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
ASB changed home loan rates today, some up some down, and reintroducing an inverted rate curve. More here.
TERM DEPOSIT RATE CHANGES
China Construction Bank raised TD rates today. Gold Bank Finance did too. But SBS Bank has raised its 1 year TD rate to ... 6%. This is the first time we have had any bank offer 6% since November 2008.
CREDIT CARD APPETITE UP, HOME LENDING DOWN
Equifax is reporting that mortgage demand continues to be down on both 2020 and 2021 volumes, with a -27% drop in the December quarter year-on-year, representing a continued softening in home lending appetite. However, enquiries for unsecured credit are up +4.2% year-on-year for the December quarter as a result of increases in credit card demand.
UPDATED I
Petrol prices monitored MBIE are now updated in our charts, here.
UPDATED II
Regular users of our livestock prices and charting services should know they are back updated after the holidays - and recording step-down levels from the lower levels we left them in mid December. For easy reference, M2 Bull, P2 Steer, Saleyard Prime Steer, and Y Lamb.
WELLINGTON ANNIVERSARY DAY
In case you overlooked it, it is a public holiday in the Wellington region and the lower half of the North Island.
LAYBY LAID-LOW?
Takapuna-based, but ASX-listed, buy-now-pay later company Laybuy has put its shares into a trading halt in Australia, pending release of an announcement "in relation to an application to be removed from the official list of ASX". The company indicated the announcement would be made before Wednesday (January 25). The Laybuy shares last traded at just 6 AUc a share, down from 20.5 AUc a year ago and down from AU$1.42 in January 2021. Laybuy says it's on track to achieve operating profitability by March 2023. It made an operating (EBITDA) loss for the six months to September 2022 of -NZ$13.9 million, "an improvement of 35.2% on the year prior", while losses after tax were -NZ$14.9 million, "an improvement of 34%". All up, Laybuy has built accumulated losses of -NZ$128.5 million through to September 2022.
KEEPING ON TOP OF THE CHALLENGES
For fund managers struggling with doing the right thing around ESG issues that are under attack from external politics and internal greenwashing, ResearchIP has a couple of useful links (CFA and Lazard) in their new RIPPL Sluice briefing sheet. Fund managers are under pressure on all fronts to deliver better returns for their investors, and SuperRatings shows this hasn't been a good outcome recently. Will ESG standards be a casualty?
NOT TAKING THE FOOT OFF
In an interview in Holland, an ECB member said the central bank will raise rates by +50 bps in both February and March and will continue to raise them further in the months after because "it's clear we are not there yet". The current ECB rate is 2.50%. This comes as some in the US reckon the US Fed will tone down its rate-hiking path.
SWAP RATES HOLD BUT SIGNALS FIRM
Wholesale swap rates were likely little-changed today. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +4 bps at 4.87%. That is now +62 bps above the OCR. (Recall, back just before the November +75 bps OCR hike, the 90 day bank bill rate was +82 bps above the prior OCR. A month before that last review, the 90 day bank bill rate was +63 bps up. The next OCR review is on February 23, 2023, also a month away.) The Australian 10 year bond yield is now at 3.46% and up +7 bps from this time Friday. The China 10 year bond rate is at 2.96% and little-changed. The NZ Government 10 year bond rate is now at 4.10% and up +5 bps, and still above the earlier RBNZ fix for the NZGB 10 year which is up +6 bps at 4.05%. The UST 10 year is up +7 bps to 3.47%. We should also note that negative yields have returned for Japanese 1yr and 2yr Govt bonds.
EQUITIES MIXED
The NZX50 has opened its account this week with a -0.5% fall in late trade. The ASX200 is flat in early afternoon trade. Tokyo has opened with a strong +1.2% gain, on top of last week's good +1.7% gain. Hong Kong is closed until Thursday and Shanghai is closed for the full week. In advance of Wall Street, the S&P500 futures are trading with a +0.3% gain indication.
GOLD FIRM
In early Asian trade, gold is up slightly, now at US$1933/oz and a +US$7 rise from this morning's open.
NZD HOLDS
The Kiwi dollar has risen +½c to 65 USc during the day from this morning. Against the Aussie we are now at 92.9 AUc and very marginally lower. Against ath euro we are at 59.6 euro cents and unchanged. That all means our TWI-5 is still at 71.8 and still touching its 2023 high.
BITCOIN HOLDS
The bitcoin price is down marginally from where we opened this morning, now at US$22,765. Volatility over the past 24 hours has been modest at +/- 1.7%.
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57 Comments
In an interview in Holland, an ECB member said the central bank will raise rates by +50 bps in both February and March and will continue to raise them further in the months after because "it's clear we are not there yet".
‘Well he would, wouldn’t he?’
They always get it wrong. This time is no different and here's the proof.
What if the world's most powerful institution is actually nearly powerless? If that was true, it wouldn't sound any different from what came out of the mouth of its most famous leader. The truth has been blocked out even though the proof has been right there out in the open this entire time.
Caught up with my cousin today. They bought either just before 2020 or before the markets went mental. Mortgages just rolled over and they are now down to one income and also dealing with the massive increase in the cost of everything. Food is well known, but daycare went up 25% on them in the last 12 months as well. Relative to what came after they don't have high mortgages, but the normal life cycle of having kids and being on reduced incomes has made this particularly difficult.
I wonder how many young people will put off having kids for a few years.
They were Labour voters but in his words, "they had 5 years and s##t the bed"
The best investment a govt can make is in Kiwi kids. The trouble is (a) it takes about 30 years to see the full benefit (b) nobody notices. Every $ spent on children is wise both for the long-term economy but also the short-term 'wellbeing'. Just needs a return to a generous universal child benefit. It does apply from age five to eighteen when every child gets roughly the same money from the govt spent on their education. However the best return is on money spent in those first 3 years of life; pre-school is useful but not as critical as those first three years. Of course it would be expensive - need to increase tax rates for all - so with all my children now adult I'd not benefit except I would by just seeing my grandchildren thriving and their parents not discussing separating so they can qualify for accommodation benefit.
Whichever party says "Families and Young Children first" will get my vote.
JANUARY 22, 2023 7:00AM BY DAVID FARRAR
Welfare rolls up again
The latest welfare stats show:
353,904 people of working age on a benefit
This is 22% higher than in Dec 2017
Those on a benefit for more than 12 months up 26% to 257,865
Maori on welfare up 26%
Pacific Peoples on welfare up 35%
Numbers on job seeker who are work ready up 51%!
Numbers on job seeker for more than 12 months up 49%
Maori on job seeker up 41%
Pacific Peoples on job seeker up 67%
What is most amazing about all this, is that almost without exception every single shop I go into to, had an ad up pleading for staff.
Anyone else think Hipkins is planning a big tax free threshold, paid for by the non bread and butter projects being cancelled like TVNZ, 3 waters, light rail, etc? Pretty sure that would be an election winner. I wonder if he would even bring it in before the election?
No. Working for Families has created an environment where all the up to 75k seems tax free for families I know that this was an effective policy at the time, but to me it seems to have distorted motivation. Its effectively a subsidy for small business..... I think if you introduce a decent wedge of tax free income say 20k per person, then you have to adjust WFF at the same time. At the moment WFF means the first 75k is tax free.... So the policy will only impact the childless on low wages. Not here to argue Jimbo, not sure how to fix it.... neither labour or National seem to have a vision to sell either.
To late for solutions, at best just delaying the inevitable.
If housing was at 5x median household income were it should have been, wages would be enough for a decent living.
But at minimum wage or welfare you aren't going anywhere.
No country in the world has unwound a housing bubble without pain.
The dye is set.
An election winner? Labour have cast their own die. Ironically they are in just about the same state of affairs as National pre the last election. The party, the government has the staggers. The Maori caucus is quiet, if not sullen, for now but won’t be for long if their demands are not continued to be met. The electorate last time quite rightly punished National for being a house divided why then would they believe that Labour on their own in the same state, could then stitch together and sustain a coherent and stable coalition government with the Greens and TMP?
no mention of containing the blow-out in new gov. spending
no mention of searching for efficiencies in wasteful old gov. spending
just talk of lifting taxes
www.newshub.co.nz/home/politics/2023/01/incoming-prime-minister-chris-h…
same old labour
damn right some aren't paying their way
but it's not the ones already paying most of the tax
https://www.nzherald.co.nz/business/auckland-housing-developer-folds-af… was this discussed today - be many more
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