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/LOAN RATE CHANGES
BNZ raise their 4 and 5 year fixed rates. Resimac changed most fixed rates, some up, some down.
TERM DEPOSIT/SAVINGS RATE CHANGES
ASB raised many key rates, some to market-leading levels. Details here.
A RANGE OF VIEWS
Housing sales volumes dipped in September suggesting a slow start to the spring selling season, according to the REINZ data. The interpretations of this data among analysts are mixed about whether this shows an 'upturn', or has 'found a base', or is still 'bouncing along the bottom'. Long term volume charts are here. Long term median price charts are here (unadjusted for inflation).
LOWER BUT STILL SKY-HIGH
Food price inflation eased again in September to its lowest level in over a year, down to 8.0% from a year ago. It was running at 8.9% in August. A year ago it ran at 8.3% pa. The Consumers Price Index will be released on Tuesday, October 17 15, and will include this food data for the past three months.
RISING
The NZ Banking Association figures show while many (43%) mortgage holders remain ahead with repayments, 1.4% are behind, and over 9000 bank customers applied for hardship status.
COSTLY TO ALL CONCERNED
Suncorp subsidiary Vero has been penalised by the FMA over a discount failure. They have copped a $3.9 mln fine for not applying multi-policy discounts to customers. Vero self reported the issue when it came to light in in December 2019, at which time its remediation program had been underway for some months. But FMA inquiries subsequently found other affected customers.
MORE PENALTIES
Kiwibank has been ordered to pay a $812,500 civil penalty at the High Court in Wellington for making false and/or misleading representations to some customers. Kiwibank admitted breaching the Fair Dealing provisions of the Financial Markets Conduct Act 2013 (FMC Act) earlier this year. The FMA and Kiwibank agreed the penalty reflected the seriousness of the breaches. The contraventions occurred over a long period of time and affected a large number and proportion of customers.
FINAL POLICY RELEASES
The final election policy releases seem to be done. Our policy comparison tool is getting well used. Remember advance voting has been open all this week, and official indications are that advance voting has been quite slow. All polling places will be open on Saturday, October 14 until 7pm. 50% of votes are expected to be counted by 10pm, 95% counted by 11:30pm that same day.
RENTERS GULP
The September rent indexes from Stats NZ shows overall rents for those taking out new tenancies are now +7.2% higher than a year ago. In Auckland they are +9.4% higher on that basis and the highest since this Stats NZ series began in 2006. If there is relief it is that they didn't increase much from August to September. Including those already in tenancies, the increase is +4.2% pa. It is less than new tenancies, yes, but it is the sharpest increase since 2008.
BIG BIKKIES
Kiwibank's $100 mln 5 year bond issue closed with huge over-subscriptions. It is taking $650 mln all up. It will pay 6.254% being 110 bps over the swap rate. They were lucky the five year swap rate has fallen just before this price was fixed. All the same, that is more than +100 bps than they are paying term deposit savers for a 5 year TD - 5.20%. These bonds are unlisted.
NZGBs FLOODED WITH DEMAND
There was also a NZ Government bond tender today, in three tranches for $500 mln. That too was heavily supported with 128 bids totalling $1.3 bln. But only 23 bids won anything. The May 2030 $200 mln went for a yield of 5.31%, up from 5.00% four weeks ago. The May 2032 $225 mln went for a yield of 5.34%, up from 5.01% four weeks ago. And the May 2051 $75 mln went for a yield of 5.53%, up from 5.46% two weeks ago. You do wonder what the other 105 bid levels were looking for, but perhaps the Kiwibank bond gives a clue.
SURVIVORS IN A MELTDOWN
In Australia, prudential regulator APRA said no bank breached capital and liquidity buffers in stress tests that assumed house prices fell by a third and unemployment spiked to 10%.
SWAPS HOLD
Wholesale swap rates are probably little-changed again today. But the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 5.68% and still +18 bps above the OCR. The Australian 10 year bond yield is down -6 bps from this time yesterday to 4.37%. The China 10 year bond rate is on an unusual move higher, up +3 bps to 2.76% and its highest since early May. The NZ Government 10 year bond rate is down -6 bps to 5.43%, and still above the earlier RBNZ fixing of 5.35% which was a sharp -9 bps lower today. The UST 10 year yield is down -7 bps at 4.57%. The UST 2yr is up +2 bps at 4.99% as the curve inversion widens.
EQUITIES FIRM
The NZX50 is little-changed in late trade today. The ASX200 is up a modest +0.2% in afternoon trade. Tokyo has opened up a strong +1.3% however. Hong Kong has opened an even stronger +1.7%. But Shanghai is up 'only' +0.5% at their open. On Wall Street earlier today, the S&P500 ended up +0.4% in their Wednesday session.
GOLD RISES
In early Asian trade, gold is now at US$1878/oz and up +US$17 today. It closed earlier in New York at US$1874/oz and earlier still in London at US$1871/oz.
NZD LOWER
The Kiwi dollar has fallen about -¼c today to be now at 60.2 USc. Against the Aussie we have slipped slightly to 93.8 AUc and against the euro we are down -¼c to 56.7 euro cents. That means the TWI-5 is down -30 bps at just over 70.1.
BITCOIN SOFTER AGAIN
The bitcoin price is a lot softer today, now at US$26,541 and down -3.3% from this time yesterday. Volatility over the past 24 hours has been modest however at just under +/- 1.7%.
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41 Comments
Onya Wolfie. Chalk it up as an 'up month.'
Interest dot co still miles ahead in economic media but be wary of any posts related to property price indexes or movements. It's like an overcrowded water cooler debate dropped into a Mad Max scenario.
Maccy B takes on the NZ property ponzi and the conclusion would be funny if it weren't dripping with reality mayonaise:
Clearly, the Reserve Bank’s aggressive interest rate hikes are working to hammer households into oblivion.
https://www.macrobusiness.com.au/2023/10/reserve-bank-hammers-household…
“Costly to all concerned” and “survivors in a meltdown.” Not specific to those captions but it may as well be - is it correct that STUFF news etc acquired government bailouts of firstly $7mill and likely another dose of the same so that it could remain “going concern.” As reported Newstalk ZB website today. If so that is incredulous to say the least but guess it would though, explain the extreme woke head nodding acclamations that have ceaselessly been dribbled out in admiration of this government.
I guess as long as they state that they're reliant on public funding and their editorial reflects that then there is no issue. With me anyway.
I have held their editorial to account before. Some of their content related to their content was retracted, but some wasn't. My general impression was that their attitude was quite haughty in terms of what they think they can get away with.
Ive been banned twice, for a week each time for comments challenging their "opinions". For 2021/22 they didn't publish any comments misaligned with their editorial policies, its recently relaxed slightly as they read the crayon scribbles on the political wall.
There's been a recent rumor that an Iwi org is going to invest / buy them.
Most of my posts there get filtered out as 'language' - not because of the language, but because I question the narrative the author wants to push.
If there's an error in the piece, however, I have found the author's generally receptive to a polite email. Their moderators not so much.
It's telling a lot of their 'articles' are opinion pieces with comments closed.
$55m for your troubles: the problem with journalism | Stuff.co.nz
Tone deaf.
The Backstory: Why government money doesn't corrupt our journalism | Stuff.co.nz
...btw I also have a bridge for sale ...
https://www.newsroom.co.nz/national-mp-in-key-seat-didnt-disclose-big-shareholding?amp=1
We're giving the American's a run for their money on election drama this year.
Looks like it's been picked up now. Probably should of just declared it once all the Michael Wood stuff came out to avoid this exact situation. Luxon will be pulling his hair out.
What is it with Fletcher Building?
NZX put a trading halt on them about lunch-time. A giant low-cost house building firm in Australia is suing them for something like $1.5 billion dollars because of failure in the water-pipes Fletchers manufactured and supplied. Apparently, it will cost about $60,000 dollars per house to replace. I think Fletchers is countering that it was an installation mistake rather than the quality of the pipes.
I remember this problem popping up in the news some time ago but have heard nothing since until today.
Anybody wanting to buy Fletchers shares for 10 cents each?
What is wrong with Fletcher's management.......years ago I heard that Fletcher's management was largely made up of ex-military types. Would this still be true?
On the night of the blow out over SKY whatever prompting Norris to resign happened to be at Novatel Auckland where a large party from Fletchers’ building division were entertaining themselves, running up a tab, likely after some internal conference. Boorish, loud, inconsiderate dominating the bar space and more. Just like Alfred E. Neumann in other words “what me worry.”
From the AFR
"UBS analyst Marcus Curley put the company Under Review on Wednesday “pending further information from FBU over the next few days”.
“The downside range from Iplex pipe repair costs has widened from UBS-estimate of $150 million (15,000 WA houses at $10,000/house) to $1.8 billion (30,000 Australian houses at A$60,000/house),” he said."
In the absence of articles on the sharemarket on this website or in NZ, for some reason, at least we can go to good ole Maccy B across the ditch for some coverage:
https://www.macrobusiness.com.au/2023/10/is-a-1987-stock-crash-coming/
The mighty Chris Joye been digging around in the RBA data that the media ignores:
Incredible stats from RBA:
Borrowers with larger loans relative to their income (‘higher LTI’) or relative to the value of their property (‘high LVR’) are more likely to face financial stress. Since interest rates increased in May 2022, higher LTI loans and high-LVR loans tend to have seen larger increases to their scheduled minimum payments compared with other variable-rate owner-occupier loans.
As a result, these borrowers are much more likely to struggle to meet their essential spending needs. About 25–50 per cent of higher LTI borrowers and about 15–32 per cent of high-LVR borrowers are estimated to have an income level not sufficient to meet their housing costs and necessary expenses, compared with 5–13 per cent for all variable-rate owner-occupier borrowers, depending on assumptions about essential expenses.
I think I probably have a few mates in those high-stress buckets. And we are just heading into barbecue season. The tone may be a bit different this year.
I just have this feeling there is plenty of monetary-policy-created sloshing wealth around to keep inflation and rates up for years, which is pretty ominous in my circles.
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