Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes today as we await tomorrow's OCR decisions.
TERM DEPOSIT RATE CHANGES
Both HSBC and TSB raised their TD offers, but neither to market-leading levels.
CRIMPED DOMESTIC DEMAND SAVED BY TOURISM?
Retail sales in the March quarter underwhelmed most analysts, even though actual sales volumes were up +3.2% year on year and were better than the monthly electronic card data suggested. Further, many analysts think domestic spending will soften further over the coming months. That’s due to the pressure inflation will have on consumer spending and the pressure higher mortgage rates will have too. But although spending from domestic demand will soften, there is an expectation that tourism and hospo will rise as momentum grows from a re-opened border.
OVERALL IN GOOD SHAPE, BUT STRESS RISES AT THE MARGIN
According to the banker's trade lobby group, nearly half of the nation's 1.2 mln mortgage holders have paid down more than their scheduled payment arrangements - but some are struggling. These figures show a significant rise in the latter half of 2021 in the numbers of mortgage holders shifting to interest-only payment arrangements. And they revealed that 4300 borrowers were granted hardship relief but a further 7600 (+26%) applied and were [presumably] turned down.
FOLLOWING THE MONEY
We released out easy-to-understand summary tables of the Government's 2022/23 Budget yesterday, both for what is planned to be spent, and where the funds are expected to come from. And today, we released the first of the drill-down detail, this one for Social Welfare (or "Social Development", if you prefer the official sanitised term). That reveals the largest benefit is NZ Super, consuming just under 5.0% of our GDP (and up from 4.9% the prior year). Each day this week we will release further drill-down detail.
3 IN 4 HOUSES NOT SELLING AT AUCTION
The national auction sales rate dipped to just over a quarter last week, ranging from zero in Waikato to 51% in Canterbury.
REGULATOR FACES INDUSTRY BACKLASH
Last year the RBNZ said it was considering introducing a scheme to pay out claims in the event of an insurance company failing. The industry doesn't want such protection for their customers. On the general insurance side, this industry is dominated by two large Aussie-owned insurers. There is more competition on the life side but Aussie-owned insurers are important there too.
STAYING AT ORANGE
We are to remain in the 'Orange' pandemic traffic light setting. That is because of the 'likelihood of a secondary wave of cases appearing' in the plannable future.
LAST CENTURY [GRAVY] TRAIN SET
Dame Fran Wilde has been named the board chairperson overseeing the huge Auckland Light Rail project, currently expected to cost $29 bln for the 24 km route. The chances are it could cost almost $2 bln/km when completed. At peak hour, it might move 1% of Auckland's population, or 2% of all people going to work. Like the Central Rail Link, it is another Queen Street-focused project. Sadly, time and WFH have moved passed it, not to mention that Auckland Council seems to have destroyed Queen Street as a destination. Consultants Lucy Tukua and Leigh Auton have also been appointed to board roles.
'REAL' EXPANSIONS ROLL ON
Early May data has been released for the factory sector in both Australia and Japan. Both sets show manufacturing sectors expanding at moderate levels. Services expanded slower in Australia in May, but faster in Japan.
SWAP RATES ON HOLD
We don't have today's closing swap rates yet but they are probably little-changed today awaiting the RBNZ's signals tomorrow. A full +50 bps is priced in. The 90 day bank bill rate is up +3 bps today at 2.31%. The last time it was at this level was on 22 July 2016. The Australian 10 year bond yield is now at 3.32% and up +4 bps from this time yesterday. The China 10 year bond rate is now at 2.82% and unchanged. The NZ Government 10 year bond rate is now at 3.51%, down -1 bp and now below the earlier RBNZ fix for this bond which was up +3 bps, now at 3.53%. The UST 10 year is now at 2.85%, and up +4 bps from this time yesterday.
EQUITIES MIXED AGAIN
The S&P500 ended its Monday session up +1.9% on Wall Street today. Tokyo has opened down -0.5% today, and Hong Kong has fallen a further -1.4% in early trade. Shanghai has opened -0.4% weaker. The ASX200 is flat in early afternoon trade today, while the NZX50 is heading for a -0.5% reversal.
GOLD SLIPS
In early Asian trade, gold has slipped -US$2 to US$1853/oz.
NZD SLIPS
The Kiwi dollar has slipped slightly to 64.3 and down -30 bps from this time yesterday. We are down less at 91 AUc. And we are -½c weaker at 60.3 euro cents. That all means our TWI-5 is now just on 71.3 and -30 bps lower than this time yesterday.
BITCOIN SLIPS
Bitcoin is now at US$29,211 and down -3.2% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.0%.
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143 Comments
Surely this government must be ousted in 2023. If only to avoid the sheer lunacy described in the 9th captioned para as above. It is the same naive, ill considered, vainglorious grandstanding of the cycle bridge that was hoisted up the flag pole by a bunch of show off, grinning incompetents with too much other peoples money to play with. Except of course this is on a far greater catastrophic scale.
The fool. The poor sap didn't know the the road to power is to marry in to the Mahuta family.
"Taumata Arowai is the regulatory body set up in response to Havelock North. We can see in this organisation that their focus isn’t solely water quality. According to their website, “Our name Taumata Arowai was gifted to us by Hon Nanaia Mahuta, Minister of Local Government”.
Having your name “gifted” by the reigning minister has a North Korean feel to it. This body enjoys a Māori advisory board whom it must consult. The chair of this advisory body is the minister’s sister."
Why does everyone hate the cycling bridge? Is it really that stupid to allow a large number of people to be able to walk or cycle the relatively short distance from their home to work? I just don’t get it?
we threw away almost as much money just last year on the stupid winter energy payment. At least we would have the cycling bridge for a hundred years or more.
It's just an automatic and slightly unhinged and shrill reaction from a populace stuck in their cars.
Makes absolutely no sense that so many hate on any alternative. Of course they were added and abetted by waka kotahi who every time the government said yes to a price added in a few hundred million cause they really don't want anything to do with a transport system that caters for less than four wheels.
I don't know about you but the logistics of cycling to work is just not practical. I sweat like a pig (actually like 10 pigs ) and there are no shower facilities at my work. It's not because I am unfit (my second job is a group fitness instructor). If there was some magical personal hygiene fairy i would absolutely bike or walk to work. I suspect a lot of people feel the same.
There is full assistance but you do not need to use it to not break a sweat. My partner cycles up hill in normal clothes on her way to work and has never broken a sweat. When you hit a hill the assist kicks in and it's like gently cycling on the flat. Same if it's windy, the assist just negates the wind resistance. Try it. I have yet to know someone who tried it who was not impressed.
Ebikes are nice. End of the day this is a pedal assisted commute from the shore to the Auckland CBD over the Harbour bridge. It's bad even on a motorbike half of the time. If you're someone who needs to be presentable for their job, open air transport over the harbour bridge isn't a sensible option. Unless you have a shower at the other end, and a spare half an hour when you get there.
...chances are it could cost almost $2 bln/km when completed.
For a tram service? The recently opened Elizabeth Line in London cost the equivalent of NZ$37bn for a 60 mile track and that's a proper subway system.
We are to remain in the 'Orange' pandemic traffic light setting. That is because of the 'likelihood of a secondary wave of cases appearing' in the plannable future.
I was half expecting another border closure for Monkey Pox.
So here is what I have been doing lately:
1) Crypto (out) - all cashed out and in term deposits. Waiting for next RBNZ call (hoping for a slight bump)
2) Equities - dollar cost averaging back into low risk value stocks / ETF via Hatch
3) Gold - matching the equity investment. All dollar cost averaging
4) Crypto (in) - getting back in gradually (less than 1% of what I once had) Almost all entirely BTC and ETH so far - no defi stuff or funny business.
5) Properties - all mortgages and debts now paid off. The rental now funds some of the investments above.
Expecting a bit of a down-turn, maybe for the rest of the year. Hopefully we bottom soon but prepared for the long ride
HM, we have similar views on a recession coming and most assets losing value over the next 12 months, so I have no shares (I have not been successful at investing in shares in the past), I don't own any crypto as I don't really understand it fully, I have just a few properties (sold 1 in 2021 and 1 in 2020) and I have some cash in the bank earning bugger all to invest, probably in 2023. Until then I will just look after my business best I can and also travel.
I'm confused and genuinely curious. Why would you be 99% cashed out of Crypto, in particular Bitcoin? I thought Cryptocurrency, namely Bitcoin, was a robust store of wealth due to the 21 million coin limit etc and was free from manipulation from Central Banks etc.
Due to our tax laws I'm a forced seller into NZD for a start (sold up at 46k on 1 April).
Long term I think its a great investment (hence I'm buying back in) but there are a range of reasons I sold - made life changing wealth so happy to sit it out and take a break for a while - my rentals and term deposits mean I could chuck in the towel at work if I was so inclined. Short term I see visions of 2018.
If we had decent tax rules (say a FIF regime or something) I might have just sat it out.
You seem so sure HM. I seem to remember, not to long ago, some commenters on here thinking the OCR would be cut sometime this year. My point is, you'd have to be really lucky to get any economic predictions right, a year out, at the moment. Most commenters couldn't even predict what the OCR was going to increase by the day before the last review, let alone a year out.
It is good to back yourself.
The biggest potential mousehook that I see in your prediction is the fact that a recession in NZ does not necessarily mean that the OCR will be quickly dropped.
If there is inflation in the rest of the world, then our OCR & mortgage rates will keep getting dragged up, whether or not we are in recession.
Too much faith in the RBNZ to be anything but an insignificant little bit player in the global banking system.
Perhaps also a little too much faith that we are not about to enter a debt doom loop, where defaults + falling prices = much higher mortgage rates as extra risk premiums are added to our shonky housing debts.
Oh for heaven’s sake! The pandemic cop out. How convenient. The truth is with or without the pandemic, they were stuffing it up before, during and after the pandemic. How did the pandemic actually alter whatever plans were in place. Just delayed and protracted the pain inflicted on the associated businesses.
Bullshit.
it was mainly pandemic, and before that a shift of corporates to Wynyard Quarter that had next to nothing to do with council.
the CRL has also been a big disruption, but that was more government-led than council-led, and once finished will be great for the CBD.
Btw, I work in the CBD two days a week, the energy is returning.
If you and David are referring to the traffic calming in the CBD - actually, it creates a much nicer environment for workers and shoppers.
I guess it’s subjective.
I see a rejuvenated Britomart and waterfront, a very nice Commercial Bay and an underrated lower - mid Queen Street.
Have you ever looked up above the verandas? There’s lots of lovely old buildings along Queen Street, in very nice condition. Especially in lower Queen Street.
Yes I have and I worked in one of them in the 1960s. But it’s what’s on the footpaths that counts for a city’s culture. For example Philadelphia where I worked over twenty odd years ago. Some of the most beautiful commercial architecture you could ever behold if you get up high enough to actually be able to see it. But down below not only crappy but dangerous. Auckland downtown has been gutted by the never ceasing alterations and public works.If that was not so the bureaucracy would not have had to cough up assistance packages to the retailers for the revenue they destroyed. Perhaps you may be right that the historical downtown will return to its former vibrancy. But in its present condition and atmosphere it is distinctly Vauxhall Gardens terrain, as per Dickens.
I have lived in 2 or 3 large world cities where parts of them were heavily disturbed by public works. But once finished, the cities were enhanced.
I learnt from those to withhold judgement on a city while much of it is being disturbed by temporary public works which will ultimately enhance it.
This is actually bollocks, though.
The pandemic reduced foot traffic to where it's now almost a quarter of the 2019 volume, a massive factor. But council was "stuffing it up", but you list no specifics.
So what actually has changed in Queen St? Instead of four lanes of cars sitting there you have two lanes of cars and a bus lane. And some planter boxes. And...some planter boxes and a bus lane have destroyed Queen Street?
What else? Surely there must be more to it than the fact there's one fewer lane of cars each way, and a few planter boxes and wider footpaths in places? Are people seriously trying to argue that is what has made the difference? That looks to me like an ideological reaction rather than any depth of thinking on the issue.
Meanwhile, Commercial Bay through to Britomart attracts a lot of foot traffic, yet doesn't have cars driving constantly through all of it. Yet, that cannot be for apparently we need 4 lanes of traffic through the middle for it to thrive.
Reality just doesn't seem to support the ranters of "council is destroying the CBD!" Perhaps this is why they stick to vague general statements and don't list specifics?
There’s still a number of specialty stores in the CBD that don’t exist to the same quality elsewhere eg. Unity Books, Marbecks.
There’s a very good art gallery, and if you like music then you can only see the NZSO in the CBD.
Many of Auckland’s best restaurants are still in the CBD, too.
The total value of stock held at 31 March 2022 was $9.3 billion, up 12 percent ($1 billion) compared with March 2021.The largest increase came from hardware, building, and garden supplies, up 26 percent ($304 million), followed by motor vehicle and parts retailing, up 16 percent ($276 million).
Those 2 sectors experienced the largest decline in sales as well. 121 m and 157 m respectively. The competing churches of Mitre10 and Bunnings not doing so well? Cheap home equity loans are no longer a good idea to fund new vehicle purchases?
Hired a car last week and was told its now $6.00 if you want a pickup by courtesy van at Auckland airport for 2 min trip to depot. Same for the way back, so I walked and asked who thought this was a good idea? Was told its Auckland Airport and they charge the company's $12.
Same as Uber - charge $4.00 but they cannot use the drop off lane outside terminal - you have to walk.
I wonder what other charges they will come up with?
I found it hilarious at CHCH Airport many years ago. If you caught the bus from inside the Airport grounds it was something like $5 for the bus ticket. But if you walked 300m to the bus stop on Orchard Road, you could catch the same bus for $1.50.
As you say, the Airports have a habit of putting up toll gates for Taxis and Buses.
It would be best if Queen St was wiped off the face of the earth. It's worse than a slum. At least a slum has some vitality. It's more like the aftermath of Chernobyl. It's claustrophobic. It's a narrow dingy canyon hemmed in with vast cliffs of ugly uninspiring skyscrapers. It's a complete disgrace as a portal to Auckland. The previous Councils, councilors, mayors and town-planners who authorised and designed this nightmare should be sought out, lined up and shot Stalin-style, especially those behind the Light Rail fiasco.
We visit Auckland , and usually stay in the CBD, currently Federal St.
Measured against the Newmarket mall, the CBD is a disorganised mess, on several levels and no escalators, to demonstrate the planners don’t care they removed the only escalator, the Victoria Street Bus Service.
Currently Britomart is deserted, we abandoned it, we would go to Newmarket, but it’s expensive for accomodation.
The planners vision may never happen..
Oh god, here we go again.
I suggest taking the train to the lovely, redeveloped Britomart. Pop in to the excellent Commercial Bay for a bite / coffee.
Then start the walk up Queen Street. Suggestion - look up! There are many wonderful old buildings still extant. Lovely.
on the street itself, the Nikau Trees are thriving and looking great.
I don’t understand the hatred that Queen Street receives…
yes many shops have closed, but you will see that in many downtowns right now in the face of the pandemic.
yes, there are many homeless - my best friend in Sydney tells me it’s the same there.
$29B is insane. Is there a source for that figure?
A fast rail system between Hamilton and Auckland CBD would be much better value and I’ve seen that quoted as cheap as $14B. It could also connect to the airport with a short connection.
I’m supportive of public transport initiatives and definitely something connecting the airport but this project seems to be and overpriced connection for a few suburbs.
If you liberalise zoning within 2 km of the rail you basically fit a whole bunch more local community and businesses within easy distance of fast public transport that avoids congestion. Worth doing rather than more constant sprawl at the fringes that will be increasingly expensive on ratepayers for long term maintenance.
Are you going to say it’s the “heartland”? That place that’s been making the same low value primary produce since 1955? The place that only survives by adding more fertiliser and discharging more wastewater? The place that every year gets slightly older, greyer and damper?
If you want a decent customer base, access to talent and a value-added processing centre there is only Auckland. I say this as an ex-Wellingtonian.
https://www.newshub.co.nz/home/new-zealand/2017/09/government-to-build-…
People have short memories,it wasn't that long ago that the Nats were proposing what would have been the worlds most expensive road per km...and this is for an above ground motorway...your dreaming if you think they are more clever,the only difference will be if ACT has their say,you would be paying a toll on every new PPP road that is built...
light rail will be too slow for airport travel, light rail will be a commuter link, and will kill shops along the way as built, look at the Albert street disaster....... we are heading for a property bubble burst its no time to build a new light rail while the CRL is still not finished.....
"Auckland Council seems to have destroyed Queen Street as a destination"
Ermm there was this thing called covid that required businesses to shut down, cruise ships and international tourists to stay away and local workers to work from home. Perhaps that had something to do with the plight of Queen St?
Cool, do you know what else all those lovely cities have in common?
They are building shit loads of cycleways, reducing the amount of cars in the city centre, getting rid of publicly owned parking, investing in massive public transport projects and huge city centre transformational public realm projects. All the things Auckland Council is trying to do but keeps getting held back by people who want Auckland to be more like Tokoroa.
It's absolutely mental.
Kiwi visits international City, comes back raving about how great it is and how shit new Zealand cities are by comparison.
New Zealand city officials says we're going to improve your city to be more like those cities you all love.
Kiwi says: no way mooaaarrrr roads, moooooarr parking
Haha, yeahhhhh
Yeah, you know, calm the traffic in the CBD (which was horribly congested and generated horrid levels of air pollution), don't ban cars but calm them, widen footpaths. Build quality underground rail with quality, well designed new train stations, acting as a catalyst for urban redevelopment in and around said new train stations....
Sounds terrible, ey?????
And the proprietors, staff and people with livelihoods collapsed by the major temporary disturbances? Collateral damage. Chaff to the wind. There it is then. As Mr Wilson in the Herald complains. 38 vacant retail locations. Wonder exactly why that is. Where did all those old soldiers go then.
I have a huge amount of sympathy for those businesses disrupted / destroyed by the CRL disturbance. That doesn't mean the project shouldn't have happened, though. Otherwise, numerous major public works projects in NZ and internationally would never have happened. Projects that have transformed cities and societies.
The issue with the CRL was that it should have been managed better and fairer compensation should have been provided.
And again, why the finger pointing at council from rightists such as David? Because the evil, leftist council is an easy target for rightists. However, If I remember correctly, the Nats drove forward the CRL project.
The city centre has to change or it will be left behind. We are in competition with other cities around the world to attract talent.
I agree that the disruption is painful, much like surgery and rehab to fix a broken limb, but you have to fix it none-the-less.
Personally I like the approach council took on High Street, transformed the street overnight in 48 hrs with tactical changes. Achieved many of the same outcomes as a full street upgrade but with none of the construction disruption (more space for people walking, less car parking=less vehicles, more loading zones and and mobility parks). Europe and US are doing a whole lot more of this very effectively by closing off streets and converting car parks to cycle lanes, bus lane and outdoor dining. The common denominator is getting rid of as many cars as possible (only keep the essential).
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