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 changed almost all their fixed rates today, and followed ASB by setting an inverted rate curve for home loans. More here.
TERM DEPOSIT RATE CHANGES
First, Westpac raised many short rates, taking their six month rate to 4.70%. Then Rabobank also raised many of its term deposit rates today, taking their 6 month offer to 5.00% and their 1 year offer to 5.75%. And Heartland advised that it will be raising its TD rates on Tuesday, January 31. That will make their 6 month rate also 5.00% and their one year rate 5.70%. No-one has matched SBS Bank's 6.00% one year rate yet.
TOUGH, BUT NOT DISHEARTENED
Costs and prices are still exerting severe pressure on the economy. But despite that, businesses are starting the new year happier than in January. ANZ's Business Outlook survey revealed business confidence bounced +18 points in January as the shock of the November Monetary Policy Statement wore off a bit. Expected own activity also bounced, up +10 points to -16. Inflation pressures remain intense. Pricing intentions rose +3 points, and cost expectations rose +7 points. Inflation expectations remain stuck around the 6% mark. There’s good reason for the RBNZ to keep hiking a while yet, ANZ says.
A BIG DEAL ABOUT A TRIVIAL CHANGE
ASB said it will remove monthly fees on everyday business and personal accounts, costing it $14 mln in account fee income over the coming year. In context, that is 0.7% of its last pre-paid annual profit of $2.035 bln. (See page 3.)
NEED MORE FUNDS
ANZ has announced that, subject to market conditions, it is considering making an offer of unsecured unsubordinated fixed rate bonds with a term of five years to retail and institutional investors and certain overseas institutional investors. The offer is expected to be for up to $½ bln.
BELOW THE CUSP
Fitch Ratings, who assigned SBS Bank an investment grade rating of BBB (last affirmed in August 2022), hasn't been so generous with with their new issuance of New Zealand dollar Tier 2 bonds. These bonds are rated by Fitch as BB+ which is not investment grade.
PRESSURE OFF?
In Australia, there is evidence price pressures are easing for businesses. Their producer price index rose +5.8% in the year to December, but only at the annualised rate of +2.8% in the December quarter from the September quarter. We won't get to know how our PPI data tracked in the December quarter until February 21.
PRESSURE ON?
In Japan, their special Tokyo inflation data came in at +4.4% and the fastest increase since 1981. Tokyo prices are considered a leading indicator for national Japanese prices. But it is not clear that this will motivate the Bank of Japan to ease off its ultra-loose monetary policies. They are determined to wait out the current cost-push inflation until it turns into a demand-driven one accompanied by wage growth.
SWAP RATES TURN HIGHER
Wholesale swap rates likely stopped falling and started rising again today. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +1 bp at 4.86%. The Australian 10 year bond yield is now at 3.58% and up +9 bps from this time yesterday. The China 10 year bond rate is at 2.96% and unchanged of course. The NZ Government 10 year bond rate is now at 4.15% and up +6 bps, but still above the earlier RBNZ fix for the NZGB 10 year which is down -1 bp at 4.07%. The UST 10 year is up +7 bps to 3.52%.
EQUITIES RISE TO CAP THE WEEK
On Wall Street, the S&P500 ended with a flourish, up 1.1% in Thursday trade. The NZX50 is up +0.2% in late trade today and heading for a modest +0.6% weekly rise. The ASX200 is back after their one-day holiday and is up +0.3% in afternoon trade and heading for a modest weekly gain of +0.5%. Tokyo has started today marginally softer but has already booked a +1.8% weekly gain so far. Hong Kong is up +0.3% at its open, and heading for a +3.0% rise in their shortened week. Shanghai is still on holiday, but returns next week.
GOLD REVERSES
In early Asian trade, gold is lower, now at US$1931/oz and down -US$14 from this time yesterday.
NZD FIRM
The Kiwi dollar is back up to 65 USc to end the week. Against the Aussie we are little-changed at 91.3 AUc. Against the euro we are firmish at 59.6 euro cents. That all means our TWI-5 is now up at 71.7 and +30 bps higher.
BITCOIN FALLS BACK
The bitcoin price is lower from this time yesterday, now at US$22,899 and down -1.4%. Volatility over the past 24 hours has been low at +/- 0.9%.
UPDATE
It is a public holiday in the Auckland region (where we are based) and the top half of the North Island on Monday. However, we will be publishing 'normally'.
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57 Comments
Could be worth watching.
The US investor targeting Indian conglomerate Adani Group over what it claims is the “biggest con in corporate history” has dared the company to sue.
Hosking did this??? Hahaha.
Watercare has not done anything like that. It mainly got a bit more Waikato river water for us.
Up until yesterday it was really dry in Ak. It does vary. Forget this climate emergency stuff. The weather varies and you need some resilience especially when people pour into Ak.
When I was much younger I remember Cyclone Alison - about 40km south of where I used to live - the Blue Duck stream on the Kaikoura coast received 400mm of rain in 24hrs.Locally one bridge got washed away (and this was a farming area). The Metservice is currently showing about 70mm since last night in Auckland.
Nope, two things to consider:
ANZ have $13bn sat in their RBNZ account earnings OCR (a knock-on impact of QE). Every 50 pts increase in the OCR adds well over $1m per week of free money for ANZ from RBNZ (i.e. the Govt)
Banks make money when rates are on the move - the simple trick of increasing the rate they charge for lending faster than they increase the rate of savings (or vice versa). Remember that banks typically pay savers about half what they make from the interest they charge on loans (the difference goes to shareholders).
It is true however that building a huge loan book whilst rates were low means they are now making money hand over fist as rates rise.
In Japan, their special Tokyo inflation data came in at +4.4% and the fastest increase since 1981. Tokyo prices are considered a leading indicator for national Japanese prices. But it is not clear that this will motivate the Bank of Japan to ease off its ultra-loose monetary policies.
The implications of the BoJ "normalizing" rates are potentially devastating in more ways than one. And interestingly some middle-class and wealthy Chinese are buying up residential property and looking to emigrate. Article is a little dated and JPY has streghthened. But if the BoJ changes course in any way, the yen head back to USD1=JPY100.
https://www.scmp.com/economy/economic-indicators/article/3176506/chines…
Article is a little dated and JPY has streghthened
Theme duplicated here more recently.
I think in the end, China will figure it out and Japan won’t. Assuming there isn’t going to be a catastrophic world war (which would be a silly assumption at this point), China is just going to start buying up property in Japan as the Japanese don’t have the ability to fill it up and Chinese people will just start taking over the country. Japanese women will marry Chinese men, and vice-versa, and over a generation or two, Chinese language and culture will become the dominant identity of Japan.
The Chinese are already doing this all throughout Southeast Asia. Kuala Lumpur, Jakarta, even Bangkok, are becoming Chinese. They started with tourist areas, where they set up tourist spots for the Chinese middle class. Chinese businesspeople move in to serve Chinese customers, and progressively, the population becomes sinoized. This also happens with the various trade cities on the Belt and Road Initiative. But now the big cities are sinoizing.
It’s a fascinating situation. You have some inner-marriage in these places, but you also have the fact that the Chinese have money, so people want to teach their kids Chinese. If you learn the language from an early age, you’re familiar with the culture and thought, and generally friendly to it.
Hard to imagine Japan ever to become a minority in their own country. The last two centuries of relations between both countries have been difficult.
Vietnam is interesting considering 1000+ years of conflict with China. However, China and the U.S. are now competing for Vietnam's favour. I think the Vietnamese would rather fight to the death than be colonized by China, much like what has occured in Cambodia.
It's the rich people of Ukraine that are the problem?
https://www.bbc.com/news/world-europe-64383388
"A top adviser (to Zelensky), four deputy ministers and five regional governors left their posts on Tuesday."
Benefits fact sheet on MSD.govt.nz website for December 22 quarter shows work ready job seeker down 36k to 98K from 2 years ago (excludes supported living, some patents and health condition/disability. Still seems a very high number when we lack food service staff, customer service personal, baggage handlers, fruit pickers not to mention huge opportunities to fix our roads. Jobs everywhere.
There's a few more categories of main benefits:
https://www.kiwiblog.co.nz/2023/01/welfare_rolls_up_again.html#comments
We should maybe rename some as Unemployables benefits. God knows this is a "complex" issue and some people need wraparound support, but honestly, not working right now indicates you either do not want to work or have facial gang tattoos. Sickness benefit already addresses those who cannot work.
This has to be addressed.
Is Robbo planning to depart parliament after Labour are flogged like the low life pond dwelling scum suckers they are on October 14 ? ...
... he's not standing for an electorate seat ... going onto the list ...
Seems to me that he's oiling the hinges on the exit door in readiness ...
The ingress is a bit unavoidable given the runways and airport are barely above sea level and built on a bit of a swamp.
Well, it is avoidable, but only if the stormwater requirements are made to be even higher. Currently they're not designed around such high rainfall volumes in such a short amount of time.
My spidey sense detects more expensive regulation around the corner. Climate change inflation.
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