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
Westpac has followed ANZ and added +44 bps to their fixed rates. SBS Bank raised its floating rate to 7.29%, and their reverse equity rate is now up to 7.75%. These new rates will apply from November 20, 2022. Update: TSB has raised its fixed and floating rates. This increase means there are now no rates on offer below 5% from any bank.
TERM DEPOSIT RATE CHANGES
Westpac has basically added +20 bps to their TD offers, and that takes their 6 month rate to 3.70% and the 12 month rate to 4.40%. SBS Bank raised some term deposit rates up to 9 months and savings account rates. Update: TSB has also raised term deposit rate offers.
THE BENCHMARKS
The RBNZ has released its Statement of Intent for 2023, and the performance metrics it will be judged by. These are as required by the updated legislation for the central bank.
FLYING HIGH
Auckland Airport (AIA, #3) today announced it has revised guidance for the 2023 financial year following a stronger than expected rebound in the aviation market, with high aircraft load factors and continued strength in forward international seat capacity expected to fuel the ongoing recovery. Reflecting this, guidance of underlying profit after tax of between $100 mln and $130 mln is now being provided for the 2023 financial year, an uplift on guidance provided in August of between $50 mln and $100 mln.
UNSTITCHING A DIFFICULT COMPROMISE
Fonterra is clearly not happy about how the Government is responding to HWEN. It says the farmer proposal was a finely balanced position where compromises were required by all parties to reach an agreed consensus. They are not happy that the Government ministers then just go and pick the bits that they like and reject the bits they don't. That unstitches the whole balanced proposal, they claim.
CAUGHT IN AN +36 BPS UPDRAFT
The $100 mln Air NZ retail bond offer has closed and the interest rate has been set at 6.61% per annum. This reflects an issue margin of 1.50% per annum over the base rate of 5.11% per annum. That is far above the indications set when this unsecured, unsubordinated, five year bond was launched on Monday. Then it seemed they would be paying 6.25%. They have been caught in an interest rate updraft since.
WARNING ON SHARP PRACTICES
FMA has issued warnings to "property investment" firms using non-compliant eligible investor certificates. Seven such firms have been issued with warnings after the regulator found 'a number of undesirable practices' in the market for wholesale investment offers. The warned firms include Black Robin Equity Limited and Westwood Terraces BRE Limited; Du Val Capital Partners Limited and Du Val BTR GP Limited; E+O Property Syndication Limited; Jasper NZ Investments Limited; Provincia Property Fund Limited; Williams Corporation Capital Partnership GP Limited; and Wolfbrook Capital Limited.
HOUSEHOLD NET WORTH SINKS
Statistics New Zealand says household net worth fell by -$129 bln, or over -5%, in the first half of the year - however household saving has picked up again. The fall in net worth is by far the largest ever recorded - almost all 'houses' in Q2, but it will be joined by declining investment fund values (including KiwiSaver) from here on.
LOW & STEADY
In Australia, their jobless rate remained steady at 3.5% in September as the number of employed people increased by just +900, and unemployment increased by +8800. Their participation rate was devilishly unchanged at 66.6%. We get our September labour force data on Wednesday, November 2, 2022.
SWAP RATES MOMENTUM BUILDS
Wholesale swap rates are firmer again today with large rises again today. The key real action comes near the close. Our chart will record the final positions but they will be very much higher, perhaps by +10 bps. The 90 day bank bill rate is up another +5 bps at 4.15%. The Australian 10 year bond yield is now at 4.09% and up +16 bps. The China 10 year bond rate is little-changed at 2.73%. The NZ Government 10 year bond rate is now at 4.77%, and up +14 bps and now matching the earlier RBNZ fix for this bond at 4.77% which was up +19 bps from this time yesterday. The UST 10 year is now at 4.15% and up +14 bps from this time yesterday.
EQUITIES RETREAT
Wall Street fell today as the bond momentum picked up with the S&P500 down -0.7% at the close. Tokyo has opened down -1.2% catching the same downdraft. Hong Kong is down -3.1% and Shanghai is down -1.0% in their early trade. The ASX200 is down -1.2% in early afternoon trade. The NZX50 is down -0.9% in late trade.
GOLD DOWN
In early Asian trade, gold is at US$1625/oz and down -US$28 from this time yesterday.
NZD DIPS
The Kiwi dollar has fallen -½c from this time yesterday to be just on 56.4 USc. Against the AUD we are up at 90.4 AUc. Against the euro we are unchanged at 57.8 euro cents. That all means our TWI-5 is at 67.3 and down -30 bps from this time yesterday.
BITCOIN WEAK AGAIN
Bitcoin is firmer today, now at US$19,043 and down -1.4% this time yesterday. In between it fell to just US$18,920. Volatility over the past 24 hours has been modest at just over +/- 1.0%.
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51 Comments
HouseMouse im still holding my view that bond yields start falling heavily early next year or even Dec. I know our views have been fairly aligned this year. How are you thinking now? I thought they would have fallen by now so have been a bit early but i cant see all falling apart in the next 6 months
by HouseMouse | 20th Oct 22, 4:09pm
Suckers rally over. Back to the slide in stocks
Just look at the 5-year swap.
This reflects what the markets think is going to happen for the next 5 years - and the 5-year swap is above 5%.
Food for thought, especially for the overly optimistic who still thinks that interest rates, once reached the peak, will start falling - it simply ain't going to happen, according to latest swap markets values.
That is sure my view now, especially after seeing the BOE automatically spray fresh money to save their bond market. Fed will do same. But of course it's inflationary and will put further upwards pressure on rates. Its looking like a doom loop to me. There just doesn't seem to be enough real wealth creation going on to blow up all the deflating bubbles, so down they will have to go. Oh well.
"The US can't keep spending and bring down inflation" - Ray Dalio.
https://www.instagram.com/reel/Cj6VEIXjhAx/?utm_source=ig_web_copy_link
Stagflation ahead....just need the rising unemployment to complete the misery level.
That is true. Back in the day when a politician campaigned on something, people voted for them, they went ahead with it.
For example, the baby boomers voted Muldoon in a landslide victory because he campaigned on abolishing the "communist" compulsory super scheme (what Kiwisaver was modelled off). So he did that. This decision represented a broad cross section of society that didn't want to pay for their retirement.
John Key campaigned on not increasing GST and fixing housing. He was voted in. So he increased GST and did nothing about housing.
I think it'll be the $NZ. It'll just continue to fall indefinitely. Certain sectors of the economy will just start falling off like diseased limbs and inflation will 'mysteriously' persist here even as it starts to level off in the US. Exporters will be OK but living standards will be seriously cramped.
Can anyone explain how our oil refinery was allowed to shut when there is a global shortage of refinery capacity, a diesel supply crisis and a national requirement for by-products.
I'm confused, we demand socialist government and pay for it with neo-liberal economic globalisation.. won't we end up with nothing?
And resolve it she did.
"Greens leader James Shaw said the government's failure to provide critical infrastructure was "negligent"."
https://www.rnz.co.nz/news/political/339633/govt-short-sighted-to-ignor…
"Ms Ardern, speaking this morning to TVNZ 1's Breakfast programme, said "that infrastructure investment has been needed for some time ... its up to us to now resolve it."
https://www.1news.co.nz/2017/12/10/second-pipeline-shutdown-shows-need-…
Uh, because since the Government gave the refinery away to the major fuel companies in 1984 so since then it's been a private asset. What gives the Government the right to dictate how a private consortium of companies manages their assets? Slippery slope. Next we'll have a Government solve the housing crisis forcing those with surplus houses to transfer ownership to those without houses.
When it was operating,it mainly refined imported oil,so I think the theory was that it doesn't make much difference whether you imported crude or refined,you still had to bring it in.NZ oil is actually better quality and is exported,I think because of the low sulphur content...and as we are allowed to burn any old diesel,they export the good stuff.
The refinery uses a medium-sour blend of crude oil, nearly all of which is imported. Most crude oil produced in New Zealand is light-sweet and is exported to refineries in Australia. Marsden Point produces 70 per cent of New Zealand's refined oil needs, with the rest being imported from Singapore, Australia and South Korea.[3]
I read a bit about the rationale behind closing the refinery and one of the things I recall is that NZ oil is high quality stuff not suitable for refining into scummy old petrol and diesel. So financially its best to export our classy black gold, and import fuels already refined by countries with economies of scale.
One mans meat is another mans poison...those that cashed up their properties at the peak last year are laughing all the way to the savings bank as TD interest rates rise...and if the Nats unwind the interest tax deductions,those same folk will be looking to buy those same houses back 30% cheaper,then rinse & repeat...
Sounds like Newstalk ZB:
https://www.nzherald.co.nz/world/the-world-according-to-fox-a-ceos-visi…
"..The decision was true to form, according to interviews with more than a dozen current and former colleagues. Since Scott took over the top job at Fox News in 2018, her colleagues said, she has managed from behind the scenes with a simple mantra: Respect Fox’s audience. Often that involves sparing conservative viewers what they don’t want to hear .."
Supposedly that made NZ more 'competitive' because wage earners here get paid a pittance (viewed from their overseas employers perspective) and are also mysteriously tolerant of imported inflation (aka pay even more for what is already overpriced stuff) thanks to the weak NZD. The logic beats me but hey!
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