Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today - so far at least.
TERM DEPOSIT RATE CHANGES
Kiwibank follows BNZ and Rabobank last week and raises term deposit rates. More here.
KIWIBANK OUTLINES PARTNERSHIP WITH ACI WORLDWIDE
Kiwibank says a strategic partnership with real-time digital payment software provider ACI Worldwide will see ACI provide and run Kiwibank’s payment hub, which is a software-as-a-service tool hosted in the Microsoft Azure cloud. Kiwibank says any service it requires is available on a secure cloud-based platform. The bank also says the ACI deal prepares and equips Kiwibank for when the NZ retail payment system is finally required to operate seven days a week, 365 days a year. Currently settlements between banks occur at regular intervals between 9am and midnight on business days only.
DOUBLE HIT
Suncorp New Zealand is the owner of these insurance brands: Vero, AA Insurance, Asteron Life, AA Life, AA Money. It has announced an after-tax profit of $84 mn for the six months to 31 December 2021. This was down -35% from the same period last year "due to adverse investment market impacts" and "increased frequency and severity of weather events". More frequent climate events are going to make it tough to be a general insurer - well, it will be tough to either insure for climate losses, or afford the premiums if you can. And insurers investments generally are at risk of lower valuations as bond yields rise. These New Zealand results were part of parent company Suncorp Group announcing a 6 month after-tax result of AU$388 mln, down -21%.
SHARPLY LOWER LOAN DEMAND
Equifax says business credit demand fell by -7.3% during the December 2021 quarter as lockdowns continued to impact business confidence. The decline in demand for business credit was driven predominantly by an almost -15% drop in demand for business loans reflecting the sectors most impacted by the pandemic such as hospitality, retail, and education.
GOING TO THE BOND INVESTOR WELL AGAIN I
Westpac says it is about to launch a new NZD, 5 year fixed rate medium term note issue. No details yet of the size or pricing. Typically bank funding campaigns like this allow "unlimited oversubscriptions". Westpac offers its term deposit customers 3.20% for five years fixed (but term deposits aren't bonds and don't reprice with yield - and they are limited to $5 mln each customer).
GOING TO THE BOND INVESTOR WELL AGAIN II
Investore Property (IPL, #37) said today that it, too, is considering an offer of 5 year senior secured fixed rate bonds (Bonds) to New Zealand institutional and retail investors. It currently has $342 mln in debt, up +23% in a year. As at September 2021 it had a Liabilities:Assets ratio of 32%, up from 28% as at March 2021.
TURNING HIGHER FASTER
The RBNZ has been publishing bank yields on mortgages and business loans monthly since January 2017. The rise from November to December 2021 was the highest ever for both, with fixed mortgage yields rising +7 bps in the month, and +11 bps for business lending. They also track call and term deposit yields, and they are rising too, up +9 bps, and also the fastest since January 2017. Apparently the turn higher isn't happening with rising bank margins.
KEEP AN EYE OUT FOR THIS
The RBNZ will be releasing its updated inflation expectations survey data on Friday, and financial markets are a little nervous about what it will show. Those risks are creeping in to wholesale rates now.
NZX50 REVIEW
Last week the NZX50 had a very good session, with its overall capitalisation up +3.7% for the week. But that just limited its longth retreat to -5.8% and its year-ago retreat to -6.4%. Last weeks gains were across the whole board, with Fisher & Payrel (FPH, #1) up +5.8% for the week and ending a string of down weeks. AirNZ (AIR, #33) rose more than +11% for the week. In fact only seven of the fifty listed equities in this index fell, and those were Argosy (ARG, #25), Fletcher Building (FBU, #9), Pushpay (PPH, #28), ANZ (ANZ, #41), Pacific Edge (PEB, #35) NZX (NZX, #40) and Serko (SKO, #44). The Energy sub-sector rose +6.0% last week, although they have a long way back from the year-on-year drop of -16%.
DOWN BUT TO BOUNCE BACK
In Australia, the widely watched NAB business confidence survey for January is out today. That shows business conditions deteriorated in January as Omicron caused infections to reach unprecedented levels, triggering consumer caution and staff shortages. Profitability, trading conditions, and employment all fell, with the impact felt across almost all states and industries. But, businesses are looking past that and confidence rebounded in January with firms optimistic that the outbreak would be short-lived, and consistent with this, forward orders remained steady.
LOCAL PANDEMIC UPDATE
In NSW, there has been a drop to 9,690 new community cases reported yesterday, now with 76,465 active locally-acquired cases, and another 18 daily deaths. There are now 2,494 in hospital there, off their high. In Victoria they reported 9,785 more new infections yesterday. There are now 58,449 active cases in that state - and there were 20 more deaths there. Queensland is reporting 5,178 new cases and 12 more deaths. In South Australia, new cases have slipped to 1147 yesterday and five deaths. The ACT has 323 new cases and no deaths, and Tasmania 601 new cases and no deaths. Overall in Australia, about 26,700 new cases have been reported so far although not all counts are in yet. In New Zealand, there were 63 cases stopped at the border, plus 202 new cases reported in the community. But testing rates are falling sharply.
GOLD RISING
In early Asian trading, gold up at US$1822/oz and up +US$15 from this last week's close, and up +US$4 in today's trade.
EQUITIES SOFT AT END
The S&P500 ended on Wall Street today down -0.4% after wobbling around its opening levels. Tokyo has opened up +0.7% in morning trade. Hong Kong has opened -0.5% lower. Shanghai has opened -0.2% lower. The ASX200 is trading +1.1% higher in its early afternoon session. The NZX50 is up +0.4% late in its Tuesday session.
SWAPS FIRM
We don't have today's closing swap rates yet. They are likely to be sharply higher, by about +8 bps for 1, 2 and 3 year durations. If these new levels hold, that will change the recent 'flat' swap curves and put them on a new rising trend. The 90 day bank bill rate rose +2 bps to 1.18% and its highest since before the start of the pandemic. The Australian Govt ten year benchmark bond rate is up +5 bps from yesterday to 2.08%. The China Govt 10yr is still at 2.73%. The New Zealand Govt 10 year bond rate is now at 2.68% (up +8 bps from this morning) and now above the earlier RBNZ fix for that 10yr rate at 2.67% (up +10 bps). The US Govt ten year is now at 1.93% and unchanged from where we started this morning.
NZ DOLLAR LITTLE-CHANGED
The Kiwi dollar is little-changed today at 66.4 USc. Against the Aussie we are still at 93.1 AUc. Against the euro we are holding lower at 58 euro cents. That means the TWI-5 is holding at just under 70.8, marginally lower than at the end of last week, and marginally higher than where we opened today.
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BITCOIN UP
Bitcoin has risen to US$43,961, up +0.7% from where we opened this morning. Volatility over the past 24 hours has been high at just under +/- 3.1%.
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35 Comments
China for you - If they could do this blatantly in presence of international media, can understand .....
tkk in the grand scheme, anything to do with the Western world, is a mere pittance. Think why the CCP titled their currency as the Yuan. Now that was the dynasty set up by Genghis Khan and founded by his grandson Kubla after he had come down & mopped up the rest of China. But before that grandad had an empire that stretched across Asia, well into east & south Europe. Like President Putin, the CCP believes all territory that they once possessed, even a thousand years ago, is rightfully still theirs. Hence the greatest land army in the world, all dressed up with nowhere to go, yet. Just fantasying!
Largest sovereign land mass in the world?
Ask our resident Comrade X.
British Empire and her self governing Dominions. Victoria beat Kubla and Genghis easy.
An increase in mid-terms swap rates by 8 bps in just one day is remarkable. If they stick, saving and mortgage rates will inevitably follow.
On longer terms, the fact that the New Zealand Govt 10 year bond rate is now at 2.68% (up +8 bps from this morning) is significant, and indicative of the fact that the markets are now convinced that higher rates are coming and are here to stay.
The govt speaking out strongly against rent controls. Chardonnay socialism is out of control.
I wouldn't worry, RBNZ told us all inflation would be a temporary phenomena last year. Renters should just "look through" it as Governor Orr advised.
Jacinda Arden had a farm e I e I o with a power rise here and a rent rise there, here construction cost increase there a tax increase.
Yes slap on a rent control as a solution... will then follow up with an economy wide wage and price freeze. muldoon would be proud
Just thinking this morning, when as a nation has NZ ever been so divided. Protests in parks, streets, and for the second time in a mass at parliament. Answer 1981 Springbok tour. Prime Minister Muldoon, another die hard interventionist. Who says history never repeats
Parliament Back in Sitting Today:
It was a buffet of wokeness, even Rawiri Waitit got in on the action with his “Generation-T” remarks.
Christopher Luxon came off as the only adult in the chamber after giving a measured speech.
He was followed by the Greens – with James Shaw's ham-fisted attempt at a series of jokes falling flat. Mr Shaw throughout his speech ONLY used his preferred pro-noun Aotearoa [this was a common theme among MPs].
Mr Shaw then called for rent controls, and alluded to great work being done by Marama Davidson, a woman known to put on sunglasses to shield her eyes from the empty-white-pages of her Work Diary.
Following the Woke-Green-Embarrassment, David Seymour was ACTivated - the bot perform well.
The fun didn't stop there.. Kelvin Davis was his typical self; economically ignorant, embarrassing and unwatchable.. I imagine the steaming servers enjoyed the break.
Though mentioning her last, PM Ardern performed as expected and pontificated half truths, spin and denial. Her remarks on housing and poverty seemed solely ethnic based. Riding on the coattails of future promises, Ardern blamed the opposition for Labour's failures, which she claimed weren't failures.
So the Greens want rent controls but Labour are adamant they will not be implemented.
How would a National - Labour alliance work? Power sharing. They're really not much different.
A good government delivers justice to its citizens. It allows people to live according to their conscience. It rewards good and constrains evil.
A rose by any other name.. and all that
rose tinted rear view mirror
I reckon we should all just write in Jenee Tibshraeny at the next General, at least we know she has a brain.
Wonderful piece!!!!
The Greens: with a vision of Zimbabwe 🇿🇼 for NZ.
First step. Co leader Davidson, in 2023 wrests Tamaki Makaurau off Mr Henare. The good oil is being ladled out, abundantly. Any electorate with a poor voter turnout is an easy target. Don’t need many numbers, as a percentage, to achieve a majority. The Greens have already perfected that technique in local body elections.
This beginning of the end of Bitcoins and Dogcoins is finally here!
Go Feds!
Fed Designs Digital Dollar That Handles 1.7 Million Transactions Per Second
It suffers from a fatal design flaw though - being controlled by the Fed.
Why is that a threat to Bitcoin? Who wants a centrally controlled digital asset that can be processed a zillion times an hour but is essentially in the control of the Fed? You can have my share.
Interestingly, with the resurgence of the BTC price, the real action is taking pace with XRP, the digital currency that the ultra-orthodox despise and is currently not on exchanges in the U.S. as they're in court with the SEC to determine whether or not it's a security. If the SEC settles, don't be surprised to see XRP moon or at least 10x. Sure a more fun time and better bet than what the pokies offers you.
As it passes the Howey test, it will more than likely be classified as a security and go to zero, like most other shitcoins once the regulation is clarified.
No precedent. Many different perspectives for and against. Consensus and past cases suggest that Ripple will be fined and move on. Perspectives of the ultra orthodox can be ignored because of bias. Furthermore, XRP can still be traded outside the US.
"No precedent" and "past cases"? You sunk your own battleship right there. Last I checked, they had a head office in San Francisco, so just another centralised scam. You sound like your bags are heavy, so good luck.
"No precedent" - as in being a digital asset banned from being sold as a security
"past cases" - as in the SEC fining crypto related projects and moving on
Last I checked, they had a head office in San Francisco, so just another centralised scam.
Yes, they make software and technology. A head office is necessary.
Australia forges ahead regardless, NZ stays in a self/imposed straitjacket.
That’s the thing. We like, just about all New Zealanders, have many friends and relatives in Australia. Our government, supported enthusiastically by our media, continually harp on about the drama, the tragedy, the numbers of dead over there. It is rather sanctimonious if not ghoulish. Yet our contacts are not complaining, harping on in that language. Instead they are staying in the real world and getting on with living. The Australian government thinks they should too. Goodbye to the dead world, and it’s not just over there, is it.
Yes, but not without their own internal critics. NSW led the way, literally dragging Victoria reluctantly along with it, then Queensland.
Our family in Sydney have carried on working and running a business for the last 2 years without missing a day off work - perhaps lucky as well.
Like other more fortunate places, like many of our cousins up in East Asia, we find ourselves in the position of trying to climb down a tree, rather than fall out of it like Australia.
Japan are having similar problems, relatively low death and hospitalisation rates, but rising cases, restrictions, and closed borders. Those less fortunate have made anyone else more wary about going in guns blazing.
These are amazingly good problems to have.
Speak to most Kiwis, and like Australians, they're getting on with their lives, and have been for a couple of years now. The rest seem to be on here.
There's lots of us on this side of the ditch just carrying as normal, working away producing stuff, even socialising ( not much, introverts and all). Not really sure what the fuss is about.
Not to forget our very popular Vax free market day.
True for many, however if you work for a medium to large organisation there’s been a lot of disruption: staff diving home wfh, some locked up in their offices now, clients and (students for tertiary) locked out by mandated premises. It’s getting harder to get projects organised, run meetings, deliver product, policies changed on the run, make sales in the real world, no prospect of international students or tourists for 3 years, - the whole system seems to be in partial paralysis & turmoil with no trust in future dates or planning. Then there’s tourism, hospitality, international education, etc who are closing down. All with no end in sight.
Yes, I lecture part time at the University of Auckland, and no in-person lectures until at least mid-semester. I have to get 'special permission' to even go into my office (which is not shared with anyone else!) But then, I can go in to the university library where there are hundreds of other people - go figure!
All seems a bit over the top for what seems to be a mild cold for most people.
Also, schools are back, so I really don't get it.
The students are really missing something.
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