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 Co-operative Bank changed fixed rates (up short, down long). China Construction Bank (CCB) also changed rates in a similar manner.
TERM DEPOSIT RATE CHANGES
CCB also raised their term deposit rates, as did Finance Direct.
A SOFT START
The ANZ World Commodity Price Index eased -1.0% in the first month of 2023, extending the late 2022 falls. Movements were mixed. Meat, forestry and aluminium prices lifted, while dairy and horticulture prices eased. In local currency terms the index dropped -1.2%.
PETROL PRICE ANAYSIS
In late January, the petrol price monitoring (MBIE) showed a sharpish rise in the portion taken by the oil company importers/distributors (refining and distribution). It is now back above 80c/L. That compares with taxes (GST, excise, import) that are now at 99.7c/L Crude oil costs in NZ$ are little changed in the latest week compared to the prior week and are back to November 2022 levels after being lower than that in December and the first half of January.
PRICE TAKERS LOSE OUT
It is clear from current livestock schedule and saleyard prices that farmers will not be compensated this year for inflation. Almost all market prices are lower than those prevailing last year. You can check specific saleyard and processor schedule prices in the links in the RH menus here (desktop only). We get to know how the dairy industry is faring in tomorrow's updated dairy auction.
ANOTHER $½ BLN
ANZ New Zealand is looking to borrow up to $500 million through five-year bond issue that is unsecured, unsubordinated fixed rate bonds (and so ranks the same as deposits, savings or term deposits by the bank's retail customers). According to their last published Disclosure Statement as at September 30, 2022, ANZ NZ had $17.7 bln of unsubordinated debt which included $4.1 bln of Covered Bonds. (Note 14.) Retail depositors won't commit funds long term, but wholesale funders will.
EYES ON THE RBA
The Australian central bank releases its first 2023 cash rate target review for 2023 at 4:30pm NZT today. We will update this item if it is any different to the +25 bps rise to 3.35% that markets widely expect.
SWAP RATES TURN SHARPLY HIGHER
As fast as they fell last week, wholesale rates have risen to start this week. Wholesale swap rates likely jumped today with chunky rises across the curve all driven from international influences. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +6 bps at 4.95%. The last time they were this high was in January 2009. The Australian 10 year bond yield is now at 3.54% and little-changed from this morning. The China 10 year bond rate is also little-changed at 2.93%. The NZ Government 10 year bond rate is now at 4.14% and up +18 bps in a substantial move higher, and now above the earlier RBNZ fix at 4.10% which was up +12 bps. The UST 10 year is now up at 3.63% as markets re-evaluate how the US Fed will see the strong US labour market data.
EQUITIY MARKETS MIXED & MUTED
The S&P500 ended down -0.6% on Wall Street at the end of its Monday trading. Tokyo has opened its Tuesday trading up +0.2%. Hong Kong has opened up +0.9%. Shanghai has opened up +0.2%. The ASX200 is little-changed in afternoon trade today. The NZX50 is down -0.4% in late trade.
GOLD STEADIES
In early Asian trade, gold is back up at US$1871/oz, up +US$4 from this morning.
NZD RECOVERS
The Kiwi dollar is at 63.2 USc, and up +½c from where we opened this morning. Against the Aussie we are still at 91.6 AUc. Against the euro we are a little lower at 58.9 euro cents. The TWI is now at 71.7 and up +40 bps during the day.
BITCOIN FALLS BACK SOME MORE
The bitcoin price has retreated further today, down -3.1% from this time Friday to US$22,837. Volatility has been modest however at +/- 1.1%.
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 ».
59 Comments
He has to bring the Maori Caucus in to line a bit more yet. He has already given Tuku's sister in law a bit of a message, but hasn't finished yet. That is assuming he actually wants to win the upcoming election, of course. Don't forget that whatever he does, he is not allowed to get in the road of a vibrant Liberal Democracy, so he still has a fair bit of work to do to get anywhere near this.
The 90 day bank bill rate is up +6 bps at 4.95%. NZ government bond yield curve.
Extreme inversions: are they expectations for a crash or something much worse?
Even after Friday's "stellar" payrolls in the US, markets worldwide cling to extreme levels of inversion which means radical pessimism. But why? If there is a worst case set of scenarios, these are what they would be. It's not necessarily a crash, but what more likely what comes after.
FT on the resurgence of crypto (Granny Herald picks it up from syndication as they don't have anyone knowledgeable or proficient to write about the space).
But what's a month anyway.
In just a month and change, roughly $300bn has been tacked on to the market value of crypto assets, sending it back above $1tn. Bitcoin has surged more than 40 per cent to roughly $23,000, rebounding from the drop to $16,000 per token, which marred the flagship cryptocurrency in the wake of FTX’s bankruptcy last year.
https://www.ft.com/content/eec4f90e-53a6-4f23-9c6f-fef72fdd7f30
The Shovel in Aussie does a p*s take of the bubble and the boomers:
“It took me more than seven years to pay off my first house. Seven years! I was practically in my thirties by the time I was debt free. Can you imagine? Being beholden to a bank for your entire twenties! I’m pretty sure no-one in their twenties these days has to go through that”.
Bradly said young people simply didn’t know what hard worked looked like. “Try managing tenants across eleven investment properties scattered around Melbourne and Sydney during a global pandemic. That’s what hard work is!”
https://www.theshovel.com.au/2022/05/04/interest-rates-17-complains-man/
More sarcasm (or maybe it's just sadness?) in the shape of where that property was, "Camberwell is known to be regarded as one of Melbourne's most prestigious suburbs with its historic residences and leafy streets.". But the thing that is pretty right is that it could take 7 years to pay off a mortgage ion a brand new 3bd brick-and-tile home in one of the new outer suburbs (that aren't outer now!). Only the husbands' income was assessed for the DTI of 3, and after the 30% Deposit, a young working couple could do it without too much stress.
More 2 bedroom than 3.
Japan has 8 million empty houses in the countryside you can pick up for almost free, much like parts of Italy. If you could work out a way to fund yourself, there's worse places you could relocate to.
In short, there are places with more or less expensive housing than NZ. Also salaries. It's a big world.
Yes and this is why NZ house prices have so far to fall, there are better options for smart young people.... and smart older people too..... Many of things we used to love about this place no longer apply. Many NZers have done very very very well out of this property boom.
My wife is Japanese and we are semi-seriously considering a move back in perhaps 7-8 years.
we perhaps wouldn’t go ‘Full Rural’, but perhaps a small city or large town on the edge of a big one eg. Inuyama just outside Nagoya. Can buy a brand new 3 bedroom townhouse there for about $NZ300k
Some great vids on youtube of rebuilds, if you can DIY go for it...... I would be tempted to get a cheap place near a decent ski field....... happy to rebuild it myself over 12 months then a great family bach for skiing swap tamiki rd for this.... https://uchijapan.com/properties/annupuri-route-66-lodge
That’s my plan. And should also have some decent savings if we sell our NZ house.
Another option is we keep our house and rent it out, and just rent over there. Possibly a better option as less commitment (and there’s a chance we move there and don’t want to stay more than a couple of years). The rental income from our house plus a bit of part time work over there would be more than enough to survive on and have a comfortable enough lifestyle
Yes although their cost of living is crazy low compared to here (apart from housing in Tokyo) and mortgage rates crazy low for a lonnnnnnngggggggg time.
Probably ends up similar to here, maybe a bit better off there because of the low housing costs and cheap cost of finance.
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.