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
The only change so far today is from the Police Credit Union who raised rates across the board.
TERM DEPOSIT RATE CHANGES
The Police Credit Union also raised term deposit rates.
BUSINESS BANKING RATES
ANZ's business rates have risen +50 bps, so their Indicator Rate is now 11.6%, their Business overdraft rate is now 13.6%, and their Agri Current account rate is now 9.8%. (Home loan borrowers can see from these rates how they get priority, all as a consequence of the RBNZ capital adequacy rules.)
WHS UPDATED
We have updated our handy profile of the Warehouse Group (WHS, #24), the last of the NZX50 companies that had a June or July financial year end reporting.
IT ISN'T HAPPENING
A third of properties sold under the hammer as auction rooms last week. We're halfway through spring but there's no sign of a lift in residential auction activity.
GOING BACKWARDS
In case you missed it over the weekend when we released the September update of our home loan affordability report, first home buyers now far less likely to be able to afford a home of their own than 3 years ago. Over that time, the position of aspiring first home buyers has deteriorated substantially.
SLOWEST POPULATION GROWTH SINCE THE 80s
Statistics NZ says a migration loss contributed to a net growth of just +0.2% in the population in the year to June, while the natural population increase of 24,100 was the lowest since World War II. They estimate our June population at 5,124,100 with Auckland becoming the source of growth for regional New Zealand.
SHARPISH DEVALUATION
We should note that the yuan is depreciating fast today, just as PRC equity markets are falling too (see below). It is now at 7.1668 yuan to the US dollar or 4.087 yuan to the NZD.
SWAP RATES RETREAT
Wholesale swap rates are noticeably weaker today so far. The key real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 4.13%. The Australian 10 year bond yield is now at 4.11% and down -21 bps. The China 10 year bond rate is unchanged at 2.74%. The NZ Government 10 year bond rate is now at 4.60%, and down -6 bps and now marginally above the earlier RBNZ fix for this bond at 4.59% which was down -10 bps from this time Friday. The UST 10 year is now at 4.21% slipping slightly from this morning.
EQUITIES RISE EXCEPT FOR PRC MARKETS
Wall Street ended their Monday session rising with the S&P500 up +1.2%. Tokyo has started today up +0.7% and building on yesterday's rise. Hong Kong however is still in a major retreat, down -1.3% in early trade after yesterday's shock -6.4% rout. Shanghai fell -2.0% yesterday and has opened today down another -0.8%. (In the absence of the Hong Kong collapse, this Shanghai result would be big news.) The ASX200 is up +0.3%, handicapped by the China links of many of their listed companies. The NZX50 is far less exposed, and is up +0.9% in late trade.
GOLD STABLE
In early Asian trade, gold is at US$1650/oz and unchanged from this morning.
NZD HOLDS
The Kiwi dollar is a little firmer at just on 57 USc. Against the AUD we are a little softer at 90.1 AUc. Against the euro we are unchanged at 57.6 euro cents. That all means our TWI-5 is at 67.6 and also little-changed.
BITCOIN UNCHANGED
Bitcoin is firmer today, now at US$19,261 and virtually unchanged from this morning's open. Volatility over the past 24 hours has been low at just under +/- 0.8%.
Daily exchange rates
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
13 Comments
Night market traders have bigger balls https://youtu.be/xPlqLHcphyw AC/DB Big Balls
Amazing watching this play out.
The Japanese government and the Bank of Japan may have intervened again to shore up the yen, which temporarily surged about ¥4 against the dollar on Monday morning.
The yen soared from the upper ¥149 level to the ¥145 range at one point. If an intervention did take place, it followed close on the heels of the action taken on the weekend. The war of nerves between the Japanese government and the currency market is intensifying, with the yen continuing to fluctuate sharply.
https://japannews.yomiuri.co.jp/business/market/20221024-66516/
The interest dot co posse could have told you what Mervyn King said y'day. Watch the video. It's gold (ignore any pun).
I think all central banks in the west, interestingly, made the same mistake. And during Covid, when the economy was actually contracting because of lockdown, central banks decided it was a good time to print a lot of money. That was a mistake. That led to inflation. We had too much money chasing too few goods. And the result was inflation. That was predictable. It was predicted, and it happened. So that’s one problem we have to try to get out of. But the public finances both in the United States and the United Kingdom were not put on a sustainable track. And markets responded to that.
https://www.spectator.co.uk/article/mervyn-king-said-the-unsayable-abou…
I actually think the government's and banks had no idea of the pandemic outcome, panicked and threw the kitchen sink at it.
Now they think they can resolve legacy supply side issues using interest rates.
End of the day, just-in-time global trade is extremely efficient but also ridiculously fragile.
Absolutely - the higher the level of debt to GDP, the more terrified of deflation governments and central banks become and the faster they need to respond to the problem. i.e. defaults happen very quickly with deflation as insolvency is quickly exposed.
But we've completely overcooked it in my opinion and now we get to experience the misery that is stagflation for a while, then may still get a fast swing to deflation afterwards when unemployment gets high enough and asset prices have dropped significantly further. And we will have even higher debt to GDP levels! So we will be in an even worse position.
It is interesting watching the demolition that is happening to the iShares 20+ year bond ETF (TLT) from the US exchanges.
It is down nearly 50% in the past year as a result of the interest rate rises and could be an indicaiton of what is ahead for the property market - that is also structured with long durations (mortgages 20+ years) with a high degree of interest rate risk.
iShares 20+ Year Treasury Bond ETF (TLT) Stock Price, News, Quote & History - Yahoo Finance
I work in sales - we deal with a range of home appliances (indoor/outdoor) that go in through a variety of popular retailers. Today had a store describe the floor as "Scarily Quiet" over the past few months. Our sales are down substantially as are the retailers - as well as being massively overstocked. Not a fabulous outlook but has been on the cards for a while. Two years of free/cheap money coming home to roost
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.