Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Non-bank lender Resimac have raised their fixed rates by between +23 bps and +43 bps and well above the main banks. They have also raised their floating rate by +20 bps to 4.09%, which is lower than the main banks.
TERM DEPOSIT RATE CHANGES
None to report today.
THE DAIRY AUCTION
After having rise at the prior four bi-weekly auction events to be +19% higher than at the beginning of 2022, today's dairy auction saw WMP prices fall -2.1% and after other lines rose, an overall slip of -0.9%. But with the local dairy season winding down now (and it will until May), today's dip won't have much impact on the farmgate payout forecasts.
THE CARBON AUCTION
There was a carbon market auction as well today. Each quarter the Government releases New Zealand Units (NZUs),also known as carbon credits, via an auction, quarterly. Demand was sufficient to trigger release of extra units from the cost containment reserve, resulting in new 10,518,300 units in total being released to the market. This was as expected. 30 of 32 bidders won something at this auction. Prior to today's auction the price of a NZU was $72/NZU having fallen from $86.25/NZU at its peak over the past month. Post auction the price rose marginally and is now at $74/NZU.
THE HOUSING AUCTIONS
Just over a third of auctioned properties are selling under the hammer in Auckland, two thirds in Canterbury.
LARGER CURRENT ACCOUNT DEFICIT ...
Our actual current account deficit in the year to December was -$20.8 bln, or 5.8% of GDP, pushed up by a rising deficit during the year. In 2020 it was just -0.8% of GDP, in 2019 -3.3% of GDP. All these are manageable levels, mainly because our overall liabilities are not rising (see next item). (The highest current account deficit for any year was -7.8% in 2008.) None of this is market-moving. New Zealand's Q4-2021 GDP result will be released tomorrow. An average +3.3% expansion is expected, but Westpac expects +3.8%, ANZ expects +3.6%.
... BUT WE OWE THE WORLD LESS
New Zealand’s net international liability position was -NZ$161 bln (-46.1% GDP) at 31 December 2021, $19.1 less than at December 2020. In Q4-2020 this was -55.7%. In Q4-2019 it was 53.7%. The narrowing of the net liability position was due to rising offshore financial asset values outpacing the rise in the value of our financial liabilities. The net international investment position represents the difference between New Zealand’s financial assets and liabilities with the rest of the world. New Zealand has a net liability position as we have more liabilities with the rest of the world than we do assets.
FMA TO CONSULT ON FINANCIAL SERVICES CONDUCT GUIDE
Financial Markets Authority CEO Samantha Barrass says the regulator will soon publish a draft conduct guide for consultation as it moves to overseeing the conduct of banks and insurers under the Financial Markets Conduct Act. This will refresh and keep up-to-date the FMA's expectations of what good conduct looks like, will apply to the whole financial sector, and won't be a prescriptive checklist, Barrass says.
RBNZ MULLS CAPITAL INSTRUMENTS FOR MUTUAL BANKS
With its new bank regulatory capital requirements being phased in by July 2028, the Reserve Bank has issued a consultation paper on developing a bespoke capital instrument that could qualify as Common Equity Tier 1 capital for mutual banks SBS Bank and The Co-operative Bank. The Reserve Bank offers two options; a Mutual Equity Instrument (MEI) and a Mutual Equity Tier 1 (MET1) capital instrument. The Reserve Bank says it favours the MET1, considering it closer to having the same loss absorbing qualities as ordinary shares. Submissions are sought by June 10.
MORE CONSULTATION ON CLIMATE-RELATED DISCLOSURE REPORTING
The External Reporting Board has released the second part of the climate-related disclosure standards for public consultation. This focuses on strategy, metrics and targets which combined, outline how entities need to assess current and future climate risks and opportunities and report on corresponding financial implications. Development of the climate reporting standards follows the announcement in 2020 to introduce a mandatory reporting regime for key New Zealand companies including large, listed issuers and financial sector entities.
FEWER NEW TRACTORS
The number of new tractors registered in February was on the low side, in fact the lowest February level in five years.
UNHAPPY IN WORK
In Australia, jobs growth is high and their jobless rate is at decade lows, but consumers are unhappy. ANZ suggests this can perhaps be explained by falling real wages. But even that is balanced by a much larger pool of household savings built up during the pandemic lockdowns so you might have thought this would back up consumption in Australia. In any event unhappy consumers present a downside risk to Aussie consumption.
CHINA HOUSE PRICES UNDER MORE PRESSURE
The latest data on house prices in the major cities in China shows that 40 or their 70 largest cities in their reporting sample declined in February from January. (They say on a population weighted basis they rose. But that 'rise' is a 6 year low.) But second- and third-tier cities remained flat or decreased month-on-month. On a year-on-year basis that is only 24 of 70 major cities that rose. The declines are building.
WHAT WILL JAY DO?
All eyes are shifting to the US Federal Reserve tomorrow morning for their inflation-fighting policy stance. Markets are nervous.
GOLD FALLS FURTHER
In early Asian trading, gold is lower today from this time yesterday, now at US$1922 and down another -US$27. It is a price that got down to US$1918/oz in New York earlier, having closed even earlier in London at US$1914/oz,
EQUITY UPDATES
The S&P500 ended its Tuesday session up +2.1%, rising steadily during the day. The Dow was up less, the Nasdaq up +2.9%. Tokyo has opened up +0.9% in early trade. After two days of steep declines, Hong Kong has opened today up +2.8%, making back a part of the overall retreat. Shanghai has opened up +0.8%. The ASX200 is up +1.1% in afternoon trade. The NZX50 is up +0.7% in late trade today.
SWAPS PUSH UP AGAIN
We don't have today's closing swap rates yet. They are likely to have risen again today, but with smaller gains than recently. The 90 day bank bill rate is up a sharp +7 bps at 1.56%. The Australian Govt ten year benchmark bond rate is down -3 bps at 2.49%. The China Govt 10yr is up +4 bps at 2.85%. The New Zealand Govt 10 year bond rate is now at 3.16% (up another +5 bps) and still higher than the earlier RBNZ fix for that 10yr rate at 3.14% (up another +5 bps). The US Govt ten year is now at 2.15% and down -1 bp from this time yesterday.
NZ DOLLAR SLIPS
The Kiwi dollar is now at 67.4 USc and little-changed from this time yesterday although it has moved around in between. Against the Aussie we are also unchanged at 93.9 AUc although it got over 94c earlier. Against the euro we are softer at 61.5 euro cents. That means the TWI-5 is now just over 73 and net lower.
BITCOIN FIRMER
Bitcoin has firmed again today, now at US$39,258 and up +0.7% from this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.2%.
This soil moisture chart is animated here.
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