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
ANZ has raised some TD rates. Their new 6 month rate is now 5.35%. Their one year rate is unchanged at 5.70%. ASB has raised some too. Their new 6 month rate is 5.40% and their one year rate remains at 5.70%.
ANZ PROFITS REPORTED
ANZ reported its half year results today and profits were down -9%. (They claim a small rise using some other non-formal reporting method that ignores some big mark-to-market valuation hits, including impairment charges.)
LETTING IT SLIDE
In Australia, the RBA's Monetary Policy Review doesn't see inflation returning to its policy range until ... mid-2025. They acknowledge the current 7% is too high but they are in no rush to rock the boat to fix that problem. They seem more worried about weak housing markets than inflation stealing savings. Perhaps they are trying to inflate their household debt away? They seem to have little tolerance for meaningful action on inflation.
TURNING UP
Lending for owner-occupied homes in Australia rose +5.5% to A$16 bln in March from February, logging a positive month-on-month gain for the first time in ten months and defying expectations for a -1% decline. Still, March’s figure was -25% lower than for March a year ago.
CHINA EXPANDS
The China Caixin services PMI came in at the same level as the official services PMI, both measures recording a healthy expansion.
HSBC BREAKUP VOTE IMMINENT
The world's eight largest bank, HSBC, is battling Asian-based activists who want to company split up and the Asian-portion of HSBC set free from the UK dominated historical institutional ownership. The campaign is being run as an ending of colonial domination for what is Hong Kong's largest bank. (It was set up in 1865 in the aftermath of the Second Opium War against China). The campaign is said to have the support of Beijing. In a tone-deaf response, HSBC is having its annual meeting in Birmingham UK tonight, and that is where the break-up vote will happen. (HSBC NZ is a branch of HSBC Hong Kong, and is reportedly under review separately.)
THE DIGITAL YUAN GAINS MOMENTUM
After nine years of fitful trials, the PBoC is finally getting its digital yuan off the ground. Some provincial governments allow trade in the e-yuan. And now public employees are being paid in e-yuan, direct to their phone wallets. Users can also directly transfer funds just by tapping another phone (even if internet signals or coverage is weak or down). Banks or credit card companies not required for daily transactions?
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SWAP RATES DIP
Wholesale swap rates are probably slipped again 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 +2 bps at 5.62% and 37 bps above the OCR. The Australian 10 year bond yield is now at 3.32% and down -2 bps from this time yesterday. The China 10 year bond rate is little-changed at 2.77%. And the NZ Government 10 year bond rate is now at 4.13%, and that is down -5 bps from this time yesterday, but still above the earlier RBNZ fix at 4.10% which up +4 bps from yesterday. See this local yield curve review. The UST 10 year yield is now at 3.38% and up +5 bps from this time yesterday.
EQUITIES MIXED AGAIN
The S&P500 ended down another -0.7% on Wall Street in its Thursday session, hurt by the woes of regional banking stocks. But Apple reported strong earnings. Tokyo is on holiday again today. Hong Kong has opened up +0.7% but Shanghai is down -0.4% at its open. The ASX200 is up a mere +0.1% in its afternoon trade. The NZX50 is down -0.8% in late trade and giving up all of yesterday's end of session rally and a bit more..
GOLD RISES
In early Asian trade, gold is higher again than this time yesterday, up another +US$8/oz at US$2050/oz and inching closer to its all time high.
NZD UP
The Kiwi dollar is much higher today from this time yesterday at 63.1 USc and almost a +¾c gain. Against the Aussie we are also up +½c at 93.9 AUc. And against the euro we are up +¾c at 57.1 euro cents. That means the TWI-5 is up +40 bps at 70.8. That is +140 bps higher than week-ago levels.
BITCOIN A BIT FIRMER
The bitcoin price has risen again today, now at US$29,466 and up another +1.5% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.4%.
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48 Comments
So the RBA is in effect looking through their mandate because they are terrified what will happen to their housing market if they actually do their job.
A new low in central bank behaviour. Let's hope it blows up in their face, and the inflation genie gets well and truly out of control over there.
Itll be interesting who looks to have better managed the return of inflation better-RBA or RBNZ. Inflating excess debt away is a pretty valid strategy. Every central bank acknowledges that in policy settings for a level of inflation above zero. RBA policy will maintain greater growth - and the answer to reducing inflation probably lies more in increasing productivity, not inducing a recession.
Inflating the Debt away only really works if Income increases and Debt stays fixed. Otherwise, all we get is what we have got = more New Debt, on top of the Old Debt to be serviced by Incomes that never keep up (the friction costs of taxation etc).
At some stage we will have run out of road to travel that route, and if it's not now, then when we get there it will be dramatic, to say the least.
This is quite interesting. My feeling is that the business is possibly hurting.
7-Eleven Holdings, the largest convenience and fuel retailer in Australia, has announced that its board has initiated the process of selling its entire business.
According to Reuters, the company operates more than 700 stores across the country and the sale process is in its early stages and could take several months to complete.
https://www.retail-insight-network.com/news/7-eleven-australia-sale-pro…
No physical. I buy ETPMAG on the ASX.
So the second interest rate hiking cycle has arrived, and the dead cat bounce in asset prices is once again proving to be precisely that. And signs of the worst default cycle since the 1991 recession are slowly emerging everywhere.
While house prices might look like they have stabilised, profound downside risks remain – especially as we move into the seasonally weaker winter months. This will be exacerbated by the vast wave of borrowers that will be forced to switch from cheap 2 per cent fixed rate loans to much more expensive 5 per cent to 6 per cent variable rate products. It will come at a time when 15 per cent of borrowers have negative cash flows, which means they don’t have sufficient income to meet their mortgage repayments and essential living expenses.
With risk-free term deposits returning 4 per cent to 5 per cent, bank bonds yielding 6 per cent and investment-grade major bank hybrids furnishing more than 6.7 per cent, the 4 per cent gross yield on residential investment property, 4 per cent to 5 per cent yield on A-grade commercial property, and/or the 6 per cent franked yield on Aussie equities appears unattractive despite what many folks may claim.
The truth about the banking crisis...Hugh Hendry nail it
Pepe Coin (yes the Frog) is up 100% today, 620% in a week and something like a million percent in 3 weeks.
And third highest perp volume in all of crypto (obviously BTC / ETH are leading)
The frenzy is so wild that Ethereum gas transaction fees are at quadruple their price.
Last time I saw something like this was late 2020 (Doge) and 2021 (Shiba Inu)
Most trading is onchain - $600 million volume. I am providing liquidity with a 2,500% yield (my pool has $4M liquidity and $116M daily volume)
Take from that what you will (and yes I bought a week or two ago - holding unlike my Shiba coins I sold way too early)
more like its taking the piss our of crypto hype
To some extent, yes. As Pepe doesn't have any use case and is pure speculation. Nevertheless, given that it reached USD300 mio market cap in 2 weeks, the community is having the last laugh at themselves, the tradfi community, and the skeptics.
Conditions have rapidly deteriorated. Bad steepening has hit both ends. Rate cuts now close.
Both the Fed and ECB hiked rates this week (in successive days), each claiming inflation is still their greatest threat. German and Treasury markets didn't care one bit, altogether pricing unmistakable deflationary dangers that aren't in the future. They're happening right now. As one consequence, central banks are now priced to turn around into cuts by mid-summer. Maybe even late spring.
They [RBA] seem more worried about weak housing markets than inflation stealing savings. Perhaps they are trying to inflate their household debt away? They seem to have little tolerance for meaningful action on inflation.
#TeamTransitory rides again. "Maybe inflation will solve itself if we ignore it!!!"
> Asian-portion of HSBC set free from the UK dominated historical institutional ownership
What historical UK ownership? The Asian domiciled HSBC created the UK domiciled HSBC in the 90s by purchasing the UKs Midland bank as a hedge against the Chinese takeover of Hong Kong. Quite a wise move in retrospect.
The e-yuan is not a cryptocurrency and has no need for a blockchain protocol. That's not to suggest that it can't happen in the future.
Following is a good summary.
https://digichina.stanford.edu/work/lets-start-with-what-chinas-digital…
Definitions get interesting.
It has one electronic ledger, similar to many cryptos.
It's centralized, like some cryptos.
It's different to traditional forms of yuan, which are either in cash, but mostly decentralized plural ledgers across many banks.
All transactions settle to one ledger . Banks reason for being changes overnight.
All transactions can be seen and controlled . And taxed. All.
So not really crypto, but qualitatively different from existing 'money'.
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