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
No changes so far today.
TERM DEPOSIT & SAVINGS RATE CHANGES
None here either, but this review might be useful.
A FINE BALANCE
So far there is no sign of a feared mass exodus of New Zealand citizens in latest migration figures to the end of April. There is a balance between long-term migrants arriving as departing.
TOURISTS GET GOING AGAIN
There are also good signs in both April and May that overseas visitor arrivals are picking up again, mainly from Australia though. New Zealanders leaving on holiday travel also picked up noticeably.
FILLING OF BOOTS
Since May 24, 2022 more than $2 bln has been drawn by banks on the RBNZ's Funding for Lending program, taking the total owing to now $12.2 bln. The cost to the borrowers is the OCR rate, currently 2.0% for a maximum 3 year term from each drawdown. The drawdown rates in 2022 (over a rolling 90 day period) exceeds any period in 2020 or 2021.
MORE BANK BOND FUNDING
ASB has announced that it is going to the debt market, like it rivals, seeking $100 mln in bond funds plus any oversubscriptions it wants.
MANAGED FUNDS TRANSPARENCY
We have launched a new free service giving access to a range of key metrics that investors need to know when choosing a managed fund, KiwiSaver or otherwise. Our new partnership with Research IP is a unique utility for investors and financial advisers
A FURTHER DOWNGRADE
Last week the capitalisation of the NZX50 fell by -2.5%, a 'loss of value' of -$2.9 bln. The capitalisation of only six companies in this index rose, the rest fell. F&P Healthcare (FPH, #1) fell -2.2%, Mainfreight (MFT, #4) fell -8.5%, Sky TV (SKT, #41) fell -12.5%, E-Road (ERD, #50 was down -8.8%. Also of note, the partial inclusion of Westpac in the NZX50 (WBC, #35) fell -11.5%. For the year this market capitalisation is now down -12% which is a loss of -$15.6 bln. Also note that we have updated the profile for Arvida (ARV, #26) following their annual report announcement.
NZSF TEAMS UP WITH AUCKLAND COUNCIL
The NZ Super Fund has linked up with the Auckland Council development arm, Eke Panuku, for large-scale Auckland development projects. It sees potential investment opportunities 'to be significant' with over $1 bln of land and vertical development opportunities planned over the next decade.
REARRANGING
The Prime Minister has reshuffled her cabinet today. Faafoi goes, Mallard goes as speaker, and Williams is out as Police Minister, replaced by Labour's "Mr FixIt", Chris Hipkins. Details here.
DOWNGRADING
Markedly slower economic growth that earlier expected in coming years - but much more persistent inflation than earlier envisaged. That's what economists are seeing, according to the NZIER Consensus Forecasts. The quarterly forecasts are compiled from a survey by NZIER of financial and economic agencies. Respondents included the five biggest banks, Treasury, the Reserve Bank and NZIER itself. NZIER's principal economist Christina Leung said the June quarter forecasts "show a downward revision to the growth outlook over the coming years, despite the stronger starting point".
SWAP RATES JUMP
We don't have today's closing swap rates yet but they have probably firmed sharply. Rises of more than +10 bps will likely be recorded taking the two year to its highest since 2015. The 90 day bank bill rate is up at 2.57%, a +5 bps rise. The Australian 10 year bond yield is now at 3.77% and unchanged from the end of trade last week. The China 10 year bond rate is now at 2.82% and also unchanged. But the NZ Government 10 year bond rate is now at 4.02%, and up another +11 bps from this morning's open and matching the earlier RBNZ fix for this bond which was also up +11 bps at 4.02%. The UST 10 year is now at 3.18% and up +1 bp since this morning.
EQUITIES FALL HARD AGAIN
The NZX50 has shed -2.2% in trade so far today. The ASX200 is down -1.3% in early afternoon trade. Tokyo has opened the week -2.6% lower. Hong Kong is down -2.7% and Shanghai is down -0.9%. The S&P500 futures are indicating Wall Street will open down -1.3%.
GOLD SLIPS
In early Asian trade, gold is down -US$9 from the end of New York trade on Friday, now at US$1863/oz.
NZD SLIPS FURTHER
The Kiwi dollar is lower again, down -20 bps from this morning's open, now at 63.3 USc. Against the AUD we are firmer at 90.3 AUc. Against the euro we are little-changed at 60.4 euro cents. That all means our TWI-5 is lower at 71.1.
BITCOIN SINKS
Bitcoin is taking a hit today, now down to US$25,699 and down -8.6% from where we were opened this morning. Volatility over the past 24 hours has been extreme at +/- 5.5%.
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76 Comments
We are, but we are buying a lot more. It's the net flow of currency that matters. We typically prop up our currency by selling interest bearing financial assets to overseas investors (who have to exchange their currency for NZD to buy our bonds). But crashing our economy to keep the yields on those assets attractive is pretty grim.
I have no sympathy for those that get cleaned out. I've been hearing the Celcius ads that have been in the real vision podcasts the last couple of weeks. If you didn't think it sounded far to good to be true you lack a healthy sense of skepticism. Free bitcoin, borrow money at 0%, and get paid high staking rewards. Everybody wins!!! Hmmm, sure.
Crypto lending platform Celsius frozen and lenders cannot withdraw access their staked coins like Bitcoin and Ethereum. Not looking good for the lenders. Remember, not your keys, not your coins.
Canada's 2nd largest pension fund invested in a $400m equity round of financing for Celsius in Oct 2021.
Apart from that. All good. Shake the monkeys from the tress.
Exodus Begins. Could be another what happened today. Try finding a seat to LAX out of Auckland on AirNZ over the next 30 days. Some weeks absolutely nothing. Guessing staffing shortages, ramping up etc all playing a factor. I did spot some Economy fares bigger than Premium Economy. Wow.
BoJ may have to intervene to stop the yen weakening. The Bank of Japan last intervened in currency markets in October 2011. The last time it sold dollars and bought yen was in June 1998.
https://www.wsj.com/articles/japans-yen-takes-a-beating-in-a-global-mar…
Yeah two weeks back it was 80 yen to the NZD, been back around 85/86 the past few days.
If it got to 88 - lucky for some - I was going to buy some more yen.
Over at Macrobusiness they reckon a weak yen is a bad sign, a sign that a global recession is well on its way…
Bad, bad stuff at Qantas.
......Qantas itself has wolfed down more than $2bn in public money and shed 9400 staff. Some 2000 were axed unlawfully, according to the recent Federal Court decision. And now its chief executive Alan Joyce is back making acquisitions again, using the public rescue to buy other companies and a bunch of new planes. And his pay, along with other executives, is once again on the rise.
Joyce topped Australia’s pay leagues in 2018 with a thumping $24m and has been one of Australia’s best paid executives over the years, if not the best, taking this mantle from the infamous Macquarie bankers, also ironically the winners from another government bail-out during the Global Financial Crisis.
But what has the public got in return for its Morrison government largesse? Look no further than the MacBank logo for this answer … a slick donut.
https://michaelwest.com.au/qantas-smiles-shareholders-and-executives-gr…
Its good being cashed up right now with no debt and seven figures in cash to deploy as needed. I see westpac's term deposits have finally gone up so will be looking into that.
I'm happily buying a bit into bitcoin as it crashes (now 1.5% of my net worth, was zero 3 weeks ago). Got a little at 25k so we'll see how that goes. Horrendous Celsius drama but that was a pretty obvious black swan that needed to happen. I have no alts - just BTC for now, and all self custodied.
I anticipate a sea of blood in the US markets this week. Also content to buy.
I don't see easy gains for another year or two really.
Invested pretty much everything I earned over the last four years, starting in 2017 at $3k. Sold earlier this year and walked away with millions.
I do expect drawdowns though. Same for stocks (which I'm buying this week). We'll get a bottom within a year or two (probably)
U.S 2Yr/10Yr is just about to invert again as the Bond market is starting to nuke the central banks. BOJ selling U.S Bonds to defend the Yen but it ain't working. Game Over for most asset classes, the credit crisis has arrived. I hope everyone is positioned accordingly.
I'm actually short term bearish here. Maybe even mid term. But interest rates will max out and inflation will fall away. Might need to wait for Putin to die first though.
Here is a book that might answer your question though:
https://press.princeton.edu/books/paperback/9780691152646/this-time-is-…
I’ll just leave this here Lonewolfnz…
Pataka kai
Free food supermarket set up by foodstuffs. Hmm If I take cashies and dont declare income I could qualify for a handout. I heard that someone pulled up to the foodbank in their merc duh. Dress down, dont wash for a week, and get everyone's sympathy, then hold out the begging cup on the way home... a good days work!
I saw that story too, I just don't get it, teaching people who have little, that they they don't need to do anything and they can get stuff for free.
I remember volunteering at the City mission to display goods, there was so much to do. Some people were sitting on the ground outside and I asked why they were there? They're waiting till were done so they can get the clothes. I said they could help us, no? The more experienced volunteer just looked at me and laughed
You need to check your financial privilege Jimbo. I suspect you won’t bother to read this.
Here you go Habibi, plug this into a reliable power source, and then use the keyboard and mouse to access the bitcoins.
- "no no no move the mouse across the screen"
- "no no don't move the mouse on the screen, use the mousepad on your desktop and move the cursor"
- "no you're using it upside down".
The funding for lending program seems to be awfully stimulatory, no? Why is $2b being pumped into the economy while inflation is so high and recession is looming?
I do wonder in the event that a bank needs to be bailed out during stagflation, how would this procedure work? Surely the bail out would be stimulatory also and there would be conflict between easing and tightening? (As this funding for lending program seems to be in face of increasing the OCR)
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