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
Heartland Bank cut its fixed rate out to two year by between -15 bps and -25 bps. But it cut its three year fixed rate only marginally (-4 bps). Then Westpac chimed in with rate hikes for fixed terms 18 months to 4 years.
TERM DEPOSIT/SAVINGS RATE CHANGES
None to report today.
UNDER THE WEATHER
Perhaps confirming the GDP retreat, the BNZ-BusinessNZ PMI contracted further in May. But the weakest region was the central NI areas that bore the brunt of the storms. However, Auckland expanded, and nationally new orders rose.
NZGB YIELDS RISE AGAIN
This is a day late, but should note that the latest NZGB tenders offered $400 mln and were met with 100 bids worth almost $1.2 bln. From the equivalent tender two weeks ago, yields rose across all maturities by +25 bps, with the May 2028 bond yielding 4.48% for 5 years, the May 2034 yielding 4.53% for 9 years, and the May 2051 yielding 4.60% for 28 years. It is a remarkably flat long yield curve now.
FAKE TD COMPARISONS
The FMA is warning of a 'phony' interest rates comparison site that is likely harvesting information for fake investments. There is no need to use an intermediary in New Zealand. There are no fees on bank or non-bank term deposits, and comparison sites like ours are free for you to find institutions you can contact directly.
NO NEW GEAR FOR CLEANUP
It might be 2023 Fieldays but more farmers are closing their wallets for new tractor purchases. May 2023 new tractor registrations were -10% lower than a year ago. And for the second rolling twelve month in a row, fewer tractors were sold, confirming the down trend and ending a 24 month period of expanding demand. You might have thought the bad weather would have seen a spike in demand for the extensive cleanup work required, but the opposite is happening. Maybe the resulting losses are large enough that lenders are wary of being exposed to these rural businesses.
NOT YET
Despite getting a new Governor who was thought to be ready to declare victory over deflation, the Bank of Japan under its new leader today kept its key short-term interest rate unchanged at -0.1% and that of 10-year bond yields at around 0% by a unanimous vote. It said it didn't move because of the high risks it sees in international economies.
SWAPS LITTLE-CHANGED
Wholesale swap rates are likely ending the week little-changed 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 unchanged at 5.68% and +18 bps above the 5.50% OCR. The Australian 10 year bond yield is up +1 bps at 4.01%. The China 10 year bond rate is has recovered +4 bps at 2.71%. And the NZ Government 10 year bond rate is at 4.54%, and down -1 bp, but that is still very much higher than the earlier RBNZ fix which is down another -4 bps to 4.45%. The UST 10 year yield is now at 3.74% and down -7 bps from this time yesterday.
EQUITIES IN STRONG BULL RUN
Wall Street ended today's session strongly with the S&P500 up +1.2% and so far this week it is up a strong +2.9%. Tokyo has opened its Friday session down -0.5% but that still means it is up +2.8% for the week. Hong Kong has opened up +0.5% for a weekly gain so far of +2.5%. Shanghai is up +0.3% in its opening Friday session, heading for a +1.1% weekly rise. The ASX200 is up +0.7% in its afternoon session on the way to a +1.7% weekly gain. The NZX50 hasn't got the bull memo, and is only up +0.3% so far today and it will likely end its week also up only +0.3% with more uninspiring trade.
GOLD GAINS
In early Asian trade, gold is at US$1955/oz and up +US$22 from where we were this time yesterday. Earlier, gold closed in New York at US$1958/oz and in London earlier again at US$1952/oz.
NZD MARGINALLY FIRMER
The Kiwi dollar has risen further today, up more than +½c and now at 62.3 USc. Against the Aussie we are little-changed at 90.7 AUc. Against the euro we are also holding at 57 euro cents. That means the TWI-5 is up to a bit less than 70.
BITCOIN FIRMISH
The bitcoin price has recovered a bit today and is now at US$25,481 and up +1.7% from this time yesterday. Volatility has been modest at +/- 1.9%.
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31 Comments
Perhaps confirming the GDP retreat, the BNZ-BusinessNZ PMI contracted further in May
Sounds like the production and consumption metrics are at odds.
For political leaders in NZ and worldwide, productivity has been a hot topic to bring up during elections but just an afterthought when drafting actual policies.
We finally may have reached an inflection point, thanks to loose monetary policies and poor socioeconomic investments/reforms from successive governments (and poor life choices on the part of citizens), where employment is at record levels everywhere, but output is dropping like a stone.
Without wanting to panic the ag sector is really struggling at the moment . For the first time probably since the early nineties there's no margin in anything , add interest rates on top .
Also tractors (and all new gear ) have increased in price by probably 30% or more in the last 3 or so years.
A 180 hp machine (common medium size now ) has gone from 170 thou to probably 250 for example. Basically priced themselves out.
Why do they need new gear for? How did farmers 30 years ago survive without all this fancy high end equipment? Probably contributing to the cost of food, farmers splashing out on $250k Massey Fergussons with all the bells and whistles so they can keep up with the Joneses on their regular protest drive through town.
Despite getting a new Governor who was thought to be ready to declare victory over deflation, the Bank of Japan under its new leader today kept its key short-term interest rate unchanged at -0.1% and that of 10-year bond yields at around 0% by a unanimous vote.
Oh, how many years have commentators been predicting an end to the BoJ iron grip on interest rates? Note that the Japanese have basically avoided inflation - despite their Govt encouraging firms to increase wages to match the price increases caused by overseas imports (like here).
Perhaps when speculating on the price of real estate is ends in disaster, the resultant lack of private borrowing can allow rates to be held low? I hope we too are about to find out.
With debt levels around two and a half times the size of its economy, Japan manages to keep government bond yields ultra low and investor confidence high that it can avoid default. Japan's debt began to swell in the 1990s when its finance and real estate bubble burst to disastrous effect. 90 percent of the debt is held by Japanese investors.
I think we understand that there are many reasons to how Japan manages inflation: price controls; competitive industrial sector and market structure; not throwing credit around like drunken sailors.
Just on the BoJ, I read recently that they have been selling their massive stash of Nikkei225 ETFs.
$30m+ Auckland supermarket sale: Two multimillionaires exit via Colliers
https://www.nzherald.co.nz/business/30m-auckland-supermarket-sale-two-m…
Blockbuster fee
Was comparing the 1 month bonus savings accounts the other day of ANZ, BNZ, and Westpac. I quite like the Westpac one, you can make as many free withdrawals per month as you like, as long as the balance ends up being higher than the previous month at the end of the month. Apart from that, Kiwibank is matching their 4.5% with their no strings call savings as well. ASB you need to leave untouched for 3 months, no to that one for me.
All mortgage, savings and investments interest rates will rise at Co-op on Monday.
They have (had) a very competitive 6 month rate which is likely to rise. Their premium savings rate for what is essentially a call account will probably be market leading for a bank once announced.
Managed retreat due to Climate Change and resource depletion:
https://www.1news.co.nz/2023/06/16/marlborough-sounds-road-repairs-will…
Soon coming to a town near you.
Not a fan of real estate agents giving false hope to FHBs. As if this will go for $350k: https://i.stuff.co.nz/life-style/homed/latest/132327341/rough-as-guts-b…
My guess is double that.
You might have thought the bad weather would have seen a spike in demand for the extensive cleanup work required, but the opposite is happening.
The wheels of bureaucracy turn slowly, the money has to gradually trickle down. Think of how much lobbying has to be done to make sure government fills the right troughs.
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