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
China Construction Bank raised its one year fixed rate by +20 bps to 5.15%.
TERM DEPOSIT RATE CHANGES
ICBC raised savings and term deposit rates. Its new 1 year rate is now 4.20%, and matching the Bank of China and CCB as the market leaders.
14 YEAR LOW
Auckland's dominant realtor Barfoot & Thompson reported a sales slump in August with prices lower than a year ago as stock levels rose to an 11 year high. The number of their sales transactions fell to the lowest since 2008 for any August. They claim they have 1600+ salespeople and 80 offices. They closed only 578 transactions in August 2022. Separately, the latest monthly mortgage figures show a market that has gone from raging hot to freezing cold in a very short space of time.
GOING BACKWARDS, IN A GOOD WAY
Statistics NZ released data today that shows our greenhouse gas emissions fell in calendar 2021 from pandemic-challenged calendar 2020. Industry emissions decreased -0.4% (-283 kilotonnes), largely due to decreases in Taranaki (down -715 kilotonnes), Northland (down -223 kilotonnes), and Southland (down -141 kilotonnes). But household emissions increased +1.1% (+85 kilotonnes), largely due to increases in Northland (up +26 kilotonnes), Bay of Plenty (up +23 kilotonnes), and Waikato (up +23 kilotonnes). The Auckland region is home to 33% of the population, who emitted 2,402 kilotonnes (30%) of all household emissions in 2021. This was -0.3% lower than the previous year. Auckland's industry emissions fell -0.9% on the same basis. Between the two emissions fell -71 kilotonnes on 2021 from 2020 and is a -9.1% reduction in ten years (-970 kilotonnes). This data stands in contrast to the breathless warnings about how bad we are doing.
DEBT CAPITAL MARKETS GUIDELINES ISSUED
The New Zealand Financial Markets Association (NZFMA) has issued best practice guidelines for the operation of NZ's debt capital markets for the first time. They're intended to give issuers, investors and intermediaries guidance on best practice in market issuance. The guidelines aren't binding. Rather they're intended to prompt market participants to consider the best interests of the wider market when undertaking market activities or making decisions.
UNABLE TO HOLD BACK MARKET FORCES
In China, their central bank cut its FX reserve ratio yesterday from 8% to 6% to bolster the yuan. But today they set the official CNY:USD rate at 6.91, its weakest since August 2020. Markets have driven it lower since.
LUCKY IN TRADE
Australia's current account surplus jumped to +AU18.3 bln in the June quarter, from a downwardly revised +AU$2.8 bln in Q1. Despite the surge, it was less than the +AU$21 bln markets expected. Within that, their trade surplus widened to +AU43 bln in Q2 from +AU$27 bln in Q1-2022. (When we get our NZ current account data next week, we will show deficits and huge variations from the Aussie experience.) Despite this strong trade showing, analysts are downgrading Q2 GDP growth for Australia from a +4.5% rate for Q2 to +3.6%, on weaker "public demand' metrics.
HOLDING & 'DISAPPOINTING'
US vehicle sales came in at an annual rate of 13.2 mln in August, holding the levels they have had for the prior three months. Supply-chain issues seem to be easing there, but they were in evidence for August and the result was considered a disappointment.
SWAP RATES UNCHANGED
Wholesale swap rates are probably little-changed today we all wait for the US to take its long weekend holiday. Our chart will record the final positions. The 90 day bank bill rate is down -1 bp at 3.51%. That is still near its highest since July 2016. The Australian 10 year bond yield is now at 3.66% and unchanged from this time yesterday. The China 10 year bond rate is marginally softer at 2.64%. The NZ Government 10 year bond rate is now at 4.04% and up +5 bps from this time yesterday and now just above the earlier RBNZ fix for this bond which was up +7 bps at 4.03%. The UST 10 year has now still at 3.21% and firming slightly ahead of their return to work.
EQUITIES STAY ON HOLD
Wall Street is still on holiday, but futures trading suggests the S&P500 will open up +0.5% tomorrow. Tokyo has opened unchanged in Tuesday trade. Hong Kong is down -0.4% in early trade. Shanghai is up +0.5% in their opening session. The ASX200 is up a minor +0.2% and the NZX50 is down an equally minor -0.3% in late trade.
GOLD RISES
In early Asian trade, gold is up +US$9 from this time yesterday to US$1,718/oz.
NZD HOLDS
The Kiwi dollar is now up at 61.2 USc, and marginally firmer than this time yesterday. Against the AUD we are unchanged from yesterday at 89.7 AUc. Against the euro we are at 61.5 euro cents and also little-changed. That all means our TWI-5 is still at 70.7.
BITCOIN IN MINOR SLIP
Bitcoin has been marginally softer, now at US$19,726 and down -0.6% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.3%.
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38 Comments
The NZ$ is bouncing along the bottom, a bit like its favourite rugby team. Mind you, our political leaders have been a fine job of exactly that for a while now.
It's only the illusion of the bottom. The actual bottom is yet to come...
No matter how bad it is...it can always get worse.
Russian central bank and finance ministry have done a u-turn on cryptocurrencies. Still illegal for cross-border payments, but that is all set to change.
https://www.investing.com/news/cryptocurrency-news/bank-of-russia-agree…
I know he's not popular with the people but Zuru's Nick Mowbray has raised the question as to why L'Oreal cannot repay the wage subsidy ($1.5 mio) granted to it by the NZ govt when the compated reported NZD18.3 bio in profit in 20/21. Actually, 2021 was the largest profit in the company's 111-year history.
Why should they? We were dumb enough to give it to them - good on them I say. They exist to make profit, which they are very good at.
Why should they? We were dumb enough to give it to them - good on them I say. They exist to make profit, which they are very good at.
Why should they? I would not be surprised if L'Oreal's tax structure means that they're NOT paying full corporate tax in NZ. It would be in their interests as a good 'corporate citizen' if you ask me.
New Zealanders will ideally reward them appropriately for their behaviour.
Collectively, 'making a profit' is killing the planet - us included.
Good on them?
Really?
NZ did print a bunch of NZD, therefore devaluing L'Oreal's NZD.. as such L'Oreal took the compensation on offer. That's not even mentioning the potential impact of lockdowns on L'Oreal's bottom line.
It sucks, but if L'Oreal legally qualified for it, there is a fiduciary responsibility to shareholders to take it.. If only to be on an even playing field with their competitors.
If taking such a handout/compensation was projected to result in loss of sales, then the fiduciary responsibility would obviously have been not to take it, or return it.
Moral of the story, Labour sucks lol :) I clicked 'thumbs up' on both your guy's points of view.
Well I don't think Kaumatua Orr has any obligation to L'Oreal and any currency risk to the company is irrrelevant.
(Corrected my post above with the NOT)
Yes.. Orr sucks too.
"They claim they have 1600+ salespeople and 80 offices. They closed only 578 transactions in August 2022"
Assume the average transaction size is $1m, that's $578,000,000, 1.25% commission is $7.225m. That covers roughly minimum wage for the 1600 sales people with nothing left, and you could more than double that in overheads. Yes, the agents are commission weighted, but still that is a disaster. They have 1000 agents more than they need......
Why would anyone buy a house when you know Te Putea Matua will do it's level best to take it from you?
What's "Te Putea Matua"
It is the mighty Kauri tree. The guardian of the great financial forest... formerly known as The Reserve Bank of New Zealand.
its the only name for the RBNZ the wokey dokies recognise.
Literal translation : The money parent
Who's your Daddy?
Yvil, the Mahuta's have licensed the name to the RBNZ - it's in their Annual Report.
I hear that the Mahuta's don't have a lot of branches on their family tree.
'This data stands in contrast to the breathless warnings about how bad we are doing.'
Uh, no it doesn't.
We need to be at zero, preferably now, certainly by 2030.
We areowhere near that trajectory, and this is lowest-hanging fruit first.
Optimism bias, methinks.....
RBA lifts cash rate 0.5pc, flags more rises in months ahead
Same for us, I guess. More % rate rises to come.
First of the banks now into the 4's for the 1 year TD's so well on track for 4.8% by Feb in fact should be there by Christmas.
yes and ICBC now 2nd bank to hit 4.8% for the 5 yr. Who will be first to 5%.....
Labour’s motel housing shame:
https://www.nzherald.co.nz/nz/bryce-edwards-labours-motel-housing-shame…
Gee I drove back from Taupo in the weekend, went through Rotorua, never been a fan but boy it’s plunged to new lows of seediness.
Good article. This is beyond "crisis" now. This is something much bigger. And it still doesn't rule out the possiblility of a massive crash.
Yep.
Also, driving through Tokoroa, I wondered once again why the government hasn’t built a massive timber prefabrication plant there to Build housing en masse.
I. Just. Don’t. Get. It.
Completely predictable however. It's a shocking state of affairs, that is making the future dramatically worse as the social issues will echo through the next few generations.
Incredible that the opposition.party offers no credible alternative on the matter too, only plans to actively make things worse. Situation stuffed by entrenched entitlement mentality.
What no one seems to mention is that the burgeoning state housing wait list has much to do with unaffordable private rentals.
You can't 'magic up' new state houses at a time of labour shortages. They'll never 'fix' this problem urgently by building their way out of it - as every month demand just grows and grows when low income families are priced out of the rental market.
Just got my petition up to Parliament;
They're going to have to regulate.
Forgive me if I'm wrong, but aren't most of the people seeking emergency housing doing so because their life circumstances have changed?
High rents make life harder for such people, but that's not necessarily why they need emergency housing.
From my understanding, the issue is the increased volume of people having circumstances changed. Will this volume be the same in future, or get worse?
Sure, if by life circumstances you mean loss of jobs; relationship break ups etc. But rising house prices over the last 5 years arising from low interest rates/COVID stimulus - and subsequent rental price increases - has more to do with the burgeoning numbers of households registering on the social housing waitlist. As the article states, that waitlist has grown from 5,000 to 30,000 since 2017.
Everyone who could afford a private rental would be in a private rental (as opposed to a motel) by choice. Social housing rent is set at 25% of household income. So, my proposal to set the private market at a benchmark of 30% of household income would likely get us back to that more do-able baseline in terms of building enough state houses to meet the qualifying criteria for state housing.
Problem at the moment is too many people qualify.
I've been asking for regulation of rents since 2014 - but from an ethical view point (I believe forcing someone else to pay off your mortgage + whatever else you can get away with, whilst denying them the ability to purchase for themselves, is morally repugnant).
I've always asked for three things: abolition of interest-only loans, 2% CV/pa rent cap, and removal of the accommodation supplement. Landlords can pay for their own bloody 'asset' - tenants cover fair use, maintenance etc. If a landlord can't afford an empty house, they can't afford the house and should relinquish it so someone else can own their own home.
Sadly, this country is sick with greed, and there is very little interest among the politicians for things to change, as the majority of them are on the sauce themselves.
Still signed your petition, though :)
I won't entertain the idea of unwinding interest-free on student loans until Super is abolished. NZ does not, or at least should not, exist solely as an exercise to make older New Zealanders richer at the repeated expense of those younger than them.
Maybe you should check out the Australian student loan repayment scheme, where loans are: Interest free, the threshold for repayment kicks in at literally double ours and the repayment rate works on a sliding scale that tops out at 10% when you hit $130K, instead of here where it's a flat 12 cents at the dollar that kicks in at half the minimum wage.
Thanks! Yes rent increase caps have been proposed by many and would have been useful had they been applied at a time when rents were actually affordable. But as the Salvation Army is quoted as saying in the article linked to above;
the National government's "housing crisis" has morphed under Labour into a "housing catastrophe".
And as also mentioned, the social housing waitlist has gone from 5,000 to 30,000 during the Labour government's term (which likely mirrors house price rises during that period as well).
Nothing short of a blanket reduction of rental prices will get us back to 'normal' demand for state housing to my mind and a position where the accommodation supplement is no longer needed..
The Turkish Government is saying inflation is tracking at 81%, but unofficially it's deemed to be closer to 180%
So could be much worse out there.
'the Lunatic RBA seems determined to drive the economy into an unnecessary recession'
Sound familiar?
https://www.macrobusiness.com.au/2022/09/lunatic-rba-drives-australia-t…
Translated:
E-Deck News: The lunatic Bosun is using all the pumps at his disposal, but the bow is getting lower and lower. If he keeps pumping at this rate, they will go under completely.
Please send your comments to stateroom 2008, E Deck, in a waterproof container.
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