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
China Construction Bank raised its floating rate today. Kookmin Bank changed fixed rates, as did Unity Money.
TERM DEPOSIT/SAVINGS RATE CHANGES
Kookmin Bank raised TD rates today.
OVERDRAFT RATE INCREASE
BNZ has raised its Business Base overdraft rate by +50 bps to 12.0%.
CONTINUING SLIDE
Residential property values are continuing to slide as the market heads towards winter, according to CoreLogic. They report that the average value of Auckland homes is down more than -$200,000 from the peak.
RECORD HIGH EMPLOYMENT
Statistics New Zealand says the unemployment rate remained the same in the March quarter, while there were +22,000 jobs added in Q1, 2023. The labour force participation rate hit a new high and private sector ordinary hourly wage growth rose 8.2% in the past year.
WHINERAY MOVING ON
NZ Super Fund boss Matt Whineray is to leave the fund after five years in charge and 15 years there and will depart before the end of the year. A search for a replacement will begin shortly.
POORLY PREPARED FOR A CRISIS
New research by the Financial Services Council shows many people have little ready cash if things go wrong.
STRONG PROFITS = STRONG CAPACITY TO HELP CLIENTS IN NEED
The RBNZ released its May Financial Stability Review today. Among the topics covered was bank profitability, and they say strong profits mean NZ banks are well positioned to 'earn their social licence' in tough times. They're well positioned to support customers in tougher times.
MASSIVE SURGE IN NET MIGRATION
BNZ economists say the migration surge is 'great news for moderating wage inflation' but raises questions of how strong population-led growth may become and how this may delay the Reserve Bank easing monetary conditions. Meanwhile, airlines are ramping up routes to China.
LOCAL RETAILING WEAK
Worldline (Paymark) says that with April 2023 marking the first full year since Covid restrictions in New Zealand were dropped, consumer spending figures reveal that the annual growth rate is indeed low and weakened even further towards the end of the month.
RETAIL NZ CEO GREG HARFORD LEAVING
Retail NZ says its chief executive Greg Harford is leaving at the end of July to move to Canberra. Retail NZ is thus seeking a new chief executive, embarking on a nationwide search. Harford has been at Retail NZ for nine years, first as general manager of public affairs.
APRICITY EXPLODES
Apricity Finance, a business finance company based in Australia but also operating in New Zealand, is in liquidation. The managing director owes millions to the company and used funds borrowed from it to pay for property and gambling expenses, the liquidator says.
EYES ON THE FED
All eyes are now on tomorrow morning's US Fed meeting result. A +25 bps rate increase is expected by the market, taking their upper-bound to 5.25%. Equity markets seem fearful. Bond markets don't. The USD is under pressure.
SCAM WARNING
The FMA is warning that Hatch Holdings "may be operating a scam". They are nothing to do with Hatch Invest, and seem to be using a similar name to confuse the unwary.
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SWAP RATES HOLD
Wholesale swap rates are probably little-changed today. 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 5.59% and still 34 bps above the OCR. The Australian 10 year bond yield is now at 3.39% and up +1 bp from this time yesterday. The China 10 year bond rate is unchanged at 2.79%. And the NZ Government 10 year bond rate is now at 4.16%, and that is down -1 bp from this time yesterday, and still well above the earlier RBNZ fix at 4.11% which down -2 bps from yesterday. The UST 10 year yield is now at 3.44% and down -11 bps from this time yesterday.
EQUITIES LOWER
The S&P500 ended down a sharpish -1.2% on Wall Street in its Tuesday session. Tokyo is on holiday today. Hong Kong has opened down a sharpish -1.6%. Shanghain is still on holiday, but will return tomorrow. The ASX200 is down -1.1% in its afternoon trade. The NZX50 is down -1.2% in late trade.
GOLD RISES
In early Asian trade, gold is much higher than this time yesterday, up +US$35/oz at US$2017/oz. Most of these gains happened in the New York session.
NZD STRENGTHENS
The Kiwi dollar has risen steadily today to 62.5 USc with about a +¾c gain from this time yesterday. Against the Aussie we are up too at 93.6 AUc and a +¼c rise. And against the euro we are up also at 56.7 euro cents. That means the TWI-5 is now up at 70.4 with a +60 bps gain.
BITCOIN STEADIES
The bitcoin price has risen today after yesterday's dip, now at US$28,504 and up +1.8% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.8%.
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64 Comments
This kicks off at 4.30:
https://happeningnext.com/event/how-to-save-the-planet-degrowth-vs-gree…
Might be of interest to the odd cornucopian....
I had this in my diary but I found our little cat very poorly at 2pm and we had to put her down at 5pm. Loosing a pet has a massive impact on kids and a family, hopefully on the positive side it teaches that all our time here is short and we must get things done and get on with life. None of us know whats just around the corner health wise. Can you post a summary of the debate?
Cornucopian. Cornucopians hold an anthropocentric view of the environment and reject the ideas that population-growth projections are problematic and that Earth has finite resources and carrying capacity (the number of individuals an environment can support without detrimental impacts). Cornucopian thinkers tend to be libertarians.
I wonder if libertarian Cornucopians trash talk libertarian non-Cornucopians?
Libertarian non-Cornucopian: Look, I just think we need to at least have some basic constraints on freedom to prevent scumbags tearing the environment to pieces for personal profit with no regard for the impact on all of us.
Libertarian Cornucopian: You total, sell-out, Nancy boy.
So tell me, esteemed bunch of economic experts in Australia, why did you get yesterday's Cash Rate rise wrong?
"Economists who were blindsided by the RBA’s decision to raise rates on Tuesday say Philip Lowe had not made it clear he had adopted a more aggressive stance on inflation." (AFR)
Well he has now, and at least no one can say the same about Adrian Orr.
FX desks make most of their money on flow and points between bids/offers and mids. Retail banks provide a lot of easy flow 20-40 points from mids. Going into these things the real traders (maybe 2-5% of the room) have possies on.. (but why have a possie on if you expect no change?) Sure someone on the FX desk may have made smalls on the jump, meanwhile the interest rate trading desk just bent over to the the tune of many 10s mils.... " IS that both hands Dr?"
Slipping under the radar of most people, but the gold price action and charts are fascinating at the moment. The patterns surrounding gold mirror what we have seen during its strong moves in the past.
As for silver, the action has been wild over the past 48 hours. Similarly with the miners.
Guess it's not going to be front and center on the pages of Granny Herald.
Clicked on the RBNZ press conference to catch Adrian Orr explaining why in 2023 'affordability' measures are no longer relevant to the bubble. It's now all about 'sustainability' (whatever that means). I felt a kind of arrogance on display towards the journos as he rabbited on about what that construct of sustainability - suggesting that only smart people like those at the RBNZ and mates in the govt and the private banks can really understand.
Not sure what that means for the hoi polloi. Who will explain that to us? Ashley Church? Or will they dumb it down in a childlike video available through the RBNZ website? One of those videos you watch and come away feeling none the wiser.
I wasted a few minutes reading some of the Financial Stability Report:
Financial Stability Report May 2023 (rbnz.govt.nz)
I didn't get far - there was this roaring sound in my ears from an approaching flock of inevitable, yet unexpected, black swans and I just couldn't push through that.
I guess they have to try.
George Orwell's 1984 comes to mind - newspeak, as does Alice in wonderland - it means what ever you want it to mean
He really does need to get fired
along with managers in Govt depts who hide behind Te Reo so that 97% of the population as no idea who they are working for or speaking on behalf of
George Orwell's 1984 comes to mind - newspeak, as does Alice in wonderland - it means what ever you want it to mean
He really does need to get fired
I thought he had become more humble, but I found this excerpt annoying. To be fair, I didn't have a chance to watch the whole press conference. Noticed Paul Conway wasn't on the lineup today. Must have called in sick. Who could blame him.
I targeted Bernard Hickey, many years ago; he seemed independent enough of thought. That's why I started here.
But no, he never got it. Or at least, his need to peddle copy in sellable quantity, made him never get it.
Others are interesting too: I've emailed Stephen Roach twice - he doesn't read, or engage; just says: I don't agree. No lack of intellect - must be a different cranial wiring.
The students in the audience tonight were interesting for the same reason - it seems to depend on what your discipline is. That, of course, shouldn't be so; academia gets a 'fail' for that.
Greenpeace is part of the same society that ACT is; the total juggernaut includes both. I resent academics and F&B types, who virtue-signal then go back to tapping in to the extraction/production/consumption system. But be very sure; Federated Farmers are WORSE by several orders of magnitude (I've just read their latest epistle - Rowarth just about make me puke). Spin, it definitely is (and academically robust, I suggest she definitely isn't).
They don't so much stifle free speech; they silo, then insist on inter-silo genuflection. That cannot be; some things are just incorrect, and shouldn't be taught; genuflection be damned. Economics, as taught, is more and more looking like it should be canned; so too should be the spending now, by people 'paid' by student debt - that is nothing but stealing from the future.
I fear for real knowledge; real science. It may be that every collapsing civilisation loses its knowledge, with few/remnant exceptions.
What do you hope for though?
I can't ever see there being a great awakening until it's way too late.
I'm more on the side of the selfish gene. Anybody, or community, or nation that does good is probably just going to be pushed out by those who will see abandoned resources to claim. It's how nature has worked for ever. Why would it change now?
The maelstrom of financial crisis is getting closer. It looks relatively clear now that it is a government bonds crisis + asset value plummeting driving margin calls + unsustainable price-wage inflation + profit-price inflation.
The interest rate rises are necessary yet also unbearable. Every bank grows more insolvent as the rates rise (on bond price mismatch), inflated asset prices fall further, workers need higher wages to pay for goods and the immense debt cost.
What is the productivity 'out' to this upcoming recession? The tight labour market is a result of the exit of huge portions of workers from the workforce as they retire out.
What is the productivity 'out' to this upcoming recession? The tight labour market is a result of the exit of huge portions of workers from the workforce as they retire out
The official narrative is that productivity comes from technology - and I agree entirely. However, technology is deflationary and 100% incompatible with exponential growth in the money supply, which seems to be the underpinning of the economy.
Yes technology destroys the ability of those who have borrowed heavily on older technology to ever repay their debt..... before the new technology makes their business model unworkable, but this is well known and taught in business school, and the school of hard knocks... and by reading any history. as powerdown will tell you.... investment is often based on the "current" cost of energy at the time of investment... its a blindness that many seen happy to ignore based on the fact that they receive upfront comisions on their transactions.
Debt to GDP Globally = 400%...the world is bankrupt can we all agree on that?
Future GDP growth doesn't even get close to covering the interest on that debt.
I think that's a hint to what Orr was suggesting today about 'sustainability' - the transition from paying off debt to merely servicing existing debt.
We are now running war time economies (debt to GDP ratios)
If you read Dalio's 'Changing World Order' you realise just how close to the edge we are.
Japan is in a unique position where the country itself has a lot of debt but the population have a lot more cash assets, traditionally invested offshore in high yielding investments.... THIS is why its so important, if interest rates start to rise in Japan , Japanese investors in offshore assets might get sick of the FX risk and might move there assets back to domestic markets 9now offering decnt rates0..... now all those foreign markets will have to roll over that departing MOLLAH.... and the only way to do that is to offer higher coupon rates to those tempted to stay.... Ouch..... here in NZ we dont have a lot of cash assets... we have debt borrowed against houses, what could possibly go wrong if say 30 bil of jap money departs NZ in the next 12 months....
"But you do have to wonder why they would increase debt so much prior to a generational increase in retirees. Very short sighted. Trumped"
2020 risked the world sinking into a depression if we didn't expand debt levels even more - but that only kicked the can down the road another few years. And it means that to pay that debt back central banks are running negative real rates to make the public poorer by stealth (i.e. inflation is acting as a tax that will reduce the quality of our lifestyles to try and pay back/pay down the debt we loaded up with in 2020-2021).
Now what do we do when recession comes? Create more debt? These are the rock/hard place issues at the end of the long debt cycle.
https://thehatchfund.com/storage/2021/03/LT-Debt-Cycle-Overview-1024x55…
Arable land in NZ has gone from from over 11% of total land area in the 1960s to just under 2% in 2021.
One Stats NZ account says the total area of highly productive land that was unavailable for agriculture (because it had a house on it) increased by 54 percent between 2002 and 2019.
STRONG PROFITS = STRONG CAPACITY TO HELP CLIENTS IN NEED
Strong profits should mean those that are underwriting the profits should equitably share in the distribution of said profits, thus higher deposit rates.
According to the Reserve Bank, the new capital requirements mean banks will need to contribute $12 of their shareholders' money for every $100 of lending up from $8 now, with depositors and creditors providing the rest.
Across Tassie:
Surprise, surprise! Both the markets and economists were very surprised when the Reserve Bank raised interest rates yesterday. And that’s the problem right off the bat. Australians have never borrowed more, and interest rates haven’t risen this fast in many decades. So the decisions of the RBA have never mattered as much to Australian families and businesses as they do today, and surprises are most unwelcome.
https://www.smh.com.au/business/the-economy/surprise-we-ve-borrowed-too…
Lending to households in Europe has basically come to a complete stop. Just like '12 and '08. https://youtu.be/6_PJgxA5paA Link
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