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
None today so far.
TERM DEPOSIT/SAVINGS RATE CHANGES
The Cooperative Bank has raised term deposit rates. Their new 6 month rate is now 5.30% and their new 1 year rate is now 5.65%. Update: ANZ has raised some rates too. Their new 6 month rate is now 5.35%. Their one year rate is unchanged at 5.70%.
DOWN BY A QUARTER FROM MARCH LAST YEAR
There has been a big drop in the number of building consents issued in March, suggesting the construction industry is headed for a sharp downturn.
PHASE ONE FAST TRACK
In Auckland, 'fast-track' approval has been given to consent for housing on the old Unitec site. This is phase one to build build 50 residential units, applied for by the Ngāti Whātua Rōpū. Readers may recall this project got a lot of airtime when Phil Twyford was Minister of Housing and pushing KiwiBuild.
NON-RES CONSENTS STILL HIGH
Meanwhile, non-residential consents are still coming through at elevated levels. However some of this is just cost inflation. Infometrics says: "Total non-residential consent values increased strongly again in March 2023, though high building cost inflation means nominal value growth continues to obscure the underlying volume of consented non-residential construction work."
DEMAND EXCEEDED SUPPLY BY MORE THAN 3x
Today's Government bond tender offered $400 mln in three maturities and $1.343 bln was offered in 111 bids. The $200 mln May 2026 tranche was won by just 5 bidders who won at an average yield of 4.32%. The May 2032 $150 mln was won at an average yield of 4.13% by 24 bidders. The May 2041 $50 mln tranche was won by 13 bidders at a yield of 4.50%.
COMMODITY PRICES SAG AGAIN
Commodity prices in world prices fell in April from March at a -20% annualised rate and are now -17% lower than year ago levels, so the recent fall is running a bit higher than the year-on-year rate. In NZD terms the fall is less. Dairy and forestry prices led these retreats in the ANZ commodity price index.
BNZ SHINES
BNZ has reported its interim profit is up +14% as net interest income and margin surge. Their half-year profit topped $800 mln, with their CEO saying the bank is well placed to support customers who are finding things tough.
MORE WIND POWER
51% State-owned and partially listed Mercury Energy today opened its Turitea Wind Farm in Manawatū, one that alone adds +2% additional renewable energy to the country’s National Grid. It is the country's largest wind farm and will produce on average 840GWh each year, enough to power 120,000 households (two Dunedins?) or 375,000 EVs.
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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 up +1 bp at 5.60% and 35 bps above the OCR. The Australian 10 year bond yield is now at 3.34% and down -5 bps from this time yesterday. The China 10 year bond rate is little-changed at 2.78%. And the NZ Government 10 year bond rate is now at 4.18%, and that is up +2 bps from this time yesterday, and still well above the earlier RBNZ fix at 4.06% which down -5 bps from yesterday. See this local yield curve review. The UST 10 year yield is now at 3.33% and down another -11 bps from this time yesterday. US Fed Powell's uncertainty in his press conference about whether there would be a US recession drove nervousness, even though the Fed's Statement brought little reaction..
EQUITIES MIXED
The S&P500 ended down a sharpish -0.7% on Wall Street in its Wednesday session after those Powell comments. Tokyo is on holiday again today. Hong Kong has opened up +1.4% after yesterday's sharpish fall. Shanghai is up +0.7% at its open after its three day holiday. The ASX200 is down -0.2% in its afternoon trade, although those Powell comments had it down further earlier. The NZX50 is down -0.1% in late trade.
GOLD RISES FURTHER
In early Asian trade, gold is higher again than this time yesterday, up another +US$25/oz at US$2042/oz. Most of these gains happened in the New York session after the London market closed.
NZD HOLDS
The Kiwi dollar is little-changed today from this time yesterday at 62.4 USc. Against the Aussie we are also little-changed at 93.4 AUc and holding yesterday's rise. And against the euro we are lower at 56.3 euro cents. That means the TWI-5 is still at 70.4.
BITCOIN FIRM
The bitcoin price has risen again today, now at US$29,038 and up another +1.9% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.0%.
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42 Comments
Another bank failure - PacWest..tic tock
PacWest weighs its options, sending bank shares in a tailspin
What shocked me is that the first three banks to fail - First Republic, SVB, and Signature - represent the second, third, and fourth largest bank failures in US financial history respectively. Washington Mutual still holds the #1 spot since it's collapse in 2008, but you have to go back to 1984 to find 5th place:
https://en.wikipedia.org/wiki/List_of_largest_bank_failures_in_the_United_States
Lehman Brothers had something like 600 billion AUM when it went down, but I guess it doesn't make the list because it successfully filed for bankruptcy and therefore doesn't count as a "bank failure"? I'm not sure. Bear Stearns was an acquisition.
PacWest will be an interesting one to watch.
It wasn't New Zealand, But that aside. Would the creditors in '84, who lost $40 billion be more or less disadvantage in terms of their Purchasing Power (what CPI changes, "Inflation" if you like, is designed to monitor) than if they'd lost $104 billion today (well 2021 actually)?
But measure it against the change in US Debt over that time instead, 33/1, and it's an even smaller change
Consistent with previous periods in history of shrinking money supply. Resulting in banking panics (and >10% unemployment and often depressions).
You should show them this chart and see if it gets their interest:
https://pbs.twimg.com/media/Fulx9tqWcAYfX_2?format=jpg&name=large
Part of the plan. JP Morgan ends up being the last man standing.
Under the terms of the deal, the FDIC will backstop 80 percent of any losses incurred on First Republic’s residential mortgage and commercial loans for the next five to seven years. JPMorgan will also not assume First Republic’s corporate debt and will receive $50 billion in financing from the FDIC to finalize the transaction.
Why JPMorgan's deal for a failing bank has Elizabeth Warren upset - POLITICO
Grant Dalton's old McMansion back on the market. Think it's fair to say that taxpayers paid for all this largesse. NZ's most successful welfare recipient.
"We" have nothing to show for it. RNZYS have a shiny trophy locked up in a case in their headquarters that only the members and guests can see. We won't even have the privilege of watching the next event live off our shores. Likely, we will have to pay to watch it in the middle of the night.
'fast track' for a mere 50 units?
I would love to now how much time and money has been spent spinning the wheels of bureaucracy for that consent, and pro-rata it across 50 units. Maybe $100K per unit?
I thought unitec was supposed to be more like 5000 units, and is there not supposed to be light rail running past the site by now?
Yes it always amazes me when you hear these announcements, then they go on to say 50 or 8 or36 etc houses and you are left thinking so what. These numbers are so small and insignificant. In Oz when these projects happen the houses are in the hundreds and thousands.
"Rurawhe also said he could not release the communication he received from Whaitiri. He said it would break confidentiality MPs expected the Speaker to uphold, but he added nothing was stopping Whaitiri from releasing the messages."
So, a significant constitutional issue (imagine if there was a 1 vote majority) & the Speaker chooses to hide behind his "relationship" with our elected representatives.
Boot these hooligans out.
About a 1/4 way down is an extract of the relevant law.
https://www.newshub.co.nz/home/politics/2023/05/speaker-adrian-rurawhe-…
Australian online bottle shop BoozeBud has collapsed. Never heard of it. But wonder how necessary an online bottlo is unless you're a heavy drinker and the savings are substantial compared to bricks and mortar. Notice AB InBev was previously an owner.
https://www.news.com.au/finance/business/retail/australian-company-booz…
Re: government stock tender:
The May 2041 $50 mln tranche was won by 13 bidders at a yield of 4.50%.
The interpolated IR semi-annual equivalent mid swap yield is priced down minus 24.03 bps at 4.255%. Dealers conserving balance sheet capacity unless a premium is paid - a deflationary signal.
More info on that South Auckland development where the developer is subsidising the mortgage rates.
Mortgage will still be stress tested in the normal manner at circa 8.5%, so good luck to the developers in shifting the homes…
Chief Spruiker HW2 and his cling-ons very quiet recently (no more talky talky), no green shoots to Spruik, just shite -2.9% mom... sell in May and go away! Tell us what investment props you buying this month....... explain the yield situation, tax situation and the required cap gain to break even after tax.... at -2.9% per month property halves every how often?
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