What happened Wednesday

A review of things you need to know before you go home on Wednesday; mortgage and TD rate cuts, retail sales surge, equity markets in mood swing, swaps up, NZD firm, & more

11th Mar 20, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
BNZ has matched Westpac's 'special' rates. Plus they have cut their unique 7 year rate by -50 bps to 5.20%.

TERM DEPOSIT RATE CHANGES
BNZ has cut most of its TD rate by between -5 and -20 bps. Co-operative Bank raised a set of key one year rates. Update: Both Heartland Bank and SBS Bank have also trimmed a range of TD rates, but they have both left their attractive 'specials' in place for now.

AN UNEXPECTED RISE
Sales made by electronic cards rose by an impressive +9.1% for core retail sales in February from the same month a year earlier. That was the second fastest rise since 2007, beaten only be a February 2016 rise. Only spending on apparel was weak. A rise this large was unexpected. Either it is an anomaly, or perhaps an early signal that panic buying is shifting the retail needle. Both consumable (groceries) and durables (long-lasting goods) rose sharply. It's an effect that covered the atrophy of tourist spending.

MAGUIRE LEAVING ANZ NZ AS BULLOCK GETS BIGGER ROLE
ANZ New Zealand says its chief operating officer Mike Bullock has been appointed to the new role of chief information officer. The change means ANZ NZ’s digital and technology teams merge and report to Bullock. Liz Maguire, the bank's head of digital and transformation, will leave this month.

SFO PROBES MAYORAL ELECTION DONATIONS
In a very brief statement the Serious Fraud Office says it has "commenced separate investigations into donations made in relation to the Auckland and Christchurch mayoral elections."

DEFINITELY DOWN
Yesterday's sharp fall in Aussie consumer confidence as measured by Roy Morgan, was confirmed today by Westpac's own consumer sentiment survey. It is at a five year low and comes despite official home loan data showing a rise in January.

NEW VECTORS
The latest compilation of Covid-19 data is here. The global tally is now 118,600 of officially confirmed cases, up +2000 from just this morning. Half of those additions so far today are in Italy, and the other half in Spain and the USA. While it is true that these absolute growth numbers aren't large in proportion to the size of their populations, the sudden spurts indicates authorities there aren't or weren't in control of the spread.

WILD DIFFERENCES IN MOOD
Despite this, equity markets have staged a rally today, especially on Wall Street which was up +4.9% after a late spurt which saw +4% of that rise happen in the final 90 minutes of trading. Australia isn't following, down -1.9% so far today while the NZX50 is in catchup mode, up +0.3% in late trade although at one point earlier it was up +2.2%. Hong Kong and Shanghai have opened with only modest positive moves, Tokyo has resumed its sharp declines (-1.3%) in very early trade. In late trade, gold is rising again.

LOCAL SWAP RATES RISING
Wholesale swap rates moved up today with a strong steepening tone. The two year is up +3 bps, the five year is up +5 bps and the ten year is up +6 bps. The 90-day bank bill rate however is up further, up another +4 bps to 0.91% as markets have now almost unwound their local rate-cut bets. In Australia, their swap curve is in a bear steepening mode today. The Aussie Govt 10yr is up another +2 bps at 0.71% after yesterday's recovery. The China Govt 10yr is also firmer, up +6 bps to 2.69%. The NZ Govt 10 yr yield is now up to 1.00% and a +9 bps daily rise. The UST 10yr is also in its new comeback mode and now at 0.69%, but it is running out of puff as the day progresses.

NZ DOLLAR FIRMS
The Kiwi dollar fell on a rising greenback overnight but has clawed some of that back today. It is now at 62.9 USc. Against the Aussie we are back up to 96.5 AUc. Against the euro we are holding at 55.5 euro cents. That means the TWI-5 is still at 67.8.

BITCOIN UNCHANGED
Bitcoin is now at US$7,946 and virtually unchanged from where we left it at this time yesterday. The bitcoin price is charted in the currency set below.

This chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Our exchange rate chart is here.

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61 Comments

by Panther | 11th Mar 20, 4:10pm 1583896240

Looks like the card payment figures were in-line with the paymark report last week showing uplift in February, paymark attributed the lift to the leap year effect, higher international spending (exl. China) and a surge in supermarket and pharmacy spending towards the end of the month. Paymark report here: https://news.fuseworksmedia.com/f1d4006d-b612-44ab-bf29-eede6cf39d6c

by powerdownkiwi | 11th Mar 20, 6:07pm 1583903265

Interesting observation from a 5 day member.

You wouldn't be touting, perchance?

by Panther | 11th Mar 20, 7:20pm 1583907615

I've been a daily reader for around six years, couldn't help chiming in finally. Not touting, just interested, I asked about the correlation between the two on Friday but didn't get a response. I think it's interesting no? For the record I have no relationship with Paymark, employment or otherwise (or any financial service provider for that matter).

by Kate | 11th Mar 20, 8:32pm 1583911970

Yes, it is an interesting correlation. We'd been trying to buy a packet of AsproClear for the last three weeks! I suspect a lot of the supermarket and pharmacy retail spending is up due to COVID19 prep. Interesting it is showing up in the Paymark data.

by Ahuhyeah | 11th Mar 20, 9:08pm 1583914086

I spent an extra $600 in Feb over and above normal, getting extras.

by Pietro | 12th Mar 20, 6:03am 1583946200

We need more ‘five day’ members. Gene pool on here getting very shallow. Too much some old, same.

by J.C. | 11th Mar 20, 4:17pm 1583896668

Aussie banks getting 'smashed' now ($ANZ -3.74%, $CBA -4.73%, $NAB -4.74%, $WBC - 3.12%).

Also, ASX200 tanking and down 23% from peak to trough. I guess it's OK to call it a bear market now.

by Audaxes | 11th Mar 20, 4:40pm 1583898035

Aussie banks getting 'smashed' now ($ANZ -3.74%, $CBA -4.73%, $NAB -4.74%, $WBC - 3.12%)

Imagine you are a cash-rich bank while a crisis rages all around you. Risk averse, absolutely, therefore you want the highest, best possible security for your cash. The best quality collateral, that is.

What if no one has any?

In other words, you’ve got spare cash and don’t mind carefully parceling it out but you can’t find any takers. Not for lack of willingness, mind you; it’s a crisis, after all, and the line is out the door. Counterparties would love to borrow every last nickel you’d offer, but they can’t because you’ll only accept the highest quality collateral in return which they don’t have and can’t get.

Thus, what happens next is the same basic economics (small “e”). You discount the price you’ll accept for lending cash, even during a panic, just to generate any return you can. Since there aren’t many showing up with acceptable collateral, you’ll go down even close to a zero interest rate if that’s what it takes.

While it sounds far-fetched this isn’t some rhetorical exercise for purposes of theoretical examinations. It actually happened during the “somehow” Global Financial Crisis: Link

by Nzdan | 11th Mar 20, 4:45pm 1583898348

Dutch auction.

by Audaxes | 11th Mar 20, 5:56pm 1583902614

ANZ economists call for a minimum wage freeze and for the Government to increase its debt limit by $60 billion

Of course - ANZ would love to park zero risk weighted government stock issuance on it's books in preference to increasingly shaky, overvalued collateral underpinning their residential property mortgage assets.

Except the citizen taxpayers would underwrite ANZ's position just as their depositors underwrite the mortgage assets.

MMT explained in one tweet
They also wrongly assume that government deficits create money, when actually they create national debt & growing regressive interest transfers from the many poor to the few rentiers who they seem to be serving.Link

by Squishy | 11th Mar 20, 4:46pm 1583898406

Unfortunately Australasian banks are grossly overweight underwriting/placement (i.e. lending) and under invested in other business lines (insurance, financial management, payment mechanisms, advisery services etc.) As rates have fallen lending is getting less profitable (margin loss) so banks that heavily rely on one business model need to be revalued.

by J.C. | 11th Mar 20, 4:57pm 1583899029

Hmmm...isn't it the story that the Antipodean banks have found the elixir and the ruling elite have shaped the environment to make the most perfect wealth generation formula in modern history?

by Henry_Tull | 11th Mar 20, 7:14pm 1583907276

Westpac in Sydney have evacuated a floor in head office as 3 are suspected virus cases.
Contact tracing being done now.

https://www.dailymail.co.uk/news/article-8098849/amp/Three-suspected-ca…

by Fritz | 11th Mar 20, 10:18pm 1583918285

We'll get more sense and insight from that floor than ever before

by Boatman | 11th Mar 20, 4:19pm 1583896787

The underlying fear of the COVID-19 virus is the 3% death rate over just 90 days.................. and who knows what the annualised rate will be .

by Andrewj | 11th Mar 20, 4:31pm 1583897519

I think it's best if we look after ourselves regards the Wuhan flu and not wait for someone else to step up and tell us what to do.
https://twitter.com/i/status/1237393224714481667

by Henry_Tull | 11th Mar 20, 7:18pm 1583907510

What do you make of it, are the powers that be,
are they unaware,
unaware yet convinced in their own brilliance,
unaware but dependent on low credibility WHO,
driven by forces other than public health.

Fascinating case study.

by Andrewj | 11th Mar 20, 7:22pm 1583907776

Worse, scared of being on the wrong side of history.

by custard | 11th Mar 20, 4:19pm 1583896754

The US number of cases now coming into focus- let’s see how the only developed nation without universal health care manages the Covid-19 crisis.

A negative outcome might gift Sanders some real ammunition in his fight to toss their current system under the bus.

“With approximately 27.9 million Americans who have no health insurance, detecting covid-19 becomes an economic problem. Millions of people are simply unable to afford getting to the doctor proactively, let alone being hospitalized with the illness.”

https://www.washingtonpost.com/opinions/2020/03/10/how-could-us-better-…

by Boatman | 11th Mar 20, 4:29pm 1583897351

The US will cope .

by Andrewj | 11th Mar 20, 4:48pm 1583898483

the have a million hospital beds but nearly 700k of those are already occupied, so it's only 300k beds in a flu epidemic.

by custard | 11th Mar 20, 5:00pm 1583899211

This could be the policy moving forward – if there’s no screaming need for them to be in a hospital bed – they’ll be quickly gone – home or elsewhere.

I wonder how credible that is once numbers escalate though….

“Dr. Mitchell Katz, CEO of NYC Health + Hospitals, said local hospitals are bracing for an onslaught of COVID-19 cases, adding that local hospitals are preparing to discharge current patients to handle incoming coronavirus patients.”

https://www.cnbc.com/2020/03/10/nyc-coronavirus-cases-are-coming-in-so-…

by Pragmatist | 11th Mar 20, 5:48pm 1583902112

Of course it will, while there is an epidemic going on there will be basically no elective surgery, grandma is going to have to put up with the walker and hip pain for a few months longer, and be told to stay the hell away from the hospital full of covid-19 patients. Thats just common sense.

by custard | 11th Mar 20, 6:50pm 1583905822

The US health care system and common sense aren't necessarily good bedfellows...

by Pragmatist | 11th Mar 20, 7:14pm 1583907258

Indeed, US politics and common sense are often at loggerheads..

by Mr T | 11th Mar 20, 6:48pm 1583905682

The US will likely have around 96 million coronavirus cases and some 480,000 deaths occuring over the next 3 to 7 months - Infectious Disease Expert Michael Osterholm Explains https://www.youtube.com/watch?v=cZFhjMQrVts

by Foyle | 11th Mar 20, 8:22pm 1583911362

If they have 100 million cases in next 3-7 months then 5 million or more will die because almost none of them will get hospital treatment - bumping mortality up above 5%

by Korki | 11th Mar 20, 9:02pm 1583913779

Or maybe they could follow the lead of North Korea...our kiwi/Chinese taxi driver on the way back from the airport today told us how North Korea had one case of Coronavirus - they shot him now they have none (I'm sure it's a joke, but ya never know)

by Foyle | 11th Mar 20, 5:11pm 1583899878

I think US is doomed. Restricted access to medicine, people who have to work (income+no sickleave) when ill, mobile population, little testing to date, large impoverished population (tonnes of homeless and drug addicts who wont modify behaviour). It's going to take off like crazy. Bet they are fleeing New York in droves like a later day Wuhan.

by custard | 11th Mar 20, 5:41pm 1583901673

US employee rights are brutal.

Lose your job in the US – chance of no notice, no redundancy and the immediate end of employer subsidised health care – you can keep your existing health care for 18 months (varies) but you’re now paying 100% for yourself, and your family - many can’t do that.

For the US, it may be more than just the poor/unemployed that this bites – a financial hit could be coming to any middle class suburb there soon, and with no way for the inhabitants to handle the health cost fallout.

by Independent_Observer | 11th Mar 20, 9:36pm 1583915781

Yip, was working in the US during the GFC. Pretty brutal for anyone who lost their job and worse was management of some organisations used the threat of unemployment to drive schedules to the extreme - workers were getting thrashed and couldn't say no.

by gingerninja | 11th Mar 20, 5:47pm 1583902025

And let's not forget that Trump rolled back Obama Care AND cancelled the Pandemic Response Team AND cut funding to the CDC.

*Slow claps*

by Andrewj | 11th Mar 20, 6:41pm 1583905292

It will in all probability bankrupt the US healthcare industry, it was coming anyway with the diabetes epedemic and mental health.

by rastus1 | 11th Mar 20, 4:36pm 1583897782

The dilemma being the trumpsters need to provide some socialized health care to get through this - and so falling straight into the arms of Bernie's free health campaign argument.

They are between a rock and a hard place politically. It will be interesting to follow.

by solardb | 11th Mar 20, 5:04pm 1583899475

They just send the National Guard into affected suburbs, probably not suburbs politicians live in.

by Foyle | 11th Mar 20, 10:09pm 1583917797

Epidemiologists are putting likely number of un-diagnosed Wuflu in US at up to 10x (10000), increase is about 10x every two weeks.
That means just 2-3weeks until they have same % infected as Italy, at which point with all the material hardship and tensions in the US I expect Anarchy will ensue in some urban centres.

by waymad | 11th Mar 20, 4:31pm 1583897516

After misreading the 'swap rates' as 'swab rates', may I (only semi-facetiously) suggest that a 'Swab Rates' graphic doohickey be used to track - you know - That which Cannae be Named?

by Hummy | 11th Mar 20, 4:31pm 1583897460

Don't forget we had a long February.

by Squishy | 11th Mar 20, 4:52pm 1583898756

Interestingly, despite the change in oil prices, petrol in my area hasn't yet changed substantially.

by custard | 11th Mar 20, 10:27pm 1583918875

A big tax chunk of the price is just so annoyingly "sticky"...

by CN | 11th Mar 20, 7:44pm 1583909083

Likely to be sticky on the downside. Also likely selling inventory purchased at higher prices, so if they cut their price at the pump, they would be making losses on their cost.

by Basil brush | 11th Mar 20, 8:32pm 1583911942

You couldnt be further from the truth CN but dont worry the commentary about fuel markets in nz makes everyone an expert. Fuel importers tend to use replacement cost accounting so prices change more or less at the same time as input costs do. The AA has a good section on their website if you want to know more.

by CN | 11th Mar 20, 8:51pm 1583913074

Thank you for that.

by Fritz | 11th Mar 20, 9:51pm 1583916696

So if we don't see more than a 5 cent drop in the next day or two we are being ripped off?

by J.C. | 11th Mar 20, 5:47pm 1583902056

Australian government has just announced helicopter money live on Sky News. Pensioners, New Start & Small Businesses to receive $500 hand outs.

by powerdownkiwi | 11th Mar 20, 6:03pm 1583902985

Accuracy please; Helicopter debt, that you will pay for later.

Kick the can but have no plan

Pretty much sums politicians up generally.

by Mr T | 11th Mar 20, 6:43pm 1583905430

Well worth a listen: The US will likely have around 96 million coronavirus cases and some 480,000 deaths occuring over the next 3 to 7 months - Infectious Disease Expert Michael Osterholm Explains https://www.youtube.com/watch?v=cZFhjMQrVts

by Kate | 11th Mar 20, 9:16pm 1583914609

Everyone should listen to that one. Here's the full interview if interested;

https://www.youtube.com/watch?v=E3URhJx0NSw

by Fritz | 11th Mar 20, 5:55pm 1583902559

Gee the CCP are horrid:

https://edition.cnn.com/2020/03/10/asia/china-coronavirus-propaganda-in…

by Pragmatist | 11th Mar 20, 7:26pm 1583907977

just took a look at teh tomtom traffic graphs.. Wuhan still in lockdown mode, but Shanghai closer to normal than I expected.
Also Milan is definitely down, but not as far as I would have thought, i expected it to be Wuhan level traffic levels.. ie, none.

https://www.tomtom.com/en_gb/traffic-index/wuhan-traffic
https://www.tomtom.com/en_gb/traffic-index/shanghai-traffic
https://www.tomtom.com/en_gb/traffic-index/milan-traffic

by CN | 11th Mar 20, 7:59pm 1583909947

Interesting & useful, thank you

by Fritz | 11th Mar 20, 9:53pm 1583916801

Agree, thx. That suggests the rhetoric around China returning to normal might be a little....BS?

by Foyle | 11th Mar 20, 8:35pm 1583912132

Thank you China, for running such an appalling system of government, where hiding bad news is standard operating procedure, and propeganda and misinformation make it impossible for people to make good choices. It makes epidemics like this one inevitable.

Once Wuflu has killed 50-100million I suspect that China may find themselves on everyone's blacklist, and might even end up with colossal international fines as the extent of their lies and misinformation - a large part of the reason for the epidemic - becomes apparent

by GV 27 | 11th Mar 20, 6:46pm 1583905604

Australia issues travel bans.

Kiwis ask people very kindly if they would please 'self-isolate'.

It's not hard to see who this will hit harder. Why are people asking the Prime Minister about the differences in how much more seriously the Australians are taking this with how NZ is approaching it? Saying businesses need to talk to their banks and the IRD about something with an exponential curve is showing a total failure to appreciate how fast things move in the business world when there are securities and government departments involved.

by Henry_Tull | 11th Mar 20, 7:26pm 1583907976

In other news.

https://www.thejakartapost.com/amp/news/2020/03/07/at-least-five-suspec…

At least five people suspected of having COVID-19 have died since late February before authorities eventually announced two confirmed cases on Monday. Some of the suspected patients died while waiting for their test results, although all of their tests eventually came back negative.

In one case, a health official even admitted to the possibility of flawed results from the test.

by Foyle | 11th Mar 20, 8:29pm 1583911744

There were tourists catching Wuflu in Bali a month back. Odds on there are 100's to 1000's of cases there by now.

by Henry_Tull | 11th Mar 20, 7:54pm 1583909665

ABC Australia.
Analysis + Ralph Norris.

https://youtu.be/3gDQAog1YyI

by Fritz | 11th Mar 20, 10:08pm 1583917710

Bank of England cuts to 0.25%!!!

by custard | 11th Mar 20, 10:29pm 1583918974

But really - pointless??

by Fritz | 11th Mar 20, 10:46pm 1583920004

I am not sure if it's pointless or not. Maybe we need to hear from To The Point and get his expert view.

I think multiple cuts to the ocr have helped keep the housing ponzi in NZ afloat. While I have no endearment to our ponzi economy, it is what it is, and the reality is that it is highly dependent on the housing market.

Applying that rationale, if the Ocr was cut to 0.25 or zero it would probably keep the ponzi afloat, and therefore keep the economy on an even keel, especially with targeted assistance from the government to vulnerable sectors.

by custard | 11th Mar 20, 11:57pm 1583924244

In this environment it may not be so much the cost of money – but its availability.

Banks may well retrench as regards their lending policies – collateral and income that looked invincible previously may be viewed in a different light – with easy credit now taken off the table.

I think it would be fair to suggest that we have, up until recently, basked in an economy that was priced to perfection.

However, as of now I think perfection is very much in the rear view mirror – we enter a brave new world?