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.
TERM DEPOSIT RATE CHANGES
Kiwibank raised some TD rates, taking their six month rate to 3.35% and their 12 month rate to 4.10%. Both are slightly higher than their main rivals. Bank of India raised most of their TD rates as well.
SERVICES SECTOR ROARS BACK
Following a good rise in the factory PMI, today the August BNZ-BusinessNZ services PSI also revealed a "roaring" expansion in the month. BNZ cautioned however: "It’s a significant step up from July’s 54.4 and even more so from July’s initial reading of 51.2 before it was subsequently revised higher. The hint of a slowdown in July now no longer applies – reinforcing our comment last month that it is difficult to be sure of trends based on one month’s data. In a similar vein, it cautions against getting too excited by the overt strength in August’s result." August’s PSI was driven higher by surging activity/sales and new orders/business. The 67.1 activity/sales reading is within a whisker of an all-time high. Along with the very strong 66.5 new orders index, it points to strong demand.
TRACTOR SALES FULLY RECOVERED
New data out today on tractor registrations shows them strong, although year-ago levels were unusually weak. But for the past 12 months they nearly reached 3,000 and we haven't seen a level like that since August 2019.
THE BIG LOCAL SELLOFF
The NZX50 lost -2.0% last week in capitalisation, like most other global equity markets. Many others fared much worse. Locally the falls were led by Fisher & Paykel Healthcare (FPH, #1) which dived -3.7% in the week. Spark (SPK, #2) fell a chunky -6.4% and Fletcher Building (FBU, #10) fell -6.2%. Pushpay (PPH, #29) fell an eyewatering -13.2%. These falls were countered by a rare Eroad (ERD, #50) +13.4% gain and Fonterra (FSF, #44) +9.3%.
SWAP RATES TAKE A BREATHER
Wholesale swap rates are probably little-changed today while awaiting Wall Street signals. Our chart will record the final positions. But the 90 day bank bill rate is up +5 bps to 3.69% which is a new high since January 2015. The Australian 10 year bond yield is now at 3.71% and down -1 bp from this morning. The China 10 year bond rate is up +1 bp at 2.70% and its highest in a month. The NZ Government 10 year bond rate is now at 4.06%, up +3 bps from Friday but below the earlier RBNZ fix for this bond at 4.08% which was up +7 bps. The UST 10 year is now at 3.46% and is unchanged from this morning.
EQUITIES MARK TIME
The NZX50 is heading for a flat day in low turnover. The ASX200 is also marking time. Tokyo is closed today for a public holiday (Respect for the Aged Day). Hong Kong has opened its week down -0.9%. Shanghai is down -0.2% in its early Monday trade. The S&P500 futures suggest a -0.2% slip awaits Wall Street's open.
GOLD DOWN AGAIN
In early Asian trade, gold is down -US$6 from this morning to US$1,670/oz.
NZD BACK ON DOWNWARD SLIDE
The Kiwi dollar has fallen -20 bps from the opening this morning but is still above the Friday level. It is now at 59.7 USc. Against the AUD we are slightly softer at 89 AUc. Against the euro we are little-changed at 59.7 euro cents. That all means our TWI-5 is at 69.4 and down -20 bps from this morning.
BITCOIN FALLS SUDDENLY
Bitcoin has fallen again, and quite sharply recently and is now at US$18,739 which is down -4.8% from where we opened this morning. Volatility over the past 24 hours has remained high at +/- 3.6%.
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35 Comments
Early previews of FOMC jitters I suppose. Perhaps we will follow the pre-FOMC call pattern of everything down until the day, and then green for a while. Although a 1% rise could cause a bit of a shockwave.
My cash reserves are ready if we get another nuke. So far the cheapest I have bought is $18.1k
If people are struggling to buy food and power and somewhere to live Bitcoin and crypto becomes useless. If you are hungry what would you choose a chicken or a Bitcoin. Crypto currency’s are going to hit the wall over next few years as it really has no value unless someone wants to buy it.
If people are struggling to buy food and power and somewhere to live Bitcoin and crypto becomes useless. If you are hungry what would you choose a chicken or a Bitcoin. Crypto currency’s are going to hit the wall over next few years as it really has no value unless someone wants to buy it.
Exactly. But I don't think you understand. THe vast majority of BTC is not for sale. And wherever the price ends up, there are buyers. Just the way it is.
And my first trip to NZ was on a Pan Am 707 via Pago Pago. Luckily for me there was a radio that needed to be fixed or the plane would have taken off on time. In those days that was a once a week flight. I was delayed getting to the airport by rain in San Francisco. The next flight a week later landed in the coconut grove in American Samoa....Most young travelers came by steam ship in those days. $1100 US one way in 1973. My fear is that with oil going through the roof in the next 5 years that those 1973 incredibly expensive prices may be back again.
Companies across China are making changes to everyday products and adjusting their business strategies to cope with rising costs and the country’s economic slowdown, which is weighing on consumer spending.
Since the summer, Kentucky Fried Chicken outlets in some Chinese cities have included chicken feet, necks, collarbones and wingtips—parts of the bird that wouldn’t look out of place at a Chinese dinner table—in their Superabundant Chicken Bucket. The bucket, which is meant for one person, is made up of 19 small pieces of these bony chicken parts and sells for 29.90 yuan, the equivalent of about $4.27.
https://www.wsj.com/articles/chinese-companies-alter-products-strategie…
Interesting.
"In other words, Chinese investors can earn higher yields in the world’s financial safe-haven without taking credit risk or worrying about yuan depreciation. "
Safe-haven? Without credit risk? Next minute, there is a spat over Taiwan, the US freezes Chinese holdings of Treasury bonds and China is in the same boat as Russia after it took its tanks for a bit of a drive into Ukraine.
Oh my,
Across Australia, monthly home loan repayments have risen to 49.4 per cent of income on average across Australia’s capital cities from a low of 34 per cent during the pandemic, but it’s expected to get even worse.
“In the very near term, the rapid rise in interest rates (both fixed and floating) is expected to outweigh falling house prices with the cost of servicing a new mortgage on the median dwelling expected to increase to a peak of 56 per cent of median income – a record high for the indicator on a national level,” the report said.
https://www.news.com.au/finance/real-estate/buying/shocking-number-of-y…
Neoliberalism impoverishes. Neoliberalism is a class war against labour by finance, primarily, and a class war against industry. A class war against governments. It’s the financial class really against the whole rest of society seeking to use debt leverage to control companies, countries, families and individuals by debt. And the question is, are they really going to be able to convince people that the way to get rich is to go into debt? Or are other countries going to say, this is a blind alley. And it’s been a blind alley really since Rome that bequeathed all the pro creditor debt laws to western civilization that were utterly different from those of the near east, where civilization took off. Link
Rents are continuing to rise in the US. According to realtor.com, February 2022 was the seventh month in a row with a double digit increase in rent prices from the year prior. Rents in February were 17.1% higher than in February 2021. The median rent in the 50 largest metro areas has risen to $1792 a month.
This is why the United States cannot industrialize as long as the house prices absorb this high a rate of income, and as long as the banking sector is supporting this, and as long as the political parties say we will not tax real estate so that all of the rising land value will be able to be pledged to banks to pay interest instead of to pay taxes. Essentially, it’s the (lack of) taxing of real estate in the United States that has subsidized the increase in housing prices, because housing prices are worth whatever a bank will lend to buy a house. If you have to go to a bank, and if they lend more and more and this money isn’t taxed away, the price is going to go up. So you have the government policy, the bank policy, all trying to promote this high diversion of income into paying land rent. Again, this is the exact opposite of what Adam Smith and John Stuart Mill and classical economics and the whole 19th century had advocated. This has priced American labor and industry out of world markets.
If you have to pay 43 percent of your income for rent, then even if the government were to give you all of your goods and services for nothing, all of your food, all of your clothing, all of your transportation for nothing, you’d still have to pay so much money for rent and for health care that you couldn’t compete with labor in Asia or the Third World or even Europe. And so this is what has essentially excluded the United States from having a successful empire. It’s the greed of the financial sector, basically, and the takeover of the government by the financial sector here as happened under Margaret Thatcher in England and then Tony Blair. You’ve had both countries essentially enter permanent austerity programs, and the only way to cure this is for housing prices to go down. But if the housing prices go down, then the banks will go broke. That’s why Obama said he had to support the banks: because if he’d actually lowered the housing prices to realistic levels, that would enable America to survive, but the banks would go under. Until you’re willing to restructure the banking system, you’re not going to be able to industrialise the American economy. - Link
Audaxes,
No love for Neoliberalism that is for sure, but Trump's 2017 tax law changes resulted in the upperclass paying $80 Billion more Federal Tax per year--so far-due to their loss of State&Local real estate property tax and mortgage interest deductability on Federal Taxes--which was capped at $10,000 per year per family for their principal home. Thus that tax benefits now only favours the American middle class, and the Congresspeople representing the "Auckland's" of the US cities went ballistic as their constituents taxes increased "hugely". With many states at 70% home ownership rate and most of those on 30 year fixed interest rate mortgages not sure rising rents is the hindarence to competing with China. 30 years spent selling capital equipment to US factories I can tell you what could only have been fixed by Tariffs (which came 20 yrs too late) was an American Factory workers "fully loaded" wages in year 2000 were $25hr versus 50 cents hourly wage for Chinese working 6 days a wk and living on site in dormitories. . American workers competing with communist country workers was never going to be a fair fight, and should have been dealt with by Tariffs from the beginning. Bill Clinton and a non MAGA Congress sold out the American workforce. Only Congress and the Presidents can be blamed. Industry just reacts to what the politicians approve/or disapprove.
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Well, well. Truth is: Saudi Crown Prince was all set to leave for London for the Big Funeral, but then stood down after sensing he was unwelcome, as human rights activists protested, & Buck Palace heeded. MBS STOOD DOWN! Brits never so crude. Truss Era! Link
TRACTOR SALES FULLY RECOVERED
New data out today on tractor registrations shows them strong, although year-ago levels were unusually weak. But for the past 12 months they nearly reached 3,000 and we haven't seen a level like that since August 2019.
Is this just another case of covid supply failure?
You can see why trying to manage this economy is hard, most metrics over the last 24 months are heavily impacted by supply chain.
The next 12 months data will likely be more telling.
The World is certainly changing!
New CNN Chairman and CEO Chris Licht has been making headlines for his moves to change the network's reputation for being hostile to former President Donald Trump. Licht had also made a pilgrimage to Capitol Hill to woo Republican lawmakers to the idea that CNN would be a forum in which their arguments could be heard fairly....Today, Licht told staffers, "the next chapter of CNN is beginning to shape."
Does anyone else find this headline / article distasteful?
https://www.nzherald.co.nz/lifestyle/queen-elizabeth-death-pm-jacinda-a…
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