Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Cooperative Bank has raised some fixed rates in the heart of their rate card. CFML has raised its variable rate by +50 bps to 6.45%.
TERM DEPOSIT RATE CHANGES
WBS (Wairarapa Building Society) has raised some TD rates.
HIGHER MAXIMUM VALUE
ANZ has raised the maximum amount it will lend on a personal loan, going from a range of $3,000 - $40,000 to $3,000 to $50,000, effective immediately.
A STALE POPULATION
Stats NZ released its March 2022 population data, putting it at 5,127,100. That means for the year to March, our population grew by a mere +19,200 (+0.38%) with the births/deaths net increase being +26,400, and we lost -7,300 via emigration. But this overall stability is corrosive. We have actually lost -7,500 people of working age (15-64) since September 2020, the first time since the current records began in 1991 that our working age population has shrunk. Worse, our median age has now risen to 38 years, the highest ever. (The latest update of their population clock is 5,154,350, so there seems to have been another +27,000 added since March, which suggests a corner has been turned - if their population clock is on the same basis as the 'official' data. That is not confirmed, however.)
A LITTLE DISAPPOINTING
Activity levels in the services sector during April were almost identical to March, according to the BNZ - BusinessNZ Performance of Services Index (PSI). But April’s result looks somewhat disappointing in the context of easing pandemic restrictions (from Red to Orange) halfway through the month. There was certainly no big overall PSI lift in April like we saw in the likes of electronic card transactions for the month.
HEARTLAND IN AUSSIE BOND ISSUE
Heartland Group Holdings says its Aussie subsidiary has completed an A$115 mln senior unsecured bond issue. It's the sixth issuance under Heartland Australia’s Medium-Term Note program and takes aggregate outstanding issuance to A$280 mln. The money raised will be used to refinance an existing Heartland bond issue which matures this month.
MODEST COMPARED TO THE REST OF NZ
Auckland's largest real estate agency is reporting that average Auckland rents increased +$19 a week, or 3.19%, over the 12 months to March. Within the city the largest rent increases were in South Auckland.
A PLAN FOR AN 'EMERGENCY' WITH LITTLE SUBSTANCE
The Government released its Emissions Reduction Plan today to generally underwhelming reviews. It may need a new 'working group' to plot where to from here (sarc/).
THEIR FOUR PRIORITIES
In Australia, their tax office has declared four areas it will be scrutinising in their 2022 review of tax returns. They are a) record keeping, b) work-related expense claims, c) rental property income and deductions, and d) capital gains from crypto assets, property, and shares.
JAPANESE PRDUCER INFLATION SOARING
Japanese producer prices surged +10% in April from a year ago, rising at a record rate as the Ukraine crisis and a weak yen pushed up the cost of energy and raw materials. "Worse" (but remembering, they are looking for inflation), the March to April rise was at an annualised +14.4% rate, so this shift up is accelerating.
A STUNNING RETAIL STAGGER
Retail sales in April were very grim in China. In February 2022 they were up +6.7% year-on-year. In March they fell -3.5% on the same basis, and that was bad. Analysts knew April would be worse thinking they would fall a massive -6.1% which itself would be a shocking retreat. But in the end they dived -11.1%. (And these are the official data.) You can almost hear the gasps in Beijing. This makes the recent warnings from Premier Li look inadequate. It will be no surprise to learn that their official jobless rate has risen from 5.8% to 6.1% with anyone's guess at under-employment.
INDUSTRY ON THE ROPES
The fall in China's industrial production in April was massive too. Take a look at this official chart. This is confirmed by looking at their electricity production data. In April, China produced 608.6 bln kWh of electricity, taking it back to 2019 levels, and the lowest since the pandemic-affected early 2020 levels. Given the expansion of their overall economic industrial base since then, a level of just 609 bln kWh is very low given it was almost 760 bln kWh in July 2021, a -20% fall from that peak.
SWAP RATES UNDER PRESSURE
We don't have today's closing swap rates yet as the local market is all focused on the Chinese gloom. Currently they show a further retreat of about -5 bps. The 90 day bank bill rate is up +2 bps at 2.13%. The Australian 10 year bond yield is now at 3.36% and down -2 bps from this time Friday. The China 10 year bond rate is now at 2.85% and up +2 bps. The NZ Government 10 year bond rate is now at 3.57%, down -4 bps from this time Friday nd now below the RBNZ fix for this bond which was up +2 bps at 3.61%. The UST 10 year is now back up at 2.91%, higher than this time Friday (NY time) but lower than where we opened this morning.
EQUITIES FALLING
The Tokyo equities market was up +1.5% before the ugly Chinese data landed. It is now up only +0.2% and falling. Hong Kong took a similar dive, now down -0.2% and falling. Shanghai is down -0.3% on a similar track. The ASX200 is up +0.3% in early afternoon trade after being up +1.1% in late morning trade. The NZX50 is up +0.4% seemingly ignoring the Chinese data. The S&P500 futures are currently down -0.6% in a deepening reversal after the Chinese data.
GOLD HOLDS
In early Asian trade, gold has fallen to US$1811/oz and down -US$1 from where we were when we opened this morning.
NZD BACK DOWN
The Kiwi dollar has fallen to 62.4 USc from 62.9 USc this morning. We are now down at 90.4 AUc. And we are now at 60 euro cents. That all means out TWI-5 is now just under 70.1 and -50 bps lower than where we opened this morning.
BITCOIN STABLE
Bitcoin is now at US$30,394 and up 1.1% from where we opened this morning. Volatility over the past 24 hours has been high at +/-3.3%.
VALE BRIAN GAYNOR
Business columnist Brian Gaynor has died "after a short illness". He was a holder of immense institutional knowledge of our financial and business markets and has had a substantial influence on keeping them honest. He was as close to a legend as this industry gets.
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73 Comments
"To recap, we have a highly unfavorable picture of: (1) accelerated evolution of the virus; (2) increased immune escape of new variants; (2) progressively higher transmissibility and infectiousness; (4) substantially less protection from transmission by vaccines and boosters; (5) some reduction on vaccine/booster protection against hospitalization and death; (6) high vulnerability from infection-acquired immunity only; and (7) likelihood of more noxious new variants in the months ahead"
https://erictopol.substack.com/p/the-covid-capitulation?utm_source=email&s=r
Covid is also running rampant in Aussie, and our government is letting those larrikins into NZ.
A stale population. Over more than the last two years or so, have read here a large number of commenters predicting intelligent younger generations are realising New Zealand does not offer great prospects for either career or family life. Is this paragraph not then confirmation of that as a fact. New Zealand’s outlook therefore appears grim. An increasing ageing population and welfare dependency and an ever decreasing pool of taxpayers in support. Had my chance of a career overseas thirty years or so ago, things were definitely better here then though.
So many commenters here love to run Aotearoa down, 30 years ago GBP/NZD was at 3.30, today it's 1.96 and AUD/NZD was at 1.35, today it's 1.10.
Their currencies are comparatively weaker generally due to our economy having been better run over that period. You need to earn 50% more in the UK today than in 1992 for the same amount of Kiwi. They have a lower average wage than we do.
Maybe, just maybe, the grass isn't greener. The UK is a basket case, Brexit a disaster, debt to GDP >100% etc etc.
I am not convinced the UK is worse than say Greece. You may be right about its medium and long term prospects but I've family in both England and France - sometimes one is better than the other but not dramatically. Hardly a basket case - those illegal immigrants sail north from France; very few in reverse direction. 250,000 French live in London making it France's sixth biggest city.
The commentators can keep running NZ down but I still prefer it. Judging by applicants for permanent residency I'm not alone.
It will only take a big property correction / crash for NZ to become an economic basket case. So I wouldn’t get too cocky about our economy.
we are also very vulnerable in many respects. Not least In a seismic sense. The ‘big one’ on the alpine fault would be disastrous not only for communities but also for tourism, while the ‘big one’ in Wellington could dwarf the Christchurch quake.
Don’t entirely disagree but my emphasis was limited to the trend being amplified by comment on this site. Likewise there was no comparison to overseas 30 years ago. My point was simply, that to me at least, NZ offered better opportunity as relative then, than it does today.
“Tomorrow, 32 central banks and 12 financial authorities (44 countries) will meet in El Salvador to discuss financial inclusion, digital economy, banking the unbanked, the #Bitcoin rollout and its benefits in our country.”
Banco Central de São Tomé e Príncipe
Banco Central del Paraguay
Banco Nacional de Angola
Bank of Ghana
Bank of Namibia
Bank of Uganda
Banque Centrale de la République de Guinée
Banque Centrale de Madagascar
Banque de la République d'Haiti
Banque de la République du Burundi
Central Bank of Eswatini
Ministry of Finance of Eswatini
Central Bank of Jordan
Central Bank of The Gambia
Comisión Nacional de Bancos y Seguros de Honduras
Direction Générale du Trésor, Ministère des Finances et du Budget, Madagascar
Maldives Monetary Authority
National Bank of Rwanda
Nepal Rastra Bank
Sacco Societies Regulatory Authority (SASRA) Kenya
State Bank of Pakistan
Superintendencia General de Entidades Financieras de Costa Rica
Superintendencia de la Economía Popular y Solidaria de Ecuador
Banco Central de El Salvador
- President Nayib Bukele
https://twitter.com/nayibbukele/status/1526029996787216387?s=21&t=B4Upw…
Most of those countries have a raft of challenges to overcome that'd be decades in the making (or undoing). An open and transparent democracy may also help, but just adopting liberal democracy wouldn't be a panacea.
Adopting Bitcoin seems even less beneficial. Unless maybe Bitcoin went up 10s of thousands of percent, but that'd be down to luck more than wise governance.
Be interesting to see where swap rates head from here. The market turmoil might be what the Fed hoped for to limit the upward rise.
A full on share market crash might see a quick switch from inflationary to deflationary pressures by killing demand. At which point the Fed will get the money printer out again and make the whole situation even worse....
Anyone see a path out of this where we don't see severe stress coming up this year?
My answer to your question: No!
There’s no painless way out of this cul de sac of the central banks’ own makings…
but you know it’s funny, most lay people are oblivious to what’s coming, even some very clever ones I know (but have no understanding of finance and economics). Most people look surprised / sceptical when I tell them an economic storm is on the horizon.
provided you aren’t exposed, maybe it’s better to be oblivious…
Yeah, well that’s why I have been picking that the OCR won’t peak nearly as high as most are suggesting, and then it will start being cut, before mid 2023 (and the election, and don’t anyone lecture me on the RBNZ being independent, they are only partly so)
A deep recession will be deflationary.
Yeah.
There’s a whole generation of very good journos at the Herald who are getting on in years - Brian Fallow, Fran O’ Sullivan, Simon Wilson. Don’t see much quality coming up the ranks, maybe Jenee is their big hope!
Hooton is very good but only an occasional writer.
Business columnist Brian Gaynor has died "after a short illness". He was a holder of immense institutional knowledge of our financial and business markets and has had a substantial influence on keeping them honest. He was as close to a legend as this industry gets.
He will be sorely missed.
He was the research manager at Jarden, as I was at O'Connor Grieve up until my departure to the UK in 1982.
"But this overall stability is corrosive. We have actually lost -7,500 people of working age (15-64) since September 2020, the first time since the current records began in 1991 that our working age population has shrunk. Worse, our median age has now risen to 38 years, the highest ever."
I'm sorry - where is your evidence that this is "corrosive" i.e. that the net wellbeing per capita change (economic+social+environmental)/financial reduces with a static population.
We have total carbon emissions targets, not per capita. Any increase in population will drive up the emissions producing net disbenefits. We also have a housing crisis driven by excessive population growth producing substantial social disbenefits.
Interest.co.nz should be reporting the facts not unevidenced opinions.
I'm sorry - where is your evidence that this is "corrosive" i.e. that the net wellbeing per capita change (economic+social+environmental)/financial reduces with a static population.
Generally when your workforce population depletes faster than your dependents there's a level of societal degredation as you are unable to maintain existing services.
It's also super rare to have a static population given declining birth rates.
Perhaps you can illustrate a country that has managed to maintain population levels well, with superior outcomes?
...a country with no natural resources except the skills & will of its people with a GDP per capita 50% higher than NZ.
I've spent a lot of time in S'pore over a few decades. Asian culture generally respects its aged people & it's a serious family obligation for the younger generations to look after parents- what do you consider the issues ?
Is geography a natural resource?
Western culture respected it's elders also, then it went and came up with the nuclear family.
Asia is following, check out South Korea, it's elders did the Asian parent thing of feeding and educating their kids on the premise they'd be looked after in old age, now a third of them will still be working in their 70s, living on the breadline.
It's super easy to point out problems, solutions seem rather elusive.
Singapore's population is going to continue to increase in the short-term as they pick up those fleeing Hong Kong (currently HK's population is dropping nearly 1% per month - 65k leaving per month). It's the natural next stop for a lot of those and probably offers the best mix of transferrable skills and comparable lifestyle.
Foremost very sad to hear about Brian Gaynor. I didn't know him personally but often found his writing very interesting and informative. My thoughts are with those who where close to him.
We have actually lost -7,500 people of working age (15-64) since September 2020, the first time since the current records began in 1991 that our working age population has shrunk.
For many younger people though this is the first time they've really experienced the job market working for them. Employers being flexible on working arrangements, proper negotiation on salaries etc. Had the Reserve Bank controlled inflation, rather than speculating on whether it would be transitory, I think the working age population would have experienced quite a little bump in the standard of living.
This should have always been the demographic dividend for the young. We stacked the deck against them to enrich ourselves but they should be living through the most ruthlessly tight employment market keeping constant upwards pressure on wages. Unfortunately what actually happened was mas migration diluted that and instead they got wage stagnation (and now worse!)
The median age is rising because more of the baby boomer bubble is continuing to move up into retirement age. WE can expect that to continue for some time more to come.
We can also expect more outward migration to occur with the opening of the border - more NZers will return back to living overseas.
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