What happened Monday

Business / news

A review of things you need to know before you sign off on Monday; no retail rate changes, no exodus, surge in FLP drawdowns, new managed funds resource, NZSF teams with Auckland Council, swaps jump, NZD slips, & more

13th Jun 22, 3:59pm by David Chaston

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%.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

Daily swap rates

Select chart tabs

Source: NZFMA

This soil moisture chart is animated here.

Keep ahead of upcoming events by following our Economic Calendar here ».

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

76 Comments

by DTRH | 13th Jun 22, 4:18pm 1655093928

More carnage on financial markets Bitcoin holders selling in droves while still can, FED will probably raise rates by .75 too 1 % NZD will continue to tumble making inflation hit new highs and it’s just Monday

by Carlos67 | 13th Jun 22, 4:36pm 1655094973

If the FED goes big then watch us do the same. Next rise needs to be 100bp.

by HouseMouse | 13th Jun 22, 5:22pm 1655097720

Doesn’t there come a point where trying to use our OCR to influence the currency becomes futile?

I mean we can keep doing it, but before you know it our economy will be a wreck and the dollar will slump anyway…

by Sam B | 13th Jun 22, 6:53pm 1655103187

Only if we're not selling anything the world wants. For now, we are.

by Jonny.Foe | 13th Jun 22, 10:59pm 1655117971

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.

by Yvil | 13th Jun 22, 4:24pm 1655094292

Ohhh, it looks like bitcoin is finally falling through the USD 29'000 floor, how low will it go?

by Carlos67 | 13th Jun 22, 4:36pm 1655095019

Zero

by theglc | 13th Jun 22, 8:53pm 1655110427

How long till our stubborn crypto fanboys become nervous...

saw Bitcoin was under $25K a couple of hours ago

Ether down 18% today

I guess 1 bitcoin still = 1 bitcoin..... LOL

by J.C. | 13th Jun 22, 4:54pm 1655096091

Tether down 18% today

Nonsense. Even BTC is only down 6.6% in past 24 hours.

by Sam B | 13th Jun 22, 5:10pm 1655097024

Tether is an obvious fraud. Its chance of long-term, or even medium-term survival, is nil.

by Tee | 13th Jun 22, 8:52pm 1655110358

Bitcoin touched 24300 just now.

by Nzdan | 13th Jun 22, 11:29pm 1655119778

23554. Down 11.3%. But it'll surely rally.

by theglc | 13th Jun 22, 8:53pm 1655110382

Oops Ether not Tether

My mistake

by Baywatch | 13th Jun 22, 4:58pm 1655096318

Noted...

by J.C. | 13th Jun 22, 5:33pm 1655098383

Zero

Good ol' Kiwi logic here.

Q: "Why will BTC go to zero?"

A: "Because I said so."

Q: "What's the probability of that?"

A: "100%"

by hum | 13th Jun 22, 4:44pm 1655095469

deux francs six sous

by Yvil | 13th Jun 22, 4:53pm 1655096031

Quelle affaire!

by dumbthoughts | 13th Jun 22, 4:52pm 1655095958

Celsius (a key component of which is its staking/rewards system) has now locked all transfers and withdrawals - celsius.network ... in crypto-speak looks like they are about to "rug pull".

by Pragmatist | 13th Jun 22, 7:55pm 1655106933

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.

by Yvil | 13th Jun 22, 4:28pm 1655094527

Banks increasingly taking up the FLP is counterproductive to the RB trying to tame inflation. Yes interest rates influence inflation but so does the amount of liquidity on the market… The RB should have shut down the FLP by now (it's ending in December 2022)

by Justa comment | 13th Jun 22, 7:37pm 1655105877

At least they are no longer getting it for 0.25%.....

by Carlos67 | 13th Jun 22, 4:33pm 1655094803

Prediction get out of Crypto before Christmas.

by Whatwillhappen | 13th Jun 22, 4:40pm 1655095222

It's tricky. Crystallize your losses or gamble on the price going up again?

by Sam B | 13th Jun 22, 4:47pm 1655095674

nah, get out ASAP. definitely get out of anything that isn't Bitcoin. and out of any investments in the crypto/DeFi ecosystem, eg shares in exchanges. Most of it will be vaporised.

by Baywatch | 13th Jun 22, 5:21pm 1655097704

I love your predictions Carlos..

by lonewolfnz | 13th Jun 22, 5:22pm 1655097745

I'm afraid your prediction was a year late.

I think you could happily sit on the side lines until December this year though. No need to rush

by J.C. | 13th Jun 22, 4:44pm 1655095446

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.

by wortho | 13th Jun 22, 4:44pm 1655095452

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.

by Brock Landers | 13th Jun 22, 5:23pm 1655097839

Flew up to Europe a few days ago. Can confirm that the planes are very very full. ✈️✅

by Rex Pat | 13th Jun 22, 6:30pm 1655101856

We have Business Class fares. We booked them late last year. The cost for any date change is enormous. More than first class would have been originally.

by Jonny.Foe | 13th Jun 22, 11:02pm 1655118132

All the airlines are pushing occupancy rates right up - they have not got the short notice business bookings they used to rely on for their margins, so they are having to make a profit out of economy seats (for the first time for decades).

by J.C. | 13th Jun 22, 4:48pm 1655095688

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…

by HouseMouse | 13th Jun 22, 6:59pm 1655103565

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…

by J.C. | 13th Jun 22, 4:50pm 1655095852

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…

by RickStrauss | 14th Jun 22, 9:54am 1655157240

Yeesh...and people rant about the poor beneficiaries...

by lonewolfnz | 13th Jun 22, 4:51pm 1655095880

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.

by J.C. | 13th Jun 22, 5:04pm 1655096688

I don't see easy gains for another year or two really.

For sure Wolfie. Will be a great time to pick up cheap BTC.

by Harvey W | 13th Jun 22, 6:03pm 1655100184

Buying Bitcoin? - a fool and his money are soon parted...

by lonewolfnz | 13th Jun 22, 6:23pm 1655101405

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)

by HouseMouse | 13th Jun 22, 6:55pm 1655103334

Buying stocks already?

I feel that’s at least 6 months too early.

I reckon late 2022 / early 2023.

by lonewolfnz | 13th Jun 22, 7:05pm 1655103942

Just conservative / value stocks for now.

This week could be painful, but so far I've done well - lots of energy and gas stocks.

by HouseMouse | 13th Jun 22, 7:11pm 1655104270

Fair enough

by lonewolfnz | 13th Jun 22, 7:41pm 1655106110

Ha, my next buys are coca cola, Berkshire Hathaway and gold miners. Lets see how I go

by Justa comment | 13th Jun 22, 7:41pm 1655106105

Anyone think AIR is near the bottom? (58 cents)

by The Black Swan | 13th Jun 22, 4:53pm 1655096009

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.

by realterms | 13th Jun 22, 5:04pm 1655096689

You might be right. Or maybe tomorrow is a big bounce and the can goes down the road a bit. So hard to tell right now.

by bw | 13th Jun 22, 4:53pm 1655096031

The ASX200 is down -1.3% - Queen's Birthday in Oz?

by Justa comment | 13th Jun 22, 7:40pm 1655106048

yep limited trading. They will fall the rest tomorrow............

by SimonRo | 13th Jun 22, 4:56pm 1655096215

Things are certainly happening in equities and crypto,

the question is - will what happened in the prior 3-5 years happen again the near future? And will I do exactly the same moves again? I'm hoping not but it's not so easy.

by lonewolfnz | 13th Jun 22, 5:21pm 1655097684

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-…

by Trickledown | 13th Jun 22, 8:36pm 1655109410

I’ll just leave this here Lonewolfnz…

https://www.theatlantic.com/business/archive/2013/04/the-great-debt-delusion-how-math-keeps-proving-austerity-wrong/275037/

by Independent_Observer | 13th Jun 22, 5:04pm 1655096679

I see the 10Y bond through 4% and the 1y swap not far behind it. Everything appears to be happening at a quick tempo once again.

by Justa comment | 13th Jun 22, 7:43pm 1655106235

yes big move through the 4%. For TEN yr bond. That sends a long term message...........

by HouseMouse | 13th Jun 22, 5:25pm 1655097930

Rentals listed on TradeMe in Auckland are really surging higher. Up to 517 townhouses now. So it’s gone from about 450 to 517 in the space of 2-3 weeks.

maybe will reach 600 by end of June, as more townhouses are completed?

by northman46 | 13th Jun 22, 5:29pm 1655098188

Wellington rentals hit a new high too (1100). Whilst houses for sale has retreated slightly, rentals have more than picked up the slack. Those not selling turned to renting instead?

by realterms | 13th Jun 22, 5:34pm 1655098456

The decline in for sale numbers is very slight, and actually much less than you'd expect from the seasonality. Most years the stock numbers are falling quite quickly by mid-June.

by HouseMouse | 13th Jun 22, 5:39pm 1655098761

Exactly.

by northman46 | 13th Jun 22, 5:55pm 1655099726

Definitely. If it holds anyway near this level then Summer will be interesting.

by NZGecko | 13th Jun 22, 6:41pm 1655102514

Rental prices to collapse as the 10s of thousands of empty Auckland homes look for renters?

by Pacman_46 | 13th Jun 22, 5:27pm 1655098066

Pack it in fullas and fullesses, Bitcoin is definitely dead this time.

by Pragmatist | 13th Jun 22, 8:06pm 1655107580

If you're a fan of the walking dead you know death is just a pause, it'll shuffle on mindlessly for a while longer till the body rots.

by HouseMouse | 13th Jun 22, 5:46pm 1655099170

For anyone that cares, I haven't had a response to my correspondence to the Herald some 8 or 9 days ago.

This perhaps motivates me even more to go to the Press Council.

by Nifty1 | 13th Jun 22, 8:08pm 1655107684

Go to FMA and complain about the financial advice/no disclosures provided in TA & Churches articles...

by HouseMouse | 13th Jun 22, 8:47pm 1655110021

Another valid option.

by lonewolfnz | 13th Jun 22, 5:52pm 1655099531

So how many of us crypto investors remembered to sell for taxes on 1 April? BTC was $45.5k if I recall rightly (I was selling from 7am that day).

by Pacman_46 | 13th Jun 22, 5:59pm 1655099997

No selling here…ride or die.

by lonewolfnz | 13th Jun 22, 6:24pm 1655101452

Well my new portfolio is certainly that. Happy to go down with the ship with these buys

by HW2 | 13th Jun 22, 6:44pm 1655102646

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!

by Yvil | 13th Jun 22, 8:11pm 1655107905

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

by HouseMouse | 13th Jun 22, 6:52pm 1655103168

‘A feared mass exodus’?

feared for whom?

property spruikers?

by JimboJones | 13th Jun 22, 7:12pm 1655104369

So what is the point of Bitcoin? I thought it was meant to protect people from dodgy printed fiat, yet it can’t even keep it’s value against fiat despite the printers being in overdrive.

by Pacman_46 | 13th Jun 22, 7:21pm 1655104892

You need to check your financial privilege Jimbo. I suspect you won’t bother to read this.

https://www.financialinclusion.tech/

by Pacman_46 | 13th Jun 22, 7:25pm 1655105142

Google Roya Mahboob and her bitcoin story, helping the women in Afghanistan.

by realterms | 13th Jun 22, 8:04pm 1655107459

The Taliban won't let us go to school, but never fear, bitcoin man to the rescue.

by Nzdan | 13th Jun 22, 11:42pm 1655120577

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".

by malamah | 13th Jun 22, 10:21pm 1655115693

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)