Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
TSB lowered two rates today. More here.
TERM DEPOSIT RATE CHANGES
None so far.
A SUDDEN BURST HIGHER
Food prices are moving higher, and quite quickly now. They were up +2.7% in January from December, and annual food prices were +5.9% higher in January 2022 than they were in January 2021. This is the biggest annual increase since August 2011, when annual food prices increased by +6.6%.
SERVICE SECTOR STRUGGLES
The services sector is in a worrying funk now. The January PSI came in at 45, the sort of level you get in a recession. The worst part was that New Order levels slumped. And also down concerningly were current sales and activity levels. So far, there hasn't been a commensurate fall in the employment yet, or of inventory levels although both sagged somewhat in January. The pressure is really on small firms; large firms have avoided the trend for now at least. Although it is only one month, and a January at that, this data may well have caught the RBNZ's attention.
LANDLORDS BEWARE
The January update of Stats NZ's index of residential rents is little-changed from December, or from September for that matter - at least on a national basis. But that masks some concerning signs. For Auckland landlords, the atrophy in average rents for dwellings that come on to the market is building. Yes, rents are going backwards in the Queen City. And for the first month January brought some chunky rent month-on-month (-1.7%) falls in provincial North Island centers, and in Christchurch (-2.3%).
GOFF RETIRES FROM POLITICS
Auckland mayor Phil Goff has announced he will not seek re-election.
MORE CORPORATE BONDS COMING UP
Investore Property (IPL, #37) has launched a $125 mln offer of five year bonds. The indicative margin is 1.15% - 1.30% pa, and based on the most recent five year swap rate, will be 4.06% to 4.21%, but with a minimum of 3.95% if there is a sharp fall away before the Friday, February 18 rate set date.
ANOTHER DOWN WEEK
It wasn't a great week for the NZX50 last week, with overall capitalisation falling -0.9%. It was a broad-based retreat with 30 or the 50 listed equities posting declines, the largest being Vista (VGL) which fell 3 places to #41. Among this sell off Sanford (SAN, #46) rose +6.7% in the week. The energy subsector fared better than average, up an overall +0.2%. Vector (VCT, #28) fell -2.3% in capitalisation, while Meridian (MEL, #6) rose +2.3%. It helped that the largest two rose while the smallest five slipped, the others in this sub-sector unchanged.
LOCAL PANDEMIC UPDATE
In NSW, there has been a fall to 6,184 new community cases reported yesterday, now with 56,194 active locally-acquired cases, and another 14 daily deaths. There are now 1,649 in hospital there, off their high. In Victoria they reported 7,104 more new infections yesterday. There are now 55,617 active cases in that state - but there were no deaths there, and unusual. Queensland is reporting 3,750 new cases and also zero deaths. In South Australia, new cases have slipped to 1165 yesterday and 2 more deaths. The ACT has 375 new cases and no deaths, and Tasmania 552 new cases and no deaths. Overall in Australia, less than 20,000 new cases have been reported so far although not all counts are in yet. In New Zealand, there were 25 cases stopped at the border, plus 981 new cases reported in the community, a new daily record driven by Omicron.
GOLD HOLDS HIGHER
In early Asian trading, gold is now at US$1859/oz, and unchanged from where we left it this morning.
EQUITIES WEAK
The NZX50 has fallen almost -1.5% in trading today with F&P Healthcare (FPH, #1) down a rather sharp -3.2%. Going the other way, both ANZ and Westpac, the two banks that have a presence in the NZX50, are making solid gains today. The ASX200 has opened today up +0.1% in early afternoon trade. That contrasts with Tokyo which has opened down an ugly -2.5%. Hong Kong is down -1.4% at their open, and Shanghai has started their week down -0.4%.
SWAPS LOWER
We don't have today's closing swap rates yet. They are likely to have retreated a little. The 90 day bank bill rate is unchanged at 1.21% and holding its Friday rise. The Australian Govt ten year benchmark bond rate is down -6 bps from Friday to 2.10%. The China Govt 10yr is unchanged at 2.80% and The New Zealand Govt 10 year bond rate is now at 2.78% (down -3 bps from this time Friday) and the same as the earlier RBNZ fix for that 10yr rate at 2.78% (down -4 bps). The US Govt ten year is now at 1.96%, and up +4 bps from the 1.92% where Wall Street closed last week.
NZ DOLLAR SOFT
The Kiwi dollar is little-changed today at 66.3 USc, if anything marginally softer. Against the Aussie we are soft too at 93 AUc. Against the euro we are soft as well at 58.4 euro cents. That means the TWI-5 is down to just over 70.8.
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BITCOIN SLIPS
Bitcoin is a little softer today at US$41,795 and down -1.2% from where we opened this morning. Volatility over the past 24 hours has been modest at just on +/- 1.4%.
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44 Comments
starting with the fact that a third of all our rates money is spent on a public transport system that is unusable for most Aucklanders not to mention a one off (no end date) 10c fuel levy -- complete shambles at AT massive rates subsidy for every single journey made. Surely it cant get worse than Len and Phil .......
https://www.nzherald.co.nz/nz/serious-fraud-office-silent-over-auckland…
He alone, there is one example. Another is his lying about polling.
His rabble, saying rates increases would be X% then making them Y%, wasting money on nonsense
Goff: "I don’t see us putting up tower blocks in some of those really nice areas (question referenced Mt Eden). What I see us doing is working down the main arterial transport routes, looking at places like New Lynn and Panmure...I don’t think that you start to encroach on the most beautiful parts of the city..."
An unstoppable downward spiral.
That's what you have with Natbour and their can-kicking policies of the last 20 years.
At some point, the lack of sustainability of their approach was always going bite.
Unfortunately, both of them are clueless as to how to forge a positive new direction. I doubt we will get anything other than policy tweaks from Luxon.
I hate what NZ has become, its only getting worse and NZ will continue its inexorable slide. Living in Australia is actually significantly better than I could have ever imagined. I could never live in Auckland again, what an awful city. Stunning harbour to sail and fish on but that doesn't really help with the cost of living or getting to work in a timely manner. The public transport is some of the worse I've used in any city in the world, a bit rich when people say its too expensive - its Auckland's only chance of being remotely liveable. Guess people are happy for Auckland to be the L.A of the South Pacific.
I like Auckland, but I am lucky that we have a high-ish household income. I think it would suck living in Auckland on a middle or even bit over middle income, because of the godawful cost of living here.
For people on middle incomes Brisbane, Adelaide, Perth and even to a certain extent Melbourne offer much better lifestyles than Auckland.
Completely agree. It wasn't until I left again that I realised how bad it actually is. The only thing I miss are some places to eat out othere than that I miss nothing. I've travelled widely and it remains one of the most overated cities in the world, unless you are very wealthy.
Interest is a legitimate expense, as it is in any other business, but I know what you are going to say..... The fact is there were better ways of tackling a perceived issue than re defining income and expenses, but don't apply it to any other business, it is absurd.
Any other business typically takes out business loans at 8 - 10%. Unless of course they tap into the equity in their home using a "Business Flexible Facility" at 4.79% plus margin.
If property investors were treated like every other business, then yes I agree deduct interest as an expense. But instead it's putting on both hats "oh I'm just a retail mom and pop borrower" and then "oh I'm entitled to deduct that because I'm a business", but I'm just a "mom and pop investor" the healthy homes legislation (Health and Safety) is crippling me!!!
Yes, rents are going backwards in the Queen City. And for the first month January brought some chunky rent month-on-month (-1.7%) falls in provincial North Island centers, and in Christchurch (-2.3%).
Month-on-month rents in Christchurch, Auckland, and the rest of the North Island (bar Wellington) usually drop in January. Maybe a few weeks in the holiday bach makes the landlords less greedy?!? Month on month rents (flow) tend to increase in February and March and between September and November.
Wasn't it Phil Goff who said Akl couldn't or wouldn't implement an empty house tax. Too much in the messy basket I guess. Perhaps too many councilors and their mates with empty houses.
Would interesting to find out if the Vancouver empty house tax is working effectively.
Carnage for Queenstown businesses:
https://www.stuff.co.nz/national/health/coronavirus/127764794/covid19-c…
Will be like this in bigger cities soon.
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