Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
SBS Bank have raised almost all their home loan rates. The Cooperative Bank has as well as has ICBC who raised all rates including their floating rate. And just as we publish, Westpac has advised rate increases, by between +20 bps and +60 bps, the last of the main banks to do so. We have an analysis here.
TERM DEPOSIT RATE CHANGES
SBS Bank has raised almost all their TD rates too, likewise the Cooperative Bank. And ICBC has raised most of their TD rates too. Westpac has also raise term deposit rates by +10 bps to +30 bps.
MBIE SEEKS FEEDBACK ON CONSUMER FINANCE RULES
The Ministry of Business, Innovation & Employment is seeking feedback on Cabinet decisions to make changes to the Credit Contracts and Consumer Finance Amendments 2020 and the Responsible Lending Code. Changes proposed seek to address concerns heard since changes to consumer credit laws took effect on December 1. Submissions are due by April 20.
MORE 'GREEN' FUNDRAISING
Goodman Property Trust (GMT, #15) is raising $150 mln in 5 year fixed rate, senior secured green bonds. They are paying 4.74% for these funds.
LEADERSHIP CHANGES AT ASB
ASB has announced three changes to its leadership team, effective May 9. Lohit Kalburgi, currently Executive General Manager of Corporate Strategy and Customer Experience, has been named to the new position of Chief Transformation Officer. Adam Boyd, currently Executive General Manager of Private Banking, Wealth and Insurance, will become Executive General Manager of Retail Banking. Nigel Annett, currently Executive General Manager of Corporate Banking, will take on expanded responsibility for ASB’s Investment Management businesses. The role of Executive General Manager of Private Banking, Wealth and Insurance is being disestablished. Craig Sims, currently Executive General Manager of Retail Banking, leaves on May 6.
MAI CHEN LEAVING BNZ BOARD
Mai Chen is retiring as a BNZ director after seven years on the bank's board.
FITCH REVISES OUTLOOK ON HEARLTAND CREDIT RATING TO 'NEGATIVE'
Fitch Ratings has revised the outlook on its credit ratings for Heartland Group Holdings and subsidiary Heartland Australia Group to negative from stable on the proposed acquisition of StockCo Australia. Fitch has affirmed the ratings at 'BBB' and 'BBB-', respectively. The revision reflects Fitch's expectation of a meaningful weakening in the group's capitalisation metrics following the completion of the acquisition, partly due to the goodwill booked after the acquisition's completed, as well as reflecting the weaker capital position of StockCo Australia compared with Heartland Group. Fitch also expects the takeover to have a material impact on Heartland Group's funding profile, which may continue weakening over the medium term if the Australian operations remain wholly funded by wholesale sources.
"IT'S A LOOPHOLE"
Consumer NZ is calling for an "unfair" KiwiSaver loophole to be closed so that employers are required to make their KiwiSaver contributions on top of an employee’s pay package, rather than taking it out of the employee’s standard earnings. Under current laws, if an employer includes a “total remuneration” clause in an employment agreement, this allows them to deduct their KiwiSaver contributions from the employee’s pay.
THIRD SLAP
The FMA has issued another infringement notice to crowd funder Equitise Pty Ltd for failing to file financial statements on time, amid broader concerns about the firm’s ability to meet regulatory reporting deadlines. This is the third consecutive year they have been called out by the FMA.
RISING YIELDS COST GOVT MORE
$200 mln was tendered today in the latest NZGB auction, in two tranches. The April 2025 $100 mln which only comes up once a year, went for an average yield of 3.23%. (A year ago it was only 0.61% pa.) The May 2032 $100 mln achieved an average yield of 3.41%, compared to 3.25% two weeks ago.
CHINA FTA UPGRADE
The upgrade to New Zealand’s Free Trade Agreement with China entered into force today. The Government is touting its benefits, especially for the forestry sector. But the forestry sector, which exported $4 bln of product to China last year only had tariffs of $1.5 mln left, a tiny 0.04% (0.000375) rate. Perhaps the more important benefit will be the 6hr border clearance time for perishables. It's a pity the Chinese economy is in the doldrums just when these 'benefits' become available.
'AUDIT THE GOLD'
A popular conspiracy meme has floated to the surface in the Australian Senate by a renegade antivaxxer - and their central bank now feels obliged to respond. It is sending an official to London to verify that Australia, 80 tonnes of gold in the Bank of England vaults is still there in 100% purity. Its worth US$4.9 bln if it is and less if it isn't. It's all to do with a Zerohedge fomented conspiracy idea that there is foul play underway by secret underground dealings. (Zerohedge has recently been outed as a type of Russian troll operation.) But it is doubtful such an audit will satisfy any conspiracy type.
SETTLING BACK
A widely-watch local services PMI in Australia expanded much less in March than it did in February. But the high February level was the outlier, not these March results.
DOWNSIDE SURPRISE
Australia’s trade surplus surprised to the downside for February. The surplus, while still sizeable, narrowed to $7.5 bln in the month from a revised $11.8 bn in January (previously $12.9 bln). Markets had expected the surplus oft $11.7 bln, with some expecting $13.2 bln. So the size of the miss is getting attention.
GOLD STABLE
In early Asian trading, gold is little-changed from yesterday at just on US$1922/oz.
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EQUITIES ALL LOWER
Wall Street had another down day with the S&P500 down -1.0% at their Wednesday close. Tokyo has opened down -1.9%. Hong Kong has opened flat and Shanghai is down -0.4% at their opening. The ASX200 is down -0.5% in early afternoon trade and the NZX50 is also down -0.50% near the close.
SWAPS HIGH BUT STABLE
We don't have today's closing swap rates yet. They are likely to be unchanged from yesterday. The 90 day bank bill rate is unchanged at 1.67%. The Australian Govt ten year benchmark bond rate is down -2 bps from this time yesterday, now at 2.93%. The China Govt 10yr is little-changed at 2.81%. And the New Zealand Govt 10 year bond rate is now higher again at 3.45% (up another +6 bps) and still well above the earlier RBNZ fix for that 10yr rate at 3.41% (up another +8 bps). The US Govt ten year is now at 2.58% and a -3 bps settling since this time yesterday.
NZ DOLLAR SOFT
The Kiwi dollar is now at 69.1 USc marginally lower again today. Against the Aussie we are +½c firmer at 92.2 AUc with a yo-yo pattern emerging. Against the euro we are down almost -½c at 63.2 euro cents. That means the TWI-5 is now at 74.7, softer than yesterday but not by much.
BITCOIN LOWER AGAIN
Bitcoin is down another -4.3% today from this time yesterday to now be at US$43,336. The Mooch's spruik isn't working so far. Volatility in the past 24 hours has been high at +/- 3.2%.
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40 Comments
We don't have today's closing swap rates yet. They are likely to be unchanged from yesterday.
Notably, all tenors out to 20 years are increasingly inverted beyond three years.
Zerohedge has recently been outed as a type of Russian troll operation
I'm sure there must be a source for this claim somewhere, since I know that on this site we don't just make things up, or simply repeat things we read on Facebook. But I couldn't find a source linked in the article?
Of course there must be a credible source!
As for gold Aus conspiracy, plenty of analysis out there casting doubt on offical gold holdings. Here’s just one...
https://www.bloomberg.com/news/features/2015-02-05/germany-s-gold-repat…
Interesting times as Russia moves to ruble and gold payment system. Whose going to be swimming naked?
tick tick tick...
The London gold and silver markets have always been beyond “opaque” without any significant reporting of transactions or positions. No data has ever been offered either on commercial banks holding accounts at the BoE, or precise technical identification of gold custodies, let alone those belonging to EU members. As Venezuela knows all too well – and EU member states could be next — who may or may not be acknowledged as a valid claimee of anything vaulted in Threadneedle Street or whereabouts is an open subject left to the entire discretion of the Canary Wharf masters, not EU politicians. Same goes for the enormous unallocated gold and silver liabilities of the so-called ´bullion banks´… or any other pertinent data. [Refs. 14+15+16] Link
A source would be nice.
That being said, I made the mistake of wading into the comment section there last night when I saw an article linked on Twitter (was something about Czech Republic supplying tanks to Ukraine).
Oh boy were the comments something else.
I wish I'd saved it, but the crux of the top upvoted comment was basically "Putin must be aghast at just how bloodthirsty the West is; he's gone into Ukraine to try and make the place better and this is how the West responds" (also don't forget that all pieces of evidence pointing to war crimes are deep-faked by the CIA in order to bolster public support for arming Ukraine and eventual 'boots on the ground')
I'm sure some of it's just trolling for trolling's sake ... but it was quite eye-opening stuff.
The comments section on Zerohedge is cancer, never go there. So are a lot of the articles to be fair. They do however have quite good financial commentary, which is the only reason I visit.
Making unsubstantiated claims about the site being run by Russian trolls however is just conspiracy theorism.
The East vs West issue has been going on since Ancient Greece, at least.
Islam = eastern menace, Russia = eastern menace, it’s the same narrative.
But it’s mutual, they have Westphobia. The face of the West “baddie” changes. Just at the face of the “east” baddie changes.
Human beings define their culture and sense of belonging in antithesis to the “other” culture. We are, what we are not.
It’s not a contemporary issue. It’s a timeless feature of human civilisation.
I quite like this sketch.
Why the discussion on recession, when everything is pointing towards it and Government / central banks have run out of ammunition.
https://www.marketwatch.com/story/heres-the-first-wall-street-recession…
Consumer sees an unfair KiwiSaver loophole that I cannot. As long as the employer is paying the minimum wage, I cannot see any difference between the employer's contribution being paid on top of the remuneration package or as part of it.
An employee might be on a salary package of, say $55,600, from which 3%+3% is deducted for KiwiSaver, or a salary of $54,000 from which the employee's 3% is deducted and to that the employer's 3% added, arriving at (more or less) the same result.
I can see that clarity would come from one or the other method being mandated, but if anything it seems more logical to make total remuneration the default. That would, however, probably require the employer's 3% contribution to be compulsory, regardless of whether the employee wished to contribute or not.
And that, surely, would be a good thing.
Consumer NZ has labeled "total remuneration" clauses in employment agreements as unfair.
I disagree with this. The employer has budgeted for this cost and the clause ensures everyone receives the same benefit of that. Otherwise those employees that opt out of kiwisaver receive 3% less.
That’s one way of looking it. On the flip side, if the employer gives a total renumeration then they aren’t actually contributing to the employees retirement at all, it’s basically the employee doing it. And if the employer is giving nothing, and the government gives almost nothing these days, then what is the point of the scheme?
The employer is paying the money, which is A the salary, and B the employer's KiwiSaver contribution. So it's either paid separately as A+B, or bundled as (A+B). What is needed is clear understanding at the beginning of employment, when the worker needs to choose whether to join KiwiSaver or not. The Government could resolve this by making the 3% KiwiSaver contribution by the employer compulsory, regardless of whether the worker wished to contribute. Then it would be irrelevant how the employer contribution is described.
Except that would be a pro-forma 3% tax hike with no mandate e.g. hasn't been part of an election policy.
Arguably just a matter of timing across your whole working life, sure, but if you're young and earning less then it's locking up a chunk of a probably limited income for a very very long time. And then you get into the whole theory of 'minimum wage must be $X for people to survive' target setting but then clawing back more and more disposable income through levies such as KS/Proposed unemployment levy and then the punishing student loan repayment scheme when compared to Australia's repayment system.
A popular conspiracy meme has floated to the surface in the Australian Senate by a renegade antivaxxer - and their central bank now feels obliged to respond. It is sending an official to London to verify that Australia, 80 tonnes of gold in the Bank of England vaults is still there in 100% purity.
UK commits ‘highway robbery’ of Venezuelan gold, says academic
I actually agree with Tony Alexander......
"What we need in our country is a reallocation of people to higher-paying, higher profit jobs. That requires that the inefficient firms unable to pay decent wages to go out of business," Alexander said. "Enforced higher wage and non-wage costs are a way of doing that.
"It's called 'creative destructionism' and it lies at the very core of capitalism. We need more businesses to fail - not because of an economic downturn but because they don't produce a product or service valued enough by consumers to be able to pay high wages."
https://www.newshub.co.nz/home/money/2022/04/kiwis-wages-need-to-rapidl…
But then again, the reason why businesses haven't failed the last 2 years is because we've propped them up using funny money from the RBNZ......oh which we are now seeing the consequences of. No free lunches in the economy. We could have just let them fail, along with the housing market two years ago, and be getting on with things now after the creative destruction....but now its going to be even more painful given that we have even more debt in the system and bigger FHB mortgages!
Can you imagine the social unrest that we would be still trying to quell if the government did nothing to support businesses and their employees during a mandated lockdown and continued restrictions? I’m not sure you realize the massive repercussions of mass unemployment had the government done nothing to support these business as you are suggesting.
Unfortunately I do understand the massive repercussions and was aware at the time, as much as I am now, and what could play out over the coming years.
Look at the social unrest around the world...its just the start (in my view).....unless we can tame inflation then there will be more to come....and yet to tame inflation we may need to pop the debt bubbles we have created...and it was by making the debt bubble bigger in 2020 that allowed our economy to avoid the pain that we probably need/needed to face.
"It's called 'creative destructionism' and it lies at the very core of capitalism. We need more businesses to fail - not because of an economic downturn but because they don't produce a product or service valued enough by consumers to be able to pay high wages."
What a hypocrite. He spent most of his working life in the most protected industry. An industry that doesn't even has to produce anything and can can create credit from "thin air." An industry that's at the root of inflation and robbing young people of their time and purchasing power.
Furthermore, creative destruction is not "reallocating people to higher wages." It's the reallocation of resources to where they are better utilized. He's got it all wrong. The price of NZ goods and services is already high and people are struggling to pay those prices. Even if you are able to add more value, it doesn't necessarily mean you can charge higher prices and pay people higher wages.
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