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.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ raised its 6, 9 and 12 month TD rates today but +5 and +10 bps. That takes their six month rate to 5.65% and their one year rate to 5.80%. These levels match their main rivals. NZCY Auckland switched their 12 and 18 month rates.
HANGING IN THERE
ANZ's truckometer economic activity monitor to May suggests that Q2-2023 could be delivering flat-to-positive economic growth. That isn't the decline many are expecting. This index shows that light traffic (private car activity) slipped from the prior month but the rolling average is still +2.3% higher than year-ago levels. The heavy traffic index, trucks and commercial activity, was up +1.8% from the prior month and that same annual rolling average is now ahead by +1.4%. Not spectacular but an expansion all the same.
PRESSURE RELIEF
We are now about one quarter away from when fuel costs stop pushing up our CPI data and start to weigh on it sharply. In June 2023, petrol prices are +8.3% higher than a year ago. But if petrol prices stay at these general levels until October, then they will be -7.5% lower. A big IF, I know, but it does give a sense of how this cost could impact CPI before the end of the year. (All assuming the excise tax relief doesn't end, of course.) The actual outcome will depend on the Singapore refined price, the NZD , and the taxes we levy on ourselves. Of course we should also note that we consume less transport fuel the more EVs are sold.
NABBED
The Police say they have raided many Auckland properties seizing all sorts of proceeds of crime as they intercept a major meth supply chain. The amount of this stuff addicts consume never ceases to amaze (me, at least).
IT'S JUST THE START
New and extensive reporting requirements are being imposed on 'large' enterprises soon. They are now legally required to report the role their governance body and senior management play in assessing, managing and overseeing climate risks and opportunities, how they identify, assess and manage climate-related risks as part of the risk management pillar, the strategy pillar requires businesses to consider and disclose how climate change is currently impacting them and how it might do so in the future, and finally, the metrics and targets pillar describes how a business measures and manages its climate-related risks and opportunities, including greenhouse gas emissions. These reports and obligations are initially required of large, listed issuers of quoted equity securities or quoted debt securities (over $60 million in market cap), or registered banks, credit unions and building societies with total assets over $1 bln, or licensed insurers with total assets over $1 bln or annual gross premium revenue over $250 mln, or managers of registered schemes, such as Kiwisaver schemes and investment funds, with greater than $1 bln in total assets under management. Almost certainly these limits will be lowered as the big end of town presses to ensure the costs of doing all this work is imposed on their smaller rivals. The costs will be certain. The impact on the global environment? not so much.
HIGH, BUT TOPPING OUT?
Japanese inflation ran at 3.2% in May, now the 14th straight month it has been over the Bank of Japan's 2% target. But there was no change in May from April, leading to suggestions it might be topping out.
UNINSPIRING
The Australian factory sector is still contracting. But the retreat was less so in June than in the prior two months amid improvements in supply conditions. However, new orders are still retreating which isn't a good sign. And their services sector is no longer expanding, even if it is yet to contract.
SWAPS RISE AGAIN
Wholesale swap rates are again ending today firmer especially at the longer end. 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 5.69% and +19 bps above the 5.50% OCR. The Australian 10 year bond yield is up +6 bps from yesterday at 4.02%. The China 10 year bond rate is unchanged at 2.72% (because they are on holiday). And the NZ Government 10 year bond rate is at 4.61% and up another +4 bps, and that is still higher than the earlier RBNZ fix which was up +7 bps to 4.55%. The UST 10 year yield is now at 3.78% and up +5 bps from yesterday.
EQUITY FALLS BUILDING
Wall Street was was up +0.4% on the S&P500 in Thursday trade. That means so far this week the S&P500 is -0.7% lower so far. Tokyo is down a sharpish -1.3% in early trade today and heading for a weekly loss of -2.7%. Hong Kong is back trading today and down -1.6% and heading for a weekly fall of at least -5.5%, a significant retreat. Shanghai is luck that it is still on holiday but its -2.4% weekly fall is now locked in. The ASX200 is down -1.0% so far today in afternoon trade heading for a -1.8% weekly loss. The NZX50 is little-changed in late trade, heading for a more modest -0.6% fall.
GOLD LOWER AGAIN
In early Asian trade, gold is at US$1912/oz and down another -US$20 from this time yesterday. It ended in New York at US$1914/oz, and earlier in London at US$1920/oz.
NZD ADJUSTS BUT NO NET CHANGE
The Kiwi dollar has retreated today from this time yesterday, down -50 bps and now at 61.6 USc. But against the Aussie we are up +30 bps at 91.7 AUc. Against the euro we are soft at 56.3 euro cents. That means the TWI-5 is little-changed at 69.8.
BITCOIN IN A SOFT HOLD
The bitcoin price has fallen back slightly today and is now at US$29,870 which is down -0.9% from this time yesterday. Volatility has been modest at +/- 1.6%.
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68 Comments
Wet your thumb and test the political wind. Backtracking is hardly novel for this government. Think the Kiwi Saver additional tax that barely lasted 48 hours. The government is haunted by inflation and the prospect of a hard landing recession. If the fuel tax reinstatement is recognised as exacerbating their dilemma then look for the present relief to remain.
Toitu is currently the main one in this field which is a government owned firm (their logo is on my milk and beer in the fridge).
I think you'll find the Big 4 accounting firms chomping away at it shortly since it is administered by the XRB who set the accounting standards in NZ. Given the scope of it I cannot see how it isn't a bigger waste of money than a big 4 audit racke... - sorry - opinion
So much for the bull market in stocks. NZX50 and ASX 200 very average calendar year so far.
NZX50 was one of the standout stock mkt indexes in the 10 years leading up to Covid. Approx 4x.
Flat for last 3 years; Flat to negative for last 5 years if factoring in inflation.
3 central banks hiked rates today (Swiss, Norway, England), why? The same reason the Fed has paused. The level of uncertainty is off the charts, they have no idea which way the economy is going to go. DSGE models are all over the place over the next year. https://buff.ly/46gOhUa Link
More even than the level of inflation, which was unchanged at 8.7%, the composition of inflation was a savage attack on Bank of England's tepid efforts to quench white-hot inflation. Core inflation rose substantially and the biggest increases in inflation where flights, holidays, recreational spending, cars etc. which would not be happening if people where tightening their belt buckles.
It absolutely showed that BoE is not making progress and is multiple rises behind the curve.
The amount of this stuff addicts consume never ceases to amaze (me, at least).
It's very moreish David, it's like grilled Halloumi for the working classes.
We are now about one quarter away from when fuel costs stop pushing up our CPI data and start to weigh on it sharply.
That's true in terms of the underlying commodity but remember government have a 25c tax increase pencilled in for June 30th.
China's photonic quantum computer is 180 million times faster says 'father of quantum'
It took less than a second to solve a puzzle that super computers would take five years to solve
Yeah makes me laugh, the Americans think China is still stealing their IP. If you ask me China went past the USA years ago, every time you see any video coming out of China is just blows you away as to their level of Engineering. The USA is now just focused on trying to hold the Chinese back.
All over the net you only need to use Google. https://en.wikipedia.org/wiki/Electric_vehicle_industry_in_China They are also the leading battery manufacturers. Peoples perceptions about China are so out of date.
Yeah, China is great at pumping out EVs.
They make them and then park them on demolished building sites, but the production stats are what matters.
(84) China is Throwing Away Fields of Electric Cars - Letting them Rot! - YouTube
All these meth hauls show you the scale of the issue in NZ, we could close this down, bring in the SAS and the Army, at the same time legalise lower level drugs control the supply and treat it as a medical issue. Would cut the gangs lunch at the same time, no fancy Harleys if addicts can get drugs from pharmacy.
Hundreds of people die in major natural disasters every week. Dozens of people die in car crashes in this country every month.
What’s disgusting is the obscene over- coverage of this event, because of human obsession with wealth and adventurism. If I was a family member of the deceased I wouldn’t like it one bit.
James Cameron was on Woke Wave (BBC) today and is sick of it too. As soon as he heard the news 4 days ago he called some of his mates who had the data. Apparently there was an implosion sound recorded when they were almost at the bottom during descent, and comms and navigation were lost at same time. As soon as he heard that he knew it was instant curtains. He was pretty annoyed we were then treated to days of MSM reports of detected knocking sounds, ongoing searching and general uncertainty.
"Of course we should also note that we consume less transport fuel the more EVs are sold"
we also consume less transport fuel:
the closer we live to town centres where we need to buy stuff work and do stuff like go to the doctor or dentist (facilitate intensification close to town centres)
The less we drive for short trips (invest in walking and cycling infrastructure)
The more we use public transport for longer trips (invest in public transport and facilitate intensification close to rapid transport corridors)
EVs are not going to save us from transport fuel costs
"New and extensive reporting requirements are being imposed on 'large' enterprises soon."
This is a global trend in most western countries. If we want to do business with Europe, Oz or North America we'll have to get across this or our enterprises will lose business. No point whingeing about it, it's the new reality. When slavery was abolished Portugal/Brazil resisted for years and lost out as others innovated and improved productivity through technological innovation. Lesson to be learnt there.
Japanese inflation ran at 3.2% in May, now the 14th straight month it has been over the Bank of Japan's 2% target. But there was no change in May from April, leading to suggestions it might be topping out.
Hey David, where's your normal line on 'Japan are going to have to get with the programme and ditch their unconventional loose monetary policy'?!?
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