What happened Tuesday

Business / news

A review of things you need to know before you sign off on Tuesday; small savings account rate rises, full borrowing rate rises, tough Auckland housing market, swaps slide, NZD firm, & more

2nd Aug 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
There are no changes to report today, so far.

TERM DEPOSIT RATE CHANGES
NBS has raised rates for most terms. ANZ raised its Online Call account, and its Select Account savings account rates by +20 bps. Their Serious Saver account went up by +30 bps to 1.80%. ANZ said these rates have risen in response to the July OCR rise.

BUSINESS ACCOUNT RATE CHANGES
ANZ raised its Business Bank Indicator rate by +50 bps today to 10.60%, and its AgriCurrent Account rate to 8.80%. Their Business Overdraft is now up +50 bps to 12.60%.

LOW SALES & FALLING PRICES COMPOUND
Barfoot & Thompson's July sales were their lowest for a July in 22 years. Meanwhile the median price on these sales was down -$130,000 from its November 2021 peak. Never since 2001 have Barfoots reported a price decline that big for an eight month period. Barfoots have over 80 branches and 1,600+ salespeople in Auckland, so on average the July sales of 611 dwellings means that averages less than 2 per week per branch office. For the past four months, they have averaged just 673 sales per month.

BACKING OFF
The Government has relaxed CCCFA rules for assumptions on credit card and buy-now-pay-later debt and how they apply to mortgage borrowing standards.

MINISTER MULLING MINISTRY'S ANTI-MONEY LAUNDERING REVIEW
Minister of Justice Kiri Allan says she has received a report from the Ministry of Justice on its recently completed review of the Anti-Money Laundering and Countering Financing of Terrorism Act. The report is expected to address how the Act has performed since 2017 and whether any amendments to it are necessary or desirable. Via a spokesman Allan says she will "table the report in the House in due course."

WHAT RECESSION?
The latest Xero Small Business Insights report for June 2022 shows strong wage and jobs growth despite slowing sales, driving the Small Business Index to rise to a record high of 146 points.

FIT & PROPER
The Real Estate Authority has published guidance on who is a "fit and proper person" to work in the industry

COOLING REGIONS
Kiwibank's regional economic review shows activity is cooling across all regions, with the South Island outperforming the North.

RECORD HIGH
The banking industry's core funding ratio touched its record high in July.

WAITING FOR THE RBA
The Australian central bank is widely expected to raise its cash rate target by +50 bps at 4:30 pm (NZT) today to 1.85%. Borrowers are very nervous there, mainly because more home loans are on variable rates and official rate changes eat into household budgets very much faster there. And there is the not insignificant question about its plans for quantitative tightening - that is, draining the huge liquidity buildup sprayed around during quantitative easing. That might hurt more than rate rises.

SWAP RATES HOLD
Wholesale swap rates were probably sharply lower and more inverted. This comes as international bond markets pack a major sad. The 90 day bank bill rate was up +2 bps to 3.19%. The Australian 10 year bond yield is now at 3.03% and down -7 bps from this time yesterday. The China 10 year bond rate is now at 2.74% and now its lowest since the start of 2022. The NZ Government 10 year bond rate is down -9 bps at 3.32%, and now well below the earlier RBNZ fix for this bond which was down -4 bps to 3.37%. The UST 10 year is now at 2.54% and down a massive -12 bps from this time yesterday.

EQUITIES NERVOUS ABOUT THREATS TO TAIWAN
The NZX50 is down -0.2% in late trade today. The ASX200 is down -0.3% in early afternoon trade. Tokyo has opened down a sharp -1.6% in its early Tuesday trade. Hong Kong is down almost -3% while Shanghai has opened down -2.9%. Taiwanese tensions aren't helping. At its close, the S&P500 ended its Monday session down -0.3%. So far US earnings reports have held up much better than was originally expected.

GOLD RISES
In early Asian trade, gold has risen +US$11 from this this time yesterday, now at US$1,774/oz.

NZD FIRMS MARGINALLY AGAIN
The Kiwi dollar has firmed again today to 63.3 USc. Against the AUD we are firm at 90.2 AUc. Against the euro we are unchanged at 61.6 euro cents. That means our TWI-5 is now at just on 71.2.

BITCOIN LOWER AGAIN
Bitcoin is now at US$22,870 and down -2.3% from where we were this time yesterday. Volatility over the past 24 hours has been modest at just under +/-1.4%.

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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20 Comments

by realterms | 2nd Aug 22, 4:12pm 1659413537

Unemployment and LCI tomorrow. Could be a turning point for the RBNZ either way.

Personally I'm picking it's going to be hot, but that's a hunch, not a preview.

by Foxglove. | 2nd Aug 22, 4:23pm 1659414187

Unemployment. There are job vacancies galore, employers crying out for staff and on the other side of the argument, 000’s of unemployed. Publish whatever stats you like but that won’t address the stark reality that there are increasing numbers of NZ citizens who either can’t or won’t work. Recall in our extended family a rather spoilt lady who never worked a day in her life save for during WW2 she was forced, conscripted if you like, to make sandwiches in a workers’ canteen. Can’t really see that scenario again today, at any level of society.

by JimboJones | 2nd Aug 22, 4:31pm 1659414712

There are also thousands of criminals, low-lives, gangsters, etc. The reality is that a percentage of people are just unemployable or don't want to work.

But contrary to popular belief, the unemployment rate is a very relevant statistic. It is a measure of how many people who want to work are employed, which is a very good indicator of how well the economy is doing. The number of people who can't be arsed is not much of an indicator of anything.

by Uninterested | 2nd Aug 22, 7:04pm 1659423882

I have been looking at the jobs on offer. The ones I have applied for in my speciality do not short list me. Probably because they are majority govt owned companies and I am an old-ish white dude. (Not bitter, its just a fact of life these days).

But other jobs do not appeal at all. Such as early starts, shift work, rubbish truck runner, retail, laborer, too far away in Ak, tradie, supermarket checkout etc.

PS I am not on the dole. Savings are running down a bit now though. I will find something eventually, but I really don't think that there are many good jobs out there.

by Foxglove. | 2nd Aug 22, 7:32pm 1659425532

Therein lies the rub. Your circumstances see you advanced in working years but for those that are younger, there is a significant difference between a job, any job that is, and a career. Not in the know on this but in earlier days apprenticeships offered a sound real future. For example, an old flatmate in the early seventies, completed an adult apprenticeship in building, then worked his way on OE all round the world, jobbing & building, came back worked in construction management and built his own home in weekends, holidays etc. Does that sort of opportunity still exist?

by al123 | 2nd Aug 22, 4:40pm 1659415253

The number of people on jobseeker is actually decreasing. The numbers on super are going up though so I guess it's true that there are an increasing number of NZ citizens who can't or won't work.

by positivelywallstreet | 2nd Aug 22, 4:50pm 1659415820

We should index our minimum hourly rate to $Aus plus 10% and see if that encourages people or businesses to work or stay..actually, ..a good plan.

by EdwardD | 2nd Aug 22, 5:12pm 1659417141

I have a number of retired friends who are fit and healthy. They say that they regret retiring early and would like to return to work, especially if they could work 3 days per week rather than 5. Perhaps employees need to think creatively.

by positivelywallstreet | 2nd Aug 22, 5:16pm 1659417412

Is there a typo there..you mean employers?

by Jonny.Foe | 2nd Aug 22, 5:07pm 1659416830

Take low wages, expensive childcare / disability / aged care, crap and costly transport, and a serious lack of affordable rentals near jobs, and you create a lot of situations in which it just isn't feasible for low income people to work.

by rastus1 | 2nd Aug 22, 8:03pm 1659427396

Yes we have created a society where one cannot afford to take a job unless it pays a wage many of us are not worth.

Therein lies the problem.

by Te Kooti | 2nd Aug 22, 5:07pm 1659416856

Many of the "jobs" don't pay a living wage. No doubt you can walk into a job tomorrow in Queenstown, as long as you are prepared to sleep in your car and live off rice. These are not living wages, wage shortage not a labour shortage.

by Roger Witherspoon | 2nd Aug 22, 6:35pm 1659422125

Yes, indeed. Bureaucrats and socialists just hate small business, especially entrepreneurial small business. They think we are all making a killing and make vast profits we do not deserve. Profitable small businesses create real jobs, some of them are the middle and large sized businesses of the future. Personally I'm all for a tax free rate on all profits retained in the business for any business with a turnover of less than $10 million.

The country will only get poorer until we start to favour productive small businesses over consumers. Running a modest current account surplus should be a strategic priority for government at all levels. Otherwise we must continue to flog off the country to foreigners and follow Argentina (64% inflation anyone) into collapse. We have been getting poorer for decades, hidden by increased indebtedness and rising house prices giving the illusion of wealth but the reality is one of serfdom to foreign interests.

https://tradingeconomics.com/argentina/inflation-cpi

by positivelywallstreet | 2nd Aug 22, 6:55pm 1659423318

Pathetic..

Give us a break and go on the unemployment benefit, you will get the minimum wage you may not pay to to staff.

but I think you are case making..it doesn’t wash..

by Jarlaith | 2nd Aug 22, 9:33pm 1659432823

Not sure what socialists have to do with your rant since last I checked, the current government is neoliberal. But what I find ironic is that you’re calling for preferential treatment from the government for your class, so a sort of privatising the profits from your capitalistic endeavours (i.e., you keep the profits) but the risks are socialised (i.e., other taxpayers subsidise your business). I would suggest that perhaps you are not as entrepreneurial as you think you are if you cannot pay a decent wage and make a profit.

by RickStrauss | 3rd Aug 22, 12:27pm 1659486427

Wonder if he's socialist enough to want to receive a universal pension at a certain age, too.

by al123 | 2nd Aug 22, 11:27pm 1659439646

The country will only get poorer until we start to favour productive small businesses over consumers

Productive small business are presumably owned by people, whose goal is to make a profit from their work on and in the business. So what you are really saying is that the government should favour people who earn their living by running a business over people who earn their living by trading their labour for a wage or salary - like nurses, teachers, or police, or the very employees of that business/ The latter are no less essential or valuable than the business owner, and there is no good reason why they should be punished by having to pay higher taxes so the business owner doesn't have to pay any. It might be true that without the business the employee wouldn't have a job (although it is very likely that in this labour market they would be able to get another one pretty easily). But it is also true that without the employees the business owner wouldn't have a functioning business.

by Jaybeedee | 2nd Aug 22, 6:34pm 1659422094

Exactly. Same in US.

by Audaxes | 2nd Aug 22, 6:32pm 1659421962

And there is the not insignificant question about its plans for quantitative tightening - that is, draining the huge liquidity buildup sprayed around during quantitative easing. That might hurt more than rate rises.

Sprayed where?

A recent Bloomberg article described central bank easing with the phrase “pumping money into the economy.” That’s a misconception. Monetary easing is actually an asset swap. The public was holding savings in one form, and now it holds it in another. The Fed buys Treasury securities from the public, and replaces them with currency and bank reserves (base money) that someone has to hold, at every point in time, until the Fed sells its bonds and retires the cash. All monetary policy does is to change the mix of government obligations held by the public. Only fiscal policy – specifically deficit spending – changes the total amount of those obligations. Link

by Audaxes | 2nd Aug 22, 6:51pm 1659423089

"Miserable" German Retail Sales Crash The Most On Record As Europe Slumps Into Recession