Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
BNZ cut rates across the board. More here.
TERM DEPOSIT RATE CHANGES
The Co-operative Bank has cut TD rates across the board by -5 to -10 bps.
A TOUGH SIGNPOST
The June update of the quarterly Westpac McDermott Miller employment confidence report says it fell sharply in the June quarter, in the wake of the Covid-19 outbreak and the subsequent lockdown. Perceptions about current job opportunities and job security have plunged. Earnings growth has slowed sharply in this survey and this fits with reports that many firms have reduced pay and hours for employees. Personal job security measures were deeply negative.
SILVER LINING?
The number of road deaths dropped to an all-time record low of just 9 in April. It did rise to 24 in May however.
LOCAL PROTECTIONS
The RBNZ has approved the sale of AMP Life to a run-out holder after the would-be buyer agreed to put in place various measures to protect the 200,000 New Zealand policyholders.
SUSTAINABILITY REWARD IN CASH
Fonterra says it is changing the way it will reward farmers for sustainable practices and now intends to offer an extra cash payment of up to 10c per kilogram of milk solids.
S&P SEES 10% DROP IN HOUSE PRICES
S&P Global Ratings says it expects NZ house prices to fall about -10% before resuming modest growth from mid-2021. The credit rating agency also says the economic risk trend for banks operating in NZ has become negative, with a one-in-three likelihood in the next two years that it assesses the economic risk score as having worsened by one category within its Banking Industry Country Risk Assessment for NZ. S&P also forecasts NZ banks' credit losses will rise to about 80 basis points of gross loans and advances, nearly 12 times above their cyclical low in fiscal 2019, in the June 2021 year. Nonetheless S&P reiterates that, even if all this happens, its actual credit ratings on NZ financial institutions are likely to remain unchanged.
FMA FILES AML/CFT COURT CASE
The Financial Markets Authority says it has filed civil High Court proceedings against CLSA Premium New Zealand Ltd (CLSAP NZ) for alleged breaches of the Anti-Money Laundering and Countering Financing of Terrorism Act. CLSAP NZ, formerly KVB Kunlun New Zealand Ltd, is the local subsidiary of the Hong Kong parent, CLSA Premium Ltd. CLSAP NZ provides various financial services, including broking, financial advice and derivatives. There's more detail from the FMA here.
IAG LOOKS TO SHUT AMI STORES
Insurer IAG is proposing to shut its 53 AMI stores and its remaining State store, and move its 350 staff to digital and contact centre roles, RNZ reports. About 65 management positions could also be disestablished, however the company says it hopes to redeploy as many staff as possible.
FATTER SURPLUS
The Australian trade balance rose to AU$87 bln in the year to May as Aussie exports fell -13% in the month while their imports fell -18%. Cars and oil took the largest hit in May.
AUSTRALIA UPDATE
COVID-19 infections are rising faster across the ditch. In Australia, there have been 7492 cases in total (+29 since this time yesterday), 102 deaths (unchanged) and a recovery rate of just under 93% (up). There are now 487 active cases in Australia (+22 from yesterday).
GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 9,073,400 and up +147,000 since this time yesterday. This is a rising pace. (And a reminder, when this tally exceeds 10 mln, we plan to give up reporting the number daily. And at the current rate that may be by before the end of the week.) American cases have risen by +32,200 in one day to 2,310,800. That is a larger-than-usual daily rise too. US deaths now exceed 120,000. Global deaths now exceed 472,000.
EQUITY MARKET UPDATES
At the end of the New York session, the S&P500 was up a little less than +0.7%. The Shanghai index has opened +0.2% higher today, Hong Kong is +0.7% up and Tokyo is up +0.8% is early trade. The ASX200 and the NZX50 are barely showing gains, each up just +0.1%.
SWAP RATES UPDATE
Swap rates were likely unchanged today. We don't have wholesale swap rates movement details yet but we will update this later in the day if they show a significant movement. The 90-day bank bill rate is staying up at 0.30%. The Aussie Govt 10yr is up +4 bps at 0.91%. The China Govt 10yr is ip +5 bps at 2.96%. The NZ Govt 10yr yield is much firmer, up +5 bps at 0.92%. The UST 10yr is firmer at 0.71%.
NZ DOLLAR HOLDS HIGHER
The Kiwi dollar rose strongly last night and has held on today at 64.8 USc. Against the Aussie we are marginally softer at 93.5 AUc. Against the euro we are unchanged at 57.4 euro cents. That means the TWI-5 is holding at 69.5.
BITCOIN RISES
The price of Bitcoin is up today to US$9,644, a gain of +2.8% although most of that came overnight. 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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105 Comments
Even the Herald had an article yesterday quoting ANZ economists' prediction of a 12% house price fall in NZ.
It won't take much to change the expectations from very positive to very "negative" now.
I put the word negative in quotation marks because I believe a house price fall of 10-20% would me most welcome for the majority of the population.
US infection rates speeding up and basically will rise at a faster pace from here on. Death rates starting to spike up in 10 to 14 days, which will rattle the public.
The is about the time when the US private payouts, rent, mortgage holidays, no eviction time span expires and more comes to a head and is stopped unless they continue to pay everyone for nothing and extend the loan holidays. Hell in a handbasket on it's way.
The very deep economic recession. A decade long event.
While we have another week trying to count quarantines, its delaying focus on the bigger issue.
ABC Australia, Alan Kohler
https://youtu.be/oWyQarwzKUA
If it lasts a decade, it'll last forever.
We are at cusp-point in the Limits to Growth timeline, out of time.
As the lady on the first Espiner look-ahead (the second one is crap, the third passable) said; this is the only chance we have to get it right. Maybe we had 10 years, but there won't be the effort left for a re-boot after this 'heave', so this is it.
And I suspect that, by and large. we'll drop the ball.
If this is a signal NZ might find itself with diminished housing market support from abroad.
China Must Prepare To Be Cut Off From Dollar-Based Financial System, Official Warns
As kiwi's overseas - with no intention to return other than for a holiday when this is allowed - we find it interesting to see how our home country slowly turns into a communist island with a hint of Xenophobia. The current leadership treats Covid-19 as they are treating cigarettes and porn. Bad for you, it must be banned. It probably won't disappear though, so how long before the economy gives in?
You would have to give an explanation on how you reached that conclusion. Countries aren't going to reopen borders with infected countries, and where borders are open there will still be quarantine. Dropping quarantine and shutting down the economy would be political suicide before the virus is brought under control.
Given that you do appear to have completely lost your grip on reality I won't be responding to you any more.
By all means bookmark it. The poster doesn't have a basic understanding of anything. Dribbling on about the risk of communism when National is not in power, and not even discussing how the National Party is so cosy with the CCP that they are a national security risk.
https://www.stuff.co.nz/national/96803291/national-mp-trained-by-chines…
https://www.stuff.co.nz/national/politics/118419927/national-mp-jian-ya…
Consider that this post is timed to coincide with a mail drop from rejectccp.com which is a site with a registration address in Arizona. Vague posts with no real context in NZ are certainly suspicious in the run up to the election.
The site is deliberately hidden behind cloudflare.
By this do you mean his/her views resonate with your own paradigm/perspectives/biases - as opposed to 'reality' which is only one's ability to process information based on learning, knowledge and cognitive ability?
I'm always nervous when people start talking about 'reality' because they're really just telling how they see things as opposed to how they really are - and to see how things really are requires the input from multiple/many differing perspectives. Usually conflicting perspectives help to locate so called 'reality'.
Nah, I'll sit in my NZ made house, with my NZ made power and water, and eat my NZ made food. Yes, technology and medicine will require some imagination to generate internally but we'll get there. The countries got enough TVs and cell phones for the next decade anyway. We're good thanks, keep your Covid.
Meanwhile, there are zero robust recovery plans other than a bunch of shovel-ready projects that will create 1200 new jobs.
I see many other countries pushing forward with programmes such as digital and research grants, local manufacturing, localising supply chains, etc. but our ministers would rather restore the tourism and hospitality sectors so that future generations can continue working in low-paid gigs, serving fries and drinks to foreign tourists and skilled migrants.
Cometonanny - please don't feel you need to return, even if it's just for a holiday.
Give it a few months - most of the world's economy will be totally wrecked - and we will be doing very well by comparison (as long as we can keep the virus out). By then I doubt you'll even be welcome as a vacationer.
The communist threat is real here. This is why it's critical to not vote for the National Party. Fortunately the National Party is not a part of the coalition so there typical economic mismanagement is not a risk unless they can form a Government after the election.
I think there is a high risk of the US falling to communism given the current socialist President handing out social welfare to the wealthy and the military with all that extra spending. Perhaps if the President wasn't so cozy with Russia and North Korea the US might have a chance of functioning. One day I dream that both democracy and capitalism will return to the US.
Here's another innovative policy announcement from TOP, not a ground-breaking one because 10-30k won't buy you much but a good start towards a digitally-driven, innovative small business environment.
I respect their their out-of-the-box thinking much more than the 'tax-everything' propositions coming out of the Labour-Green climate change campaigns.
well, you are only interested in your own inward looking world.
https://amp.scmp.com/news/china/military/article/3074154/american-spy-p…
"S&P SEES 10% DROP IN HOUSE PRICES
S&P Global Ratings says it expects NZ house prices to fall about -10% before resuming modest growth from mid-2021"
For the record, assuming that the report was dated after the most recent REINZ median house statistics for May 2020.
1) the REINZ median house price for NZ for May 2020 is $620,000. A 10% drop from this price level would mean median house price in NZ would fall to $558,000.
https://www.interest.co.nz/charts/real-estate/median-price-reinz
2) the REINZ house price index for NZ for May 2020 is 2,962. A 10% drop from this price level would mean REINZ house price index for NZ would fall to 2,665.8
https://www.interest.co.nz/property/105522/house-prices-have-been-trend…
"I thought prices already dropped around 8% at the previous report? ($680K - $620K)"
Yes, they have.
I'm unable to find the S&P report anywhere.
NZ Herald reported this story today - https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12…
i) "Rating agency S&P says it expects New Zealand banks to experience a rise in credit losses as house prices fall by around 10 per cent."
ii) "In a report released today S&P Global Ratings ..." - report release today
Given the date of the release to the media of the S&P report, I'm assuming that the 10% fall is based on the most current price levels as at the end of May (and not the peak median price of $680,000). That would mean 10% drop from May median house price of $620,000 to $558,000 (and an 18% drop from the peak of $680,000 to $558,000)
If that assumption above is incorrect, and their forecast is 10% from the peak, that is not really a forecast - we're already 88% of reaching their target 10% drop before the report even came out. (8.8% fall in May 2020 of their 10% forecast). If this is the case, then there is only another 2% from the peak level of $680,000, to $612,000. (or 1.1% from May 2020 of $620,000 to $612,000).
"house price drop coming" in the headline,
hmmm, house prices may very well drop indeed but since Interest doesn't possess a cristal ball, it shouldn't be a statement made with such affirmation by a neutral, unbiased media. A question mark at the end of the statement would be more appropriate.
"You're all being stupid, you'd say the same if the headline said "house price increase coming""
FYI, and for the record, a couple of random articles which I found (links listed below) which are referring to property prices forecast to rise.
I couldn't see any comment referring to the headline of the article with forecasts of property price rises, suggesting a question mark was required. Perhaps I overlooked.
Feel free to check for yourself
1) https://www.interest.co.nz/property/102667/households-are-now-increasin…
2) https://www.interest.co.nz/property/103283/westpac-economists-say-their…
Another observation to note: - the property price bulls didn't seem have any questions surrounding the "neutrality" of the headline either ...
CN so you cannot make the difference between your first link saying that prices are FORECAST to rise and your second link saying people were EXPECTING prices to rise with the affirmation of today's headline that prices WILL drop.
There is a very definite difference and the above headline would be fine if it said prices were expected or forecast to drop
https://i.stuff.co.nz/travel/travel-troubles/121917273/coronavirus-scot…
Scotland to NZ, two weeks in quarantine and not a single test. Bloody useless! How is Labour going to manage the economy if it can not do the basics???
National in bed with the CCP, Labour dosent mind capitalizing on the trade deal that Helen Clark cut with them either.
I watch very little to no media apart from Interest.co.nz, fail again OB1.
Both are useless but one is the latest to screw up and needs the chop because of their failure to effectively manage anything well.
Okay how the Wuflu works OB1, is that it can infect people two weeks after infection and that person could still not be showing symptoms. This person was allowed to talk with others that may have been infected. Testing must be standard.
I dont give a toss shebis on they are both shockers but you are somehow blinded that Labour is the be all and end all.
The point is Oldbloke that the person could have had covivid and spread it in the community. That is a Labour screw up, from one end to the stinking other.
"Was testing required while they were in quarantine? No."
Do you not understand? That is the problem! We didn't test anyone coming in, so had no new cases.
The minute we start testing we get multiple new cases every day. Makes a normal person wonder about the 28,000 people that have entered the last few months.
Thank goodness Thelma and Louise did get tested. Otherwise we probably would still be proudly proclaiming our "Zero" cases to the world.
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