Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
There were no rate changes to report today.
TERM DEPOSIT RATE CHANGES
Nelson Building Society raised their TD offers for 1-3 years. SBS Bank improved its I-Save savings account rate by +5 bps.
THE LOCKDOWN HAS BEEN GREAT FOR ANZ
ANZ NZ's annual profit pushes above $1.9 bln, up +44%, helped by strong housing lending and lower loan provisions. 70% of total lending now housing lending as it quietly transitions from a full trading bank to essentially a mortgage bank. This tax-paid profit is equivalent to $484 for every adult in the country aged 20yrs and over and $340 of that is from mortgage lending. That is up from $351 in the prior year where $240 was from mortgage lending. ANZ's shares have risen +1.2% so far today.
A SLOW GROWTH HOUSING SECTOR
According to dominant Auckland realtor Barfoot & Thompson, average housing rents in Auckland were up by less than $1 a week in third quarter of this year. They say average rent increases in Auckland have halved in the last six years.
STRONG DEMAND FOR 'SUSTAINABILITY'
There has been very strong interest in the Christchurch City Holdings $150 mln "sustainability bond" offer, with more than $330 mln in bids so far. That has allowed them to trim the indicative margin to +0.35% on top of today's final 5 year swap rate (currently about 2.59%) so this bond may yield something like 2.95% pa. Marketing 'sustainability' motivates investors these days (or more precisely, it motivates investment managers who then sell it to motivated investors.) Update: following a big rise in the swap rates today, it settled at 3.01% pa,
BIG YIELD RISES
There was another set of NZGB auctions today with $500 mln offered over three maturities. $848 mln was bid in 80 bids, 29 of which were successful. The May 2026 $200 mln saw a sharp rise in yield from one month ago, resulting in a 2.32% pa yield, and up from 1.69%. The May 2031 $200 mln went for a 2.58% yield, up from 2.13% last time. And the April 2037 $100 mln offer went for 2.84%, up from 2.49% pa.
FIJIAN PHOENIX
ANZ is pointing out that Fiji is about to rise after a very tough year. "Fiji’s pandemic-induced economic pain is almost over. Now, the gain. A successful vaccination campaign (AZ), internationally recognised COVID-19 safety protocols for travel and in-country tourism operators, plus competitive high value tourism packages have unlocked the pent-up demand for a Fiji holiday." Tourism accounts for about 40% of all economic activity in the country.
MORE UPWARD PRESSURE
Westpac Australia's respected Bill Evans is now saying the RBA will start raising their official policy rate in February 2023, a year earlier than the previously expected 2024 restart indicated by the RBA. Following Westpac, ANZ's analysts have joined him too. This has motivated a general shift higher in Aussie wholesale rates which were already on the firm side. And there is a collateral impact on Kiwi wholesale rates which are getting kicked higher in sympathy. (See below.)
VIRUS RESURGENT IN CHINA
In Beijing, they are locking down as Delta cases start popping up in the capital, spread from northern provinces. This will have a chilling effect on travel in China, and depresses their faltering recovery further.
LOCAL PANDEMIC UPDATE
In Australia Delta cases in Victoria have risen to 1923 cases reported there today, and going backwards. There are now 22,189 active cases in the state and there were another 25 deaths yesterday. In NSW there were another 293 new community cases reported today with 4,058 active locally acquired cases which is lower, and they also had 2 deaths yesterday. Queensland is reporting zero new cases. The ACT has 10 new cases. Overall in Australia, more than 75% of eligible Aussies are fully vaccinated, plus 13% have now had one shot so far. In contrast, there were seven new cases in New Zealand at the border, and 89 new community cases including two in Christchurch. Now 87.2% of Kiwis nationally aged 12+ have had at least one vaccination, while the Australian rate is now at 87.4% of all aged 16+. More here.
GOLD STABLE
In early Asian trading, gold is up +US$2 from where we were this time yesterday, now at US$1795/oz but fractionally lower than either the New York close or the London fix.
EQUITIES MOSTLY LOWER
The NZX50 is down -0.6% late in its session. The ASX200 is down -0.3% in Thursday afternoon trade. The very large Tokyo market has opened today down another -0.9% in morning trade after yesterday's fall. Hong Kong has opened up +0.1%, but Shanghai has opened down -0.5% in their opening trade. The S&P500 fell away in the last hour of trading today and ended -0.5% lower.
SWAP & BONDS RATES RISE FURTHER
We don't have today's closing swap rates yet. They probably rose again, in sympathy with the big Aussie shift higher. The one year is up another +5 bps, the two year up +8 bps and the 3 year up +6 bps. The 90 day bank bill rate is up +3 bps at 0.78%. The Australian Govt ten year benchmark rate is now at 1.87% and up +1 bp from this time yesterday. The China Govt 10yr is now at 3.00% and unchanged. The New Zealand Govt 10 year rate is now at 2.60% and up another sharp +6 bps. That leaves them still well above the earlier RBNZ fix for that 10yr rate at 2.53% (+7 bps). The US Govt ten year is sharply lower at 1.55% and an -8 bps fall.
NZ DOLLAR STILL ON HOLD
The Kiwi dollar is now at 71.6 USc and unchanged from where we were this time yesterday. Against the Aussie we recovered +40 bps to 95.5 AUc. Against the euro we are holding at 61.8 euro cents. The TWI-5 is now at 75.2, little-changed but still well above the top of the 72-74 range we have been in for most of the past eleven months.
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BITCOIN EASES BACK AGAIN
The bitcoin price is now at US$58,841 which is another -3.2% lower than this time yesterday. It is now -10.8% below its high on October 21, 2021. Volatility in the past 24 hours has been moderate at just over +/- 2.9%.
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49 Comments
Interesting point that the ANZ profit works out to $384 per capita (assuming adult sheeple popn). Now, if you combine the total supermarket profits, the profit is closer to $120 per capita.
ANZ's profit is made from nothing really, except debt servicing. Supermarket profit is of course comprises innovation, production, supply chain, sales & marketing, and retail.
Good lord JC, being negative is one thing but being ignorant is inexcusable.
Do you even know where ANZ makes it's profit? Half of of it is from Institutional and Business - financing exporters, facilitating trade, funding other lenders, Kiwi Saver etc. Credit cards, motor vehicle finance. NZ is an open trading economy and ANZ is the largest player in the banking system that is needed to facilitate this. Access to credit is what makes us a developed nation. I don't care for John Key much but for heaven's sake, give it a break.
Less than 50% of ANZ's profits came from personal banking and mortgage revenue is a subset of that. Business lending creates jobs and exports.
https://www.anz.com/content/dam/anzcom/shareholder/2021-FY-new-zealand-…
Pakeha virtually wiped out te reo, it wasn't taught in schools, used in media etc (in fact you could be, and were, disciplined for speaking it at school). You will no doubt have noticed it is rapidly proliferating now though Lapun..... I am more than happy to reply to you in te reo if that's what you want..
Sorry but I studied French for 7 years, married a French woman, have a son who is French and living in France but I cannot speak or understand a sentence in French. You either have an ear for languages or you don't and I don't. My second wife is fluent in five and picks up Te Reo easily since it is similar to Motu. I meant the act of writing is a colonial artifact irrespective of specific language.
Note the attitude to languages in schools for Te Reo in NZ was similar to Scottish Gaelic in Scotland when I was young. Even today a child has to be careful not to be cheeky in a language (say hindi or mandarin) that is not understood by their teacher. At least now no child is hit whatever they say or do. In the past missionary schools preferred teaching in the indigenous language but it was the parents who insisted on their children learning English.
You are welcome to reply in Te Reo - there are websites that will translate for me. BTW you are to be congratulated for not sprinkling words I cannot understand into a pseudo-language; an Anglo-Maori version of spanglish or franglais. Language is used to communicate and much of the media uses Te Reo in much the way Victorians used to use Latin; that is an elite communicating that they look down on the less educated.
So you're for winding the clock back to a time when NZ was inhabited only by Maori (but presumably with the colonial trappings like refrigerators and medicine and stuff), and kicking out people of other races, and that violence is justifiable. Thanks for coming out and saying it TK, I was about to ask what success looked like to you.
You know, maybe 'colonialism' was the best thing to happen upon these shores TK, could have been far worse people turn up, and from what I read of it pre-European NZ was anything but the enlightened paradise you seem to imagine.
Cue the outrage and name calling - "white man bad" is the new religion.
Japan stands as a glaring example that a pre-industrial culture can absorb outside technology and ideas without being replaced, suffering genocide, or having their language beaten out of them. I don't think us white men are as special as some of us think we are - just a quirk of history that we got the break-through technology.
Agreed. However genocide implies intent. Surely far more deaths were caused by epidemics than gunfire. Deaths from epidemics disproportionately killed more Maori. The Spanish flu killed Maori at a tenfold rate compared to Pakeha and some diseases such as measles barely kill Asians and Europeans but wipe out other ethnicities. It is a lesson we may relearn when Covid-19 hits all the inhabitants of NZ. Already there is scattered evidence that Melanesians in PNG are more susceptible than say Han Chinese in Asia. And in NZ Pacifica and Māori are over-represented in hospital cases during the current outbreak. Both our Pakeha and Maori leaders ought to be giving Maori and Pacifica priority for vaccinations, testing and treatment. [My knowledge of NZ history is weak so apologies in advance if I have ignored any deliberate plans to exterminate all Maori as per the killing of indigenous Tasmanians.]
I'm not aware of any such widespread extermination either, as far as I'm aware the vast majority of deaths were from disease as you say so a fair point that genocide may be inappropriate in the NZ context.
The initial spread of those diseases by colonisers and visitors would truly put covid into perspective - over half of some native populations being lost to disease. Unfathomable to our society and gives some context to the colonial military contests against broken populations.
I had the distinct impression I was dealing with Melbourne via NZ phone intermediaries for order purposes only - all formal limit diktats etc came out of Melbourne. No decision making was enacted in NZ. Window dressing the accounts doesn't change the fact ANZ NZ is primarily a building society with a one trick pony product - namely residential property credit creation - witnessed by the fact that 70% of lending was dedicated to that sector.
Housing lending reaches 70% of total lending
The bank grew home lending by $9.3 billion, or 10%, to $99 billion over its September year. According to figures from Aussie parent the ANZ Banking Group, housing lending reached 70% of ANZ NZ's total lending at September 30. That's up from 67% a year earlier, and 63% in 2019. - Link
I do not mind that ANZ is making record profits, as the biggest banking institution in NZ. Not a single bit. Actually, I do not mind having the NZ banking system showing financial resilience. Would you rather have the banking system with profits being crippled ?
What I would prefer is to see the majority of banking institutions fully owned by NZ entities, but I guess that this is a different story.
Also note that the NZ housing Ponzi is in a fragile state, given how inflated it is, so all banks will need all the resilience and margins they can get if the whole thing turns into custard.
Whoever replaces Elliott will face some significant challenges, not the least of which is the promise to cut expenses to $8 billion by 2023. Expenses in the year to September 2021 were $9 billion.
The plan is to run the bank at a cost of $7 billion and spend $1 billion a year on investment. The cost of running the bank is now $7.4 billion.
https://www.afr.com/chanticleer/anz-s-stunning-home-loan-fail-20211027-…
Westpac Australia's respected Bill Evans is now saying the RBA will start raising their official policy rate in February 2023, a year earlier than the previously expected 2024 restart indicated by the RBA.
Dislocation at the short end of the Australian government bond market.
This^^
now extrapolate what happens when they stop buying the longer term bonds.
From Greg Foss (30 year bond trader)
The yield on the two year increases by 25bps means prices of existing 2yr bonds fell by about one half a point. (100 points in par). Not a catastrophe, but if the same happens in 10s and 30s the price drops are 4% and 12%, meaning years of coupon returns are destroyed.
I have been waiting to see the number that might be used for DTIs. We know its 4.5 in the UK, but we also know we have gone way past that, in some cases 8.
Well done BNZ, this will strengthen NZ banks which is a good thing, but I dont like the 6, 5.5 should be the max I think.
The May 2026 yield jumping to a 2.32% pa from 1.69% pa in only 4 weeks is quite a massive movement, as are the massive and sudden jumps in many swap rates in the last couple of weeks. Strange that this has not been given much attention, as the repercussions of such big movements will be felt in all retail rates pretty soon.
Don't worry I am sure the RBNZ & govt finance people are running around behind the scenes trying to find a "legal justification" to justify restarting the LSAP. To drive down yields.
Don't expect the mainstream media to cover this as there existence basically depends on govt support.
Clarke and Dawe explain it well, 11 years on.
Plan A: Interest rates head north. Home prices to head south? My money is on house prices stablising, with a little (5-15%) shrinkage. Yes, I know, I'm hopeful.
Plan B: The govts tell the big corps/banks to start forgiving them their dues. It'll be better than television. [Mind you, anything's better than television these days.]
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