Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
HSBC raised all their fixed rates today. Basecorp changed their floating rate +55 bps. Check the swap rate section below. The leap up was huge today. It's only a matter of [a short] time for banks to push fixed rates higher again. Any rates with a 3% on it are about to disappear. Rates with 6% on them are about to appear.
TERM DEPOSIT RATE CHANGES
ICBC has also raised term deposit rates, as did HSBC.
NATIONAL AUCTION SALES RATE DOWN TO 36%
As the housing market comes off its summer peak, auction numbers are falling. But so are auction sales rates with the lowest in Auckland, dropping in Bay of Plenty, strongest in Canterbury and Queenstown-Lakes.
A COMING WINTER OF DISCONTENT?
Westpac reports that consumer confidence has continued to tumble in recent months and is now the lowest it has been since the Global Financial Crisis in 2008 in their quarterly survey. Households say their financial position has deteriorated as the economy has been buffeted by a multitude of headwinds. That includes rising consumer prices and higher mortgage rates, both of which are squeezing households’ disposable incomes.
"RBNZ WON'T SAVE HOUSE PRICES"
ANZ economists say homeowners shouldn't expect the RBNZ to intervene to stop house prices falling sharply. Inflation has so much strength and persistence that the RBNZ will likely need to keep raising interest rates despite softening house prices, they say.
AUSSIES GLUM
In Australia, consumer sentiment is falling hard there too. Their ANZ/RoyMorgan survey shows it at its lowest level since September 2020. Fast rising inflation, especially petrol, is denting confidence even though their labour market is strong. But more consumers there feel their incomes aren't keeping up. The weakness in consumer confidence presents a growing near-term risk to the outlook for household spending.
CAN YOU HELP?
We are in a drive to build our resilience. We would rather rely on readers' support than fickle advertisers, political public funding, or dubious multinational 'gifts'. We are not supported by the Public Interest Journalism Fund, NZ On Air, nor Google, nor Facebook's similar programs. If you appreciate this coverage, we can offer you ad-free experience. And great economic journalism, of course. Find out how here.
THE HOUSEHOLD SECTOR WINS THE DECADE
Stats NZ released an analysis of the consolidated national balance sheets today, and although it is only up to 2020, it does show some interesting shifts over the past 14 years. Real estate is now in the books valued at $1.15 tln, $605 bln for houses we live in, $304 bln for residential rental properties, and $243 bln for company-owned premises. These represent 21% of all our assets, up from 19% ten years ago. (I thought it would have grown more.) Household balance sheets now collectively hold 37% of the nation's recorded assets. Ten years ago, that was 33%. Banks and all other financial businesses now have 25% of all assets, compared with 26% ten years ago. For businesses it is 28% now compared with 31% ten years ago. Government is now over 9% vs under 9% a decade ago. But because neither banks, business nor government increased their share, this data won't make the news (except here of course).
GOLD UP
In early Asian trading, gold is up +US$12 from this time yesterday at US$1934/oz.
EQUITIES MIXED AGAIN
After being down almost -1% at one stage, the S&P500 ended their Monday session essentially unchanged. Tokyo has opened today up +1.3%. Hong Kong has started up +0.6%. Shanghai has started their session down -0.2%. The ASX200 is up +1.1% in early afternoon trade. The NZX50 is down -0.1% in late trade.
SWAPS LEAP
We don't have today's closing swap rates yet. They are likely to have risen sharply today, maybe by as much as +15 bps across the curve. The 90 day bank bill rate is up +2 bps at 1.58%. The Australian Govt ten year benchmark bond rate is up +16 bps at 2.71% from this this time yesterday. The China Govt 10yr is up +1 bp at 2.84%. The New Zealand Govt 10 year bond rate is now at 3.30% (up +12 bps) and still higher than the earlier RBNZ fix for that 10yr rate at 3.27% (up +11 bps). The US Govt ten year is now at 2.32% and up +17 bps from this time yesterday. Jay Powell has supercharged bond market yields (sliced into bond prices) in his direct speech earlier today.
NZ DOLLAR SOFTISH
The Kiwi dollar is now at 68.8 USc and down more than -¼c than at this time yesterday. Against the Aussie we are down similarly at 93 AUc. Against the euro we are marginally softer at 62.5 euro cents. That means the TWI-5 is now just under 74.1.
BITCOIN LITTLE-CHANGED AGAIN
Bitcoin is little-changed today, now at US$41,179 and down just -0.3% from this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.3%.
This soil moisture chart is animated here.
Keep ahead of upcoming events by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
11 Comments
So far, swaps have only risen enough to forsee ~5% retail rates. To see 8%, we'd need another ~250 bps increase in swaps, which is as much or more than we've seen in the run up so far (from last winter's lows).
You might be right, but if so there's a big run up in swaps to come. It's certainly not baked into the swap curve as of now.
The US Govt ten year is now at 2.32% and up +17 bps from this time yesterday. Jay Powell has supercharged bond market yields (sliced into bond prices) in his direct speech earlier today.
The more that mainstream gets talked into more rate hikes in the short run, the uglier the curves get. The Treasury yield curve after today’s verbal assaults now stands inverted from the 3-year note on down to the 10-year; the entire middle is rather alarmingly upside-down.
The market doesn’t fear rate hikes creating a recession, rather these curves all indicate a recession is too much of a probability regardless of rate hikes and how many times some policymaker says to just ignore yields and curves. They’ve been ignored for months already, and they just keep coming. Link
Right on time for the Fed to start aggressively raising rates into the recession....as history suggests it does and perhaps always will?
Stateside - a cash rate of 2.5-3% would crack the housing market and the wider economy:
https://www.ft.com/content/812c6df1-2f54-43f8-b60d-eed613ccceff
Households say their financial position has deteriorated as the economy has been buffeted by a multitude of headwinds.
Most households costs are consumable purchases, not mortgage payments, so the Reserve Bank preference for allowing inflation to remain high while home loan rates remain low is exacerbating the economic pain felt across society.
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.