Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes today.
TERM DEPOSIT RATE CHANGES
Westpac is the latest to cut term deposit rates, from low to even lower, and taking their cues from ASB. Rabobank trimmed their too, as did First Credit Union. Update: And now BNZ has cut as well.
THE MAGIC OF LOW INTEREST RATES I
If they can scrape together a deposit, mortgage payments should be affordable for first home buyers on average incomes in all regions including Auckland, according to the July update of our home loan affordability reports.
THE MAGIC OF LOW INTEREST RATES II
And the REINZ is saying that more Auckland homes were sold in the first seven months of this year than the same period of last year, despite Level 4 lockdown
MORE VIGILANT?
The latest data report from CERT NZ suggests that New Zealanders may be becoming more vigilant online following a significant increase in reports of cyber security incidents during the first half of 2020. CERT NZ received a total of 3,102 incident reports between 1 January and 30 June, which is a +42% increase on the same period last year. In April alone 820 incident reports were received, the greatest number of reports CERT NZ has received in any one month since it was established in 2017. While the total financial loss for the six-month period was $7.8 mln, the loss was significantly lower in Q2-2020 at $1.8 mln compared to $6 mln in Q1.
LOOKING AHEAD
Fitch is saying that the relaxation of lockdowns and movement restrictions, travel recommencing, non-essential retail and hospitality reopening and the launch of government stimulus packages are all being taken into account in their forecasts for the New Zealand consumer spending outlook in the short- and medium-term (2020-2024). The spread of COVID-19 globally will have a negative impact on New Zealand’s consumer spending in 2020, with real household spending forecast to contract by -2.0% year-on-year. In 2021 they project a recovery to more than +4% growth over the year.
FMA APPOINTS DIRECTOR OF INVESTMENT MANAGEMENT
The Financial Markets Authority (FMA) has rehired Paul Gregory to fill the newly created role of Director of Investment Management. Gregory rejoins the FMA in November from PIE Funds where he's Chief Operating Officer. Having previously worked in journalism and corporate PR, Gregory was the FMA’s Director of External Communications and Investor Capability from 2015-2017, and manager of Portfolio Intelligence at the NZ Super Fund. As Director of Investment Management, Gregory will lead the FMA’s strategic focus on and regulation of the retail investment management sector, including KiwiSaver.
NEW SHAREHOLDER FOR VIVIER
Vivier and Company, a controversial NZ-registered financial services provider, has a new shareholder. Companies Office records show the Austrian-based Martin Haschka replaced Dunedin resident Allan Court as sole shareholder on August 26. Both remain directors. Vivier's registered office and address for service is the Chisholm Links golf course where Court is golf pro. When contacted by interest.co.nz last month, Court first said he wasn't Vivier's beneficial owner and subsequently said he was. See more on Vivier here.
THE PROBLEM IS US, NOT THEM
Statistics NZ released updated data focused on the contribution of household activity to New Zealand's carbon emissions. The focus on households and their choices is wise because this is the only sector increasing its GHG emissions on a total, and per capita, basis. "Industries" are reducing theirs and have been for a long time now. Households however, while happy to blame others (and have formed political parties to do just that), but are the real culprits according to the data. This latest data on "industries" is that they are reducing GHG emissions at the rate of -2.6%, while the latest data for households are increases at the rate of +9.1%.
RENEWABLES RISK RISING
Our hydro lake storage problem is becoming acute, with national storage unusually low for this time of year. 'Renewable' is a worthy goal, until it doesn't deliver.
LESS COMMITTED
In Australia, commitments to new capital expenditure, the necessary component o future expansion, fell in the June quarter by more than -11% and for plant and machinery, the components of improving productivity, the fall was -14% compared with the same quarter in 2019.
EQUITY UPDATES
In Australia, the ASX200 is up +0.5% in early afternoon trade and making back about half of yesterday's fall. The NZX50 Capital Index is up +0.2% in late trade. Earlier, Wall Street closed higher, up +1.0% in a steady all-day gain. At the opening, Shanghai is up +0.3%, Hong Kong is down -0.8%% and Tokyo is down -0.3%.
SWAP RATES UPDATE
Swap rates at the long end turned up sharply yesterday following international trends with the 10 year up +8 bps to 0.58%. Short end rates were little-changed. Today's swap rates aren't available yet. We will update this note if there is a significant movement. The 90-day bank bill rate is still unchanged at 0.28%. The Aussie Govt 10yr is down -2 bps at 0.92%. The China Govt 10yr is up +3 bps at 3.07%. An the NZ Govt 10yr yield is also back up by +3 bps to 0.58%. The UST 10yr is down -2 bps at 0.68%.
NZ DOLLAR FIRM
The Kiwi dollar is marginally softer than at this time yesterday at 65.3 USc. But against the Aussie we are more than +½c higher at 91.6 AUc. Against the euro we are up +½c as well at 56 euro cents. That means the TWI-5 is up to 69.2.
BITCOIN HOLDS
The price of bitcoin is little-changed today at US$11,388. 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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38 Comments
THE MAGIC OF LOW INTEREST RATES I
If they can scrape together a deposit, mortgage payments should be affordable for first home buyers on average incomes in all regions including Auckland, according to the July update of our home loan affordability reports.
This magic does not extend to the extraordinarily high discounted present values of future cash outgoings (liabilities) caused by low interest rates - in fact it becomes a massive drag on the standard of living most FHBs desire.
It only impacts on them when they refuse (steadfastly) to move out of the main centres. This is the market system working perfectly.. if you can't afford a house in Auckland then move..real simple. Maybe now some people are seeing the dysfunction of the big population centres and deciding to migrate.. It will take a while but it will happen. Those people clinging to the "big city economic picture" may have to rethink their game plan.. and not before time
You only have to LIVE in the smaller centres Fritz, given the reported commute times in Auckland you could still work in a larger centre and commute, only difference is you'd be driving at 100kph instead 30kph... or work from home, lvl 3&4 have proven this is quite viable.
Wow..market system working perfectly? Yes get yourself into massive amounts of eye watering debt for the same house my parents brought for pennies in the dollar. But let's make it easy for you we will only charge you a tiny amount of interest over the next 30 years...promise. Oh and by the way it was much harder in our day..interest rates were over 15%.
It's really not as simple as that, Hook. Even from a purely financial perspective, moving out if the main centres usually means a drop income and a change in career, but for many who rely on family for childcare a massive increase in childcare costs. It's not actually that simple for many people to change the careers they've worked so hard for, leave the communities they've lived in their whole lives, and stick their kids in full time childcare as opposed to leaving then with grandparents.
Even if mortgage rates halve from 3% to 1.5% it only increases the ability to borrow by about 20%. And it is pretty clear that we are seeing a sea-change in work from home due to the impact of videoconferencing that will make it possible for many more people to move out of the city. That will inevitably reduce city house prices over long term and hollow out the demand for cbd office space.
This time Labour governments decession is not a health response but political response.
They have already decided to go for level 2 for political reason and now will spin and read data to get the desired outcome of going to Level 2 unless it really gets very very bad by weekend.
https://www.newshub.co.nz/home/new-zealand/2020/08/coronavirus-live-upd…
JA is set to lose all goodwill
The hapless Minister of Health perfecting his perfect part-time performance
Health Minister Chris Hipkins commits to overhaul reporting of COVID-19 testing after Newshub uncovers massive shortfalls
https://www.newshub.co.nz/home/politics/2020/08/health-minister-chris-h…
The Government still can't provide an explanation for the 5500 shortfall in testing, despite a team of about 15 number crunchers working on it since Wednesday afternoon.
But as a direct response to this story, the Health Minister has told Newshub that from next week they will be changing the way they record and report testing data to try and regain public confidence in the system.
PAXGOLD now available in NZ on EasyCrypto from today. PAX Gold (PAXG) is a crypto asset backed by Gold. Each token is backed by one fine troy ounce (t oz) of a 400 oz London Good Delivery gold bar, stored in Brink’s vaults. If you own PAXG, you own the underlying physical gold, held in custody by Paxos Trust Company
“[households are the] only sector increasing its GHG emissions on a total, and per capita, basis”. With pretty much the highest population growth rate in the developed world it is no surprise that total GHG emissions for households have grown. And it seems many new arrivals (and locals) don’t particularly desire a low-carbon lifestyle, hence per capita growth. Prius? No thanks I’ll have a Prado. Small house? McMansion thanks.
What’s the solution to combat inflation due to all this loose monetary policy? Why shift the goal posts of course and allow for greater stealth tax.
Fed relaxes inflation target in major policy shift https://www.bbc.co.uk/news/business-53933239
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