What happened Monday

Business / news

A review of things you need to know before you sign off on Monday; retail rate rises spread, revised class action law coming, China profits drop; swap rates drop, NZD holds, & more

[updated]

27th 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
Home loan interest rates are ratched up by two more banks. Kiwibank and TSB, although there are signs wholesale funding costs have stopped rising. More here.

TAP TURNED OFF
ANZ has put a temporary hold on high LVR lending.

DISCOUNT ENDS
The ANZ Personal Loan campaign ends today at 5pm with their rate for this facility rising from 10.95% back to 12.90%,

TERM DEPOSIT RATE CHANGES
Rabobank and Kiwibank both raised term deposit rates today, with the new levels by both topping market comparatives. More here. Update: TSB has also now too.

LAW COMMISSION RECOMMENDS CLASS ACTIONS LAW
The Law Commission is recommending a new Class Actions Act be developed to improve access to justice and efficiency in litigation. The Commission also says regulation and oversight of litigation funding is needed in NZ, citing significant barriers to accessing civil justice.

WELCOME UPTICK, EXCEPT FOR ERD
Last week the NZX50 participated in the global equity market recover, with capitalisation up +2.0%, the sort of rise we haven't seen for some time. F&P Healthcare (FPH, #1) rose +3.3% and Fletcher Building (FBU, #9) rose +6.7%. But the biggest weekly rise was for Skellerup (SKP, #30) which rose 11.2%. At the other end of the scale, ERoad (ERD, #50) is on the skids even further, losing a massive -14.4% in capitalisation last week. Since March 31 when it was added to the NZX50, their share price has fallen a massive -65% over those 90 days. It has been a disaster period for them.

DEFAULT
Russia has defaulted on its foreign debt. It can't pay largely as a result of sanctions inhibiting its ability to shift funds. It's their first default of foreign debt in 100 years. But during Russia’s financial crisis and ruble collapse of 1998, then president Boris Yeltsin’s government defaulted on $US40 billion of its local debt.

PROFIT STRESS IN CHINA
The struggles on China's industrial companies continued into May. In the month, profits were -6.5% lower than the same month a year ago, and it is little comfort that decrease was less than for April. That takes their year-to-date gains back to just +1.0%. The whole situation is actually much grimmer; manufacturing profits are almost -18% lower and utility companies -6% lower. The overall results are only restrained by profit surges in coal and other mining companies.

LIQUIDITY STRESS IN CHINA?
The Chinese central bank injected a total ¥100 bln (NZ$23 bln) into their banking system today, the largest daily injection since March 31, by a seven-day reverse repurchase at a rate 2.1%. to ease pressure from rising cash demand toward the end of the first half of the year. They started pumping more cash into the financial system on Friday. Demand usually surges towards the end of the quarter, when commercial banks also have to shore up cash positions for an administrative quarterly health check by the central bank. But the size of this may suggest more is at play this time.

SWAP RATES FALL
We don't have today's closing swap rates yet but they probably fell, and probably substantially. Treat with caution. The 90 day bank bill rate is up +3 bps at 2.81% today (and its highest in three years). The Australian 10 year bond yield is now at 3.72% and up +1 bps from this morning. The China 10 year bond rate is now at 2.84% and+5 bps higher. And the NZ Government 10 year bond rate is now at 3.89%, and down another sharp -12 bps from this morning and still lower than the earlier RBNZ fix for this bond which was also down -12 bps at 3.90%. The UST 10 year is now at 3.14% and unchanged from this morning's open..

EQUITY PRICES START STRONG
The NZX50 has continued last week's good form, rising +1.2% in late Monday trade. The ASX200 is up +1.6% in early afternoon trade. Tokyo has opened the week up +1.3% and Hong Kong is up +2.3% in very early trade. Shanghai has started its Monday session up +1.0%. The S&P500 futures suggests Wall Street could open tomorrow down -0.2% in a small pullback from the strong Friday close.

GOLD FIRMS
In early Asian trade, gold is up +US$9 from this morning's open at US$1835/oz.

NZD SOFTER
The Kiwi dollar is little-changed from this morning's open at 63.1 USc. Against the AUD we up at 91.2 AUc. Against the euro we are softer at 59.7 euro cents. That all means our TWI-5 is now down -20 bps at 70.9.

BITCOIN HOLDS
Bitcoin is now at US$21,095 and -0.6% below where we started out today. Volatility over the past 24 hours has been moderate at +/- 2.2%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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45 Comments

by profile | 27th Jun 22, 4:21pm 1656303669

Oh to be a public servant. No wonder our productivity is in the toilet.

"This paper outlines our intention to establish a Matariki Advisory Group to decide when and how a Matariki public holiday should be celebrated in Aotearoa, New Zealand, and to appoint to this group, each for an eighteen month term from the date of commencement:

...note our intention to appoint to the Matariki Advisory Group for terms of eighteen months each, from the date of commencement;

...5.1 The Group is classified as a Group 4, Level 1 body under the Cabinet Fees

Framework. The fees are $1,035.00 (plus GST if applicable) per day for the Chair and $780.00 (plus GST if applicable) per day for members, which is consistent with the Fees Framework."

Matariki Advisory Group: establishment, appointments and Terms of Reference (mbie.govt.nz)

by powerdownkiwi | 27th Jun 22, 4:36pm 1656304570

Compared to all the selling off of the family silver, from 1984 till recently, chicken-feed. And that was real theft.

But Maori, while they were not a sustainable society as of European arrival, were far closer to that state, than we are or were.

Those who think reverting to their ways can solve our overshoot predicament, are mistaken. But not nearly as mistaken as the unchanging, unthinking types who still cheer 'growth'. Or those paid to cheer it, of course.....

by Pragmatist | 27th Jun 22, 4:41pm 1656304896

The daily rate is fine, in fact its bloody cheap, there are plumbers that charge more. Its the taking 18months to do so little that's the problem.

Call for submissions from relevant parties, wait a month or two, then form the committee for a week or two to read the submissions. Another month for consultations and they should be pumping out the final recommendation.

by J.C. | 27th Jun 22, 4:48pm 1656305283

The daily rate is fine, in fact its bloody cheap, there are plumbers that charge more

Agree. Those consulting fees are not outrageous.

by agnostium | 27th Jun 22, 9:30pm 1656322230

Completely agree. These are mates rates because it's a public entity. If this were private sector it would be at least twice as much.

by Matt_B | 27th Jun 22, 6:10pm 1656310234

Doesn't specify work hours

1 hour meeting and then golf and drinks

Plus all travel and accommodation provided for,

by Nzdan | 27th Jun 22, 6:30pm 1656311417

Or have multiple 1 hour group sessions for various groups to maximize daily rate.

by dumbthoughts | 27th Jun 22, 5:00pm 1656306044

To quote the Gypsy King, Tyson Fury - "easy money, free money"

by kiwikidsnz | 27th Jun 22, 5:21pm 1656307296

Will there be any Mahuta's in the group ?

by KBKIWI | 27th Jun 22, 5:41pm 1656308509

Come to interest.co.nz for excellent coverage of NZ economic & market activity - stay for the grotesque, race baiting, misogynistic commenters.

take your racist garbage comments back to your facebook group of angry old white men.

by lowercase capitalist | 27th Jun 22, 5:51pm 1656309099

Are you sure these comments are race baiting/misogynistic? I feel like there would be questions of nepotism even if she was a white man.

by J.C. | 27th Jun 22, 6:03pm 1656309802

Are you sure these comments are race baiting/misogynistic? I feel like there would be questions of nepotism even if she was a white man.

Thank you. Race and gender are irrelevant when it comes to nepotism.

Anyway, here's a good read on the consulting rorts out of Queenie.

We knew it was a lot of money (the council’s annual spend is more than $100 million) and it did have some of the hallmarks of “jobs for mates”. When we chose ZQN7 at random (it was the last on a list of more than 400 QLDC contractors and consultants) we did not necessarily expect to find anything. It had taken more than two years to get the list in the first place.

https://crux.org.nz/crux-news/inside-the-cashed-up-world-of-the-queenst…

by dumbthoughts | 27th Jun 22, 6:13pm 1656310415

Great read that Crux piece ... snout-in-the-trough behaviour going on there that would make Napoleon from Animal Farm blush.

by Te Kooti | 27th Jun 22, 6:48pm 1656312505

Just to be clear, pakeha snouts in the trough.

by Beanie | 27th Jun 22, 7:32pm 1656315125

That's unnecessary, we all know snouts come in all shades of colours.

by lowercase capitalist | 27th Jun 22, 7:37pm 1656315423

All snouts are equal. Some are just more equal than others.

by JimmyJames | 27th Jun 22, 7:49pm 1656316190

Thanks for your casual racism Te Kooti. Just another Monday. Chalk it up.

by Nzdan | 28th Jun 22, 8:08am 1656360494

I've called Te Kooti out on it before, didn't go down too well.

by singautim | 28th Jun 22, 5:26am 1656350818

Fair call. It reminds me of PNG - the difference in NZ is they are better at burying it.

My fear is co-governance will dilute responsibility even further making this kind of thing even harder to weed out.

by singautim | 28th Jun 22, 5:18am 1656350282

Great link. My Papuan family is often embarrassed by the corruption in PNG and my wife even remembers colonial times favourably as being more honest. This article is a good corrective. As they say in Port Moresby 'it is not what you know but who you know'.

by agnostium | 27th Jun 22, 9:38pm 1656322725

Great link. This is what happens when you continue to denigrate public servants. You miss out on talent that doesn't want to put up with all the shit they get handed out only to also get paid less than their private sector counterparts. At the end of the day the work still needs to be done and the public sector ends up having to pay many times more by hiring private sector contractors. All part of the privatisation masterplan. I know as I've worked in both. Now I'm in private sector I charge approx. 4 times more doing exactly the same work I used to do in the public sector, plus the added bonus that I don't have to put up with self entitled pricks who think that because you work for government you are somehow personally accountable to them.

Welcome to neoliberalism.

by Te Kooti | 27th Jun 22, 6:01pm 1656309664

Welcome KBKiwi.... There is a whiff of Tauranga Ratepayers in the comments!

by kpnuts | 27th Jun 22, 6:19pm 1656310766

ask any kaupapa maori service what it thought of suicide prevention money going to her family -- who had no knowledge expertise or experience inthis area -- where the groups doing the hard Mahi once again got nothing

by kiwikidsnz | 27th Jun 22, 6:33pm 1656311610

I didn't make any "...grotesque, race baiting, misogynistic" comments at all.

Methinks you doth protest too much ad hominem. I've never been on Facebook however I'm always happy to be judged by the quality of my enemies.

by JimmyJames | 27th Jun 22, 7:32pm 1656315165

@KBKIWI

Mahuta is a family name not a race. Your thought patterns a clearly aligned to race though with twist of sexism and an evident dislike for old people seeping out there too.

by EdwardD | 27th Jun 22, 7:33pm 1656315181

When I read this comment, I wasn't thinking about colour or race, I assumed it was about nepotism.

by Rex Pat | 27th Jun 22, 10:00pm 1656324023

When your mind is a hammer, everything looks like a nail waiting to be hit.

by Brock Landers | 28th Jun 22, 4:10am 1656346238

I wonder if the commenter above has any self awareness.

by Nzdan | 27th Jun 22, 6:33pm 1656311606

Tane Mahuta also helped the RBNZ write their narrative, purpose and values. Wonder what the consultancy fees were there for the Mahuta family.

_/sarc

by kpnuts | 27th Jun 22, 6:17pm 1656310645

Maori have been celebrating Matariki for decades -- they already have a process and the dates had already been set for years to come -- so this is just a pointless excercise and waste of money 18 months ? must be another Mahuta contract

by RickStrauss | 27th Jun 22, 6:24pm 1656311048

Productivity is in the toilet because it makes more sense to park money in land speculation than to work hard building a productive business. Because we lack a party with genuine intent and real economic policy to do otherwise.

by The Person | 27th Jun 22, 7:31pm 1656315086

Just to be clear, cause to me from your posting, this sounded like an ongoing group appointed every 18 months, but actually this is the advisory group that was formed in order to establish the new public holiday, whoose work is now done and dusted.

So before establishing a new public holiday, the government looked into what was needed to do so. I don't see the big deal?

8 The purpose of the Group is to advise on:

8.1 A date for a Matariki public holiday, and provide a forward annual calendar for this holiday for the next thirty years; and

8.2 How best to celebrate Matariki by marking its importance in an appropriate manner.

"Work programme 38. The Group will initially report back to responsible Ministers by 1 February 2021"

"The Group will have an ongoing mandate up to the first celebration in 2022"

by HouseMouse | 27th Jun 22, 7:54pm 1656316483

I am a big fan of Matariki and 100% support it’s recognition as a public holiday but this is a nonsense.

by JamesM | 27th Jun 22, 8:24pm 1656318276

So $300K per member assuming 5 day weeks for 18 months!!!!!!!

For what? A few suggestions on a haka, powhiri followed by a hangi at a number of Marae across the country.

by The Person | 28th Jun 22, 12:07am 1656331666

I'm afraid that your estimate of $2.7 million for member fees alone is slightly off

The Group will meet at least monthly until the end of the term of appointment. Meetings may occur more frequently as the Group sees fit, within budget constraints

Cabinet should note that the estimated costs for the Group are $0.40 million in 2020/21 and $0.15 million in 2021/22 to fund members fees, engagement and consultation processes and to operate a Secretariat for the Group

by sit23 | 27th Jun 22, 5:48pm 1656308933

Get your priorities right. What is more important? Looking after our exporters, balancing our country's budget, and looking after our taxpayers, or creating a Matariki junket using all the usual suspects.

by Baywatch | 27th Jun 22, 6:26pm 1656311181

Bringing down the price of cheese..

by OldSkoolEconomics | 28th Jun 22, 6:52am 1656355939

Staying in power for another 4 years.

by RickStrauss | 27th Jun 22, 6:25pm 1656311103

The Law Commission is recommending a new Class Actions Act be developed to improve access to justice and efficiency in litigation.

Would that have made it easier for victims of HardiLeak building products, I wonder? Didn't their bid stop when getting to the Supreme Court because of a lack of funds to go further?

by Pa1nter | 27th Jun 22, 10:23pm 1656325388

So China has just committed to going zero covid for up to 5 years

https://www.theguardian.com/world/2022/jun/27/alarm-in-beijing-after-an…

Yeah, you can do what you want with the OCR, inflation is here to stay.

by HouseMouse | 27th Jun 22, 10:29pm 1656325790

Wow.

The horrid authoritarian entity that is the CCP is simply using Covid as an excuse to markedly reduce the very limited freedom that China’s people already had.

be scared, be very scared…

by Pa1nter | 27th Jun 22, 10:34pm 1656326052

Not only that but their government is knowingly adversely affecting the economy. Their legitimacy has rested on recurring strong growth, and hampering manufacturing and exports will complicate that.

by HouseMouse | 27th Jun 22, 10:38pm 1656326289

Exactly.

As I have been saying for several years, China’s destiny is middle income nation status, at best.

by singautim | 28th Jun 22, 5:34am 1656351248

Nothing wrong with being 'middle income nation' if that wealth is fairly distributed and the environment is not being thrashed.

by OldSkoolEconomics | 28th Jun 22, 7:08am 1656356899

By keeping manufacturing on semi lock down in china, at the same time Russia is affecting food and oil prices by the ukraine war and its blockades.. they are jointly keeping a vice on high inflation in the west and thus major economic damage is being inflicted on us. The longer they do this the weaker the west economy and greater our social unrest.. all the while whilst they build their dictatorships and militaries.

Along with chinas protracted lockdowns affecting supply chains and prices ukraine war will also be drawn out..

The Institute for the Study of War concluded that the Kremlin "intends to conduct a protracted conflict in Ukraine and is seeking to advance mobilization efforts to support long-term military and political goals in occupied areas of Ukraine."

Given china and russia stated intentions to make it a long period of delays, and thus for us to control inflatoon western reserve banks will surely need to use high interest rates to quell local demand from us peasants for a long time.

It will be an interesting next decade..days of overinflated asset prices, big holidays and throwaway clothes are gone. Back to the good old dqys