Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
We missed noting that TSB cut most home loan rates, including its two year rate to 3.35%. SBS Bank reduced many fixed rates today.
TERM DEPOSIT RATE CHANGES
TSB and a range of other banks have cut term deposit rates. Details are here. SBS Bank has made cuts too, too late for that article but recorded in our rate tables. We have also heard that more cuts will be coming on Monday.
WESTPAC JOINS IN
Westpac now says customers can now apply for a six-month deferral on principal and interest repayments on home loans and personal loans. Payments may be deferred, but interest will still accrue and need to be paid in the future - just like the 'assistance' offered by other banks.
AND NOW CREDIT CARD RATE CUTS, SORT OF
ANZ has cut the interest rates on its low-rate credit card, for the period 1 April to June 30. Only their Low Rate Visa (and Business Visa) is being reduced, down to 9.95% from 13.90% for purchases. And then they say they will go back up to 12.90% after that. But readers should note that Kiwibank already had their Low Rate Visa at 9.95% and are not saying this rate will rise on July 1.
'DOWN, PRE-LOCKDOWN'
ANZ reports: "Consumer confidence fell 16 points in March to 106. Given the country only went into level 2 alert at the end of the interviewing period, this is just the start, presumably. The proportion of households who think it’s a good time to buy a major household item plummeted from 41% to 16%. Even if consumers wanted to spend, their ability to do so is now severely curtailed."
BIG FALLS
Local petrol prices have fallen hard, in response to the sharp falls in crude oil prices. The discounted national U91 price is now down to $1.71/L, a level that it was in May 2006. For Auckland, the average discounted price is $1.84/L and the level we first had in May 2008. It is a pity there is nowhere to go when prices are this low.
WOE IS ME
The Property Council warns of commercial property foreclosures as some tenants stop paying rent - seeks Government assistance for landlords. Unfortunately for them, being a landlord isn't an 'essential service' and of course the buildings will still all be there available for occupancy whether they go bust or not. The case to protect them from creditors will be very hard to make, given they took a calculated risk with their leverage when they purchased. They like the "willing buyer/willing seller" mantra when they buy cheap, but not when the pressure turns on them.
COVID-19 NUMBERS JUMP ALARMINGLY WORLDWIDE
There are now more than 368 cases identified in New Zealand, with another 85 new cases today, including six important clusters. Worldwide, the latest compilation of Covid-19 data is here. The global tally is now 530,000 of officially confirmed cases, up +62,000 from this time yesterday and accelerating over the week. There are now 448,000 cases outside China and almost all of them are in five core countries. In fact, China is no longer the epicenter - as we predicted earlier in the week, the US now has the most cases and their numbers are growing exponentially, at a frightening rate. They are up from 14,250 a week ago, to now 83,800 today, six times higher in one week. Many other countries have caseloads exploding too, like the UK which is up to 12,000 and more than 500 deaths. Australia is now over 3000 cases, and 13 deaths. The pace of global infection is accelerating quickly and global deaths now exceed 24,000. New Zealand is about to get its first Covid-19 death, from the eight people in hospital with the virus.
'ESSENTIAL'
The Government has allowed Imperial Tobacco to remain open and producing cigarettes as an 'essential service' - a decision that has caused outrage.
MORE CHUNKY RISES
In New York earlier, the S&P500 was up +6.4% earlier today, a second day of major gains and all juiced by the stunning stimulus being unleashed by the Fed. So far, investors are ignoring the equally stunning rise in joblessness and the frightening rise in the virus transmission. Locally, the NZX50 Capital Index is up +1.6%, largely on the back of gains by F&P Healthcare, Spark and some electricity companies. The ASX200 has given up all earlier gains and is now lower. The main Asian markets have all opened higher.
LOCAL SWAP RATES STOP MOVING
Wholesale swap rates are little-change today, if anything, down -1 bp. The 90-day bank bill rate is also down -1 bp. Low change may become the pattern now we are in lockdown mode. In Australia, their swap curve is down -2 bps across the curve. The Aussie Govt 10yr is down -5 bps to 0.92%. The China Govt 10yr is down -4 bps at 2.68%. The NZ Govt 10 yr yield is down -1 bp to 1.09%. The UST 10yr is down -4 bps at 0.82%.
NZ DOLLAR FIRM
The Kiwi dollar has rising over the past 24 hours as the greenback comes under pressure. The NZD us up almost +2c to 59.7 USc. Against the Aussie we holding at 98.3 AUc. Against the euro we are rising too, up +1c to 54.1. That means the TWI-5 is now up to 66.3.
BITCOIN STAYS UP
The price of Bitcoin is firmer, now at US$6,814 and up a minor +1.3% 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 ».
78 Comments
It doesn't matter what mortgage rates are for those that won't be buying. (Yes. It's ONLY Australia, whose economy is still somewhat open,but....)
"This is deadly': 1000 auctions pulled as floor falls out of market" (AFR - and that's not the Ceiling that's given way)
The RBNZ needs to cut a further full percentage point. Given the RBNZ's woeful forecasting history, why wait to go negative .Monday morning is good. For the banks , given the majority of mortgages are two years fixed, the banks should not profit from any economic downside , and allow all existing mortgage holders, the majority of whom are two year fixed to benefit prior to term.
Cash, given the current circumstances , should we be using it.
Sorry , edited. Blame daughters. Moo
Weekend reading
http://mural.maynoothuniversity.ie/1884/2/N206-10.pdf
Dunedin should see a major price fall given the huge rises over last 5 years which has be built on debt not major improvements in the local job market they have lower income than Christchurch but higher house prices???.
Also I have been watching jobs on trademe drop from 1985 two weeks ago to 1337 today for Christchurch not looking good for house sales or rentals.
I'm a first home buyer who moved back to Dunedin last October with 350k in my bank account expecting to be able to buy a house with a very little mortgage... Man was I shocked at the prices here! We eventually put in an offer for a run down old character home in Mornington that ended up selling for 700k, 50k over what we put forward. All I can say now is that you never know what worse luck your bad luck has saved you from!
StuckAtHome, I believe absolutely, that the RBNZ has shown scant regard for savers for considerable period. Whether it be the OCR setting, deposit insurance or your "cash is safe with us " mantra. However New Zealand is an economy primarily based on housing, its banking system based on housing mortgages Indeed in August 2019 , having slashed the OCR, Governor Adrian Orr "hopes that the low interest rate will get people spending." This unfortunate sad institution is very unlikely to change, with 1.3 trillion in compressed wood chip to worry about Savers be damned.
The next stage will be to crush the NZD.
I doubt a commercial property glut would do much damage to the already 'bent-out-of-shape' global economy.
Maybe its a good time for the government to bailout (instead of bailing out) a few motels around the country for cents on the dollar and repurpose them into state housing.
"The Property Council warns of commercial property foreclosures as some tenants stop paying rent - seeks Government assistance for landlords."
Outrageous nonsense, have they no shame ? After years of superb returns things go to custard and within A FEW WEEKS off they chime wanting to suck on the govt teet. They can f... right off.
Analysis shows that account registrations on Japanese crypto exchange Bitbank exploded by 40% two weeks ago (same time as Bitcoin crashed). Bitbank is one of the original exchanges in Japan and regulated by the Japan Financial Services Agency. This is quite interesting considering Japanese hold high private savings relative to the rest of the world.
David, I might be starting well back here but I struggle to understand your fuel prices. Akl Full price vs discounted is 2.04 v 1.84 but on GASPY all I see is fuel around AKL at mid to high190s with maybe 6 cents off with the loyalty card.
Question - what does discounted mean?
Australia is one that really worries me. They think they have lockdown but SFM spends Wed arguing whether hairdressers are allowed 30min with clients. Setka the most evil trade union official in Australia is keeping multi story building sites open and get this, my niece who works as a nurse in hospital operating theater in Brisbane is having takeaways for her birthday . Niece by marriage I should add.
Shut it down FFS Scotty.
"It is a simply huge failing. ...But they – all of them – Health, Treasury, Reserve Bank, ministers, and countless other agencies could, and should, have been a great deal better prepared and ready to act firmly. They owed that to New Zealanders. They let us down."
https://croakingcassandra.com/2020/03/27/hopeless-and-complacent/
More from this post:
Much of the stuff governments and their agencies do really doesn’t matter that much in the scheme of things. The crisis that currently sweeps over us, sweeping away civil liberties, even Parliament, casting hundreds of thousands onto the welfare rolls and probably slashing GDP by a third or more, destroying countless businesses really does. Our government – and probably most of their overseas peers – failed us badly, simply wasting very scarce time, whistling as they kept their spirits high, even as the boat was about to go under.
It's a great piece from one of the best in NZ. Pathetic performance from the govt and its agencies.
I was noting on this website, as early as early February that a huge economic crisis was on it's way.
Why couldn't the collective brains of govt work that out and plan? Totally asleep at the wheel.
I think we can all agree that governments didn't take the pandemic seriously enough early enough, world wide. And were not prepared, save perhaps South Korea (their dress rehearsal not to much earlier). Actions have been reactive, for sure.
But what is particularly maddening here in New Zealand is that the RBNZ had spent the last couple of years gleefully thrusting the OCR lower to prop up property bubbles, leaving us precious little leeway and too much debt when this white swan hit. The silly belief in a "new normal" turns out to have been a belief in Santa Claus. It was stupid to devalue NZ's savings and pump up asset bubbles while diminishing the stocks that would be needed in a crisis.
So why was it? Remember too, several economic / financial commentators (I won't mention names any more) saying as late as mid to late February that the economic impacts would be moderate at worst.
Are they dumb?
Were they bowing to vested interest?
Were they blinded with wishful thinking?
Why ??????????
To be fair it wasn’t that long ago it was a problem only in China that they seemed to be getting under control. Even now the death rate in China is a very tiny number. To put it into perspective their road toll is 100,000 per year but they have only had 3000 virus deaths in total.
It wasn’t until the Italians got it that it started to look like a real threat.
Oh Noes - the Racing Industry is suddenly not quite as Essential as t'was Yesterday (h/t David Farrar over at Kiwiblog).
Glass half full: more Pet Food.
I don't think it's a matter of 'profit'.
I think you'll be quite happy for the system to remain intact, so they can go back on the teat.
Just remember it's keystroke-born digits they 'loan' to you (covered by laws they pushed for) and in return they want a real pound of your flesh. That's because they want to buy real Beamers, not virtual ones like the virtual wealth they conjured up.
The NZX50 actually ended down 0.79% and I am actually glad ( and I hold shares). At one point earlier in the day it was up a @ 3% but dropped all afternoon - profit taking I suspect. I'm hoping that it will make people take note and scale back their "irrational exuberance".
It was a good chance today to sell off your holdings before the main collapse which may be called in the future as the April fools day collapse as only fools would still be holding any stocks after all the chances to offload but still hold because mainstream news tells you to ????
It turns out the jobless claims in NYC are a 30 sigma event. Watch the entire animation.
https://twitter.com/lenkiefer/status/1243166718924554240
I think deaths give a good way of estimating the true numbers of infected - using an approximately 1 in 70 death rate seen in countries like Korea with best testing and falling number of new cases. Iceland is perhaps even better info with a huge testing program (they are set up for genetic testing there due to fantastic genealogical records that medical researchers mine for info) that caught a whole lot of infections that other countries likely would have missed and may indicate far lower risk of death than thought - though it will be a few more weeks before we know for sure (as cases progress through 2-3 week mark where death normally occurs).
The Ministry of Health's own 2017 plan has, as Phase 2 (see P10) this useful statement:
Phase:Keep It Out - Border management
Potential Trigger: Sustained human-to-human transmission of a novel influenza virus overseas in two or more countries
Specific Objectives: Prevent, or delay to the greatest extent possible, the arrival of the pandemic virus in New Zealand
Now, if the Wise Ones had actually followed it.....coulda, shoulda, woulda....
From the top, no rent paid while the stores are closed. Be a nervous time for the rentier class, particularly the leveraged. https://www.theage.com.au/business/companies/retail-carnage-hundreds-of…
Retail stores were already in decline competing with online stores. The GST applied to overseas online purchases possibly helped retail stores a bit but this virus will most certainly finish them particularly those in the malls.
I mean who’s going want to visit a crowded mall like Sylvia Park?
As a commercial property owner of an office premises in Albany I am lucky I don't have large mortgage . Our tenant has notified us he will pay for April and move out taking his business home.
The bank has agreed to a 3 month payment holiday from May ,so we are good until August 2020 and if needed they have indicated this could be extended to 6 months .
I always understood the risks of investing in any asset class and the risks of losing this and any other revenue stream such as dividends and interest , so I have no issue with this
I just need to figure out plan B and implement it and so far plan B is to buy time from the bank
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