Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes announced today.
TERM DEPOSIT RATE CHANGES
None here either.
OCR DOUBLING IN THE NEXT ELEVEN WEEKS?
ANZ economists have revised their inflation and interest rate forecasts up, seeing a +50 bps rise in April and another +50 bps in May taking the OCR from 1.00% now to 2.00%, as they now see the OCR hitting 2% by May - eleven weeks from now.
COMCOM STAYS HANDS-OFF
The Commerce Commission has recommended a series of tweaks to the supermarket sector but stopped short of some of the tough measures it contemplated. The supermarkets seem to have successfully pushed back any challenge to their dominance.
ONLY UP +34% FROM 2017
Auckland Council's latest rating valuations have ranged from +15% in the Waitemata Ward (central leafy suburbs and CBD) to almost +60% on Aotea/Great Barrier Island. Overall the rise is +34%. These changes update the prior 2017 levels. But they are only based on the postponed 2020 valuation levels.
DAVID CUNNINGHAM JOINING SQUIRREL
David Cunningham, former CEO of The Co-operative Bank, will become CEO of mortgage broker Squirrel in July. Squirrel says Cunningham will take over from Squirrel founder, John Bolton, who will stay closely involved in the day-to-day running of the business, as an executive director and adviser. A former Westpac executive, Cunningham joined The Co-operative Bank in 2012, shortly after the PSIS became a registered bank and changed its name. He headed up distribution and product management prior to becoming CEO in 2017.
SBS BANK EYES BOND ISSUE OF UP TO $150 MLN
SBS Bank is seeking to borrow up to $150 mln through an issue of five-year bonds. The unsecured, senior, fixed rate bonds will pay investors at least 4.05% per annum. The offer opens Tuesday, with the issue margin and interest rate for the bonds to be set following a bookbuild process, expected to be completed on March 11. The indicative issue margin range above the underlying base rate for the bonds is 1.15% to 1.30%. The SBS bonds are expected to have a BBB+ credit rating from Fitch. SBS says the purpose of the offer is to raise funds to be used for general corporate purposes, including making loans to SBS customers.
HOUSE BUILDING PROPS UP GDP
Next week, Stats NZ will announce the Q4-2021 GDP result. It is expected to deliver minimal growth at the given both the pandemic impositions, plus higher-than-expected inflation. But today we do one of the final pieces of the overall puzzle - building work completed. That was up +10% in 2021 from 2020, with a good burst in the Q4 period, and mainly because of new house building. Auckland led that activity. Still to come before the GDP data can be calculated are the Q4 manufacturing data, and the current account data. In Q1-2022 the industry has been grappling with staff and materials shortages, and costs are rising rapidly.
WHERE THE GROWTH HAS BEEN
Stats NZ also released updated data on the local digital sector, which it does every two years. It says over the two years sales of software and services were worth $13.0 bln, up +39%, sales of published software rose +52% to $4.0 bln, sales of IT services increased +34% to $9.0 bln, and exports of IT software and services were 17% of the total sales of ICT software and services, down from 19%.
BROAD RECOVERY
In Australia, the NAB business confidence index jumped in February and January was revised up. This February result is the highest reading in four months, which was way above the long run average. During the month the Omicron virus wave eased and the late 2021 momentum was regained. Confidence rose in every sector. But neither the Ukraine conflict or the east coast flooding will have been fully reflected in the February data and both could have more of an effect over coming months.
WEATHER'S REVENGE
Last week a major rainstorm hit NSW, but missed Sydney. This week it has hit the city full force. Major flooding is extensive and will have wide economic repercussions.
BROAD RETREAT
Japan's current account slipped further into a larger deficit as the cost of imports far exceeded its exports in Q4-2021. It was their largest deficit since 2014 and their second largest deficit ever. They normally post surpluses.
GOLD IN LITTLE NET CHANGE
In early Asian trading, gold is now at US$1993/oz and down -US$1/oz from this time yesterday. It has been moving around a bit in between however and touched US$2000 in the morning London fix.
EQUITIES SOLD OFF FURTHER
In a building selloff on Wall Street, the S&P500 closed -3.0% lower in Monday trade. The Dow was down -2.4%, the NASDAQ -3.6%. In opening trade in Tokyo today, they are down -0.2%. Hong Kong is up +0.9% after yesterdays enormous retreat, and Shanghai is down -0.2%. The ASX200 is down just -0.1% in early Tuesday afternoon trade. The NZX50 is down -1.0% in late trade.
SWAPS JERKED HIGHER
We don't have today's closing swap rates yet. They are likely to be up sharply on the outsized ANZ view that local rates are going up fast. The 90 day bank bill rate is up +1 bp at 1.35%. The Australian Govt ten year benchmark bond rate is up +12 bps at 2.20%. The China Govt 10yr is unchanged at 2.85%. The New Zealand Govt 10 year bond rate is now at 2.81% (up +8 bps) and sharply higher than the earlier RBNZ fix for that 10yr rate at 2.79% (up +3 bps). The US Govt ten year is now at 1.76%. That is up +7 bps bps from this time yesterday. Investors have conviction the Fed will raise rates next week, just as earnings are under threat.
NZ DOLLAR SOFTISH
The Kiwi dollar is -½c lower than this time yesterday, now at 68.4 USc. Against the Aussie we are up at 93.3 AUc. Against the euro we slightly lower at 63.3 euro cents. That means the TWI-5 is now at 73.7.
Appreciate this coverage? Support us and go ad-free. Find out how.
(We are not supported by the Public Interest Journalism Fund, nor Google, nor Facebook's similar programs.)
BITCOIN HOLDS BUT VOLATILE
Bitcoin is little-changed from this time yesterday, now at US$38,173 and down a minor -0.7%. Volatility over the past 24 hours has been high however, at just on +/- 3.2%.
This soil moisture chart is animated here.
Keep ahead of upcoming events by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
33 Comments
Would be the speculative growth stocks I'd be staying clear of at present - adding a higher discount rate to their growth projections could have massive downside risk...(then again, many already have)
NASDAQ approaching 20% fall from its highs early last year and that might only be the start. If you want to use the 20% as the threshold for a crash...then it appears that one is happening right now.
I was going to dump a whole lot of money in the kids' Kiwisavers when the Ukraine invasion began, but I've been holding off out of laziness mostly, but also with an eye on the markets. 1-2% declines across most sharemarkets every day. I won't catch the falling knife, but the cuts won't be so deep when I eventually jump in.
You missed the party I'm afraid. Don't worry, another one will start eventually.
I'm down about 2% in the year so far, thanks to some heroic performances from ASX oil and gold companies cushioning the NZX blow. No biggie - I'm a net buyer anyway so falling prices is good for me, no margin to worry about.
A third of the agency's $60 million annual funding is raised directly via industry levies.
I guess they do alright in regulating our power (distribution & retailing) and telco markets. Market studies is just a small part of a very wide range of activities performed by the watchdog.
I'd love to get a gig doing one of their market studies, like the grocery store report. Who didn't know there was a duopoly? Prices are expensive? Stores treat their suppliers badly? They are making a killing?
I could spend several months, using as many words as I can think of to make a very impressive report.
Welcome to my world. While not involved in this one I have done many "reports"
The analysts spend a week or two sorting the data, then about an hour to come up with a recommendation.
Said recommendation is then ignored, as the senior/exec in charge has visions of a grand magnum opus/pathway to glory and already has a "great" narrative in their head.
The analysts then spend months creating, massaging, and interpretting the data to try and make it fit the narrative.
Finally a the report passes through mutliple layers of management, review, and finally comms to effectively erradicate any meaningful points. The idea being that it provides the commissioning entity with the ability to interpret it as required depending on their own pre-determined narrative.
You then release the report, which is either not read or critisised heavily because it was clearly pointless.
In my experience, the smarter entities don't commission reports, they take too much time. Rather they look at the facts, listen to the analysts recommendations, and take action all within a week or two.
Groceries may cost more at the supermarket but I fill up with petrol while I am there, New World. $2.63 a litre today with 6 cents off a litre discount for shopping there. $3.06 a litre at the local BP with 6 cents off a litre. The difference goes a little, well more like tiny, way to helping with the food price rises. At the end of the day it all adds up.
Robbo tells the radio audience that "income growth has been outstripping inflation over the last few years." No doubt headline metrics support that, but it is not a particularly indication of his economic literacy and ability to assess reality.
https://www.iheart.com/podcast/211-heather-du-plessis-allan-24837940/ep…
LME paused trading after a Nickel jump:
Nickel, used in stainless steel and electric-vehicle batteries, surged as much as 250% in two days to trade briefly above $100,000 a ton early Tuesday. The frenzied move -- the largest-ever on the LME -- came as investors and industrial users who had sold the metal scrambled to buy the contracts back after prices initially rallied on concerns about supplies...
Lots of cheap money speculating on commodities as pre-financial crisis.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.