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A review of things you need to know before you sign off on Thursday; some significant retail rate changes, business confidence crashes, foreign buyers vanish, swaps fall, NZD holds, & more

Business / news
A review of things you need to know before you sign off on Thursday; some significant retail rate changes, business confidence crashes, foreign buyers vanish, swaps fall, NZD holds, & 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
TSB raised its floating home loan rate by +75 bps to 6.25% today. SBS Bank cut its two and three year fixed rates by -20 bps.

TERM DEPOSIT RATE CHANGES
Kiwi Bond interest rates were raised today. See this. ANZ raised its TD rates late last night. See this. And Westpac did too today for terms out to 18 months.

FOREIGN BUYER ACTIVITY VANISHES
Sales of NZ homes to foreign buyers is down 91% since restrictions were introduced in 2018. Less than 100 homes were sold to foreign buyers in the June quarter, while foreign owners sold more than 200 of their NZ properties.

'A TRULY SPECTACULAR CRASH'
A collapse in residential construction sentiment highlights another gloomy ANZ Business Outlook Survey, which has plunged to an all-time low.

HOT DEMAND, FALLING YIELDS
More than $1 bln was bid for the $400 mln on offer at today's NZ Government bond tenders which attracted 95 bids over the three maturities. Yields fell. The April 2027 $200 mln saw its yields fall to 3.34% from 3.57% two weeks ago. The April 2033 $150 mln also brought lower yields, 3.50% compared to 3.75% two weeks ago. And the final $50 mln for the April 2037 bond went for 3.66%, down from 3.91% two weeks ago.

A PROBLEM, & A SOLUTION
The Financial Markets Authority (FMA) completed a review of ethical investing claims in managed funds. One finding the FMA noted was “investor decision-making is complicated by relevant information being scattered, partial or lacking”. Our resource on Investment funds provides a detailed analysis of hundreds of KiwiSaver and Non-KiwiSaver funds as analysed in a standard way by Research IP, including disclosure of multiple approaches a fund manager can apply to invest more responsibly.

AMMUNITION REVIEW
June data out today (S33) shows that 35% of all mortgage debt will come up for a rate review within the next six months, and another 23% by July 2023. That is $120 bln that will be repriced by January, and another $76 bln over the following six months. And that is the smallest proportion coming up for review since at least 2016 when this data series started. More borrowers have gone long to avoid the repricing risk.

LENDING TO BUSINESSES A GROWTH AREA
Bank lending to large businesses is growing quickly now. (S35) In June it was up by more than +10% from year-ago levels, a second month of double-digit growth and these are the fastest two months of expansion since this series started in 2017. Lending growth to SMEs is up a lesser +7.3%, also a series high. However, large businesses only get 35% of bank lending whereas SMEs get 65% of it. (Don't forget, large businesses can also raise debt on capital markets, avoiding banks.)

ACCOUNTING BODY CONSULTS ON CLIMATE-RELATED STANDARDS FOR THE BIG END OF TOWN
The External Reporting Board (XRB), an independent Crown entity tasked with preparing and issuing accounting standards and audit assurance standards, has released its final consultation on the climate-related disclosure standards about 200 of New Zealand’s largest entities will need to report against from next year. Consultation is open until September 26. There's more information here.

UNINSPIRED
In Australia, retail sales activity disappointed in June. They ross a mere +0.2% from May after the May change was revised lower. This latest data was the softest rise in retail trade since a retreat in December 2021, and signals that retail volumes are shrinking as inflation bites harder. June's retail trade may be up +12% from year-ago levels, but the tepid May-to-June rise is the one catching the eye of analysts (up at an annualised rate of only +2.5%).

SWAP RATES SLIDE
Wholesale swap rates may retreated today as bond markets have taken fright at the overnight action. The 90 day bank bill rate was unchanged at 3.16%. The Australian 10 year bond yield is now at 3.21% and down another -10 bps from this time yesterday. The China 10 year bond rate is now at 2.79% and unchanged. The NZ Government 10 year bond rate is down -11 bps at 3.48%, and below the earlier RBNZ fix for this bond which was down -9 bps to 3.50%. The UST 10 year is now at 2.78% and down -3 bps from this time yesterday.

EQUITIES UP STRONGLY
Wall Street surged after a dovish Powell spoke following the Fed's +75 bps hike. It ended up +2.6% for the day. Tokyo is up a more restrained +0.2% in their Thursday trade so far. Hong Kong is up +0.4% and Shanghai is up +0.7%. The ASX200 is up 0.6%, but the NZX50 has got the Wall Street bug and is up +1.8% in late trade.

GOLD RISES
In early Asian trade, gold has risen +US$18 from this time yesterday, now at US$1,735/oz.

NZD LITTLE NET CHANGE
The Kiwi dollar has risen +30 bps to 62.6 USc from this time yesterday in a net shift covering both the AU CPI and the US Fed hike. Against the AUD we are down at 89.6 AUc. Against the euro we are unchanged at 61.4 euro cents. That means our TWI-5 is also little-changed at just over 71.

BITCOIN JUMPS
Bitcoin is now at US$22,740 and up a strong +7.6% from where we were at this time yesterday. Volatility over the past 24 hours has been very high at +/-4.9%.

Daily exchange rates

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Daily benchmark rate
Source: RBNZ
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End of day UTC
Source: CoinDesk

Daily swap rates

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Opening daily rate
Source: NZFMA
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Source: NZFMA
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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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48 Comments

I see the ANZ finally increased their TDs today, looks like they have been thinking long and hard since the OCR rise and have decided not to raise the 5yr at the long end, staying below ASB and Westpac which is unusual for ANZ. I still think no one is certain for sure, the next 9 months will be interesting to see where inflation goes.

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So Fed hikes. Yen strengthens. Ol' ratty and Ethereum go on a tear.

All the cause and effect seems broken.

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That's called the J-Pow trade. Wait for tomorrow's dive.

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Nervous (dovish) Powell said, "Recent indicators of spending and production have softened. Growth in consumer spending has slowed significantly..." but didn't mention inventory. He couldn't because then he'd have to admit recession is ahead not behind us.  Link

Hence knee-jerk dash to leverage asset purchases anticipating lower interest rates.

Here's the thing; throughout what might have already been a "technical recession", curves got much, much worse (inverted) *during* it. They weren't inverted because of what already happened, huge markets massively hedged against what is yet to happen - and almost certainly will. Link

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Here is the revision history from roughly the past 24 hours on Wikipedia's RECESSION page: Link

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If he's right, inflation will no longer be something to worry about. 

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It seems that Fox have dumped D Trump.

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If you want a laugh, take a look at F45's share price. Macquarie still had it outperfrom until today, the investment industry is a joke.

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The millionaire's factory. Full of the best and brightest. Selling a fair share of snake oil. 

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"F45 gym founder Adam Gilchrist to offload controversial $14 million Freshwater home"

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They updated it!

In response to yesterday’s announcement, a Macquarie analyst downgraded F45 Training from Outperform to Neutral with a price target of $4.00 (from $17.00). "... At these levels, there could be lots of value, or there could be more downside surprises ahead – being on the sidelines is best," the analyst told clients in a note.

Current price is $1.35. How do you miss revenue guidance by 50%?

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Don't ask Macquarie.....

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So much of a trainwreck, it's in the tabloid media. Sounds like a complete scam pumped by celebs. 

https://www.dailymail.co.uk/news/article-11056077/F45-stock-market-melt…

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Surely not... Crypto is even worse, by that I mean the biggest Ponzi ever witnessed.

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Surely not... Crypto is even worse, by that I mean the biggest Ponzi ever witnessed.

The pension fund industry dwarfs crypto when it comes to Ponzis. It is coming to a head. The 'financial advisors' hate the ol' rat poision with a passion. Best performing asset of the past 10 years and it's out of their scope.   

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One of the biggest bits of news today was rents falling for the second month in a row. 

Filled up the car for $2.70 per litre today. 

The inflation beast is being tamed.

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Deflation will hit NZ so hard next year that everyone and their motor gang will be begging for inflation.

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The inflation beast is being tamed.
 

You have made it very clear your views on inflation peaking etc, for what’s its worth I feel the opposite, this beast is far from tamed.

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Good on ya. Everyone can have a different opinion, it would be boring otherwise. 
Only time will tell.

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By end of March 2023, what do you think will be much higher in price than March 2022?

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Food

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*much* higher? I think it will be a *bit* higher 

Food is only one of many components of the CPI basket, albeit an important one.

how about transport? (another key one)

Rent? 

 

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I think fuel, food, energy still have some way to go . 

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fuel -- was around $2.70 in march and climbing --  take the25c cut and you would have paid $2.95 today --

 

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fair point.

Will be interesting to see if they restore the 25c before the election  

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Yeah it will be, I doubt very much they will though. 

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I think it's a 50/50 call. 

Certainly it will be hurting fiscally, but .....they have an election they want to win

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rates , insurances, water and sewerage, electricity, gas building products, whiteware, fertalizer,    more to the point -- what do you think will be cheaper excepting property ? 

 

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the question isn't really what will be cheaper, rather whether things will increase much in price.

I think there's a good chance rent will be fairly flat

I think due to 'demand destruction' many goods and services will have fairly low levels of inflation.

Transport will be quite dependent on whether government extends the 50% public transport and 25 cents off fuel initiatives   

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I don't think you're considering the wage / price spiral that's starting to happen.  Wages having to be increased now to retain staff, increasing the price of goods and services, etc, etc.  

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Maybe. Although ANZ's business confidence survey suggested hiring intentions have weakened a fair bit, the market might be transitioning to one that is far less tight. 

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But the employment market is still very tight. Wage increases have been baked in recently.  The impacts of these will lag. Employees are expecting further pay increases as they are experiencing large price increases - food, fuel, interest.  An additional thing to consider is the NZ$ falling further, increasing the price of imported goods.  I'm not saying your wrong but I don't think it's a simple as you appear to assume.

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I'd expect employment numbers will start faltering in the latter half of the year. So while employees will expect higher wages to counter inflation, their roles will be up in the air.

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Isn't a major part of petrol dropping just because govt pulled up stations for fleecing consumers?

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No way.  Everything bad that happens is the Government's fault, but nothing good ever comes from the Government's actions.  The industry is passing on supply chain savings to the consumer, as they always act in good faith.  

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Not sure what your putting in the tank but I only run Mobil 98 and it's $3.12 in Tauranga.

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91

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Are you putting 98 in the old Corolla still Carlos?

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JDM Subaru you don't put 91 in any decent car.

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I never put 98 in my JDM Subaru because NPD100 is cheaper here in Christchurch! 

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I was gonna say, if you insist on high octane why stop at 98.

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2.97 Mobil Causeway

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Commodity prices certainly seem to be at a peak right now but they can take a while to filter through the system which might lead to a rise in prices for some products through to next year. 

https://www.indexmundi.com/commodities/

 

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Australian Treasurer tells workers they have to bail out the over indebted for two more years. It just goes to show how prevalent this idea of asset price primacy is across Governments and Reserve Banks.

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So China has locked down Wuhan, home of the blasted virus, because of 4 asymptomatic cases. What a crock.

They are doing this not for public health reasons but to:

1. Control a population that isn’t used to economic weakness and

2. Weaken the West by contributing to inflation, by disrupting logistics

call me a conspiracy theorist, but I don’t care.

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HM.

Its ok. You aren't the first person to question wether the 'muricans and the CCP are trying to bankrupt each other whilst smiling in their face. Ultimately, some entity has to be responsible for covid and punished accordingly.

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