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A review of things you need to know before you sign off on Tuesday; only minor retail rate changes, low auction activity, resilient mortgage book, but falling activity, swaps stable, NZD firmish, & more

Business / news
A review of things you need to know before you sign off on Tuesday; only minor retail rate changes, low auction activity, resilient mortgage book, but falling activity, swaps stable, NZD firmish, & more

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
HSBC raised its floating rate to 6.34$, a +45 bps rise. The Police Credit Union raised its floating and one year fixed rate.

TERM DEPOSIT RATE CHANGES
Liberty Financial raised all its term deposit offers from 3 months to 5 years. Liberty is unusual because it is a finance company with an investment grade credit rating.

NATIONAL AUCTION MONITORING
Nationally, the number of properties going to auction remains low with about a quarter selling under the hammer, according to our national wrap-up of last weeks residential auction activity.

HIGHER RATES HIT BIGGER SPENDERS
Mortgage interest costs have risen more than 30% for average households. Statistics New Zealand says the highest spending households are the ones more affected by the rising mortgage rates.

A RESILIENT MORTGAGE BOOK
In the June quarter, borrowers spent almost $2.8 bln on interest on their home loans, the most for any quarter since March 2020. But even at that rising rate, that is only an overall rate of effective interest rate of 3.3% pa, so rising rates have yet to bite most borrowers. However, borrowers are clearly getting prepared; they make $4.4 bln in excess payments in the quarter (over and above their scheduled repayments) and that is the most ever recorded since this data series began in 2014. Since the low point in March 2019 when $3.1 bln in excess payments were made in the quarter, home loan borrowers have been steadily increasing this resilience. Repayment deficiencies which spiked after March 2020 and falling now, and bank writeoffs are now near all-time lows.

WITHERING
There were less than 15,000 new mortgage commitments in the June month, a decrease of more than -10% from May. (C31) This is the lowest number of commitments for a June month since data collection began in late 2013.

GUARD CHANGE
In Australia, APRA supremo Wayne Byres has announced he is quitting at the end of October. APRA is Australia's prudential regulator and their policies and focus are influential in New Zealand, especially through the Aussie parent banks.

CHINA PRESSES THE PAIN BUTTON
Staying in Australia, punishing Chinese tariffs have decimated what was Australia’s most lucrative export market for wine. Sales slumped from AU1.1 bln two years ago to just AU$25 mln now. That has forced them to find other markets, and they are with sales to the rest of the world rising quickly, up +AU$400 mln. But the Chinese punishment means that their yields fell -14% from 2020 to 2022.

WALMART SLIDES
In the US, behemoth retailer Walmart's shares fell almost -10% after a grim trading update ahead of releasing their Q2 earnings results.

MODERATE GROWTH RETAINED
South Korea reported its Q2 GDP. That showed a pick-up in economic growth to 2.9% from the year-ago period and well above analyst estimates. A rebound in private consumption and government spending offset the decline in exports and private investment.

SWAP RATES HOLD
Wholesale swap rates may not have moved much today. The 90 day bank bill rate was up +1 bp to 3.14%. The Australian 10 year bond yield is now at 3.37% and up +2 bps from this time yesterday. The China 10 year bond rate is now at 2.80% and unchanged. The NZ Government 10 year bond rate is little-changed at 3.63%, and now above the earlier RBNZ fix for this bond which was unchanged at 3.60%. The UST 10 year is now at 2.79% and up +2 bps from this time yesterday.

EQUITIES MEANDER
Wall Street struggled to find any direction or momentum today, ending its Monday session up a trivial +0.1% on the S&P500. Tokyo has opened its Tuesday session flat. Hong Kong has rallied to make back most of yesterday's loss, up +1.2% on the day so far. Shanghai has opened up +0.6%, also making back Monday's fall. The ASX200 is up +0.2% in afternoon trade. The NZX50 is down -0.5% in late trade.

GOLD HOLDS
In early Asian trade, gold has risen a minor +US$2 from this time yesterday, now at US$1,727/oz.

NZD FIRMISH
The Kiwi dollar has risen to 62.6 USc from this lime yesterday. Against the AUD we are down at 89.9 AUc. Against the euro we are little-changed at 61.2 euro cents. That means our TWI-5 is now just under 71.1 and a small intra-day rise.

BITCOIN SLIPS AGAIN
Bitcoin is now at US$21,082 and down -5.1% from where we opened this morning. Volatility over the past 24 hours has been high at +/-3.0%.

Daily exchange rates

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End of day UTC
Source: CoinDesk

Daily swap rates

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This soil moisture chart is animated here.

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

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18 Comments

What a bunch of 🤡

They look even more stupid each time they do this. As someone else said, it’s already close to minus 15%, so it’s like this latest forecast is almost automatically out of date, haha.

I remember that P8 was ANZ’s biggest fan, he thought they were just wonderful. He hated it when I criticised them.

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14

Don’t forget in November or December 2021 they said 3%, haha

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8

It will end at 30% when Christmas rolls around.

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16

I agree! I can see all the post covid gains being erased = down 35%

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6

As I said early / mid 2021, off the plans sales would collapse in 2022, and nowhere near the numbers of homes consented will be built. This articles says 50%, I think it will be significantly less, perhaps 30-40%.
 

https://www.oneroof.co.nz/news/41895

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Why in god’s name would anybody buy off the plans these days? Ok maybe if your deposit, down payment or whatever is secured independently  somehow, but who in their right mind would trust a developer and/or builder with their money before anything starts? Think there have been plenty of stories in the media of late of woeful would be new home owners who have completely lost much of their money in return for zilch.

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9

Correct. Maybe, just maybe, you *might* consider it with a very established and credible developer.

Otherwise, yeah, don’t touch with a barge pole 

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7

Sounds like plenty of property investment opportunities coming up in the future when the idiot Aussie banks foreclose on the people nobody in their right mind would have lent to in the first place. At my friend's mortgagee auction, the ANZ said she cost them $140000. I reminded them that the idiot lenders employed by the ANZ had cost them that money, and had they all been sacked yet?

Maybe those ANZ economists mentioned above can predict the best time to swoop on these cheap deals.

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10

I have friends who bought of the plan going on 2 years ago now. Costs keep stacking up, and the builder and the developer keep shifting blame. But here's the kicker - It's the same person through two different companies! So far they have a title on land (that has a covenant tying them to that builder) to show for their stress and money. The latest issue - a new huge council drain running through the side of the section rendering the existing housing plans unless without massive new costs. It sucks and there's no great way out.

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7

Building sure is a lot more hassle than buying.

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2

Crypto exchange Coinbase under investigation for selling securities. What the SEC is doing is supposedly doing is protecting little guy investors. 

Question is why did the SEC let Coinbase IPO in the first place and giving the green light to investors to buy shares of a company that is offering purported unregistered securities?

What we are witnessing is drenched in institutional corruption and self interest at its most blatant. 

https://www.bloomberg.com/news/articles/2022-07-26/coinbase-faces-sec-i…

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4

err, No.

"What we are witnessing is drenched in institutional corruption and self interest at its most blatant. "

It was the previous Administration that processed the Coinbase IPO, and your criticism might be valid for that. The new SEC boss wasn't confirmed until right when that IPO was approved. Gensler is a real regulator, not beholden to the industry and probably wouldn't have let it slide through. I have much more confidence Gensler will stand up for investors, rather than his predecessor Jay Clayton, a lawyer whose professional life was representing the the big end of Wall Street. Your criticism applies to Clayton. Given half a chance, Gensler will fix the problems you point out. His investigation is long overdue.

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8

Disagree. If you were aware of Gensler's background, you would be aware that he cut his teeth at the Vampire Squid and is beholden to Wall Street. And you're missing the point in that the SEC greenlighted the Coinbase IPO. The fact that the head of the SEC has changed is irrelevant. If Coinbase was guilty of breaking any laws related to the selling of securities, I would understand. But if the SEC was surely aware that Coinbase was selling what they define as securities, then Coinbase should have been investigated or warned much earlier. This hasn't happened. Furthermore, the public were not warned. 

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4

Clayton was a Claytons regulator? ^^

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Now we can all get some sleep ... quote/unquote

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This may offer some interest: https://www.nzfbf.co.nz/news/202203

The addition of 25- and 30-year tenors in the interest rate swap market (NZSW).

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Australian Wine

"But the Chinese punishment means that their yields fell -14% from 2020 to 2022."

Maybe Sir J K was right not to offend Leader Xi, when his bodyguards manhandled the Green MP.

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