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
Bank of China cut its fixed home loan rates sharply today, generally by -20 to -4 bps for terms 18 month and longer. Now only Heartland Bank has lower offers for these terms.
TERM DEPOSIT/SAVINGS RATE CHANGES
Bank of China raised rates for terms to 6 months, and lowered them for terms 1 year and longer. Its new 6 month rate is now 6.20% and its 1 year rate is now 6.25%.
WORKERS SIGNAL MORE JOB CONFIDENCE
Westpac reports that its employment confidence survey found employees are less nervous about the future. That report showed employment confidence rose by 4.7 points to 104.4 in the March quarter, the second rise in a row. Jobs are still seen as getting harder to find, consistent with the forecasts of a further rise in unemployment in the months ahead. But current workers are feeling more confident about their job security, and are becoming more positive about earnings growth as inflation has receded from its highs.
OMBUDSMAN'S WARNING FOR SMALL BUSINESS OWNERS
Financial Ombudsman Financial Services Complaints (FSCL) is warning small business owners to seek advice before applying for business loans because protections under the Credit Contracts and Consumer Finance Act only apply to consumer loans, and responsible lending obligations don't apply. FSCL's Susan Taylor cites an increase in complaints from small business owners struggling to repay loans. “A common issue in some of the complaints we are seeing is that the lending was allegedly unaffordable, and often a secondary issue is that the borrower considers the lender has not been fair in their response to hardship”, says Taylor. “A business loan carries risk because a lender may have the power to place a caveat on a property, require security over assets including the family home or take personal guarantees. While borrowers can apply for hardship assistance when struggling to keep up with a consumer loan – and the lender is legally obligated to consider a hardship application – this is not the same for business loans."
THE BIG GETS BIGGER
StatsNZ only provides regional GDP data annually, to March and on a one year delay. Despite it being old, it does provide some interesting insights all the same. For years, Wellington per capita economic activity was the highest of any region. But not now. Auckland caught up in 2023 and has undoubtedly passed it on a per capita basis in 2024. It was up +9.0% in 2023 after being up +10.1% in 2022. And the share of Auckland of all economic activity reached 38.2% in 2023, the highest ever. In 2000 it was 35.8%. In 2019 it was 37.6%. Rightly or wrongly, the Queen City is growing its economic dominance. (This regional series doesn't extend back earlier than 2000.)
THE SMALL COUSIN
Keeping populations in perspective, we should note that Auckland region (basically Auckland City) had a population of 1.7 mln of a national 5.2 mln. Data out today in Australia shows Sydney had a population of 5.5 mln, Melbourne 5.2 mln, Brisbane 2.7 mln, Perth 2.3 mln, and Adelaide 1.4 mln.
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MORE CAPACITY, BUT STILL SMALL
The RBNZ's foreign currency intervention capacity was almost at $20 bln at the end of February. That was up +$7.9 bln from the same month a year ago, the most ever, but almost half of that rise was in July 2023.
SIGNS OF LIFE IN THE MORTGAGE MARKET
The latest mortgage figures from the Reserve Bank show that for February there was a seasonally-adjusted rise of +4% in borrowing, while the latest figures are up some +28% on the dire February 2023 figures
WARNED
The Financial Markets Authority has cautioned two Southern Cross entities for neglecting to apply advertised discounts on insurance products, causing almost $600,000 in overcharged premiums.
KIWIBUILD STILL A VERY TOUGH SELL
It is tough selling houses these days. Now KiwiBuild is having to discount them to get them moved. Kāinga Ora says its Alfriston committed duplexes with two bedrooms, 74m2 (but no car park) start at $675,000.
LOW FOR A TOUGH REASON
Although it is near a 20 month high, that is not saying much. The Westpac-Melbourne Institute consumer sentiment index is still very low and showing no real signs of recovering. Cost of living pressures are said to be keeping it low.
SWAP RATES FIRM
Wholesale swap rates are likely to be a little firmer today. Our chart below records the final positions. The 90 day bank bill rate is back up + 1 bp to 5.64%. The Australian 10 year bond yield is up +4 bps at 4.06%. The China 10 year bond rate is little-changed 2.33%. The NZ Government 10 year bond rate is up +6 bps from this morning at 4.66% and the earlier RBNZ fix was at 4.62% and back up +7 bps. The UST 10yr yield is up +3 bps at 4.24%. Their 2yr is now at 4.58%, so the curve is now inverted less, now by -34 bps.
EQUITIES EASE LOCALLY
Wall Street ended its Monday session down -0.3% earlier today. Tokyo has opened little-changed. Hong Kong is up +0.6% at its open. Shanghai is up a minor +0.1%. Singapore has opened up +0.5%. Meanwhile, the ASX200 is little-changed in afternoon saving. The NZX50 is down -0.3% in late trade.
OIL PRICES FIRMER
Oil prices have risen +US$1 today to US$82/bbl while the international Brent price is up about half that, now at US$86/bbl.
GOLD ON HOLD
In early Asian trade, gold is little-changed from this time yesterday, still at US$2173/oz.
NZD HOLDS SOFT
The Kiwi dollar is back to where it was this time yesterday at 60 USc. Against the Aussie we have stayed down at 91.8 AUc. Against the euro we are softish at 55.4 euro cents. This all means the TWI-5 has remained at just under 69.2.
BITCOIN RISES
The bitcoin price has firmed since this time yesterday, now at US$69,780 and up +4.7%. At one point it was above US$71,000. Volatility of the past 24 hours has been high at +/- 3.6%.
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82 Comments
WORKERS SIGNAL MORE JOB CONFIDENCE
Somewhat surprising to me… The link below posted this morning by Kiwikidsnz is interesting in that respect.
https://www.abc.net.au/news/2024-03-26/immaculate-disinflation-rba-cent…
In terms of the public sector, they might be a bit less enthusiastic in the next survey.
The report said the survey was done before some of the recent announcements about job cuts in the public sector.
https://www.rnz.co.nz/news/business/512687/employment-confidence-rises-job-search-toughens-report
"its Alfriston committed duplexes with two bedrooms, 74m2 (but no car park) start at $675,000."
Gosh I can't imagine why there are no buyers? 2bedroom (basically apartment), unit title perhaps? And no car park when you are out in the middle of nowhere with Manurewa as your closest neighbour. Wonder what the transports are to the CBD.
Better to take the money rent somewhere nice and close to work.
Gosh I can't imagine why there are no buyers?
I think it's widespread delusion Wolfie. My reckon is that the suburbanites, ruling elite, and media are terrified of house prices falling. While they won't openly express it, they hope that the avocado munchers are going to sell a kidney just so they can pay as high a price as possible for properties such as this to break in to the housing market.
https://www.stuff.co.nz/business/350183036/apartment-mogul-joins-mayor-…
Todd was also passionate in his views that development should be focused in the central city, rather than in the rural south, when speaking to a reporter.“We have no shortage of high density land. We don’t want to be developing in fu.....g Drury, it’s so wrong.“All the money [there] is in rezoning the land, and building the houses is an afterthought, and the city is left picking up the legacy of bullshit development.”Todd was referring to developers who buy land in Auckland’s future urban zones at a low price and then apply for a plan change to make it’s zoning available for housing development, substantially increasing its value.
“And, it’s all those rapacious money grubbing ... those big old developers ...you know who they are,” he said.
The comments follow three of New Zealand’s biggest developers, Oyster Capital, Fulton Hogan and Kiwi Property, having successfully applied to collectively rezone 330 hectares of land in East Drury. The development will be the size of Napier.
Done every day in the US for the past hundred years since the introduction of Municipal Bonds. Developers take out Options on Farm Land 50k from the CBD's knowing in 20 years that land will be converted to Residential Subdivisions. Difference is all the infrastructure expansion costs-3 waters, roads, schools (paid out of local rates at least 70% in the US) are accessed against the new lots created. Might be an assessment of $50,000 per lot (section), but doesn't matter as its paid up front by the Local Council by means of a Municipal Bond, and then each new homeowner pays it back (with interest) over the next 20-30 years as part of their annual rates. New Schools funded the same way. Rich people buy the bonds--and the attraction and incentive is no tax paid on the interest--Win/ Win.
StatsNZ only provides regional GDP data annually, to March and on a one year delay.
The 'Owner-occupied property operation' contribution to Gross domestic product by industry, by region -Table2 must be construed as an overhead cost to employers if they want to retain home owner employees?
I know imputed rental of owner-occupied housing is calculated in the US for GDP purposes according to this document.
1 The imputation, however, was not included in BEA’s earlier estimates of either national income or national product.
2 The 2008 SNA (paragraph 1.65) cites the opportunity cost principle as the foundation of the accounts. “In the SNA, however, the concept of opportunity cost as defined in economics is employed. In other words, the cost of using or using up, some existing asset or good in one particular process of production is measured by the amount of the benefits that could have been secured by using the asset or good in alternative ways. Opportunity cost is calculated with reference to the opportunities foregone at the time the asset or resource is used, as distinct from the costs incurred at some time in the past to acquire the asset.”
Might be just me, but the water cooler crew don't even raise an eyebrow when I bought this in to the conversation. Australia seems be running towards a cliff without a care in the world.
Is this all planned? And what is the end goal?
It will need to be “raining tradies” to meet Australia’s gutsy housing targets, an expert has said.
The Albanese government has pledged to build 1.2 million homes in the next five years, but in order to meet that goal an extra 90,000 construction workers are required in the next three months.
https://www.news.com.au/finance/business/other-industries/housing-targe…
Specially while stories like this are in the paper almost every day there:
A national building company that collapsed earlier this month owes $29.7 million to creditors.
News.com.au previously reported that a group of companies linked to a major building firm with construction sites spanning across four Australian states had gone into administration and had paused all work.
https://www.news.com.au/finance/business/other-industries/four-states-h…
If your industry is going bust, whos going to build 1.2 million houses?
And funded with what?
She's a powderkeg, givin off sparks.
Michael Hudson: Corruption. Your central – when I was down in Australia, Karl took me to your very nicely-designed capital of Canberra and I met with the central bankers there. And they said, “We’re a very lucky country. We live in the – we’re a neighbour of China and we can balance our payments and really get by just through exports. We don’t need any industry and quite frankly, we don’t need people.” So, this is – the corruption is just the bank-centred world view that Australia should be run for the benefit of the mining interests, the iron mining interests that created the wealthiest lady, I’m told, in Australia. Link
I guess if you hang in your wealthy circles Yvil you can turn a blind eye to what’s happening. Oblivious to it all.
But one day, when it gets bad enough and unavoidable, you might care
maybe it would be healthier if I didn’t care. But that’s the problem isn’t it? So many people have given up caring
So what happens if ‘doing something about it’ is in the hands of politicians?
I guess that means that we have to wait until things like homelessness or crime get so so bad that politicians - and voters - take them seriously enough?
Ambulance at the bottom of the cliff?
The more I think about it the more I think PDK has got things right. Fuck off to a block of remote land somewhere and live off the land, away from ‘civilisation’
So what happens if ‘doing something about it’ is in the hands of politicians?
The politicians are us. If people feel that strongly, they can easily assemble and something about it.
Instead it's treated like Netflix. Scroll through the options, and pick something medicore.
I'm also on a block. Didn't even take me to 30 to see what a dead end game living in a rat race is (unless you're aristocracy). I probably spend less time working it that I did commuting.
Egalitarian: most people were poor and had no access to welfare
Egalitarian: everyone watched the same news, ate takeaways, f/c or kfc on friday or sunday night, couldnt order ahead, no drive-through, no home deliveries, everything decent was expensive, went to the same movies on Saturday night, watched the same game, and had no variety
Egalitarian: the reason why the country was emptying out
I would wager that levels of happiness were far greater than today. Simpler, yes. And probably better for it.
I think a key reason the country was hollowing out was the profound economic shocks of The UK’s cutting of the trade umbilical cord, and ultra high inflation.
They had far lower expectations.
When I was a kid, I remember visiting friends and family if they got a new appliance like a microwave or dishwasher. Now people fart and buy a 75" TV online.
Good news is, all this consumerism and stomping on one another in competition is only voluntary, if not deeply habitual.
Oz - not sure I believe this "...surplus demand is driving up costs, driving down profits in construction industry"
https://www.abc.net.au/news/2024-03-26/scott-hutchinson-surplus-demand-…
The comments on workers job confidence is hugely suprising to me. Ignoring the chatter happening around government workers, i have heard of at least 10 private sector companies having large restructures or 'reassessing their size' in Wellington in the past two weeks, and a few in Chch. Largely on the back of government funding being pulled from a number of projects. Specialist services industries like project management, architecture, engineering, landscape architects, and even large accounting firms. Think things are about to get a whole lot worst before they get better.
To be honest, the kids are hardwired completely differently. The idea of "taking profits" exists but they're far more comfortable staying in the ecosystem. Many of them start from relatively nothing. They play in a space where 100x still happens. Not legacy coins.
lets hope he has a few nights pissed in the gutter before his luck runs out, risk/money management is a lesson hard learned.
perhaps a sell 1/2 levels so at least he can play again next round
its my guess that a very famous individual is now staring 40-50 years inside on the basis it would never end.......
please take this comment in the way i suggested it, not a slight on him/her/it/they, just lessons are hard to learn especially in a 6 figure portfolio
An eyeopening interview with the former founder and owner of this website about the real reasons New Zealand SME wants cheap overseas labour: https://www.youtube.com/watch?v=cpukmQ7IL0I&ab_channel=1News
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