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). It's a skinny edition today.
MORTGAGE/LOAN RATE CHANGES
None so far today.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either.
LISTINGS SURGE
A surge in new listings is a key feature of the current housing market. High stock levels in the market at the start of this year mean buyers have plenty to choose from over summer.
INSURANCE ISN'T COVERING IT
Fletcher Building said its NZICC project (Auckland Convention Center) rebuild "remains on track" for completion in late calendar 2024. They are still waiting on an insurance payout of "more than $100 mln". But they now suspect more will not be covered so they are adding a new provision of $165 mln to complete the work. They also said they have raised a further provision of $15 mln for the Wellington Airport carpark issues.
EDGING UP
Overall commodity prices lifted in January, but only because of higher butter prices and a small retreat in the NZD.
NZX50 CHANGES
The food sector is this week's biggest mover with a +4.8% increase. This comes as A2 milk (ATM) gets a boost from 11th into 10th spot and finally back into the NZX Top 10. Overall, the NZX50 capitalisation rose +0.5% last week with the Tech Sector up +4.4%. But both the Consumer Goods sector, and Industrial sectors fell -3.2%. The others were little-changed. You can track the sector changes here. You can see the whole 50 companies here with links to their profiles. Profiles are updated with the latest annual account information, and there are a few of those coming through now for calendar year end balance dates.
NON-MARKET FUNDING RISES & GETS A [SLIGHTLY] LONGER DURATION
Total bank funding sources reached a new record $572.6 bln in December, but that is only up a minor +1.5% from a year ago. "Non-market funding" which is what they borrow from depositors reached $422.3 bln and that was up 3.3% in a year (+$13.8 bln). Funds committed by depositors for 1 year or more reached 16.2%, its highest level since May 2019. The rest, including current accounts and at-call deposits, continue to dominate. (Remember, 'depositors' are more than just households. In this case they include companies and government.)
SWAP RATES RISE
Wholesale swap rates will probably be noticeably higher today. So far the 2yr swap is up +9 bps. (H/T IS.) However, the key reaction will come at the close. Our chart below records the final positions. The 90 day bank bill rate is unchanged at 5.67%. The Australian 10 year bond yield is holding at 4.10%. The China 10 year bond rate is down -2 bps at 2.42% and a new all-time low. And the NZ Government 10 year bond rate is up a major +13 bps at 4.75% (back to where it was a week ago), while the earlier RBNZ fixing was at 4.66% and up +9 bps from Friday. The UST 10 year yield is now at 4.07% and up +5 bps from this morning as early market activity prices in a more reluctant Fed for March cuts based on the strong US labour market data. The UST 2yr is at 4.42% and so that key inversion is holding at -35 bps, unchanged from this morning.
EQUITY WINNERS & LOSERS
The NZX50 is down -0.4% in late trade today. The ASX200 is down a full -1.0% in afternoon trade, not liking what they see in China. Tokyo has opened up +0.4% (probably benefiting from China-flight). Hong Kong has opened down -0.5%. But Shanghai is crashing further lower, down -1.7% in early trade and compounding last week's huge -6.7% loss. Singapore is also sharply lower at their open, down -1.5%. The S&P500 futures suggest Wall Street will open tomorrow up a minor +0.2% but that would embed another all-time record high.
OIL EASES FURTHER
Oil prices are slightly softer from this morning at just under US$72.50/bbl in the US while the international Brent price is now just under US$77.50/bbl. It does seem odd that these prices aren't reflecting heightened Middle East tensions. Non-Middle East oil is plentiful, apparently.
GOLD SOFTENS
In early Asian trade, gold is now at US$2036 and down -US$4 from this morning and down -US$14/oz from Friday..
NZD ON HOLD
The Kiwi dollar is now just on 60.5 USc and down -10 bps from this morning and down a full -1c at this time on Friday. Against the Aussie we are unchanged at 93.2 AUc. Against the euro we are also unchanged at 56.2 euro cents. That means the TWI-5 is now at just under 69.9 today and little-changed from this morning.
BITCOIN RETREATS
The bitcoin price dipped -1.2% today from where we opened this morning to US$42,371. There's been low volatility over the past 24 hours of just under +/- 1.0%.
WAITANGI DAY
Waitangi Day is tomorrow, Tuesday, February 6, and is a public holiday in New Zealand. There will be no 4pm briefing tomorrow. We return on Wednesday.
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44 Comments
The author of this Stuff article calls this unit ‘cheap’. RV is 830k. Talk about out of touch.
https://www.stuff.co.nz/home-property/350167087/why-we-love-auckland-un…
Don’t think they do think. Or even if they do the powers that be exist in a world of self infallibility known only to themselves.Once the ludicrous subsidy of the previous government runs off, so too will the silly outfit in its entirety and it will be absolutely of no loss to any discerning reader.
Agreed re: block wall.
Back in my uni days I lived in an absolute $hit hole of a 'lads flat' that had all block wall construction (apart from the bathroom, the toilet in which came detached from the floor resulting in our bathroom being the shopping mall over the road for a week until we convinced the landlord to fix it).
The amount of condensation and mold was incredible, and it was always either freezing cold or boiling hot. Worst place I ever lived in in terms of quality of life.
However, the rent was so cheap when split five ways - and we were usually either out partying or at university or work - that it was tolerable for a year as a 20 year old. As he had plans to demolish, the landlord also turned a blind eye to various things such as the carport being burned down when we let the neighbours (who had an equally bad dump) borrow it for one of their parties.
But dropping the thick end of a milly in debt servitude to buy such a thing? No, thanks.
It's all explained when considered from a 'demand perspective'.
These brick and tile units are highly sought after by 'down sizers', i.e. being rich older people. They are often in great central locations and come with big, sometimes huge, chunks of land. Single level, and with a garden. Neighbors will be likewise well-healed and typically older. Just what rich oldies want. And so they think nothing of paying heaps for them. Savvy younger buyers likewise see the same thing but as a stepping stone.
IMNSHO $830k for one of these (didn't read the article) could be a steal in the right location.
Seeing more developers offering ‘mortgage subsidies’ to try and shift their product. Getting desperate now. One in the inbox today offering a discount of 2% for 2 years.
Still a bit of an issue in that the banks will be stress testing 3-4% above that discount rate on offer.
‘Hard landing’ likely in house building. Wow.
Too bad that likelihood wasn’t taken seriously 18 months ago. I was telling government officials that. Their response was effectively ‘yeah, nah’.
https://www.nzherald.co.nz/nz/politics/housing-warning-to-government-ha…
Frankly, our public service and their policy analysis and advice is abysmal.
I’m currently in the trenches, I’m seeing it first hand. The drop off on new builds is astounding! Unfortunately there isn’t renovation work to supplement the labour hours one needs to find each week to keep a team busy. High unemployment in the construction sector inbound.
I’m also in the trenches but at the other end of the scale, we have so much work on, so many incoming projects and so many people approaching us for work that we could go from 10 on the tools to 15 and still be busy.
our suppliers are slowly ramping up again and employers trying to poach good staff.
In my experience it’s abysmal (I have worked on contract in two agencies, some 4-5 years sgo). Dominated by generic policy advisors with no real experience in the field they are working within.
And a dominance of ‘Yes Minister’ behaviour - providing advice that ministers want to hear. Rather than ‘free and frank’ advice.
Out of interest - have you worked in government ministries /agencies?
Did they use lube?
They are going to defend that 4241 low back in 19 Oct 2018
Traders will buy that with close stops hoping for the PPT to ride in, if they fail to stabilise all hell breaks loose what are the short term call options looking like?
as much a doomster as I am, I doubt that the CCP want to see 4241 fall at close, almost all models would be forced to sell
Via Maccy B,
Guinea’s National Transition Council approved a joint venture between Rio Tinto Plc, China-backed Winning Consortium Simandou and the government that seeks to develop the world’s biggest untapped iron ore reserve.
WA mining industry along with the rock star wages and conditions set to implode.
https://www.bloomberg.com/news/articles/2024-02-04/guinea-lawmakers-app…
A record $8.9 trillion of US government debt will mature over the next year.
The government deficit in 2024 is projected to be $1.4 trillion.
So someone will need to buy more than $10 trillion in US government bonds in 2024 - this is the equivalent of . 1/3 of all outstanding US federal debt at this point in time.
But the Fed is expected to start cutting rates, so the bonds are less attractive.
Who's going to fund all of this debt?
Well said, David, (Shame the NZH didn't get their facts right in the first place!)
Herne Bay sewer upgrade support
David Chaston of interest.co.nz is one of the few locals who support Watercare Services’ Herne Bay sewer upgrade.
“Everyone’s keen to have a well‐functioning sewer system and cleaner harbour, and a temporary use of the Salisbury Reserve to keep this important project on track is a sensible solution. Alternative options will only delay and slow things down, something our neighbourhood doesn’t need,” he told Auckland Council of the proposal in his supportive submission.
“Push ahead,” Chaston encouraged the authority.
Source: https://www.nzherald.co.nz/business/property-insider/ZYR3S4UUXNC5BFREAY…
https://www.nzherald.co.nz/nz/anz-misses-investment-scam-warning-from-b…
Oh dear.
The head of the Banking Ombudsman service sends out an email to financial companies with a hyperlink to a known scam site and ANZ's mail system blocked it?
What did the sender expect to happen? How many of the recipients likewise blocked it? And whose systems didn't? And why didn't their own systems block it outbound if it was a known danger? And was the sender absolutely certain that a disreputable site wouldn't result in virus transmission should a recipient click on the link?
I have had a few email exchanges with this person where their competence needs to be called into question, and to be frank, the minister / board would do well to review their performance.
Slightly off topic but worth noting..........I have two TDs of the same size and terms, with 2 of the big 4.
One pays monthly interest on the due date, be it a weekend or public holiday, the other, even after 7-day banking was introduced, will still defer their payment to the next business day, if interest is due on a weekend or public holiday...................
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