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
Westpac has raised its fixed rates for terms 18 months to four years. That leaves its 1 year rate at 6.99% and pitches its two year rate at 6.79% matching ASB's recent hike. All other banks are lower than that for <80% LVR lending. Update: ANZ has raised all fixed rates to three years, and cut its four and five year fixed rates.
TERM DEPOSIT/SAVINGS RATE CHANGES
The Co-operative Bank tweaked a couple of rate offers up slightly. Unity Money did too but for a broader range of rates. Update: ANZ has raised all its term deposit offers for terms 1 year and longer.
NET WORTH DECLINES BUT SAVINGS STILL POSITIVE
New data from Stats NZ to March 2023 shows households lost more than $42 bln in wealth in the quarter and -$175 bln in the year, with their net worth falling to +$2.2 tln. This was a fifth consecutive quarterly retreat from the peak of more than $2.4 tln in December 2021. Falling housing values are the main reason for the falls. Meanwhile Stats NZ reported that households saved less, as their spending increased at a faster rate than their disposable income. But we are still saving and we have improved our overall savings impulse significantly since 2018. There hasn't been a year since June 2018 when net savings wasn't positive. In the year to Match 2023 it was +$5 bln. That compares to the year to March 2018 when it was a negative -$868 mln.
MANY MORE NEW HOUSES
New dwelling completions in Auckland are running at a record high level. Almost 1500 new homes were completed in the Queen City in that month, taking the annual total to more than 14.700. The slowdown signaled by the recent decline in residential building consents may not show up as a decline in the number of new homes being completed until 2024 or even 2025. For perspective, Auckland built just 7000 new houses in 2017. The official focus on more houses is clearly working and with momentum - and may be behind why median house prices will languish for longer than many assume.
GOING LONG
A new data series from the Reserve Bank shows the recent promotion of lower interest rates for three-year mortgage terms by some of the major banks has swayed significant numbers of customers to 'go longer' with their terms.
HUGE DEMAND FOR SYNDICATED NZGB ISSUE
The Treasury has today announced that an additional NZ$5.0 bln of the nominal 14 April 2033 New Zealand Government Bond has been issued via syndicated tap. The bonds, which carry a coupon of 3.50%, were issued at a spread of 4 basis points over the 15 May 2032 nominal bond, at a yield to maturity of 4.7575%. Total book size, at final price guidance, exceeded NZ$12.2 bln leaving a massive $7.2 bln unsatisfied. They say there will be no further issuance of this April 2033 bond prior to October 2023.
LANGFORD CONFIRMED
Federated Farmers have elected Wayne Langford, a 40-year-old dairy farmer from Golden Bay, as the organisation’s new national President. He was the acting-President. He replaces Andrew Hoggard who stepped down from the role to contest this year's election for the ACT Party.
NEW GUIDELINES TO BATTLE A STINKY PROBLEM
The Environmental Protection Authority has approved changes to the rules around how a neonicotinoid insecticide, Actara, can be used if the brown marmorated stink bug (BMSB) invades the country. MPI applied to increase the use of Actara from four applications per year up to a maximum of eight in a single area, only in response to a serious BMSB incursion. There are strict rules around its current use to control insect pests on kiwifruit, pipfruit, and potatoes.
GAME CHANGER?
And while we are talking about EPA approvals, they say they are now just weeks away from a decision on whether to approve the feed additive 3-NOP to reduce methane emissions in livestock.
FORMAL AML WARNING FOR AUCKLAND REAL ESTATE AGENCY
The Department of Internal Affairs (DIA), has issued a formal anti-money laundering warning to Hills Real Estate. The DIA says Hills failed to meet its obligations relating to the establishment, implementation, and maintenance of an Anti-Money Laundering and Countering Financing of Terrorism Act program. DIA says Hills failed to conduct ongoing customer due diligence, monitoring and reviews to identify grounds for reporting suspicious activity, as well as failure to keep records in accordance with requirements. Hills must "take immediate action to rectify all areas of non-compliance and will continue to be closely monitored."
TWO MEN SENTENCED FOR CORRUPTLY TRYING TO PROFIT FROM CHRISTCHURCH REBUILD
Former Canterbury Earthquake Recovery Authority (CERA) and Ōtākaro Ltd employees Gerard Gallagher and Simon Nikoloff were sentenced at the Christchurch High Court after being found guilty on corrupt use of official information charges brought by the Serious Fraud Office. Gallagher was sentenced to 12 months home detention and 200 hours of community work. Nikoloff was sentenced to seven months home detention. The two had access to official information including how much landowners were willing to sell for, what investors were willing to pay and what was planned for the city. The SFO says they used this information to secure a sale and purchase agreement for their own company and then try and set up private business deals through which they would personally profit by hundreds of thousands of dollars.
SQUIRREL MONEY PROFIT RISES
Peer-to-peer lender Squirrel Money, part of the Squirrel Group, has posted a rise in March-year profit after tax to $880,305 from $209,542. Revenue topped $3 million, with expenses at $1.9 million and net finance costs of $37,209.
WORKFORCE GROWS FAST AGAIN
The expansion of the working age population has moved back into high gear in the June quarter, according to Stats NZ data. The June quarter growth was the most for that quarter since 2016. The full year rise was almost +90,000 and back to the upper end of the pre-pandemic range.
ANOTHER WHOPPER
Australia recorded another large trade surplus for both goods and services in May, +AU$10.4 bln and a level that is being normalised for them. Over the past 12 months that is now just under +AU$150 bln. That's equivalent to 5.9% of their AU$2.5 tln nominal GDP.
SWAPS RISE AGAIN
Wholesale swap rates are probably up today again but mostly at longer durations. 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 now +18 bps above the 5.50% OCR. The Australian 10 year bond yield is up +11 bps from this time yesterday at 4.11% after the RBA decision. The China 10 year bond rate is unchanged at 2.70%. And the NZ Government 10 year bond rate is now up +6 bps at 4.78%, and still higher than the earlier RBNZ fix which also rose +5 bps to 4.72%. The UST 10 year yield is now at 3.97% and up +12 bps from this time yesterday.
EQUITIES MOSTLY LOWER, SOME SHARPLY LOWER
Wall Street was back open after their public holiday and the S&P500 ended little-0changed down just -0.2%. The next key market-moving data is Saturday's non-farm payroll report. Tokyo has opened its Thursday trade down another -1.2%. Hong Kong is hurting, down an even sharper -2.2% in early trade, but Shanghai is down just -0.2%. The ASX200 is down -1.1% in early afternoon trade. But the NZX50 is up +0.1% in late trade.
GOLD LOWER
In early Asian trade, gold is slightly lower at US$1919/oz and down -US$4 from yesterday. Earlier it closed in New York at US$1915/oz and earlier still at US$1925/oz in London.
NZD HOLDS
The Kiwi dollar is little-changed from yesterday, now at just under 61.9 USc. Against the Aussie we are up very slightly at 92.8 AUc. Against the euro we are still at 57 euro cents. That means the TWI-5 is little-changed at 70.5 and still a two month high.
BITCOIN SLIPS AGAIN
The bitcoin price has again slipped marginally today and is now at US$30,498 which is down another -1.2% from where we were this time yesterday. Volatility has remained modest at just on +/- 1.1%.
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57 Comments
It will take more disaster to get Fed pivot because the FOMC saying it won't budge even for a recession. Therefore take longer for Fed to realize the recession isn't "mild" before cutting. Thus, ST and MT yields are rising as the FOMC intends pulling up LT rates as they go. Link
Jay Powell doesn't want to consider oil prices. Fine. Core US PPI is a far better gauge of the economy and "inflation" pressures than core PCE Deflator which NEVER tells you anything useful about the economy right now or in the coming months. https://buff.ly/438qweh Link
Yep. Very interesting. Lots of people think of course it is not their fault, and that the government should somehow intervene and lower interest rates or otherwise save them from the decisions that they have made, and lots of people feel sorry for them.
However, if anyone had invested a whole lot of money in shares in some company an industry 'expert' had recommended, and subsequently lost the lot when the company went bust or whatever.....would anyone care. No, they would get laughed at and told to not believe what 'experts' write in the media. Why is it different with property? I know it is going to be very tough on some people, some people are going to go broke, and some people are going to lose their homes. It is no one's fault but their own. Bad decisions have consequences, and people make bad decisions all of the time.There are going to be devasting consequences for many as a result of being sucked into this. It's very sad, but it seems that is what is going to happen. But hey, we saved 80,000 lives remember? We are so lucky.
Yep. Very interesting. Lots of people think of course it is not their fault, and that the government should somehow intervene and lower interest rates or otherwise save them from the decisions that they have made, and lots of people feel sorry for them.
I think we're still at the anxiety stage with quite a bit of the ol' denial starting to emerge. But we're not at the panic stage just yet. And when the anger kicks in, you will know all about it.
So glad I listened to what Max Keiser was saying 3 years ago, that we would be in for stagflation. Locked 2,4m in for 5 years at 2.92%. I was blocked from here for sharing his videos. Our bank manager was calling me a madman. But still support this site as it gives me a good inside. Thanks interest.co.nz
It's different with property because people need somewhere to live. And if you're a FHB how long were you meant to wait? Our FHB son simply wanted some dignity and control over where and how he and his partner lived. I've got no sympathy for investors. They took a risk, which many wrongly assumed was a one way bet.
"Our FHB son simply wanted some dignity"
Unfortunately, borrowing more than you can afford to pay back to pay for an overpriced house is no way to get dignity.
The game was rigged, your son got sucked in. Instead of trying to beat a rigged system you and he should have focussed on fixing the system or supporting those who want to.
Top tip for you and your son, don't vote National and Act, they want to bring back the rigged game rules.
Well don't complain, if you don't genuinely want to understand the root of of the problem. Persuing exponential growth in a finite space, with depleting resources now destabilising what was seen as BAU pre 2008, was always going to end badly for increasing numbers of people. Labour is woefully lacking in how to halt the decline, but then they do have constant whining from influential media and lobbyists to ensure no deviation from the journey to the cliff. Whereas Nats and ACT are like some tunnel visioned death cult with the IQ of yeast! Collapsing quality of life for the majority is official policy.
Was mindlessly scrolling on TikTok last night. Some Kiwi mortgage advisor popped up drawing out a scenario in which a mortgage holder has approached him saying they are rolling off 2.95% to 6.75% (or something like that, can't remember exact numbers).
Based on the mortgage $ value of $500k, he calculated it was going to be an extra $1500 per month in repayments.
What's most interesting is this video went viral, relative to his other content, with numerous comments chiming in saying "I'm in the same situation and I'm stuffed" (or words to that effect).
Nasty.
"Prime office buildings in southern China’s tech hub Shenzhen are losing luster for investors as the vacancy rate rose to a record 24.5% amid a weak business environment."
https://www.caixinglobal.com/2023-07-06/more-shenzhen-office-space-goes…
Good read on USD dominance and de-dollarization.
The main message to take away, though, is that it is not possible to upend the world’s monetary system and pivotal currency without upending the entire world trading system too. If the US were to change and relinquish its role as the principal absorber of the surpluses of other countries, including especially the PRC, then everything else has to change too. US deficits would contract as US savings rose, and Chinese and other surplus countries’ surpluses would have to contract or disappear because that is the other side of the global balance of payments. This would impose huge costs on and necessitate major policy reversals in the PRC and other countries with surpluses that would have unexpected and unpredictable consequences, including for political stability and governance systems.
https://www.geostrategy.org.uk/research/de-dollarisation-would-upend-th…
The Treasury has today announced that an additional NZ$5.0 bln of the nominal 14 April 2033 New Zealand Government Bond has been issued via syndicated tap. The bonds, which carry a coupon of 3.50%, were issued at a spread of 4 basis points over the 15 May 2032 nominal bond, at a yield to maturity of 4.7575%. Total book size, at final price guidance, exceeded NZ$12.2 bln leaving a massive $7.2 bln unsatisfied. They say there will be no further issuance of this April 2033 bond prior to October 2023.
Big discount settlement price with respect to par redemption value and a significant RP carry coupon?
Not so good for domestic non-bank investors - the annual pro-rata capital price accrual from issuance price to redemption par price is taxed at one's highest marginal income tax bracket.
The expansion of the working age population has moved back into high gear in the June quarter, according to Stats NZ data. The June quarter growth was the most for that quarter since 2016. The full year rise was almost +90,000 and back to the upper end of the pre-pandemic range.
That's a lot of houses that need to be built, 35k houses (assuming 2.6 people per household.) Not to mention water, roads, schools, hospitals, railways, public transport, parks etc.
Let's pray to the neoliberal gods that at least a few of those 90k workers have the skills to build all of that and work at our schools and hospitals.
The last time I checked, we weren't attracting enough nurses to fill the existing gaps, let alone meet the additional demand brought to our shores by all these migrants.
I remember when some banks were stress testing people in the 5's when the interest rates were dropped. IMO this was just stupid. I was always told that you should budget for interest rates in the 8's. I also remember when it was big news when interest rates went under 10% in the 90's, and that was seen as really low. All we have done is make houses really expensive and unaffordable when interest rates are at more sustainable levels. Too much greed imo has caused this.
Over the ditch, as well as the poor and working classes, migrant communities themselves are now being destroyed by the out-of-control immigration.
David Llewellyn-Smith refers to the Guardian as The 'Woketardian'. Bit raw but I get the point.
In short, not even The Woketardian can disguise its own useful idiocy of the property lobby any longer.
Is this enough to pivot the fake left back to reality? I doubt it. But there may be hope in the above story.
As well as the poor and working classes, migrant communities themselves are now being destroyed by out-of-control immigration.
Immigration is itself now the “hate”.
https://www.macrobusiness.com.au/2023/07/fake-left-panics-as-immigratio…
But it's bigger than the property lobby, it's the whole growth cult that's destroying quality of life. Mass immigration is the tool to keep the populace from noticing the bigger picture, as they sprint ever faster on the debt slavery hamster wheel. We got a chance to catch breath briefly during COVID, but our political overlords are working tirelessly to ensure no deviation from crushing NZ under the sheer weight of humanity. The political class have no ideas, no honesty and no understanding of hard physical limits. As awful as labour are, a Luxon government is a horrendous prospect!
Lets hope the 3-NOP decision is positive for the EPA followed by a mass testing on farms supported by Fed Farms and full subsidised rollout. Lowering methane emissions by around 30% a year from almost every cow in the country while having no effect or improving outputs would be absolutely massive. Would save the country billions in climate change emissions.
But we are still saving and we have improved our overall savings impulse significantly since 2018.
The problem with these sort of stats on 2023 is the boomer affect. Older people who are freehold are a decent demographic and their savings rates likely obfuscate the volume of people hand to mouth in the younger/poorer demos.
Exactly. The polarization into winners and losers makes averages of little value. So NZ is spending big on overseas travel and cars, as motels fill up as emergency accommodation and food banks struggle to keep up.
Massive rebalancing underway with years to run - just the start.
The rebalancing I foresee will certainly look like things are getting worse - wage/price spiral driven inflation and slumping asset prices, large numbers of people in massive need draining every drop from govts, rising crime rates. The eventual break I expect is more of current trends, gone hyperbolic - a collapse of remaining trust in fiat, thereby rendering govts powerless (printer not go brrr) except to chase rioters around a bit. A proper depression for most of us, scraping by on home growns, with a few genius robot nerds driving armoured cars between strongpoints.
"Trade officials across Asia were assessing the fallout from the latest escalation in the US-China technology battle after Beijing said it would impose curbs on exports of metals used in chipmaking." https://ft.com/content/2fa865 Link
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