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
Resimac raised its rates, both floating and fixed. The Cooperative Bank said it will increase its floating rate by +40 bps on March 6 to 8.15%. For existing customers it will be effective March 15.
TERM DEPOSIT/SAVINGS RATE CHANGES
The Cooperative Bank raised their savings account rates also effective March 6, with their Step Saver potential rate rising +50 bps and taking it to 4.10%. Other savings accounts with them get a lesser increase.
SLIDING LOWER IN FEBRUARY
Average value of NZ homes were down -$99,000 from the March 2022 peak, Auckland values down -$186,000, and Wellington values down -$215,000 according to the CoreLogic House Price Index. We should remind ourselves that February and March are the traditional high-points of the real estate selling seasons.
SLOWDOWN ARRIVES
The latest building consent data for January indicate a slow but steady decline in new residential construction activity. And non-residential building activity also shows signs of tapering off.
ARREARS SWELL
Credit bureau Centrix says the current economic climate is 'putting pressure on households across New Zealand', with 430,000 behind on consumer debt repayments.
TEN YEAR LOW
February new car sales were weak. They were down -18% from year-ago levels to their lowest monthly total since pandemic-affected August 2021, and the lowest February since 2013. Sales of used imports were also weak, down -27% from year-ago levels although they were higher than any month since August 2022.
MORE NEW COINS
The RBNZ reported that it minted 10 mln 20c coins in 2022 plus another 8 mln $2 coins. This comes after it skipped minting any in 2021.
A SHOCKING OUTCOME
The RBNZ also reported that the total value of all 3.2 mln KiwiSaver balances exceeded $91 bln by the end of 2022. That is down -$3 bln in value from the end of 2021. The IRD separately says it took in $9.3 bln in member contributions, so that means your friendly KiwiSaver manager managed to lose -$12.3 bln for you on those investments in the year. Yes, the year was a tough one for fund managers, but more than a -10% loss of capital can never be said to be good by the fund management industry.
AUSSIE GROWTH EASES
Australia reported its Q4-2022 GDP growth today, coming it as expected at +2.7% from the same quarter a year ago. In Q3-2022 it was +5.9% so the rate more than halved. This was the fifth straight quarter of growth in the economy but the softest pace in the sequence, as household consumption grew the least in five quarters amid intense cost pressures and rising interest rates. The consumer was the key surprise, according to Westpac analysts, with only a tepid +0.3% rise in overall spending. Services were the key disappointment, with only a modest rise. Also, income growth was weaker than anticipated and the decline in the household saving ratio was more pronounced they noted. While nominal gross household income grew by +1.6%, real household disposable income contracted by a hefty -2.2%.
AUSSIE INFLATION STAYS HIGH BUT EASES SLIGHTLY
Like New Zealand, Australia also reports its formal CPI on a quarterly basis, and for Q4, 2022 that was +7.8%. But they also have a monthly CPI indicator series and for December that came in at 8.4%. However that monthly measure fell back to 7.4% in January, their second highest level since this monthly CPI series started in 2018. Analysts had expected it to retreat to 8% so this is a bigger fall than expected.
A GOOD RECOVERY
China said both its factory sector, and its services sector, each expanded at a moderate rate in February, a key set of improvements. Both were outcomes better than expected. The services sector result was a two year high; the factory result was a ten year high. And backing that up was the private Caixin PMI survey which reported similar good improvements.
SWAP RATES HOLD HIGH
Wholesale swap rates are likely little-changed today. Yesterday they closed with the 2-year at its highest since November 2008. It may hesitate from here before finding a new track. The real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate rose +2 bps to 5.15% which is now +40 bps above the current OCR. The Australian 10 year bond yield is now at 3.83% and down -5 bps from this time yesterday. The China 10 year bond rate is little-changed at 2.93%. And the NZ Government 10 year bond rate is now at 4.63% and down -3 bps but still above the earlier RBNZ fix at 4.62% which was down -2 bps today. The UST 10 year is up +2 bps at 3.94% to end its February. It started at 3.52% so it has risen +42 bps in those four weeks.
EQUITIES MOSTLY LOWER
Wall Street ended its February month today with a -0.3% slip and taking its February retreat to a chunky -3.6%. Equity prices are getting repriced lower as interest rates rise. The NZX50 was down -1.5% in February and for today, it is down -0.3% in its first day of March trading. The ASX200 was down -2.9% in February and is down another -0.2% in afternoon trade today. Hong Kong has opened its March trading with a +0.8% daily rise. Shanghai is little-changed on the same basis. And Tokyo is down -0.4% to start its first day of March trade.
GOLD IN MINOR FIRMING AGAIN
In early Asian trade, gold is slightly firmer from this time yesterday, now at US$1823/oz and up another +US$5.
NZD MARGINALLY FIRMER
The Kiwi dollar is little-changed from this time yesterday at its new lower level of 61.7 USc. It couldn't hold its overnight gains. Against the Aussie we are almost +¾c firmer at 92.1 AUc. Against the euro we are marginally firmer at 58.4 euro cents, also unable to hold on to all the overnight rise. That means the TWI-5 is now at just at 70 and up +30 bps from yesterday.
BITCOIN SLIPS SLIGHTLY
Bitcoin is down -1.7% today, now at US$23,047. Volatility over the past 24 hours has remained modest at +/- 1.2%.
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54 Comments
your friendly KiwiSaver manager managed to lose -$12.3 bln for you on those investments in the year
Unless you're in a conservative fund, that is (congratulations, boomers?). The Kiwi Wealth Kiwisaver has their cash fund up by 2.43% over the 12 months to Jan 31, which doesn't sound like much, but is a damned sight better than the -7.46% return generated by their default fund over the same period.
Still, you'd have been better off leaving your money in the default fund than taking it out to buy a house with 12 months ago.
I get shafted every time. Put it into cash when Covid happened (everyone was expecting economic collapse), instead share prices went crazy, then I put it into growth once Covid seemed over with, then share prices drop. And its not the first time its happened to me!
Maybe I should keep moving my funds around and sell economic advice (the opposite of what I do is bound to be correct).
All investments are forward bets on the future providing resources and energy. Never forget that.
Forward bets which, cumulatively, expected to grow, had to assume an ever-bigger supply of both. (Or to 'value' existing items (made of/from both) ever-higher. The problem is discretionary vs essential. I reckon we are looking down the barrel of a collapse in discretionary 'values', vis-a-vis essential stuff.)
That was ignorant, in both senses of the word.
Just where the floor is currently, is an interesting question. How fast it is lowering, is another. The Lorax was right; the Onceler was wrong. Well-named, but wrong.
Exponential growth, including growth in the amount of energy required to get at the 'next' best resource (you just dug up the best-remaining one in the last round). And that applies to to energy; you used the best last round. So the effort required, increases compoundedly. Atop that, there has never been more infrastructure (stuff) and never more maintenance requirement (which must be triaged BEFORE new stuff - delay bites you in the bum).
We live in interesting times....
The energy is neither there nor here, if by energy you're talking about fuel.
If the energy is financial leverage, then there is definitely a shift away from the common person like never before. You're just a number out of billions. Soon to be a subscription service.
I guess I'm the most DGM of the DGMs - according to my records I switched from moderate to cash in 2015. Sat and waited as the money printing pump of the stock market left me behind, then was able to do nothing when they couldn't afford to do it anymore. I knew a shit storm was coming but I don't trust myself to pick tops so just took a position and forgot about it.
... I just left mine in growth ... because , even allowing for some gnarly bad bear markets , most of the time it will be up ... the human condition is for growth ...
Growth is good ... life gets better by technological , scientific , medical breakthroughs ... growth just keeps on ... growing ... fantastic !
I'm in a similar situation. Getting the timing right to get back into risk is going to be a challenge. What index do you try and pick a bottom of? US? NZ? Do you go 100% risk or leave some in cash? I'm 63 so silly to go full risk I'm thinking. Picking the top of the housing market was relatively easy compared to picking the bottom of a share market.
See https://milfordasset.com/funds-performance/view-performance#/tab-unit for their results across funds
Hey Richard Cranium aka Chebbo....
I'm a rich white baby boomer who rapes ( the land for example) everything and screws everything else...
Even a prize prick like me, who invested in property for huge profits lost 8% with ANZ default conservative KS...( Not that I give a flying fart as I invested else where)
I hope your boomer parents spend all their/ your inheritance money on everything but you - you big ignoramus!
Neither does this "winker" bagging Boomer's for working hard and earning thier money. Unlike today's " gimmie generation,"
Most of these young twat "baby boomer bashers" are just Lame woke losers who are just jealous of the hard working boomer generation.,.. who are currently spending up large and keeping the economy from crashing.
And like you.... Cannot take honest criticism!... But instead cry like a baby!
.
I think my one (Ark Niko) managed to fall 60% total at one point. And with a 1% management fee based on the opening value!
This is why I like the idea of Australian self managed super funds. You can even put some money into bitcoin, imagine that! (who wouldn't like a 50% increase in value in just 2 months this year)
February new car sales were weak. They were down -18% from year-ago levels to their lowest monthly total since pandemic-affected August 2021, and the lowest February since 2013. Sales of used imports were also weak, down -27% from year-ago levels although they were higher than any month since August 2022.
In Aussie, a UBS analyst pointed out that he was closely watching the decline in house prices because there was a “very strong” historical correlation between property prices and new vehicle sales.
https://www.afr.com/companies/transport/rising-rates-to-bring-steeper-f…
Two tradies up here in silverdale area have scarpered offshore in the last month. I picked up a few power tools real cheap. One had a 2019 landcruiser prada , low km that he still wanted serious money for. Wanted 50s when he acknowledged to me dealers where only offering 42.... He left his hilux with a mate and says he will be back in two years, they dont devalue.. we will see
it rhymes with Confusion ?
I dont think they need deposits right here and now, lending is down and they all have funds sitting in ESAS from the printing debacle. RBNZ is never going to let another short term credit event impact the banks, it will always print and fund in an emergency.
Banks are moving there 1 year and 2 year rates around knowing people are lazy and their own roll off durations.
The CCCFA rules have made form filling so bad no one can be bothered moving banks, and the banks know it....
I see zero funding stress but defintiely there will be some serious credit discussion going on.
I also sent them a complaint and let them know why (https://www.kiwibank.co.nz/contact-us/feedback/). Though all banks have been sluggish to pass the OCR on to their customers, Kiwibank have consistently been the worst. I doubt it'll do much, but maybe..
Less than 4 million NZ residents are old enough and eligible to taken on consumer debt.
By this estimate 10% of the entire eligible population is behind on repayments at a time when unemployment rate is near-historic lows. What happens when the job market begins to falter?
If the high-interest pain continues it won't be long before mortgage stress goes up too, forcing a whole bunch of fire sales across the country and crashing the market further (and harder).
Outlook for construction in Australia ‘dire’:
https://www.macrobusiness.com.au/2023/03/thousands-of-aussie-home-build…
Enjoyed this little satire on Aussie builders, equally applicable here:
The RBNZ also reported that the total value of all 3.2 mln KiwiSaver balances exceeded $91 bln by the end of 2022. That is down -$3 bln in value from the end of 2021. The IRD separately says it took in $9.3 bln in member contributions, so that means your friendly KiwiSaver manager managed to lose -$12.3 bln for you on those investments in the year. Yes, the year was a tough one for fund managers, but more than a -10% loss of capital can never be said to be good by the fund management industry.
Complacency.
I was surprised to see that this Tiwai Point contract "negotiation" is still in progress, thought the Govt again caved in a year ago.
https://www.rnz.co.nz/news/business/485107/what-s-holding-up-an-energy-…
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