Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
None to report today.
TERM DEPOSIT RATE CHANGES
None here either.
APOLOGY
We have been battling website issues today. Nothing to do with DDoS attack, rather all internal. We are sorry for the interrupted service. :(
LESS UNCONFIDENT
ANZ’s preliminary September business confidence survey shows overall confidence became less negative, and ‘own activity’ confidence was also less negative as well. The survey suggests firms are looking through the second wave impacts. This data is better than expected. Still while most indicators are at their ‘highest’ (or least bad) since February, they all well below pre-COVID levels.
HEAVY DROP I
Statistics NZ today reported the largest fall in manufacturing sales ever for Q2-2020 (since their series began in 1994) with sales down -$3.1 bln compared to the June 2019 quarter. Volumes produced were down -12%, values were down -9.5%.
HEAVY DROP II
Wholesale trade sales fell -$2.7 bln or -10% in Q2-2020 compared with the same quarter a year ago. And that is the largest fall in the 25 years of this data too.
'ALL OVER THE ROAD'
ANZ's truckometer shows the Light Traffic Index (cars) fell -13.1% in August, while the Heavy Traffic Index (trucks) fell -6.5% as the impact of the second COVID-19 outbreak weighed, including the roadblocks around Auckland.
CRIMINALITY ALLEGED
The Financial Markets Authority has filed criminal charges against an individual in relation to the Forestlands group of companies (now being liquidated), for alleged disclosure and financial record keeping breaches.
NEW EXEMPTION
The Government is creating a new border exception category to enable the return of some temporary work visa holders who are overseas and have strong, ongoing links to New Zealand. Business groups are welcoming the change.
LOTS OF NEW PUBLIC DEBT, SMALLER ECONOMIES
Ratings agency Fitch says New Zealand's Govt debt to GDP ratio is on track to go from 27% in 2019 to 49% in 2022. Australia's is going from 42% to 61% of their GDP. (Japan's will end up at 261%.)
GLIMMER
In Australia, much is being made of consumer confidence “roaring back”. But actually, that is only in the perspective of the last six disastrous months. In fact, consumer sentiment remains very negative across the ditch according to the Westpac MI survey.
EQUITIES UPDATE
On Wall Street, the S&P500 ended the day down a very sharp -2.8%. The tech-heavy NASDAQ exchange was down -4.1% with Tesla taking one of the largest falls. At its opening today, Shanghai is down -1.6%, Hong Kong is down -1.1%, and Tokyo is reversing yesterday’s gains, down -1.6%. The ASX200 is down -2.5% in early afternoon trade, and the NZX50 Capital Index is down -1.3% in late trade today.
SWAP RATES LOW
Yesterday, local swap rates fell to new record lows for 2, 3 and 4 year tenors. The two year is down to a minuscule 0.0275% (or $2.65 annual interest for every $10,000). Longer rates were little-changed. We won’t have the final data for today yet and if it is significant we will update it here. The 90 day bank bill rate was unchanged at 0.30%. The Australian Govt ten year benchmark rate is 0.91% and down -5 bps. The China Govt ten year bond is at 3.14%, down -2 bps. The New Zealand Govt ten year is now at 0.57% down -7 bps and approaching the record low of 0.49%. The US Govt ten year is down -5 bps at 0.67%.
NZD DOWN
The Kiwi dollar has fallen from 66.9 USc yesterday to 66.2 USc now, a drop of more than half a cent. Against the Aussie we are at 91.7 AUc and little-changed. Against the euro we are at 56.2 euro cents, also little changed. That means our TWI-5 is now at 69.1 and the lowest in two weeks.
BITCOIN
Bitcoin has fallen further today, now at US$10,019 and down -3.5% from this time yesterday, of which -1.4% of the drop was from where we opened this morning.
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14 Comments
ANZ’s preliminary September business confidence survey shows overall confidence became less negative
I wonder why ANZ bothers with this survey anymore. If you believe these numbers, businesses have been feeling less pessimistic overall since July than they did back when Jacinda's team swore into government.
This survey was taken as our region with the largest concentration of businesses and economic activity was in lockdown and the rest of NZ continues to suffer a sustained loss in foreign income from closed borders.
So full of crap!
Ratings agency Fitch says New Zealand's Govt debt to GDP ratio is on track to go from 27% in 2019 to 49% in 2022. Australia's is going from 42% to 61% of their GDP. (Japan's will end up at 261%.)
Meanwhile,
Biggest experiment in monetary history: Central banks are almost engaged in a battle over who can rumble their printing presses the loudest. Link
Hi Audaxes, question to you regarding RBNZ QE. When the central bank buy NZGBs off commercial banks, does RBNZ hand the cash that is free to use or does it credit the member bank's account at the RBNZ. The latter would increase the reserve account facilitating potential for increased lending.
Yes, the latter. However there are no fractional reserve lending ratio regulations operating in NZ.
Banks' lending is tempered buy regulatory capital requirements on the asset side of the ledger rather than liability constraints.
There were two major evolutions in money and banking that seem to fall outside the orthodox narrative. The first was a shift of reserves and bank limitations from the liability side to the asset side. The second was the rise of interbank markets, ledger money, as a source of funding rather than required reserve balancing: replacing the old deposit/loan multiplier model. Courtesy of J. Snider from Alhambra
Central banks want inflation to melt the real value of government debt and produce nominal growth. There's a huge difference between wanting inflation and getting it. Cheap money via negative OCR and low interest rates to increase velocity (money through the economy through individual spending) and borrowing supported by the wealth effect of rising asset values IE: property. They want us all to take on more debt to keep the ship afloat.
The first point I need to make is that day-to-day central banks pay attention to asset prices when setting monetary policy, even when, as in New Zealand, their formal focus is exclusively on consumption prices.....
This can apply with any kind of asset, but in New Zealand, we see this mostly through house prices
All very interesting and something that could have been written by any Central Banker today. But is wasn't. It was penned by RBNZ's Bollard; 16 years ago, and shows just how little their view and policies have changed, regardless of what is happening around us all.
I'll suggest that Adrian Orr would deliver just such a speech today, and as required.
https://www.rbnz.govt.nz/-/media/ReserveBank/Files/Publications/Bulleti…
The regulatory capital controls confirm the bias.
Is there a better daily count than the share 'markets'?
As we know, they're overpumped with keystroke-issued QE.
As we can see, they leap around much more than can ever really be changed underwriting-wise, on the ground in a day. Which means we're monitoring a bunch of lemmings; breathlessly and several times a day (even RNZ, unquestioningly).
There has to be a more accurate count?
It's more of the same at Watercare. The fact that we pay these executives to take a free natural resource is ludicrous.
https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12363652
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