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
Only the Police Credit Union changed rates, with fixed rates lower. Ditto Heretaunga Building Society
TERM DEPOSIT RATE CHANGES
The Police Credit Union raised most term deposit rates at the same time. Heretaunga B/S did too.
TAX BREAK, IN PERPUTUITY
Housing Minister Woods has announced that new and existing build-to-rent flats will to be exempt from interest deductibility changes in perpetuity if they offer 10-year tenancies.
NO RESPITE !
The RBNZ's survey of household inflation expectations (H1) shows them remaining as high in Q3 as they were in Q2. The one year expectation by households is 7.0% (median) just like their perception of current inflation. Perceptions of house price inflation vanished in Q2 for a year-ahead assessment and they have stayed at 0% in Q3 - but not gone negative. This data is collected from a household survey by the research provider, Research NZ, on behalf of the Reserve Bank. Inflation perceptions are different to actual inflation. Read this.
NO RESPITE II
The rising cost of fruit and vegetables is driving food prices higher. They were up +10% in the year to July, and overall food items, prices are up +7.4%. That is high by historical standards, but these high levels have been around for every month of 2022 now. Other than fruit and vegetables, grocery prices were up +7.5% in the year, meat, chicken and fish were up +7.7%. Eating out meals were up +6.6%.
SOME RESPITE
Statistics NZ's rental price monitoring shows that rents haven't changed much over the last four months. In Auckland and Wellington rents are down -2% for properties that have come to market. For all properties, they are up less than -1%. For Auckland that trend has been going on for a much longer time with rents up only +1.0% over the past year. It seems that not only are FHBs 'winning' with falling lower quartile house prices, but renters are getting relief as well.
VIGILENCE REQUIRED
ANZ is reminding customers stay vigilant and watch out for texts and emails asking people to click a link and make a payment or download an attachment as phishing scams circulate. The bank said customers were receiving a variety of text messages and emails claiming to be from the IRD and NZTA. The messages include a link to receive a tax refund, a cost of living payment or to renew a vehicle license registration. The links lead to a fake website where people were asked to enter information including internet banking log in details, credit card details, driver license and other personal details. If you get such a text or email of this kind don’t click on any links and delete the message immediately.
NOT WORRIED
The RBNZ household expectations survey covered other perceptions (H2). These are new questions with the Q3 data only the third time it has been published. That shows hardly any household thinks they won't make either a mortgage or rent payment in the next year. They also don't think their earnings will change much, and few currently thing they will lose their job in the next month (all 'median' score). More than half say they will be able to pick up a new job in the next 3 months if they did lose their job.
TOP END OF A LOW FORECAST
Fonterra has today provided an update to its earnings guidance for the 2022 financial year that ended on 31 July 2022, indicating that it will be towards the top end of its current guidance of 25 to 35 cents per share. Full financial results will be released on Thursday, September 22, 2022. The final milk payout result will also be released then.
IN THE DUMPS
Credit scorer Equifax has said overall consumer credit demand reduced by -24% in June from year ago levels, which included mortgage demand falling by -37% and unsecured credit demand was down -18%.
OFF THE CANVAS?
Factory activity picked up in July according to the BNZ-BusinessNZ PMI. But analysts are mainly seeing opaqueness rather than any real progress. BNZ observed: "The details don’t offer much clarity either. In a word: noisy. That is perhaps understandable judging by respondent comments, where there still seems to be a stop-start tone to business amid reports of disruption from labour shortages, illness and absenteeism, freight and logistics issues including for raw material supplies, along with intermittent new orders."
JOINTLY FIGHTING FMD RISKS
The Trans-Tasman agriculture ministers announced tighter coordinated border biosecurity arrangements today is a beef-up effort to keep the Indonesian foot & mouth disease outbreak from entering either country.
IAG NZ ANNUAL MARGIN & LOSS RATIO RISE
Insurance Australia Group (IAG), says its NZ unit posted a 7% increase in annual gross written premiums, up from +2.8% the previous year. The increase was mainly attributed to premium rate increases across all the key portfolios, plus volume growth in the commercial property and commercial motor portfolios. IAG NZ, including State, NZI, AMI and Lumley, also had strong retention rates, with these improving on prior year levels across all key commercial lines portfolios, IAG says. The underlying NZ margin increased to 16.8% from 16.4%, with this attributed to ongoing disciplined cost management, including the introduction of automation, and increased rating to address higher input costs from inflationary pressures. IAG NZ did, however, incur a slightly higher underlying loss ratio of 54.5% versus 53.6%. To deal with the increasing severity and frequency of extreme weather events, IAG says it has put in place its biggest perils allowance to date, lifting this 19% to A$909 million for 2023. IAG didn't actually reveal what its NZ unit made in profit.
BACK TO THE FUTURE
House prices have now fallen back to the same level they were at in May last year. More than a year's worth of capital gains have evaporated, the REINZ House Price Index shows
THE NEW ECONOMIC REALITY
NZ Post is reporting that online spending was down -4% in Q2-2022 from the same quarter a year ago, and totaled $1.6 bln in that 90 day period. They say although shoppers are spending about the same online each time they buy but they are now buying with less frequency. "This first half year result was driven by strong spend numbers in January and, to a slightly lesser degree, February. In more recent months, we’ve seen monthly online spend numbers at lower levels than the equivalent month a year earlier - April 2% down, May 0% down and June 10% down," they report.
SWAP RATES RISE
Wholesale swap rates are probably much higher again today in a steepening curve and following the global tide (H/T NS.). The 90 day bank bill rate rose +4 bps to 3.27%. That means from the last OCR rise on July 14, it has now risen a further +27 bps, taking the 2022 rise to +230 bps. The OCR has risen +175 bps in that time. The Australian 10 year bond yield is now at 3.43% and up another +10 bps from this time yesterday. The China 10 year bond rate is at 2.75% and unchanged. The NZ Government 10 year bond rate is now at 3.52%, up +8 bps from this time yesterday, and now just above the earlier RBNZ fix for this bond which was up +12 bps at 3.51%. The UST 10 year is now at 2.88% and up +9 bps from this time yesterday.
EQUITIES FLAT-LINE
Wall Street gave up earlier gains today to end with the S&P500 unchanged. That puts it up +1.5% for the week so far. Tokyo has opened its Friday session up a very strong +2.4% and heading for a weekly gain of +2.0% for the week. Hong Kong is flat and heading for an unchanged week. Shanghai is also flat on the day, but heading for a +2% weekly gain. The ASX200 is down -0.7% today and may struggle to hold any weekly gain. The NZX50 is down a minor -0.1% and heading for an equally minor +0.2% weekly rise.
GOLD HOLDS
In early Asian trade, gold is up +US$2 from this time yesterday, now at US$1,787/oz.
NZD FIRMER
The Kiwi dollar is up another +½c of it to now be at 64.4 USc. Against the AUD we are firmer at 90.7 AUc. Against the euro we are up at 62.4 euro cents. That means our TWI-5 is now up at to 72.5.
BITCOIN UP & VOLATILE
Bitcoin is down -1.5% from this time yesterday to US$23,946. Volatility over the past 24 hours has been moderate at just over +/- 2.3%.
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57 Comments
The Government is beginning to understand the enormity of its reckless money-printing: those who do not own a house or who do not have the Bank of Mum and Dad to give them a house will never be able to own a house. New Zealand becomes a nation of renters. Yet the Government is equally determined not to build the necessary 100,000 state houses for income-related lifetime rent by all who want them. Therefore, the Government, in a pre-election panic as the Opposition benches beckon, turns to investors to provide the homes it cannot provide itself.
The failing of their latest game is that a 10-year lease, when it expires, is no better than a 10-month lease. Those who will never own a home need secure, lifetime tenancy, and the assurance that the initial rental price they sign up for will never increase beyond matching rises in the CPI cost of living index.
Further to VIGILENCE REQUIRED: "ANZ is reminding customers stay vigilant and watch out for texts and emails asking people to click a link..."
How its done: Phishing fraudsters used SIM box to fleece hundreds of victims, police allege
https://www.smh.com.au/national/nsw/phishing-fraudsters-used-sim-box-to…
Yes! It's astonishing how technically complex and slick some of these scams are getting. This article really highlights some of the things a lot of otherwise astute users might not be aware of...
https://www.youtube.com/watch?v=s7LS5lh0dLQ
Also further to that, its all very well ANZ reminding us to stay vigilant when they provide the very platform for this to happen, namely so called security codes via SMS. I'm sure I read that SMS as a means of 2FA was banned in the US. Our biggest bank is either too lazy or inept to change this and we are left with carrying (an unfair) burden of security. As I understand BNZ with a token and Kiwibank with challenge questions (as long as your answers are false) are the most secure we can get. Why they do not support FIDO security keys is beyond me. We are all happy to carry house and car keys but how many have a security key for access to email etc? Sorry I haven't got links but a quick Google of yubikey and password entropy is worth reading about.
Also while I'm here another great defence is a permanent credit report suppression (its free) that stops any identity theft being used to take loans out in your name. And yes I have suppression on centrix and illion and opted to get alerts on equifax worth the $65 annual fee.
Yes, notification peeking, what a dumb idea, but again perhaps Google and Apple are not expecting any business to be so dumb as to send codes via SMS. Welcome to she'll be right land. A word of advice if your phone gets stolen, call your bank to stop all payments from all accounts from all channels, ie mobile and IB. Then call your carrier to block the SIM to prevent codes being sent. Why do we have to put up with this...why do we keep being told to be careful and don't click this and do check that etc...why can't the banks, nzta and nzpost and others try harder..why won't they share the burden of security...its their systems these scumbags are taking advantage of...as i said either too lazy or inept, they can't even prevent a ponzi sheme (ANZ V Ross Asset Management) or child exploitation (Westpac and AML reporting)..perhap its lazy AND inept?
Any thoughts?
I have been very surprised to get a call from an ex employee asking if we had a job for her. On one hand she left 3 years ago on very bad terms, threatening to take me to the employment tribunal. On the other hand she was one of the best workers we've ever had, for over 4 years, also we do actually need more staff.
Any thoughts?
If someone threatened to take me to the employment tribunal (and it was unjustified) then I'd never re-consider them for employment again. If on the other hand there were reasonable grounds for them to take a case (but they didn't) and they were an outstanding employee then I'd certainly reconsider employing them again.
Yes, if you know what you're doing with meat you can do it pretty cheap. Fruit and veg I find pretty affordable, but I do stick to what's in season with some tins or frozen to supplement. I cook based on what's cheap rather than shop based on recipes. The local veggie shop is usually much cheaper than the supermarket.
The average bloke ain't stupid. We all know who will likely ask for a 10 yr term. Housing NZ or similar, whose tenants are more likely to smash the place up. I had one such tenancy. But hey, they do do it all up at their cost. Unfortunately, the cost of do up falls at the foot of you and me, the tax payers. So I refuse to have these tenants who have no respect for someones property.
Here’s some really DGM thoughts for a Friday.
where’s this country going? Violent crime happening everywhere, and it all seems to be becoming more ‘in your face’ ala the USA.
more and more homeless people.
more dodgy looking people around.
I have really started to genuinely fear deeply for this country over the past few months. I really don’t like the way things are going.
not to mention the mediocre / crap level of service I have been getting in many areas recently.
Everything is mediocre HM, or worse. The All Blacks, The Warriors, the RBNZ, the Govt., the economy. They are all soft, a low performance culture unaccountable for poor performance. We scare our kids with extreme hyperbole of impending climate doom. The same old photo of a few Napier houses about to be lost to erosion shown over and over.
Meanwhile, our talent flee's the country at an accelerating pace. There are few real meaty jobs here, the unemployment rate is a mirage.
Once were warriors
On the plus side, it';s still a beautiful place to live.
What you're talking about is happening everywhere; violent crime is exploding across many countries, and people the world over are jaded and disillusioned. It's crisis after crisis after crisis, shit it's almost as if existence is very fragile and could be taken away just like that.
I don't really fear for NZ at all, at the end of the day it's a country with more resources than people, situated better than most in the coming decades.
The existing world order is another story. Which obviously we are part of, but have very little say over.
There's opportunities all over the place in NZ. Just not in every field, and every job type. So people are faced with pivoting, relocating, or just dealing with it.
As for the role of the state, that's difficult. Total libertarianism looks dreadful, as does total state control. The government has to be working in 3 dimensions, planning for the future, putting out fires, and having to uphold status quos. All the while, appeasing a voter base that has a wide range of demands, and levels of understanding.
Te Kooti,
"We scare our kids with extreme hyperbole of impending climate doom. The same old photo of a few Napier houses about to be lost to erosion shown over and over."
If children are being scared, whether at school or at home, that is regrettable. I have no doubt that the world is experiencing a largely human related climate change and am prepared to back that up with evidence-masses of it, but children should never be scared. There is still much to learn about the complex interactions of our climate and I do wonder just what information is being given to the teachers to help them through this.
Sadly, i must agree with most of your post. I have lived here for 19 years in retirement and have enjoyed it greatly. I live at the Mount and now know every track in the Kaimais and many beyond. My family are here also and would not go back to live in Scotland, but I can see much, too much, that is not good in too many areas. Mediocrity abounds sadly.
Swaps ticking back up again, albeit gradually after a large fall. I wouldn't be surprised to see significant FLP drawdowns before the facility is closed at the end of the year, with ASB first off the blocks courtesy of Vittoria Short's interview this morning.
The cheap FLP money is too tempting for banks to ignore. Remember that this is being offered at a time where inflation is at 30-year highs in most major economies. The cost of wholesale funding is likely to increase faster and higher than the OCR, and institutional investors aren't likely to be interested in the types of securities banks are offering anyway, at least not without charging a premium for them. The RBNZ has expressed its willingness to accept just about anything the banks are prepared to offer as collateral for cheap FLP loans, and are not being adequately compensated for the risk of doing so.
Between the LSAP and the FLP, it's not suprising to see banks making record profits while Joe and Joanne Public are all cancelling Netflix subscriptions to try and make ends meet. These programmes have enabled a massive transfer of wealth and risk from private to public sectors. I really hope that the call for review into New Zealand's economic response to COVID-19 gains traction, and gets the attention it deserves.
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