Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Both BNZ and ASB raised home loan rates. But ASB's rises were notable because they pushed on up above all others. More here. Update: Both Westpac and Cooperative Bank has also raised rates
TERM DEPOSIT RATE CHANGES
ASB raised term deposit rates, taking their nine month rate to 2.00%. Update: Westpac and Cooperative Bank have raised TD rates too.
RATE RISES GET MAJOR PUSH
The US Federal Reserve raised their policy rate today by +25 bps. That amount by itself isn't that important, but is comes soon after they signaled they are ending QE,, one member wanted a +50 bps rise, their dot-plot rose notably, and inflation signals are all much higher. They have fired the starters gun for the real race higher for policy interest rates, after months of signaling. (Hong Kong raised their policy rate today too.)
HIGHER MILK PRICE, LESS PROFITABLE
Dairy co-operative Fonterra maintained its 'mid-price' farm gate milk price forecast today of $9.60/kgMS and its full year forecast earnings of 25c to 35c a share. But they also signaled that their half year profit fell -13% because they are paying so much more to farmers for milk.
RIVERS TO DEPART
The well-regarded CFO at Fonterra has said he is quitting. No reasons have emerged yet.
BIG JUMP
Immigration NZ says more than 22,000 residence visas have been approved since the start of this year. That's an eightfold increase.
SMALL JUMP
Economic activity as measured by GDP rose a less-than-expected +3% in the December quarter from the prior quarter as the economy bounced back in Q4-2021 from the lockdown blues - but the bounce was nowhere near as strong as economists thought it would be. But despite that, all analysts seem to agree the Q4 rise won't be sustained, so the best we are heading into is a lackuster expansion. And no-one sees inflationary forces easing. Business NZ sees the outlook as 'subdued'.
IMPORTING OUR PUBLIC SERVICE CULTURE?
I kept getting the sense that many senior public service managers were speaking with British accents. Are we being re-colonised from the inside of our public institutions? The concern is that we are just importing 'solutions' to some other country's problems. So I asked the Public Service Commission (ex the SSC). The have responded like this. For Tier one roles, "Of the current 39 Public Service leaders, one was educated in the UK, one was educated and appointed from the UK and one was educated and appointed from Australia." For Tier two and Tier three roles (about another 1280 roles defined as 'senior leaders of the wider Public Service'), "Public Service Commission does not hold the information relating to tier two and tier three Senior leaders across the Public Service."
ONLY FOUR WINNERS, 57 LOSERS, BUT YIELDS JUMP
More than $760 mln was bid today in 61 bids for two NZ Government bond tenders. But only four bids won anything. The April 2027 $100 mln got $482 mln in bids. Two bidders won at 3.01% and up from 2.65% just two weeks ago. Presumably the other bidders all bid higher than that. The $100 mln available for the May 2051 bond got $281 mln bids from 32 bidders. Again, only two won anything here and at 3.53%, well above the 3.19% two weeks ago.
COMPLETED!
Hugely over-budget, and very late, the long awaited and long-needed 27km Transmission Gully highway is now slated to open "before the end of this month". There will be significant travel time savings and related fuel time savings (not to mention significantly fewer road accidents).
A VIRTUOUS JOBS REPORT
Australia added +77,400 jobs in February and their jobless rate fell from 4.2% to 4.0%. (In February 2021 it was 5.9%.) Better, full-time jobs rose +122,000 while part-time jobs fell -45,000. With our borders open, the sucking sound might be louder.
GOLD RECOVERS
In early Asian trading, gold is higher today from this time yesterday, now at US$1934/oz and up +US$12. In between it had fallen under US$1900/oz, so a recovery is underway.
EQUITY UPDATES ALL UP
The S&P500 ended its Wednesday session up +2.4%, after a volatile ride through the Fed announcement. In the end it finished strongly higher. Tokyo has opened up +3.2% in early trade with similar optimism. Hong Kong has followed up yesterday big recovery with an even larger +3.6% rise at their open today. Shanghai has opened up +1.2%. The ASX200 is up +1.4% in afternoon trade. The NZX50 is up +1.5% in late trade today.
SWAPS ON HOLD?
We don't have today's closing swap rates yet. They are likely to have changed little today with the lower-than-expected GDP result taking the wind out of local sails. The 90 day bank bill rate is up another +2 bps at 1.58%. (Two weeks ago it was 1.34%.) The Australian Govt ten year benchmark bond rate is up +3 bps at 2.52%. The China Govt 10yr is down -2 bps at 2.83%. The New Zealand Govt 10 year bond rate is now at 3.20% (up another +4 bps) and still higher than the earlier RBNZ fix for that 10yr rate at 3.18% (up another +4 bps). Although it got as high as 2.24% in between, the US Govt ten year is now at 2.15% and unchanged nett from this time yesterday.
NZ DOLLAR RISES
The Kiwi dollar is now at 68.4 USc and a full +1c higher from this time yesterday. Against the Aussie we are lower at 93.6 AUc. Against the euro we are firmer at 61.9 euro cents. That means the TWI-5 is now just over 73.7 and +65 bps higher as commodity currencies find favour again.
BITCOIN RISES
Bitcoin has firmed again today, now at US$41,033 and up a chunky +4.5% from this time yesterday. Volatility over the past 24 hours has been high at just over +/- 3.6%.
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40 Comments
Food for thought for some of the Aussie emigration proponents. It doesn't appear to be the housing nirvana some make it out be. You need to add stamp duty and road toll's into the mix as well.
https://www.smh.com.au/property/news/sydney-melbourne-among-top-five-le…
Also, two large construction firms have tipped over there in recent weeks
https://www.abc.net.au/news/2022-03-17/condev-construction-liquidator-w…
https://www.news.com.au/finance/business/other-industries/australian-bu…
Australia is not even close to being a housing nirvana. Some parts of it are just significantly less bad than here.
The numbers look a bit suspect though. Because median unit and house prices are reported individually in Australia it looks like they are using the house price. In New Zealand there is only a median dwelling price.
May not be an apples with apples comparison.
Bitcoin has firmed again today, now at US$41,033 and up a chunky +4.5% from this time yesterday.
Interesting times for ol' ratty. Y'days pump looked like whales playing their market trading games, but the market has bounced solidly back.
And the Ukraine has understandably established a legal framework for the country to operate a regulated crypto market. Hot off the heels of the EU not voting against proof of work (Bitcoin) being an environmental pest.
https://techcrunch.com/2022/03/16/ukraines-president-just-signed-a-law-…
937 in total in Wellington city too. I've never seen it this high ever.
Rentals have been hovering around 800 too. Whilst I haven't tracked them long term, it has been around this mark and not dropping since the usual January boom. Plenty have been listed for 2 months.
I got an update in one property today in a regional town that's seen a lot of growth recently, but has seen at least a doubling of houses on the market since last year. This house was last sold July 2020 for 560k, RV (Sept 2021) 760, Homes estimate 850.
Was advertised a few months ago at offers over 695. Then changed to price by negotiation. Now it's at offers over 650.
There will be significant travel time savings and related fuel time savings
Not heard of the Downs-Thomson paradox David?
https://en.m.wikipedia.org/wiki/Downs%E2%80%93Thomson_paradox
I've posted this before but will take any excuse to repost. It's from the Ozzie satire show Utopia but is still the best explanation I have come across to illustrate Jevons Paradox and how it gets bypassed in transport projects
This guy Milam has done lots of research on this. I can't find a link to the original but here's an abstract and other references which say the same
https://journals.sagepub.com/doi/pdf/10.3141/2653-02
edit: here's a better full access one
Yes I'm broadly familiar with the induced demand theories. It's by no means a universal law and depends hugely on the specific circumstances.
It's not restricted to roads either, it also applies to public transport etc.
At some level transport has to approximately scale to population or it would get so jammed up noone could get anywhere.
Now that it's on the cards that tourism will be opening up, entrepreneurs will be scouting new opportunities in those areas in which New Zealand has traditionally done well, like extreme adventures.
But they will have to be really scary to better what I saw the Aussies themselves doing on tv last night where a new reality tv show involved participants having to do really frightening challenges, such as the SAS-like escaping from inside a submerged helicopter.
Anyway, I still have an eye for the main chance despite my age, and I spotted a great opportunity for those younger to exploit. I thought of it when I read that a convoy of a couple of hundred "Tribesmen" motorcyclists, riding along the highway four abreast and straddling both sides of the road, turned on some poor driver they were tail-gating who had been intimidated into having to pull over to the side of the road to let the convoy pass. The bikies then decided that this innocent motorist deserved a hiding for this insolence in spoiling their fun; he was then beaten to a pulp and is now critically injured in hospital fighting for his life.
The police say they want to hear from anyone who has footage of this incident, so we can confidently say nothing more will happen from this quarter.
But what a business opportunity! An entrepreneur only has to start a business with the "Tribesmen" whereby the tourist looking for an extreme experience has to survive driving a vehicle at the head of a "Tribesman" motorcycle convoy knowing that if he doesn't hold his nerve over the whole course and is intimidated into turning off to the side of the road to let the convoy pass he will receive a life-threatening beating. The "Tribesmen" would not expect too high a fee because the prospect of satisfying their bloodlust would be almost payment enough; thus the overheads would be pretty low. So you could pocket the tourists' fee with only a small percentage going to the "Tribesmen", perhaps just enough to cover their petrol.
This extreme experience would surely put New Zealand back in front of the Aussies.
Anyone can take up this idea for free; I require no payment. Consider it my contribution to the New Zealand tourism business in these challenging times.
It can be simpler than that though. A jet boat driver in Queenstown, loaded up recreational drugs, plus a belly full of booze, goes out the next morning, and unsurprisingly launches said boat into a bunch of rocks and passengers get injured, not dead luckily. No not the wild west but surely then, the wild south east.
It's only since the car started to dominate over buses, mopeds and bikes that they have had that sort of congestion. Solution is similar to most congestion issues, increase the cost of driving at peak times via parking fees, congestion charging and investing in alternative modes like bus and cycling priority and pedestrian areas in downtown streets. https://www.sciencedirect.com/science/article/pii/S2213624X21002157
I'm British as well, it's not a slight but an observation about the risks associated with importing poor practices.
Edit to add: I don't buy the replay about not collecting data on employees background. I've not worked in a decade that didn't collect all sorts of background and cultural information. They are just too lazy to coordinate a proper response.
It seems like most times I hear a public sector official on RNZ defending some patently absurd civil service outcome, the accent is usually a foregone conclusion. But if someone is going to pay you big bucks to come to NZ, work in a Comms role and give you five weeks of annual leave (as well as generous PPL) why wouldn't you? There are worse places to be, and it beats trying to work a marketing role in the private sector in a contracting economy (outside of housing) only to be paid the bare minimum.
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