Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
The Cooperative Bank raised all its fixed rates from 6mths to 1 year, with their 1 year rate now 4.49%. Kookmin Bank raised their fixed rates for terms 6mths to 2 years. Resimac raised their floating rate by +50 bps to 6.19%. Midland Mortgage Trust raised their floating rate by +110 bps to 7.60% floating for residential. Update: ANZ has raised most of its fixed mortgage rates. More here.
TERM DEPOSIT & SAVINGS RATE CHANGES
First Credit Union raised all their TD rates. Update: ANZ has raised many terms deposit rates. Details in our rate table pages.
BOTH UP & DOWN AT THE SAME TIME
The sharp fall in our currency has seen commodity prices react differently in the past month depending on whether you look at them in world price terms, or NZD terms. The ANZ World Commodity Price Index fell a further -2.8% in May, driven down by weakness in aluminium, dairy and forestry. But in local currency terms the index gained +2.0% from that currency effect.
DOWN
The number of new homes being built in Auckland is slowly declining. New home construction there is down -9.4% on a year ago.
DEFINITELY DOWN
In Australia, consumer confidence dropped a sharpish -4.1% last week, most likely on cost-of-living concerns as inflation expectations rose to 5.7%, its highest weekly reading since early April. Consumers there are especially pessimistic about the current economic outlook and their current financial circumstances.
TIGHTER
The local job market remains tight as a drum, according to the latest BNZ/SEEK Employment Report. Job adverts continue to rise - but the number of people applying for each job continues to fall.
MORE BONDS
Rabobank signaled today that it will be raising funds via a 3 year floating rate Note soon, possibly as early as tomorrow (Wednesday). Details then. Rabobank has an ongoing carded 3 year term deposit offer at 4.15%.
RITUAL TRAVEL
Finance Minister Grant Robertson is travelling for Sydney to meet with the new incoming Australian Federal Treasurer, Dr Jim Chalmers. He is following Prime Minister Jacinda Ardern will is due to meet new Australian Prime Minister, Anthony Albanese in Sydney as well. Albanese is just back from meeting the Indonesian President. The travel detail reveals the pecking order, and when administrations change, these visits are ritual.
RBA SURPRISES
The Reserve Bank of Australia has hiked its cash rate target by more than just about any analyst foresaw. It is up +50 bps to 0.85%. The AUD has jumped. Aussie bond yields have leapt another +4 bps. The ASX200 hasn't reacted yet but was already weak. More here.
SWAP RATES RISE SHARPLY
We don't have today's closing swap rates yet but they have probably firmed following the international rises especially in the US. Rises could be in the order of +6 bps although the RBA's decision might affect that. The 90 day bank bill rate is up another +3 bps today at 2.52%. The Australian 10 year bond yield is now at 3.51% and up +1 bp ahead of their imminent RBA review. The China 10 year bond rate is now at 2.83% and up +1 bp. The NZ Government 10 year bond rate is now at 3.72%, and up +5 bps from where we left it on Friday and above the earlier RBNZ fix for this bond which was unchanged at 3.70%. The UST 10 year is now at 3.05% and even higher than where we started this morning. A week ago it was at 2.74%.
EQUITIES MIXED
On Wall Street the S&P500 finished its Monday session up a minor +0.3. Tokyo is up +0.4% in late morning trade there. Hong Kong is down -0.3% in early trade. Shanghai has opened flat. The ASX200 is down a sharpish -0.9% ahead of the RBA's rate review. The NZX50 is down -1.3% to start the week here. All our majors are under pressure, but the -3.6% fall by Mainfreight (MFT, #4), and the -4.1% by Mercury (MCY, #12) stand out. The gainers today are mostly tiddlers, although they include a +1.2% recovery by Ryman (RYM, #11).
GOLD SOFT
In early Asian trade, gold has fallen -US$2 from this morning to under US$1840/oz. Recall we left it on Friday at US$1871/oz.
NZD SINKS AGAINST USD
The Kiwi dollar has moved down against the greenback, now at 64.6 USc and more than a fill -1c fall since this time Friday and almost half of that today alone. Against the AUD we are holding at 90.2 AUc. Update: following the surprise jump in the RBA's cash rate, the NZD has sunk by almost -½c. Against the euro we are softish at 60.5 euro cents. That all means our TWI-5 is down to 71.7.
BITCOIN DIVES
Bitcoin is now at US$29,254 and down -6.5% from where we opened this morning. It can't seem to hold above US$30,000 in this current phase. Volatility over the past 24 hours has been very high at +/- 4.3%.
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39 Comments
I remember this property being debated as an excellent purchase with high upside for development (House Mouse?)
Will be interesting to see how it works out...
Before: https://www.barfoot.co.nz/property/residential/waitakere-city/new-lynn/…
After: https://www.trademe.co.nz/property/residential-property-for-sale/auctio…
Is there any upside to flips in this market...
Great job with the reno but probably in vain, with the turn of the market, the developer is unlikely to make a profit. Many property "renovators" who have done very well for many years, are about to find out that it wasn't really their skills earning them money, but rather the market that was going up so strongly while renovating.
Looks like Tony Alexander has thrown in the towel on the "dreanged housing mkt".
MB says: "No wonder Tony Alexander has called the “end game” for the nation’s housing market. If the RBNZ follows through with its forward guidance, then New Zealand’s housing market is facing its biggest price crash in generations."
https://www.macrobusiness.com.au/2022/06/end-game-arrives-for-new-zeala…
JC
So Tony has come out and said the whole thing is based on bullshit and jelly beans.There are no fundamentals that support our prices...just the hope someone comes along and pays more.
That graph is rather sobering.A 55% fall to get us back to a DTI of four..which is where houses are affordable.
Imagine what effect this will have on our economy...how are those Bremworth shares looking?How many second tier finance companies will be toast?How many invested them?Will fletcher survive?
Its going to get very interesting I think.
Short term, very messy. But with a structured walk-back (the kind we should have let happen under Covid) it could be doable. Let people refinance their loans at low-to-zero interest rates while they pay down the debt and get back to level pegging and let the wider economy reap the benefits.
It's interesting reading Macrobusiness. Here, I feel like a freak for being skeptical on the extent to which the OCR will be raised. Without knowing it, I've noticed recently that the Macrobusiness writers have a very similar view.
They argue that the Aussie housing market and economy will be annihilated if the OCR goes as high as the RBA is projecting - and therefore it won't happen. Mirrors what I have been saying on this website.
What, you mean after decades of financial reinvention and QE, central banks and authorities won't just shut up shop and tell us all we're on our own?
Stop talking crazy man.
The bigger question is how many more times they can kick the can and what happens to society each time it bounces.
My guess is 2-3, and "get progressively worse".
Are you sure about the planet? Re https://climateactiontracker.org/
Saving important stuff is poss not one of humananities best qualities. Greed on the other hand...
Update: following the surprise jump in the RBA's cash rate, the NZD has sunk by almost -½c. Against the euro we are softish at 60.5 euro cents. That all means our TWI-5 is down to 71.7.
The Kiwi seems under constant pressure at the moment. It's like RBNZ are always one rate rise behind and it's killing us in terms of importing inflation.
Today’s Roy Morgan New Zealand Poll shows support for a potential National/Act NZ coalition increasing by 2.5% points to 50% in May and stretching its lead over the Labour/Greens on 43%, down 1% point. This is a lead of 7% points for National/Act NZ, the largest since the Jacinda Ardern-led Government came to office over four years ago in October 2017.
"It is not fit that you should sit here any longer. You have sat here too long for any good you have been doing lately … In the name of God go.“ Oliver Cromwell
That's what happens when you are incompetent, break multiple promises, hypocritical, underwhelm on things like child poverty, housing and climate change (you know, all the things they got elected on) are highly arrogant, and contribute significantly to a rapidly weakening economy...
They have no one to blame but themselves, even if they think they can keep blaming external forces (which is kind of fair enough, but only up to a point...)
Fletchers stockpiling GIB....
https://www.stuff.co.nz/business/128886141/fletcher-building-apologises…
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