Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
There have been no changes so far today, however, ANZ has moved up its business rates by 50 basis points. ANZ's business bank indicator rate is now 9.6%, the business overdraft rate is 11.6% and the agri current account is now 7.8%.
TERM DEPOSIT RATE CHANGES
There have been no TD rate changes so far today, however, ANZ has moved its standard online savings rate up 10 basis points to 0.3%.
CONSENTED YES, BUT WHEN WILL THEY BE BUILT?
Record consent numbers for new dwellings have been reported by Statistics New Zealand, but Westpac senior economist Satish Ranchhod wonders how quickly they will be built. "We expect that, while building activity will remain strong for some time, it won’t rise as quickly as consent numbers have. Shortages of labour and materials are widespread. That’s providing a brake on the pace of building activity, with completion times stretching out. We’re also seeing costs rising rapidly," he says. He also notes that while building activity has been surging, population growth has plummeted. "As a result, home building is now running well ahead of what’s needed to keep up with population growth, and the housing shortages that developed in many regions over the past decade are now being rapidly eroded."
AUCKLANDGEDDON? BARFOOTS' SALES PLUMMET
It's getting cold out there. Auckland's largest real estate agency experienced a dramatic decline in sales volumes in April, with selling prices also dropping. Barfoot & Thompson sold just 615 residential properties in April, down from 1107 in April last year. That's a fall of 44%.
ROBERTSON PLAYING BY NEW FISCAL RULES
Finance Minister Grant Robertson's first pre (May 19) Budget speech for the year was a financial trainspotter's delight, introducing us to a new debt ceiling and new surplus target. Under the new rules goodie bags such as the NZ Super Fund will be included in the debt measures.
CLEAN CAR DISCOUNT KNOCKS NEW SALES; THE MIGHTY UTE FEELS THE PINCH
The Motor Industry Association has reported the weakest April month for new vehicle registrations since 2015 following the introduction of the Clean Car Discount fees. For the first time in over a decade no utility vehicles (utes) made the top three for sales. Overall, registrations of 9,756 new vehicles were down 25.7% (3,377 units) on April 2021. Year to date the market is up 3.4% (1,853 units) compared with the first four months of 2021. The top three models for April were the Mitsubishi Outlander (837 units), the Toyota RAV4 (716) and the Mitsubishi Eclipse Cross (544).
NAB TO UNDERTAKE 'REMEDIAL ACTION PLAN' AFTER AUSTRAC INVESTIGATION
AUSTRAC has accepted an enforceable undertaking from National Australia Bank (NAB) to uplift its compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws. The action follows an AUSTRAC enforcement investigation which identified concerns about NAB’s AML/CTF program, systems and controls
TAKING THE PLUNGE ACROSS THE DITCH
Australian Consumer confidence plunged 6.0% last week, according to the latest ANZ Roy Morgan poll. This was the sharpest fall since the 7.6% drop in mid-January due to the Omicron surge. ANZ head of Australian economics David Plank said the strong inflation result of 5.1% reported last week was likely the primary driver of the drop in confidence as it increases the prospect of interest rate hikes by the Reserve Bank of Australia in the near future. This is supported by the fact confidence dropped 9.6% amongst people ‘paying off their home loan’, while for people who already own their home or are renting confidence dropped by 4.7% and 4.2% respectively. The RBA was making its latest rates decision later on Tuesday.
BUSINESSES WANT MORE DEBT, BUT CONSUMERS NOT SO MUCH
Credit bureau Centrix says businesses appetite for debt has started to bounce back, suggesting business confidence may be improving. But overall demand for consumer credit is down 6% year-on-year, while loan arrears are increasing across the board. The number of consumers in arrears is up 5% year-on-year in March 2022, driven primarily by increasing arrears for personal loans, buy now pay later accounts, and telco plans.
GOLD FLAT
In early Asian trading, gold is just about in positive ground, up $1 on the day so far at US$1864 - but that's after a more than US$20 drop overnight.
SWAPS FIRM
We don't have today's closing swap rates yet. They are likely to be firm again. The 90 day bank bill rate is up 2 bps today at 2.13%. The Australian Govt ten year benchmark bond rate is up 3 bps at 3.28%. The China Govt 10yr is at 2.86%. The New Zealand Govt 10 year bond rate has risen 4 bps to 3.75%. The US Govt ten year has just retreated back to a little below the three mark at 2.99%.
STOCKS MIXED
Wall Street had a turn for the more perky after recent gloom, finishing up 0.26%, and Hong Kong is recovering from a down start to be up 0.3%. Tokyo and Shanghai are closed for holidays. The ASX200 is just in positive territory, up 0.02% in mid-day trade, but the NZX50 is down again, this time by 0.6% in late Tuesday trade.
NZ DOLLAR MIXED - BUT BETTER AGAINST US
The Kiwi dollar has revived a little against the US dollar and is up 30 basis points from this time yesterday at 64.6. Against the Aussie though we have dropped by about the same amount to 91.1 AUc. Against the euro we are 5 bps lower at 61.1 euro cents. The TWI-5 has moved up to 72.0.
BITCOIN MARKS TIME
Bitcoin is not much changed in the past 24 hours, falling 0.24% to US$38,540, having been as low as $38,156 and as high as $39,075 in the past 24 hours. The whole crypto market is little changed in value at US$1.74 trillion.
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37 Comments
AUSTRAC has accepted an enforceable undertaking from National Australia Bank (NAB) to uplift its compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws
The new National candidate for Tauranga has spent time working on compliance and AML for Westpac, CBA, Deutsche--all three with sketchy track records on AML. His time at Westpac was prior to the bank being fined for AML failures, but it makes you wonder what he actually achieved in his role(s).
https://www.complianceweek.com/regulatory-enforcement/westpac-set-to-pa…
The New Zealand Govt 10 year bond rate has risen yet again, another 4 bps, to a remarkable 3.75%. And swap rates have been relentlessly increasing all over the spectrum.
Markets are sending very clear signals that the rates normalization process has still a long way to go, and any hopes that rates might decrease in the medium term are starting to appear as pure wishful thinking,
No, bond traders are betting on what RBNZ will do in response to the domestic / international context and the yield is rising accordingly. If RBNZ announced they were going to be more doveish, the yield would come down, if RBNZ came out with some even more macho hawkish message, the yield would go up. The idea that the RBNZ is a follower of the markets is deeply flawed - although they are obviously influenced heavily by other central banks (they 'hunt in packs').
With only a 0.25% rise today, the RBA has green lighted inflation. They dont however have the same over inflation in housing that we do, Melbourne, Brisbane and Perth all have medians less than 800k compared to Aucklands 1.1 (was 1.2 last dec but has since dropped 100k). But they have still locked in 5%+ inflation for the next quarter.
They seem to have adopted a policy of not saying much between meetings, to give themselves maximum flexibility.
In April, they reiterated their view of a 3.25% peak OCR. As of now, the swap markets are saying it will be 4.25%. May will have a full suite of updated RBNZ data and forecasts so it will be very interesting to see where they land. If they stick with their existing track there will be a major correction in short term swaps. Suspect we will land somewhere in the middle as the housing market is softening quicker than they projected.
ROBERTSON PLAYING BY NEW FISCAL RULES
My house is falling down - the windows are cracked and dangerous, the pipes leak raw sewage onto the front garden, and I need to replace my 1960s heating system because the gas is too expensive - my damn bills are taking up all of my earnings. My bank have offered me a huge overdraft at rates that are well below inflation... but I am nervous about debt because it might look bad for me to be overdrawn. My dad always said you should only spend what you have earned. So, do I:
a) Struggle on and pay the bills - maybe using a small overdraft to replace a couple of my windows every few years so I don't leave my kids a condemned, unhealthy property.
b) Put a 10 improvement plan together to get my house all nice and warm, extend my negative real rate overdraft to pay for it, leave my kids a house that doesn't cost them a load of money and make them ill, and focus on making sure interest payments are serviceable for our family over the medium- to long-term?
The Westpac bloke is only about quarter of the way to a complete understanding of the construction side of things.
notably missing from his comments are the huge headwinds for residential construction of:
- falling house prices
- rising costs of finance (more a factor on demand side, but will start to impact developers too)
The economics discipline leaves so much to be desired, especially in a tiny country with a tiny talent pool like NZ.
Mediocre.
Since residential property investment is a business that shouldn't be treated any differently than any other business, in reference to comments around the removal of interest deductibility, then why are Landlords not required to take out business loans at 9.6%?
Surely that's treating them differently to any other business.
No, they are providing a very high level of security to the bank against their debt, and losses in the value of the property held as security can be covered by the level of equity held by the bank, or else the joint finance security held on the persons other property.
For the first time in over a decade no utility vehicles (utes) made the top three for sales.
Manufacturers weren't prepared for the legislative changes because there was no industry consultation. It actually takes years to design a vehicle, test it, re-tool the plants, stamp them out and ship them to customers. Last I heard there won't be a hybrid ute in New Zealand until 2023.
I largely share the sentiment. But there are so many supply issues right now that I wouldn't want to extrapolate from these numbers. Certainly the EV numbers are way down because tesla nz can't get any cars into the country (because shangahi has been shut down). Wouldn't surprise me if there are similar stories for many others.
it wont take ford long to design and built an electric ute, the new CEO has split the company up and the new electric division is flat out, as for NZ farmers buying an electric vehicle that will take years to change their mindset, they are a very old stubborn breed
2022 Ford F-150 Lightning, Already Sold Out, Starts Production (caranddriver.com)
And here it came from Peter Thompson today, as expected: "Barfoot & Thompson Managing Director Peter Thompson warned vendors against having unrealistic price expectations if they want to achieve a sale.' He is right, the vendors who have been on the market for over 3 months now need to get real or delist.
Newshub and Roy Morgan polls out today.
https://www.newshub.co.nz/home/politics/2022/05/newshub-reid-research-p…
https://www.roymorgan.com/findings/8962-nz-national-voting-intention-ap…
One poll has ACT at 10%, the other at 6%. Quite a difference, yet both think each other’s numbers are well outside their margin of error.
It would be good if someone took the numbers from all polls within a certain timeframe, that would be a much bigger and diverse sample set with a lower margin for error.
it is to be expected, if you look at the election in australia labour are going to win that means next year we will change party in charge as well. as for things getting better in NZ over the short to medium term don't count on it. neither major party has a long term vision they both will say do what ever it takes to win the benches then stay there as long as they can to the determent of our future generations.
Actually, I don't trust either, preferring the Kantar (ex Colmar Brunton as the more independent version)
However, the trend is well and truly set in now, Ardern might oversee one of the worst election results in Labour history if their path continues with so many highly contentious and divisive policies. How will the UN job be looking then?
Interesting, not one comment on Robertsons Gerrymandering of the debt measurement,
Moving the measurement so that the current 35% is a fantastic 20%
Then his future 30% under the new measurement is actually 52.5% under the current rules.
Can he please define "Fiscal Responsibility"?
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