Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
The Cooperative Bank cut all their fixed rates for terms 6 months to 3 years. Their new core 6.35% fixed rate offer is pretty competitive.
TERM DEPOSIT/SAVINGS RATE CHANGES
Kookmin Bank raised term deposit rates today. Unity Money raised their six month TD to 5.50% as a 'special'. ASB raised its Business Saver rate by +35 bps to 2.10% matching BNZ, but less than ANZ and very much less than Kiwibank's 3.90% rate for this type of account. Update: Westpac has raised its 3, 6 and 9 month TD rates, taking their 6 month rate to 5.00%, and catching up to their main rivals.
CREDIT CARD CHANGES
TSB has launched a new Mastercard credit card offering that features a low rate option at 9.95% - including for cash advances, which is a bit unusual and better than most.
SPINNING IN PLACE
ANZ released its Truckometer analysis of traffic movements to February, and despite the lockdowns and cyclone-affected disruptions they say the data is "consistent with the recent observed slowdown in retail spending."
THE AFFORDABILITY PRESSURE IS GREATER FOR RENTERS
Stats NZ has released its household income and housing-cost data providing income and expenditure information for the year to June 2022. They say it shows housing affordability is significantly more challenging for renters than homeowners. One in 4 households that were renting were spending more than 40% of their disposable income on housing costs, compared with 1 in 5 households that were paying a mortgage. They say rents continued to increase at a faster rate than mortgage payments. Over the last 15 years, average weekly rent payments have increased +93%, compared with a +49% increase in average weekly mortgage payments.
SCAMMERS INNOVATE
CERT NZ’s latest annual summary of online crime shows that scammers are still finding new and inventive ways of getting to our money. Financial losses jumped +19% to $20 mln, mostly due to a spike in Q3-2022. These are the biggest losses reported to CERT NZ in a single year. Phishing and credential harvesting, scams & fraud, and unauthorised access all saw significant increases and unauthorised money transfer scams targeted individuals for some large losses.
NEW OWNER, BIG RECOVERY
Yili-owned Westland Milk has had a significant financial turnaround, posting record sales and a $120 mln recovery in profit compared to last year. Revenue rose to more than $1 bln in 2022 for the first time ever, a significant +27% rise built on a shift to higher-value products
ETS UNDER REVIEW NOW
The Ministry for the Environment has announced the Emissions Trading Scheme (ETS) will be reviewed to assess what changes are required to encourage emitters of CO₂ to reduce their emissions rather than simply offsetting pollution by planting trees. The carbon price hasn't recovered since the failed tender recently, back down to $64.50/NZU today
MOUNTING COST
Cyclone Gabrielle insurance claims have now topped 40,000. More than half the claim value of $890 mln so far comes from Hawke's Bay.
NZGB BOND TENDER SUCCESSFUL
118 bln totaling $1.145 bln were received for the three NZGB tranches on offer today. 60 won something. Yield shifts were lower than month-ago equivalent events, but higher for the 2-month-ago May 2032 bond. More here.
HONEYPOT STRESS
NZ On Air's funding source for media has become such an essential honeypot for program producers that NZ On Air is having to limit the number of applications they will accept from applicants. Applicants have learned how to game the system with multiple requests. You do have to wonder how many of these producers will fare if this funding window is limited or closed. There seems little evidence this money is just seed or startup funding to allow transition to fully commercial demand without the need for taxpayer support. It has built into a core addiction.
GROWING FAST
Canada's population is now approaching 40 mln in a fast 2022 spurt. They added a record +1 mln new people over in 2022, largely boosted by immigrants and the substantial intake of Ukrainian refugees. The expansion is a stunning +2.7% in one year, their fastest ever post WWII.
ANOTHER STATE TO REJECT THE AUSSIE LIBERAL PARTY
In Australia, the State of NSW votes this Saturday, and the latest poll suggest that the ALP is widening its lead over the Liberal incumbents. (The Murdoch media promotion of the Liberals appears to be toxic in Australia.)
FED FALLOUT
The US Fed's +25 bps rate hike earlier today to 5.0%, and its decision to focus on inflation-fighting rather than bank stability, has played out in markets with US equities falling, US bond yield's falling, and the USD retreating. Bitcoin fell sharply. But most of these shifts have been relatively minor, as markets return to the repricing discounts and benchmark interest rates rise. Some are hoping the +25 bps is the last of the Fed increases, but they are a minority. Falling asset valuations will have severe consequences for many investors, but the rebalancing of prices with income is a shift that needs to happen. Just because rich investors feel pain in this adjustment process isn't a reason not to do it. What is pretty special is that the US labour market has held buoyant for so long. It may continue a while yet, although it won't do so forever. The Fed needs it to pull back and will probably keep hiking until it does. (The rest of us are just along for the ride.)
SWAP RATES STAY DOWN
Wholesale swap rates have probably not moved much today, holding their lower levels. However, the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 5.15% and still +40 bps above the current OCR. Markets are pricing in less than a +25 bps rise at the next RBNZ review on Wednesday, April 5, 2023. The Australian 10 year bond yield is now at 3.31% and down a minor -1 bp from this time yesterday. The China 10 year bond rate is little-changed at 2.88%. And the NZ Government 10 year bond rate is now at 4.23% and well above the earlier RBNZ fix at 4.13% which was down -8 bps from yesterday. The UST 10 year yield is down -12 bps today, now at 3.47%, although earlier it was down -16bps.
EQUITIES MOSTLY LOWER
In New York, the S&P500 ended its Wednesday session down a sharp -1.7% after the Powell press conference. In the initial Fed decision release it rose +0.7% but then slumped with a gross move of -2.4%. Tokyo is down -0.6% in morning trade there. Hong Kong is up +0.6% but Shanghai is down -0.1% in their early trade. The ASX is down -0.7% in afternoon trade while the NZX50 is down -0.4% in late trade today.
GOLD RISES
In early Asian trade, gold is up +US$22 from this time yesterday at US$1967/oz. But that is slightly lower than the US$1970/oz it closed at in New York.
NZD RISES
The Kiwi dollar has risen more than +½c from this time yesterday, now at 62.5 USc. Against the Aussie we are firmer, now up nearly +½c to 93.1 AUc. And against the euro we are holding at 57.4 euro cents. That means the TWI-5 is now up to 70.2 and up +30 bps in a day. Some international analysts are essentially saying it is a good time to short the NZD, but so far their expertise isn't working for them.
BITCOIN SHIFTS LOWER
The bitcoin price has fallen -2.4% from this time yesterday, now at US$27,428. Volatility has been very high today at +/-4.1%.
Daily exchange rates
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
41 Comments
Tony Alexander:
banks collapse= house prices will rise
banks don’t collapse= house prices will rise
high inflation= house prices will rise
low inflation= house prices will rise
UFO lands on the beehive= house prices will rise
His job (independent economist) seems pretty straight forward.
Do they have a choice? How stable do we think banks will be if Inflation hits 20%? (And the UK looks like it's well on its way given today's figures)
"February’s rise in CPI came as a shock to City analysts.... the cost of food and non-alcoholic beverages in particular had risen by about 18% in the year to February, its highest rate since August 1977."
Their little +0.25, to get to a real rate around -10% (compared to actual price increases, not stupid CPI), is dwarfed by their QE to deliver a massive bank bailout by guaranteeing depositors.
If inflation was a pig it would be standing right in the trough gorging itself as if there is no tomorrow.
And 15 years ago the average 2-Years Fixed rate was about ~10%. Today it's ~40% lower at ~6%. So any increase has to have come from higher principal repayments. Just imagine how much better off we'd be if the necessary mortgage principal was half what it is today. You know, what it was 15 years ago.
https://www.rnz.co.nz/news/national/486567/auckland-council-votes-to-le…
"Auckland Council has voted to leave Local Government New Zealand (LGNZ).
The votes were tied at 10-all before Mayor Wayne Brown used his casting vote in favour of leaving"
"They weren't expecting that, were they."
https://i.stuff.co.nz/national/politics/local-government/131587192/800-…
The mayor said his band had played a conference, and at a past one in the Bay of Islands “watching 800 members of local boards getting pissed and dancing the night long for no benefit to ratepayers questioned my value of it”
Oh man, I suddenly lost a huge amount of respect for you.
Seriously, by the time his term ends (if he makes it) what exactly do you think he will have achieved on terms of outcomes for Auckland: Better Transport? Better public facilities? More attractive to international tourists? More attractive to international workers (you know the ones that will actually improve productivity).
From what I can see he is just smashing things up with no plan to improve anything. It's pretty easy work if you can get it but it's not going to improve Aucklander's lot one tiny bit.
I think smaller council's benefit more than the bigger ones as they can leverage the bigger council's expertise. I agree that Auckland can probably live without it but a shame for the smaller council's.
The more worrying thing is he appears to be making decisions based on his narrow personal experience of interacting with that thing. This is not what we need from our leaders.
Yep because kicking stuff generally makes it work better and harder.
He's a vandal, like Trump, no vision, no strategy, no idea. Smash, smash, smash.
In 3 or 4 years time when everyone is paying higher rates for shitter services because he didn't make the tough calls or made decisions based on his personal reckons we'll be worse off. It's the same approach C&R took over the years and what got us into the mess we're in.
In early Asian trade, gold is up +US$22 from this time yesterday at US$1967/oz
Watching poor man's gold (silver) closely. In Kiwi pesos, nothing too spectacular in the short time frames, but it's starting to look very compressed. Up 60% in 3 years so doing a job of hedging against inflation.
Over the last 15 years, average weekly rent payments have increased +93%, compared with a +49% increase in average weekly mortgage payments.
We are still in a low interest environment though with inflation way above target, and it has been so for a long time now. We are wrapping mortgage holders in a lot of cotton wool.
National Luxton announce education changes BUT nothing about Health. The sector that they toaly F$%cked up and the sector that this government finished off.
We do not expect people to be put on matresses at A and E overnight.
The country has been totaly shafted by these people
"National Luxton announce education changes"
He hasn't announced any changes, he's just thrown out some soundbites that old rich people like hearing "back to the good old days".
There is no substance from what I can see. I have kids that go to school and there is nothing in the package that appeals to me as a parent. It sounds very much like the UK Tories pitch which has been an absolute disaster in the UK.
I read the herald piece on Luxon and his education reforms.
He kind of lost me when he said NZ had fallen out of the top ten countries in the world for maths & reading.
National needs a complete clean out. Goodfellow has been a disaster for the party and the country.
Don't remind me. I took a punt on this 2-3 weeks ago when I noticed the shareprice was down around 20% YTD. Figured sales shouldn't drop too much as they are a lower cost option. Assumed inflation might take 10% out of their profits which if correct would have meant a 9% pa return based on last years numbers. Big mistake.
Is the banking crisis over? To those at the Fed, no problem, all set. Another 4-letter tool and all good. Yeah, but they thought the same thing last time, too. https://youtu.be/G7NvblwuhrU Link
FED only have 2 plans, if the SHTF, print and pretend its all good (worked last time), or if that fails rebase away from fiat based on gold, but if other super powers have more gold ... not such a good plan. Market knows this and will test... those with gold will test the hardest.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.