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
Later yesterday the Cooperative Bank who have lowered their fixed rates for 3, 4 an 5 years fixed, taking their 5 year down below 6%. Today both BNZ, ASB and Kiwibank raised their floating rates in response to the Wednesday OCR change - but no others yet. BNZ's rise was +45 bps, ASB and Kiwibank's were by +50 bps. More here.
TERM DEPOSIT RATE CHANGES
Both BNZ and Kiwibank raised some savings or notice saver accounts, BNZ by +50 bps, Kiwibank by +35 bps. ASB has raised all its term deposit rates, but their one year rate is still lower than Kiwibank's 4.0%.
SINKING
House prices are now declining in all main urban districts according to the latest REINZ sales data, adjusted for properties by type.
THE WEALTH EFFECT IN REVERSE
Statistics New Zealand says household net worth has fallen for the first time in nearly three years, while Kiwis have been spending nearly every dollar of their income. Not only are they burning through their cash reserves now, the value of their housing assets is falling, as are the KiwiSaver balances, and equity portfolios.
CLIMATE CHANGE & INSURANCE
Tower CEO Blair Turnbull says reinsurers are questioning their down-under exposures and he sees a risk of uninsurable areas in the future.
TACKLING WINTER & COMPLACENCY
In the face of increasing winter infections that are challenging hospitals and their staff, the Government is increasing access to antiviral medication to those most likely to end up in hospital, making free masks and RATs more widely available, and doing another push to lift uptake of flu and COVID-19 vaccines including the second booster.
CBD's NOT COMING BACK
The pandemic, flu and the attractiveness of working from home means CBDs are becoming less attractive. This is a global transition that just isn't going away. Rising yields and lower demand make the repricing of office buildings a grim prospect. The result will be much lower valuations for commercial offices and the retail that has been built around it. It also undermines the current pattern of public transport. Even 'free' won't save it and ridership isn't returning to pre-pandemic levels any time soon. Auckland Transport's May public transport patronage is down -20% from May 2021, and now only half of pre-pandemic levels.
AUSSIE JOBLESS RATE FALLS ON STRON P/T JOBS GROWTH
The Australian employed workforce rose by +88,000 in June, a bit more than half full-time jobs, and a surprising number were part-time. That took their unemployment rate down from 3.9% to 3.5% (a record low for them) and involved a small uptick in their participation rate. This lower than expected jobless rate will put pressure on the RBA to act harder and sooner. (The last time NZ reported its jobless rate, it was 3.2% in March. We get our June data on Wednesday, August 3, 2022. They are unlikely to change much given the strong jobs market here.)
SWAP RATES FIRM
Wholesale swap rates may have pushed on up firmly today, adding to yesterday's late rise. The 90 day bank bill rate was up +5 bps to 3.05% ahead of the OCR review. The Australian 10 year bond yield is now at 3.48% and up +4 bps from this time yesterday. The China 10 year bond rate is now at 2.83% and unchanged. And the NZ Government 10 year bond rate is now at 3.70%, up +6 bps from this time yesterday and now the same as the earlier RBNZ fix for this bond which was unchanged again at 3.70%. The UST 10 year is now at 2.96% and down -2 bps from this time yesterday.
EQUITY PRICES MIXED
The S&P500 ended its Wednesday session down -0.5%. Tokyo has opened up +0.6% in late morning trade. Hong Kong has opened up +0.2% in their early Thursday trade. Shanghai is up +0.1%. The ASX200 is up +0.4% in early afternoon trade. The NZX50 is also up +0.4% in late trade, led by PPH (+5.8%), FBU (+2.2%) and RYM (+1.8%).
GOLD FIRMS
In early Asian trade, gold is up +US$4 from this time yesterday, now at US$1730/oz.
NZD LITTLE-CHANGED AGAIN
The Kiwi dollar has had a minor slip from this time yesterday, now at 61.1 USc. Against the AUD we are virtually unchanged at 90.4 AUc. Against the euro we now just under 61 euro cents. That means our TWI-5 is little-changed at 70.4.
BITCOIN RISES
Bitcoin is now at US$20,273 and up +4.0% from this time yesterday. Volatility over the past 24 hours has been high at +/-3.9%.
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51 Comments
That took their unemployment rate down from 3.9% to 3.5% (a record low for them)...
Congratulations to whoever hired that last worker! Soon the primary reason for buyouts will be acquiring another companies payroll.
Nah, recession will sort that out
Doubtful, the backlog of unfilled positions is large. Remember we have fewer workers per consumer in our economy every year now. This is not 2008.
So do you think
- "This time it's different", and that shortage of labour persists through a recession
or
- Unemployment will spike, like it has in historic recessions
If you think it's the former, and that there really is a shortage of labour, I have to know, do you think there was a genuine shortage of houses last year?
"Every system is perfectly designed to get the results it gets." - W. E. Deming
One good aspect of NZ house prices falling is that the cost of managed retreats from uninsurable areas will be significantly lower. My view is if you've bough in an uninsurable area it sucks to be you but you should have thought about that. Any other attitude by government is putting taxpayers on the line for hundreds of billions of dollars.
We need to fix the incentives now before insurance retreat becomes a real issue. And keep house prices down while we're doing it. Driving house prices down in stupid areas using market mechanisms (with some regulatory levers) now will help in the long run.
Depends when you purchased. As if you purchased 50 years ago, you the risks may have been unknown. Overtime the number of risks grow as more and more research is done identifying new risks.
The term deposit rates for ASB look odd under Interest.co's savings drop down. The $10,000 plus rates are less than the $5000 ones. The rates don't match those on the ASB webpage.
I noticed that too Zachary - thought I'd had one too many.
They are usually pretty good. Do they manually update them?
ASB website is up to date now. Small and large TDs are exactly the same rates. Interest.co's chart is not quite right in that an ASB 10k+ 12 mth is 3.90%.
A real pearl of an article supporting decentralized finance:
"Oh, so sins in banking supposedly stopped in 2008? Hmmmm…I’m not sure the record supports that. Banks have paid an astounding $321 billion in fines since their supposed redemption at the hands of us taxpayers in 2009."
"I remember one anti-bitcoin nut wrote an article “Bitcoin Is Evil”. I don’t get that. It’s a piece of open source code anybody can use. It certainly has not ever done evil to anyone. Banks, on the other hand, have been convicted of $321 billion worth of evil deeds. (And, that’s only the ones they were caught at.)"
To put that number in context: the United Nations food-assistance branch, the World Food Programme, estimates “$6.6 billion would help stave off starvation for 42 million people across 43 countries.”
Banks spent fifty times the amount that would solve world hunger on fines. Maybe the article should have been “Banks Are Evil"
https://panteracapital.com/blockchain-letter/defi-worked-great/
Is that the same UN food assistance branch that actually said that amount would fix hunger as stated? Elon Musk offered to pay the money if they could show him in public how it would work. They then withdrew and altered their statement to something a bit more truthful. $6.6billion would pay for a lot of Toyota Landcruisers, meetings, and luxury glamping with high security all around for their staff.
Word is getting out about New Zealand.
https://www.stuff.co.nz/travel/news/129273557/new-zealand-ranked-second…
✈️ ✅
It will cause mental anguish for some, but somewhere nearby is viewed vastly more favourably.
☀️🏖️🦘🐨
For whom the bell tolls?
It's part of the name change conspiracy
Only 'second worst country'.. and after all Orr and GR's hard work on our economy... they did everything possible from what i can see.. dropped interest rates the most, let more people in than anyone else, inflated houses the most, increased food prices the most, printed as much cash as the machines could print, constrained construction, allowed duopolies and monopolies in critical industries. They even boasted the longest border lockdown, allegedly controlled the media and made huge handouts to big business... and now even have energy left to be vying for the the highest rate rises, biggest housing crash and best inflation rate.
Gutted. Damn good effort though.
Wow - second to a country that has a record of human rights violations against foreign nationals.
A weird nation where local men formally greet other men with kisses but married couple can't hold hands in public.
Yeah we are the land of the long ripoff.
but immigrants shouldn’t whinge, anyone should able to research these things these days
Do you think then, that NZ will get a inflood of Kuwaitis?
No wonder there was so much backlash from business lobbies on the government setting the median wage as threshold for sponsoring migrant workers. The target labour imports are those who don't have much skill to offer and are happy to be ripped off by employers (also landlords, banks and supermarkets) in return for permanency.
Suits the rest of us. The fewer people available to do jobs, the more we have to be paid.
According to the Wall Street Journal, NZ ranks 1 for "Ease of Doing Business"
https://graphics.wsj.com/table/DoingBusiness & https://en.wikipedia.org/wiki/Ease_of_doing_business_index
New Zealand topped the Ease of Doing Business rankings in 2017, 2018, 2019, and 2020
According to Luxon:
“Under this government… it’s getting really tough to do business, and businesses don’t want to make the investment they need to grow their business.”
Not in support of Luxon in any way, but you should read the Wikipedia page to the end. The 'Ease of Doing Business' research has been thrown in the garbage bin. The research is from the World Bank.
I did read to the end and aware it was canned. I saw it on Facebook and thought it was a funny little tidbit to coincide with Luxon's recent comments, which were just as garbage.
Beggars belief National could manage to lose this time.. hat off to 7HouseLuxon who seems to be doing his very best.
Perhaps then Nzd, including this disclaimer in the first post, would have given it more balance?
Why? You don't see people including disclaimers when they share memes?
Oh absolutely your call. You knew there was another side to the story and elected to, for fun, not mention it and i quite obviously would not have volunteered any annotation if not subjected to subsequent comment. Your form & credibility then, full stop.
Oh no, the credibility of my internet handle is in tatters. Lighten up.
From your Wikipedia link:
"The report was discontinued by the World Bank on September 16, 2021, following the release of an independent audit of the data irregularities. The audit documented how bank leadership pressured experts to manipulate the results of the 2018 and 2020 Doing Business Reports."
This was widely reported several years ago
Pretty massive one day jump in swaps today. 3.79 to 3.96 for 1 year!
https://www.interest.co.nz/personal-finance/116685/team-transitory-made…
"Have mortgage rates peaked?"
The inflation is looking still out of control in the US, rates could go higher than expected. The next 9 months will be interesting.
Serious matters aside, are we really going to build a light rail terminating in Wynyard where the restaurants are closed and the lights are out?
I guess the planners see light rail as life support and hope weekenders will resuscitate Wynyard, the Sydney experience is maybe, if the travel cost is zero.
Hmm..https://www.smh.com.au/national/nsw/free-fares-spark-surge-in-sydney-pu…
The cost estimates for their tinpot light rail are off the charts, up to $27 billion wtf.
Especially when you consider an engineering masterpiece like the Elizabeth Line in London was delivered for £19 billion.
I guess incorporating the Maori world view into every facet doesn't come cheap.
They didn’t price an above ground design, I have in mind Chicago or New York…, it may have been able to extend onto the harbour bridge…
Joking…
I don't mind the concept of light rail, but I agree that's crazy money, that I, for one, would much rather see spent on urgent hospital upgrades.
Exactly, explicitly, especially. There is something rotten in the state of New Zealand, when the politicos are infatuated and obsessed with constructing fanciful, unviable, vainglorious pies in the sky with absolute disregard for the basic needs of the people.
It's not the politicos per se (although they do love a massive project) it's the people investigating and advising on the projects. They all come from an infrastructure background. To bastardise the expression, when all you've ever been trained to use is a hammer, everything looks like a nail. They also benefit from massive infra as they will then end up joining the big infrastructure firms that build the project, their livelihood depends on it.
@agnost it is definitely the politicians. They make their decisions based on politics not science. The fault of the engineers is not telling them when their ideas are stupid but of course if they do what happens to those engineers? The politicians just go and find a yes man (or woman or other)
Twyford in particular was vainglorious. 100,000 Kiwibuild homes, light rail operational by 2020 (!!!), a new city between Auckland and Hamilton.
gosh the guy was a vainglorious fool!
The tunnel option is way more expensive than a surface light rail would be. The reason they have suggested a tunnel is to save the car parks on dominion road, the world's most expensive car parks. Just like East West link would have been the most expensive road in the world
I went and had lunch and a couple beers in Wynyard last week, there were plenty of people there.
You know..
This is like mass transport, like the buses that people board at running speed as they go to or from Mount Smart to downtown,or the tubes that load people from Londons O2 Arena,unless we can muster those numbers light rail is a waste of money.
The idea of "Uninsurable areas" is crazy.
Any area should be insurable. The premiums might make you cry, but at the right price, any risk is profitable to insure.
Also note the 2-10 year NZ bond spread has gone from ~40bps to ~11bps in the last week, the markets are telling us what confidence surveys and asset prices are. Only things left to topple are spending and employment figures.
'at the right price, any risk is profitable' - it's not just the physical risk, the moral hazard risk inherent in retreat areas (eg owner initiated fires) is extremely challenging to estimate and price.
I thought the whole reason for insurance is that it spreads the risk across a big pool of people, all of varying risks.
Insurance cover also requires a degree of responsibility - if you leave your car unlocked with the keys inside on the street you may find that you have breached your duty of reasonable care.
People have known of coastal geotech, erosion and flooding risks for millenia. Socializing their costs for their private profits is increasingly unacceptable.
No surprise, groceries 25% more expensive here than Aus:
https://i.stuff.co.nz/business/129247364/kiwis-pay-25-more-for-grocerie…
NZD vs Yen is all over the shop, now back up close to 85
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