a house with it and not use any Fiat money.
A lot of the reasons that gold is going up in value in relation to $ value, is that the buying power of Fait is dropping.. Gold retains its buying power, Fiat is inflated away.
The world has gone nuts.
Tesla up 11% today to $1835 per share.
This is company that has never paid a dividend and loses over $1B a year and in the midst of the biggest economic shock of our lifetimes.
No one can predict how this craziness is going to end, I for one have given up and just going to sit on the sidelines and watch...
China has said it will initiate an anti-dumping investigation into Australian wines. China is the top market for Australian wine exports. The move is widely seen as a punishment of Australia for its close links with the USA and comes after similar earlier moves with barley and tourism. So it is a ratcheting up of pressure. China only moves on items it can easily source from elsewhere, so it is one-sided pain.
It may exclude NZ wines - https://en.wikipedia.org/wiki/Exercise_RIMPAC#RIMPAC_2020
Swap rates fell sharply today with the two year rate down -5 bps to just 0.08% and a new record low. Other short end rates fell sharply too.
Given one year T bills were tendered by the Crown today at 16.25 bps there must be some form of dislocation being registered in the IR swap market, either on the floating or fixed side.
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.