Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Following the OCR hike, banks have been a bit stunned by the hawkishness and are slow advising their changes as they reassess from the expected "dovish +50 bps" stance they expected to a "hawkish +50 bps". Expect wide-ranging rises, and a set of updates soon.
TERM DEPOSIT RATE CHANGES
BNZ raised most of its TD rates today, even before the OCR change. General Finance has too. But since the OCR hike, silence.
ORR THE HAWK
The key news today is the +50 bps OCR rate rise, the fifth consecutive rise, taking the shift up by +175 bps from where it started at 0.25% in October 2021. And extending the hawkish tone, today's MPS shows (p45) they intend to raise it to "3.9%" by June 2023. As they don't actually do a 10 bps change, that probably means 4% by June, a doubling from now. Further, their indicators show that once arriving at this high level, it won't fall much from there for at least the following two years at least.
FEWER BUT TRICKIER SCAMS
CERT said there was a decrease in both incident reports and financial loss from cyber attacks and scams in Q1-2022 after a record numbers in Q4 2021. Although this may sound like good news, reports of new methods of attack are on the rise. Among the new attacks are text messages trying to scam bank accounts.
HEADY GROWTH
NZ Post research claims there were almost 2.3 mln people using online shopping in Q1-2022, and they did almost 17 mln transactions in the quarter, a rise in a year of +66%. Average transaction size is up +12% to $131.
HOT DEMAND BRINGS MORE RESOURCES
Auckland Council says it is "scaling up" to meet heavy demand for building consents.
SWAP RATES LEAP, DIFFERENT TO EVERYONE ELSE
We don't have today's closing swap rates yet but they have probably zoomed higher. Certainly equivalent 2yr bond yields turned up by +15 bps. The 90 day bank bill rate is up +2 bps today at 2.33%. The last time it was at this level was on 22 July 2016. The Australian 10 year bond yield is now at 3.24% and down -8 bps from this time yesterday. The China 10 year bond rate is now at 2.80% and down -2 bps. The NZ Government 10 year bond rate is now at 3.55%, up +4 bps and now well above the earlier RBNZ fix for this bond which was down -6 bps, now at 3.47%, prior to the OCR release. The UST 10 year is now at 2.77%, and down -8 bps from this time yesterday.
EQUITIES MIXED AGAIN
The S&P500 ended its Tuesday session down -0.8% on Wall Street although that was after an afternoon recovery of sorts. The tech-heavy NASDAQ ended down -2.4% and that too was after a small intra-day recovery. Tokyo has opened today lower, but is now flat. Hong Kong has opened flat in early trade, embedding the losses of the first two days. Shanghai has opened +0.4% up. The ASX200 is up +0.8 in early afternoon trade today, while the NZX50 is up +0.4% well into the afternoon trade and the RBNZ policy shift hasn't had much influence in this market.
GOLD FIRM
In early Asian trade, gold has risen +US$9 to US$1862/oz.
NZD MOVES HIGHER
Before the OCR announcement, the Kiwi dollar was little-changed at 64.4 USc. After, it rose to 65.1 USc. Before, were were soft at 90.8 AUc, after up at 91.5 AUc. Before were were weaker at 60 euro cents, after at 60.8 euro cents. That all means our TWI-5 moved from 71.1 before to 71.9 after, more than a +1% appreciation.
BITCOIN FIRMS
Bitcoin is now at US$29,582 and up +1.3% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.0%.
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42 Comments
Orr trying desperately to gain back some credibility with the hawkish tone today. He will no doubt crush domestic inflation with this talk (taking the NZ economy with it) but our CPI aint heading below 3% until the global factors have quelled and who knows how long that will take.
Air New Zealand shares are trading at an irrationally low price relative to the context of the company. Really keen to pick up some stock once it ticks back up again. It remains effectively a monopoly airline over the country and half owned by the state. Given the retreat of commercial airlines after covid, you'd think the stock would stick up more?
Any reason why it is falling so fast?
Someone's buying and on the inside..
Air New Zealand chief executive Greg Foran buys $1m worth of shares
Air New Zealand chief executive Greg Foran has purchased $1 million worth of shares in the airline following the completion of its $1.2 billion capital raising.
A disclosure note issued by the company to the New Zealand stock exchange on Friday said Foran bought 1.46 million Air New Zealand shares worth $1m, across two transactions on Tuesday and Wednesday.
Shares in Air New Zealand closed at 67.5 cents on those days.
The key news today is the +50 bps OCR rate rise, the fifth consecutive rise, taking the shift up by +175 bps from where it started at 0.25% in October 2021. And extending the hawkish tone, today's MPS shows (p45) they intend to raise it to "3.9%" by June 2023.
RBNZ has doubled the OCR three times from the low and is expected to double it once again to ~4.00%.
The annual deposit amount to earn a pretax return of $10,000 has fallen from $4,000,000 at 0.25% to $500,000 at 2.0% and will fall to $250,000 at 4.0%.
Fed effective funds rate was anywhere between 5-15%..
https://fred.stlouisfed.org/graph/fredgraph.png?width=880&height=440&g=…
Am I missing something here? If 80% of inflation is being caused by overseas factors which we have no control over, how is increasing costs to home owners / business going to correct this. It is the more costs to the hard working and won't change prices of fuel or imported goods!
Nail on the head. No one was complaining while rates where crashing, being crushed by importing deflation. Why complain now they are rocketing as we import inflation? We are just unwinding decades of inflation.
Anyway the OCR does have some influence over consumer demand. If petrol goes from $3 to $4 people probably drive less or choose a lower cost transport option like regional flying.
The OCR announcement should not a surprise, nor the next couple. Inflation is causing havoc in a labour restrained environment. Imagine if we had 3x DTI set 20 years ago. The multi billions being sucked from today's economy by Banks speculative debt could be deployed by society in a much more constructive way. There would be no need for today's inflation.
The overleveraged are a small population vs everyone else. The elections. Kmkng, which voting block do you protect.
Hint...speculators all vote National or Act.
I am delighted to report that having retired from crypto (well sort of). I am no longer losing money on bitcoin.
Instead I'm losing money on the USD!
(I did get a bit out this morning but its been a rough week for USD holders - and I suppose gold and US stock holders fall into that camp)
I am delighted to report that having retired from crypto (well sort of). I am no longer losing money on bitcoin.
Happy to say that I've never lost money on BTC and ETH Wolfie. Took a bath on Chainlink (-73%) but seeing it comprises <1% of my portfolio, not too bothered and not selling.
It will depend on overseas events. The OCR has to rise to tame domestic inflation, so unless we overseas events change then it will have to keep climbing - regardless what anyone in NZ would prefer.
Seems that there is significant potential for escalation of the recent issues with China and Russia - leading to higher global energy and food costs (and possible fighting over resources) and thus more geopolitical tensions?. Thus more pressure on the $Kiwi and likely more OCR rises.
Probably a good time to balance investments.
Now Tony Alexander is saying house price falls of 10-15%.
In a month or two he'll be saying 15-20%!
All over the place (remembering he picked rises of 5% in January)
https://www.oneroof.co.nz/news/tony-alexander-interest-rates-set-to-ris…
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