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
TSB cut their 6 month and one year fixed mortgage rates, and raised their two year rate slightly. Bank of China cut their 1-3 year fixed rates. Update: Westpac has pushed the boat out a bit further for the main banks for TD's 12 months and longer, now with the highest offers for these main rivals. Their new one year rate is 5.50%.
TERM DEPOSIT/SAVINGS RATE CHANGES
Bank of China raised their term deposit rates.
CONSTRUCTION INDUSTRY SLOWS
The first signs are emerging of a downturn in construction activity, principally in the residential sector. The latest Statistics NZ figures suggest building activity peaked in Q3 2022 and started to decline in Q4-2022.
WAIKATO SHINES
For non-residential construction, strong activity in Waikato in the December quarter was a feature, with +$37 mln more construction work put in place compared to September. Over the last year, non-residential work put in place in Waikato has increased +73%, as strong factory and storage building drove these higher levels. (H/T Infometrics.)
THE AUCKLAND BILL
The Insurance Council says about $111 mln of insurance support has already been paid as part of what will be 'a long recovery' from the Auckland Anniversary weekend floods, while about 30,000 claims have already been lodged as a result of Cyclone Gabrielle. Their estimate is that in the end, all claims will top $1 bln (or about 0.3% of the national annual economic activity (GDP).
COMMODITY PRICES STOP FALLING
ANZ reported that their World Commodity Price Index increased +1.3% in February from January, a welcome lift after 10 consecutive monthly falls. Stronger returns for meat and forestry products were the main drivers. But that still leaves them -15% lower than year-ago levels. In local currency terms the index gained +2.0% on the same month-on-month basis, supported by an easing of the NZD.
TRACKING FEBRUARY SPENDING
Payments network Worldline (ex-Paymark) has been looking at how the storms affected consumer spending in February. They say consumer spending spiked both up and down as the extreme weather hit in February. More here.
MORE RURAL SUPPORT
The Government has extended the $29 mln aid package for storm-hit farmers and growers by another $26 mln taking the grant to $55 mln. It is for post-cyclone cleanup and recovery. So far they have received 2,846 applications and paid out more than $17 mln. Up to $10,000 is available for pastoral farmers, and up to $2000/ha (to a max of $40,000) for growers.
PROGRESS TAMING INFLATION ?
In Australia, the Melbourne Institute's Monthly Inflation Gauge showed prices eased sharply to under 5% at an annualised rate in February from January from almost 11% annualised rate in January from December. This was the sixth straight month of increase in the index, bringing the year-on-year rate to 6.3%, which was the second highest since the series began. For sure, the RBA will have noticed this data ahead of their cash rate target review tomorrow. Another +25 bps rise is baked in now and that will be their tenth in a row.
KOREAN INFLATION PROGRESS
And South Korea is making progress on the inflation front - probably at the cost of growth. Their February CPI rate fell below an annualised 4% rate and the year on year rate slipped to 4.8%.
SWAP RATES HOLD HIGH
Wholesale swap rates are likely little-changed today at the short end. The real action in swap rates comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps to 5.18% which is now +43 bps above the current OCR. The Australian 10 year bond yield is now at 3.80% and down -5 bps today. The China 10 year bond rate is softer by -2 bps at 2.92%. And the NZ Government 10 year bond rate is now at 4.69% and down -7 bps from this morning and still above the earlier RBNZ fix at 4.66% which was down -2 bps today. The UST 10 year is at 3.96% where it was when we opened this morning.
EQUITIES MOSTLY HIGHER, EXCEPT CHINA
The NZX50 is up +0.4% in late trade today. The ASX200 is up +0.5%. Tokyo has opened its Monday trade up +1.1%. Hong Kong is down -0.6% in very early trade. Shanghai is down -0.6% at their open. The S&P500 futures suggest that Monday will open on Wall Street very little changed from its Friday close.
GOLD MARGINALLY SOFTER
In early Asian trade, gold is slightly softer from the open this morning, now at US$1853/oz and down -US$4.
NZD STILL ON HOLD
The Kiwi dollar is little-changed from this morning, still at 62.2 USc. Against the Aussie we are also little-changed at 92.1 AUc. Against the euro we are little-changed as well at 58.5 euro cents. That means the TWI-5 is still at 70.3.
BITCOIN BECALMED
Bitcoin has moved very little today, now at US$22,440. Volatility over the past 24 hours has been low at just under +/-1%.
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
54 Comments
Its going to be a long wait till October...... I guess they start in earnest about the 14July about 3 months out.... until then the MPs will be snipping at one another as will commentators from the Left and Right on here.
We could do better by making the media ask them real questions - not just woke or growth-assuming ones.
And we could ask the site to make party touts identify themselves - in the interests of democracy.
:)
I think they've largely identified themselves on the Chris Trotter thread from earlier?
Longest wait ever
PS I am no longer sure who Chris supports....
"Any man who is not a socialist at age 20 has no heart. Any man who is still a socialist at age 40 has no head."
"Any man who is not a socialist at age 20 has no heart. Any man who is still a socialist at age 40 has no head."
That has been a long standing affirmation, but at this stage of capitalism I'm not sure how relevant it still is.
We have created a frankly god-awful way to live, prioritising materialism at the expense of our souls.
Are you sure capitalism is to blame? In NZ I lay the blame on the housing market which has made us obsessed with money and large amounts of debt and created extraordinary inequality. And the housing market is the least capitalist and most regulated market in the country. Maybe if we’d let people build stuff on their own land 40 years ago we wouldn’t be in this mess.
Add to that the central banks keeping the cost of debt well below the market level too.
“And the housing market is the least capitalist and most regulated market in the country.”
Say it again but this time with a straight face
No. He’s right. You can’t build anything anywhere with out begging for permission first.
Are you sure capitalism is to blame?
We're a social animal, and the core driver of capitalism is for everyone to compete with one another so as to accumulate a personal surplus. We're seeing full well the proliferation of wealth, and dismantling of group values in favour of individualism.
Chris supports Chris
Agreed, totally. The partisanship on here is too often as inane as it is puerile. It is from my jaundiced point of view of quite some useful simplicity to be able to dismiss the lot of them, politicians that is. They belong in my category pigeon hole, just above used car sales people, along with consultants, counsellors and modern economists.
I wonder if we could not vote on solutions to problems then on people to implement them....
I want to pick and choose from a menu....
A move towards direct democracy and further away from representative democracy.
A whole new set of trade-offs.
Re: resi construction slowdown, all clients I am working with who have large exposure to residential construction (typically supplying to builders, painters, plasterers etc) are seeing some substantial declines in lead/inquiry volumes and a more challenging sales environment.
For some of these businesses it's a rude awakening to go from selling hand-over-first to having to hustle for work now.
Good to hear stories from the coalface, as people like JimboJones don’t seem to think it’s slowing.
I never said it’s not slowing. But it is surprising me how slowly it’s slowing. December quarter construction starts near record highs in an already overstretched industry. Why anyone would build a residential house right now is beyond my comprehension, but I guess if you are a development company you either go under not building anything or go under building something.
It has also really surprised me it hasn’t slowed sooner.
But this data is for the December quarter, so from October. I suspect the bulk of starts were October / November, and sentiment wasn’t really starting to dive till November / December.
There’s also a lot of irrational exuberance in residential property development which can be highly dangerous. As I mentioned here recently, I have a close mate who is an eternally optimistic developer, it’s only in the last month or so that the reality has started to sink in for him. He’s gone from moderately optimistic to moderately pessimistic (and that takes some doing) within the space of 2-3 months.
There’s a whole lot of new housing that just isn’t shifting. It’s priced at 2021 prices, so at least 20% too high, but because of construction cost inflation etc etc. developers are having to maintain those prices (or drop 5%) just to break even.
Many will need to drop at least 10-15% to shift the housing, which will likely mean they make a loss. And therefore limited ability to recycle profits in to new developments. Couple that with banks and other financiers getting much tighter on lending to developers…and it’s getting challenging
Yep, go back 12 months and employing a good builder was like winning lotto… HR for the building division reported 3 months ago monthly application numbers were 30, 2 months ago 75, Feb applications where 130! Most from package building firms
Simply mind blowing.
The corporate regulator ASIC is using an automated system to dismiss allegations of serious wrongdoing by company directors in as little as 38 seconds, allowing thousands of bosses who oversaw failed firms to escape scrutiny over the past five years.
One report lodged by veteran liquidator Michael Brereton, of firm William Buck, accused the directors of a company that failed while owing creditors up to $250,000 of withholding records, trading while insolvent for more than two years, and breaching their legal duties.
New figures from ASIC show that of the more than 30,000 reports from liquidators it received between the 2018 and 2022 financial years, more than 28,000 included allegations that directors had broken the law.
The same data shows that ASIC only referred, on average, less than 3 per cent of those reports to another part of ASIC for more action. The data shows that on average ASIC asked follow-up questions for only around 13 per cent to 18 per cent over the past five years. The remaining 85 per cent of reports received auto-generated responses such as the one Brereton received despite the reports of lawbreaking by directors.
https://www.smh.com.au/business/companies/gone-in-38-seconds-regulator-…
The problem is 250k is no longer big bikkies, Liquidators are some of the worst at charging by the hour, and there is no blood in the stone.
There is no blood in the company, but normally lots in the directors. AFAIK they can go after the directors if they were trading illegally. I have been on the losing end of a company trading while insolvent and the liquidators couldn’t have given less of a crap.
Re waikato non resi. Ruakura Inland Port and Sleepyhead both massive
Man the council did not seem to want Sleephead.
I think that's was the Waikato Reigional Council.
The Inland Port is tied up with Tainui Group Holdings. Huge development out that way now since State Highway 1 bypass was planned and opened.
They have a maccas and kfc by the off ramp. Hasn't everywhere 🤔
Sadly one of many stories to come. Deposit gone like a puff of smoke.
"Selling house for a total loss
Hi, sorry if this isn’t the best channel for this but I just wanted some advice on how to go about this situation I’ve found myself in.
My partner and I are both 26. We bought a house in 2021. We’d lived at home and luckily had good jobs, deposit was pretty even but since then I’ve started to earn a lot more than him.
In hindsight buying a house was so stupid at our age but we had FOMO and didn’t know when covid would end.
I want to travel and have a job where I can work internationally, he doesn’t and is happy staying.
Our relationship is starting to sour but I feel like we are holding it together because our house is, if we’re lucky equal to our mortgage. So our 20% deposit is gone and our repayments made so far.
we can afford our repayments as we staggered with multiple loans but it does suck to think about how much we’re paying and for me, that I’m sacrificing travel and working holidays in my 20s.
Is it crazy to just try sell and take the loss? I’ve got no idea what others have done in relationship breakdowns in this situation and it feels pretty hopeless."
Who knows what will happen in say ten years time, but the past doesn’t predict the future and there is no guarantee that it would be of any financial benefit to hold it. So do what feels best now.
You sell, get on with Life, and it's surprising how well it all turns out in the end.
Many of us will have experienced something similar at that age - and some of us had several subsequent lessons that we eventually learned from!
Probably got parents telling them to stick with it and the place will double in value in 10 years.
What a truly awful position to be in, it would be hard to walk away from all that money at that age. They were the bottom rung of a pyramid scheme, the gains have already been taken at the top.
Yes the axiom- cut your losses and move on.
Firstly, I'm sorry to hear that things are not great.
You talk about two different issues, one is your marriage, which we cannot comment on, the other is your house. If your house is holding your marriage together, as you say, that's obviously a good thing.
About selling your house or not, I would say if you're comfortable paying your P&I mortgage, keep the house. You probably focus too much on the value of your house going down at the moment, and this this site is not helping. Remember when you bought the house, you didn't buy it for 2, 5 or 10 years. When you look back in 20 years, you will see that today's downturn, even though it's serious, is nothing in the long term. You need sone perspective.
Best of luck!
Wow, it’s like we read 2 completely different things.
It’s a quote from a forum somewhere. As indicated clearly by the opening sentence of the post, and then the passage in quotation marks.
I'm pretty sure I saw it on a Reddit finance group the other day. It popped up in my phone's notifications.
I concur with Yvil.
"If your house is holding your marriage together, as you say, that's obviously a good thing."
Yes kids, the foundation of a good marriage according to Yvil and HW is to tie yourself financially to someone and force yourself to stay with them regardless of things like love, friendship, intimacy or life aspirations. Hold on and service that mortgage people, meaning of life = mortgage debt servitude ...
That's a sad comment that completely misinterprets my post. It's a really negative, biased narrow minded post, agnostium.
One thing I’ve learned over the last decade is when it comes to big decisions like this you really have to trust your own gut. No one can predict the future, and if they could then that would already be embedded in todays prices anyway.
Learning takes more than a decade, and history rhymes but does not repeat.
If relationship is dead then you may have to escape and put it down as an expensive mistake consoling yourself that it could have been worse - leaky homes or flood wreck. Otherwise hang in another 12 to 18 months. Mortgage rates are high but inflation is higher. If it stays that way you will win eventually (as I did in the 1970s in London). If there is space take in one or two lodgers. Find very well paid job overseas - most developed countries pay better than NZ. You can even earn a fortune in undeveloped countries if you have the right skills.
I copied the post from a fb forum.
its not my personal situation but someone else, one of many I suspect.
Anyone with half a brain cell would have realised that…..
That's sad and not genuine of you gnx. Why share somone else's problems on a public forum?
Because it was anonymous and from another public forum mayhaps Yvil
take the hit and get on with life,your life is just starting and keeping your relationship together because of a house is something you will regret later.Seeing the world will change the way you see life.you only get one shot at it
Westpac TD rises, even the 5 year, talk from the US fed sinking in here. ANZ will have to re-think their 4 and 5 tr TDs, the story has changed to the upside in the last few weeks.
Anyone know where I can bet on the All Blacks not winning the world cup? Not an option at the TAB, at least not now.
The flakey sevens style on offer by our Super rugby teams has reaffirmed to me that the ABs are unlikely to win the cup.
I would put a bet on them not winning the cup if it was offering $2.50 -$3.00
TAB has such appallingly bad odds but in this instance, ie betting against the AB’s you generally do well. Open an account overseas, then you can double your fun by shorting the NZ dollar as well
Haha
So presumably it’s possible to open an overseas account. When I have scanned previously some sites seem to prevent people in certain parts of the world (such as NZ) from accessing.
The TAB has NZ second favourites behind France, that’s a joke. I would say we should be behind at least three Six Nations sides and SA. So fifth favourite at best.
Our forward pack is average and we are severely lacking at the critical first five position - options are ultra flakey, and flakey does not win you cups…
Thanks. Only offering one market right now, cup winner.
Interestingly they have ABs as favourite ahead of France…
A bit like flakey Brazil in the football world cup - perennial favourites but often flop.
I am sure there will be many more options by the time the tournament comes around.
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