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
More floating rate changes came through today. The most interesting was from ANZ who only raised their by +40 bps, the lowest of all the main banks. Westpac added 45 bps. Cooperative Bank added +40 bps like ANZ but their resulting floating rate came in lower than any big bank except Kiwibank. Among the big banks, after these adjustments, the difference between all five is now down to 39 bps, from 44 bps previously. More here.
TERM DEPOSIT RATE CHANGES
Rabobank raised all its term deposit and savings account rates. Their one year offer is now 4.15% and the highest of any bank. ANZ, Westpac and the Cooperative Bank all raised savings account rates, but only Coop Bank's Step Saver went up +50 bps. Xceda Finance raised all their term deposit offers.
UNDERMINED
New Zealand's factories are now contracting. The June PMI recorded a shift from expansion to contraction. Worryingly, this was driven by retrenchments in new orders and production levels. The demand side of manufacturing is clearly losing momentum. Troublesome logistics and the unreliability of supply chains were much more commonly reported than the odd account of improvement.
JULY POLL SHIFTS
The July Taxpayers Union/Curia political poll shows National and Luxon slipping but still ahead, Labour and Ardern rising, Act at 10% and the Maori Party showing the biggest move up even if they are well below the 5% threshold.
MAJOR MOMENTUM FAIL
China has reported bad economic activity levels for the June quarter, worse than the poor ones expected. And remember, these are the official data. GDP fell -2.6% in the June quarter from the March quarter, and that undermined the year-on-year expansion to just +0.4%, well below the expected +1.0% and miles lower than the March level of +4.8%. China's goal of a 2022 expansion of "about 5½%" is now lost. The upcoming Party Congress is likely to be a dour affair with a dark economic shadow hanging over it (the date for this Congress hasn't been set yet).
RETAIL REBOUND
China's weak GDP result is after they reported a surprise rise in retail sales for June. the +3.1% year-on-year increase for June easily beat market estimates of a flat reading and shifting from a -6.7% drop in May. The latest figure marked the first increase in retail trade since February, as consumption recovered following a drop in pandemic lockdown restrictions.
COAL IS THEIR ANSWER
After sliding all year, China says its electricity production rose sharply in June, up +1.5% from year ago levels after May was down -3.3% on the same basis. June's coal production, used mainly to fire up electricity generators, was up +15%. China is said to be considering swallowing its pride and start buying Australian coal again - mainly because local production is unsustainable at current levels. China's climate goals are a massive case of greenwashing - ditto Australia.
SWAP RATES FLAT
Wholesale swap rates may gone sideways today. The 90 day bank bill rate was up +5 bps to 3.10%. A week ago it was 2.68% so a +42 bps rise. The Australian 10 year bond yield is now at 3.44% and down -4 bps from this time yesterday. The China 10 year bond rate is now at 2.82% and little-changed. And the NZ Government 10 year bond rate is now at 3.68%, down -2 bps from this time yesterday and now slightly below the earlier RBNZ fix for this bond which was down -1 bp to 3.69%. The UST 10 year is now at 2.95% and down -1 bp from this time yesterday.
EQUITIES SLIDE
The S&P500 ended its Thursday session down -0.3%. That's a -2.8% retreat so far this week. Tokyo has opened up +0.6% in late morning trade and if this holds it will end the week down -0.4%. Hong Kong has opened down -0.7% in their early Friday trade building to a -4.0% weekly loss. Shanghai is flat in early trade today and on the way to a -1.7% weekly fall. The ASX200 is down -1.0% in early afternoon trade heading for a -1.4% weekly. The NZX50 is down -0.5% in late trade wiping out all the prior weekly gains and heading for a -0.3% fall.
GOLD WEAK
In early Asian trade, gold is down -US$14 from this time yesterday, now at US$1716/oz. We should note that it closed in New York at US$1710/ox, and in London at just US$1701/oz, so this is something of an intra-day recovery.
NZD FIRM
The Kiwi dollar has had a minor +¼c rise from this time yesterday, now at 61.4 USc. Against the AUD we have risen a bit more to 90.8 AUc. Against the euro we up marginally at 61.2 euro cents. That means our TWI-5 is up +30 bps at 70.7.
BITCOIN FIRMS FURTHER
Bitcoin is now at US$20,691 and up +2.1% from this time yesterday. Volatility over the past 24 hours has been high at +/-3.2%.
Daily exchange rates
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep ahead of upcoming events by following our Economic Calendar here ».
32 Comments
Thats where it gets a bit crazy. If say Oz completely supplied China with all its coal, would people say that greenwashing occurs in both places? I would have thought that such things can only happen in one place. Either the seller or the buyer of the non green product. Not both.
In a similar vein I strongly believe that NZ should not face any wrath concerning meat sold overseas.
Self-justification, by any cranial contortion?
No number of wrongs make a right. The problem every country faces, is that without the high-EROEI energy of fossil fuels, they.... aren't. That makes it quite a conundrum, because depletion means they're going to be 'aren't' at some point anyway.
Better to go 'aren't' early, while there is manoeuvring - time.
But "he/she/they who runs out last laughs longest" (but also becomes a prime target for invasion...unless they have nukes...)
I’ve got to be honest PDK, I love your passion but I very rarely understand a word you say.
It's clearly both. It only takes one to stop it they are both complicit. It's all about the money baby that overides everything even your very existence.
Agreed
Energy emissions always accrue to the user and not the producer, the opposite of everything else.
They're supply chains, not supply bubbles so all part of the supply chain need to have some drivers to change behaviour.
People will be getting grumpy in China. Time to stir nationalistic fervour and start a war!!!
They will not attack the main Taiwanese island.
Know when to fight and when not to fight: avoid what is strong and strike at what is weak. Know how to deceive the enemy: appear weak when you are strong, and strong when you are weak. Know your strengths and weaknesses: if you know the enemy and know yourself, you need not fear the result of a hundred battles.
Is that the Irish coach?
A limited campaign against Kinmen or Matsu islands initially is more feasible and would tick a lot of boxes. But still PRC might not be victorious.
Kinmen in particular really is an island fortress. But only 10km from mainland. Interesting place.
Battle of Kinmen was last hot battle between PRC and ROC. Famous ROC victory.
Isn’t that the whole point with why China might go to war now - “appear strong when you are weak”.
For context,the top 3 countries were Mexico,Indonesia & Taiwan in that order,so not too sure who they were surveying and what the parameters were.
shadwo
How early do they let the interns start on the Friday beers at interest.co.nz?
WFH - 3pm happy hour on Fridays
That late?
JPY at 24-year lows against USD. Strong buying volumes of the ol' rat poison been evident all week out of Japan.
This is definitely a case of "The least dirty shirt" place to hold FX reserves, to me the big news is China.... Remove the forward finance pipeline for homebuilding and its all over.... those GDP numbers, I wonder if Xi has lost control of that stats department..... normally the the growth rate in china is 6
Yes. Remember that Japanese are big holders of cash and the economic destruction is nowhere near as bad as in China. A weak yen is arguably necessary in light of Chinese manipulation of currency.
So are foreigners of near cash equivalents for securities associated currency basis swaps proceeds. Link
Is it not a sign that he will be dumped next party congres?
Yen has been like a yo-yo against the NZD. If it gets back to 87 I will buy some more
The great China mortgage payment strike.
Former UBS Group AG economist Jonathan Anderson once called it “the most important sector in the universe.”
“Property has been getting steadily worse the whole time; prices, sales, starts, all terrible,” said Craig Botham, chief China economist at Pantheon Macroeconomics in London. “The chronic deterioration has now taken another step. It was always going to hit the financial sector eventually, given the prevalence of collateral in loan books with large real estate portions.”
https://fortune.com/2022/07/15/china-mortgage-boycott-homebuyers-real-e…
Not surprised, developers sell homes off the plan, don't finish the builds, use the money to setup another development elsewhere, sell homes off the plans and repeat.
After 5-6 years the developments are bulldozed by the council and mortgage owners are left without a home.
At 28 projects, the estimated bad debt generation was 86 billion or 1.4% of outstanding mortgage balance. Now at 100 projects..
China is screwed.
It certainly doesn't look flash from the outside, but given the nature of such a controlled state it's really hard to determine just how bad things are.
Undoubtedly worse than they make out.
Most of it is self-inflicted. Xi has been disastrous for the country.
What will it take to shift him?
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.