What happened Friday

Business / news

A review of things you need to know before you sign off on Friday; some TD tweaks, ANZ reports big profit, Aussie home lending turns up, HSBC's breakup vote due, swaps slip, NZD rises, & more

5th May 23, 3:59pm by David Chaston

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
None today so far.

TERM DEPOSIT/SAVINGS RATE CHANGES
ANZ has raised some TD rates. Their new 6 month rate is now 5.35%. Their one year rate is unchanged at 5.70%. ASB has raised some too. Their new 6 month rate is 5.40% and their one year rate remains at 5.70%.

ANZ PROFITS REPORTED
ANZ reported its half year results today and profits were down -9%. (They claim a small rise using some other non-formal reporting method that ignores some big mark-to-market valuation hits, including impairment charges.)

LETTING IT SLIDE
In Australia, the RBA's Monetary Policy Review doesn't see inflation returning to its policy range until ... mid-2025. They acknowledge the current 7% is too high but they are in no rush to rock the boat to fix that problem. They seem more worried about weak housing markets than inflation stealing savings. Perhaps they are trying to inflate their household debt away? They seem to have little tolerance for meaningful action on inflation.

TURNING UP
Lending for owner-occupied homes in Australia rose +5.5% to A$16 bln in March from February, logging a positive month-on-month gain for the first time in ten months and defying expectations for a -1% decline. Still, March’s figure was -25% lower than for March a year ago.

CHINA EXPANDS
The China Caixin services PMI came in at the same level as the official services PMI, both measures recording a healthy expansion.

HSBC BREAKUP VOTE IMMINENT
The world's eight largest bank, HSBC, is battling Asian-based activists who want to company split up and the Asian-portion of HSBC set free from the UK dominated historical institutional ownership. The campaign is being run as an ending of colonial domination for what is Hong Kong's largest bank. (It was set up in 1865 in the aftermath of the Second Opium War against China). The campaign is said to have the support of Beijing. In a tone-deaf response, HSBC is having its annual meeting in Birmingham UK tonight, and that is where the break-up vote will happen. (HSBC NZ is a branch of HSBC Hong Kong, and is reportedly under review separately.)

THE DIGITAL YUAN GAINS MOMENTUM
After nine years of fitful trials, the PBoC is finally getting its digital yuan off the ground. Some provincial governments allow trade in the e-yuan. And now public employees are being paid in e-yuan, direct to their phone wallets. Users can also directly transfer funds just by tapping another phone (even if internet signals or coverage is weak or down). Banks or credit card companies not required for daily transactions?

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SWAP RATES DIP
Wholesale swap rates are probably slipped again today. However, the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps at 5.62% and 37 bps above the OCR. The Australian 10 year bond yield is now at 3.32% and down -2 bps from this time yesterday. The China 10 year bond rate is little-changed at 2.77%. And the NZ Government 10 year bond rate is now at 4.13%, and that is down -5 bps from this time yesterday, but still above the earlier RBNZ fix at 4.10% which up +4 bps from yesterday. See this local yield curve review. The UST 10 year yield is now at 3.38% and up +5 bps from this time yesterday.

EQUITIES MIXED AGAIN
The S&P500 ended down another -0.7% on Wall Street in its Thursday session, hurt by the woes of regional banking stocks. But Apple reported strong earnings. Tokyo is on holiday again today. Hong Kong has opened up +0.7% but Shanghai is down -0.4% at its open. The ASX200 is up a mere +0.1% in its afternoon trade. The NZX50 is down -0.8% in late trade and giving up all of yesterday's end of session rally and a bit more..

GOLD RISES
In early Asian trade, gold is higher again than this time yesterday, up another +US$8/oz at US$2050/oz and inching closer to its all time high.

NZD UP
The Kiwi dollar is much higher today from this time yesterday at 63.1 USc and almost a +¾c gain. Against the Aussie we are also up +½c at 93.9 AUc. And against the euro we are up +¾c at 57.1 euro cents. That means the TWI-5 is up +40 bps at 70.8. That is +140 bps higher than week-ago levels.

BITCOIN A BIT FIRMER
The bitcoin price has risen again today, now at US$29,466 and up another +1.5% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.4%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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48 Comments

by King of the whiners | 5th May 23, 4:06pm 1683259603

So the RBA is in effect looking through their mandate because they are terrified what will happen to their housing market if they actually do their job.

A new low in central bank behaviour. Let's hope it blows up in their face, and the inflation genie gets well and truly out of control over there.

by Yeah right | 5th May 23, 4:16pm 1683260167

Itll be interesting who looks to have better managed the return of inflation better-RBA or RBNZ. Inflating excess debt away is a pretty valid strategy. Every central bank acknowledges that in policy settings for a level of inflation above zero. RBA policy will maintain greater growth - and the answer to reducing inflation probably lies more in increasing productivity, not inducing a recession.

by bw | 5th May 23, 4:29pm 1683260953

Inflating the Debt away only really works if Income increases and Debt stays fixed. Otherwise, all we get is what we have got = more New Debt, on top of the Old Debt to be serviced by Incomes that never keep up (the friction costs of taxation etc).

At some stage we will have run out of road to travel that route, and if it's not now, then when we get there it will be dramatic, to say the least.

by Rob Reid | 5th May 23, 4:50pm 1683262226

Inflating the Debt away only works if what you mean by works is encouraging further debt fueled speculation and discouraging saving.

by J.C. | 5th May 23, 4:07pm 1683259666

This is quite interesting. My feeling is that the business is possibly hurting.

7-Eleven Holdings, the largest convenience and fuel retailer in Australia, has announced that its board has initiated the process of selling its entire business.

According to Reuters, the company operates more than 700 stores across the country and the sale process is in its early stages and could take several months to complete.

https://www.retail-insight-network.com/news/7-eleven-australia-sale-pro…

by Grattaway | 5th May 23, 4:27pm 1683260870

no more vape or cigarette sales??

by J.C. | 5th May 23, 4:29pm 1683260950

no more vape or cigarette sales??

Aussie convenience stores are expensive places to buy anything.

by J.C. | 5th May 23, 4:12pm 1683259932

Silver price in Kiwi pesos been on a roll.

Past 3/6/12 months - +16-17%

Past 3 years - +70%

Technicals look very sexy in terms of a major breakout. That is supported by a buoyant gold price.

by Frank Sobotka | 5th May 23, 4:35pm 1683261339

Where do you buy your silver JC?

by J.C. | 5th May 23, 4:44pm 1683261857

No physical. I buy ETPMAG on the ASX.

https://www.marketindex.com.au/asx/etpmag

by IT GUY | 5th May 23, 6:22pm 1683267734

Jc do these guys trade futures and warrants or just hold physical

by Officebound | 5th May 23, 8:31pm 1683275467

Do you realise it's better to buy assets cheap? Especially ones that don't do anything.

It's a terrible time to buy silver.

by J.C. | 5th May 23, 9:00pm 1683277222

It's a terrible time to buy silver

Maybe. Maybe not. But yes, entering the market at lower prices is always good.

by nigelh | 6th May 23, 8:17am 1683317821

I've always taken silver to be the poor man's gold.

About a year ago or so the guy who led the charge against Gamestop was also leading the charge on Silver. Trying to round up people with Hunt Brothers expectations.

by nzbigben | 5th May 23, 4:14pm 1683260057

What happened to lift NZD against all other currencies?

by HouseMouse | 5th May 23, 4:24pm 1683260663

Looking forward to seeing petrol a bit cheaper at the pump.

by bw | 5th May 23, 4:33pm 1683261223

Perhaps only for another 7 weeks or so. 30th June, isn't it?

by J.C. | 5th May 23, 4:28pm 1683260882

What happened to lift NZD against all other currencies?

USD weakness and relatively high interest rates compared to major traded currencies.

by Audaxes | 5th May 23, 5:23pm 1683264233

Market reaction shows that the first read is that of a dovish ECB hike as accompanying forward guidance suggests the ECB is nearing the end stages. Euro down 0.4%. Link

by Justa comment | 5th May 23, 4:15pm 1683260157

ANZ raises the 2 year TD back up again. Says a lot. Rates are not dropping a lot anytime soon.

by IT GUY | 5th May 23, 4:41pm 1683261668

So the second interest rate hiking cycle has arrived, and the dead cat bounce in asset prices is once again proving to be precisely that. And signs of the worst default cycle since the 1991 recession are slowly emerging everywhere.

While house prices might look like they have stabilised, profound downside risks remain – especially as we move into the seasonally weaker winter months. This will be exacerbated by the vast wave of borrowers that will be forced to switch from cheap 2 per cent fixed rate loans to much more expensive 5 per cent to 6 per cent variable rate products. It will come at a time when 15 per cent of borrowers have negative cash flows, which means they don’t have sufficient income to meet their mortgage repayments and essential living expenses.

With risk-free term deposits returning 4 per cent to 5 per cent, bank bonds yielding 6 per cent and investment-grade major bank hybrids furnishing more than 6.7 per cent, the 4 per cent gross yield on residential investment property, 4 per cent to 5 per cent yield on A-grade commercial property, and/or the 6 per cent franked yield on Aussie equities appears unattractive despite what many folks may claim.

by Beanie | 5th May 23, 4:47pm 1683262029

So 15% of borrowers to keep afloat will be selling their toys. Especially their expensive to run toys.

by HouseMouse | 5th May 23, 4:58pm 1683262686

Where’s that from please IT?

by HouseMouse | 5th May 23, 5:16pm 1683263818

Found it. Joye spreading the joy.

by Baywatch | 5th May 23, 4:54pm 1683262448

So it begins..China's digital yuan is issued by the PBOC, China's central bank. ..ANZ should take note

by Baywatch | 5th May 23, 5:01pm 1683262875

The truth about the banking crisis...Hugh Hendry nail it

https://www.youtube.com/watch?v=8DehQKs2uZ0

by Palmtree08 | 5th May 23, 6:26pm 1683267973

These dudes are asking when rates are getting back to zero? As if that is the new "normal"? Seems these experts need to be asking why economies will only function with free money? Not this nonsensical waffle!

by lonewolfnz | 5th May 23, 5:06pm 1683263202

Pepe Coin (yes the Frog) is up 100% today, 620% in a week and something like a million percent in 3 weeks.

And third highest perp volume in all of crypto (obviously BTC / ETH are leading)

The frenzy is so wild that Ethereum gas transaction fees are at quadruple their price.

Last time I saw something like this was late 2020 (Doge) and 2021 (Shiba Inu)

Most trading is onchain - $600 million volume. I am providing liquidity with a 2,500% yield (my pool has $4M liquidity and $116M daily volume)

Take from that what you will (and yes I bought a week or two ago - holding unlike my Shiba coins I sold way too early)

by J.C. | 5th May 23, 5:10pm 1683263418

Onya Wolfie. That volume has taken off since Pepe started raising eyebrows. Unfortunately I can't play this. Need my sleep and sanity.

by Zachary Smith | 5th May 23, 5:46pm 1683265606

Some context:

With a current price of $0.000001184, PePeCoin has a circulating supply of 420 trillion coins

by J.C. | 5th May 23, 5:58pm 1683266334

Yes, It's great. Taking the proverbial pis out of the financial world. While it may not be obvious to most, coins like Pepe have an important role in disruption.

by David Chaston | 5th May 23, 6:32pm 1683268364

more like its taking the piss our of crypto hype

by chebbo | 5th May 23, 6:53pm 1683269618

It really is casino capitalism on steroids. I used to laugh at some of the things being bought and sold on the derivatives market, but crypto takes it to a whole new level.

by Independent_Observer | 5th May 23, 7:03pm 1683270186

The monkey NFTs were the final straw for me...confirmation everyone had completely lost the plot. Not sure if that was about the same time as the 'shit' coins.

by chebbo | 5th May 23, 8:07pm 1683274050

I think the monkey NFTs came later. Dogecoin is pretty old, I remember it being given out instead of upvotes on Reddit. It was literally just a joke until Elon Musk mentioned it in a Tweet, then boom, all of a sudden it's serious business.

by J.C. | 5th May 23, 7:21pm 1683271267

more like its taking the piss our of crypto hype

To some extent, yes. As Pepe doesn't have any use case and is pure speculation. Nevertheless, given that it reached USD300 mio market cap in 2 weeks, the community is having the last laugh at themselves, the tradfi community, and the skeptics.

by Pa1nter | 5th May 23, 7:43pm 1683272636

Haha it's like arguing your religion is less ridiculous than all the others.

A god with 8 arms is just silly. My jello god, perfectly sane.

by Rob Reid | 5th May 23, 6:44pm 1683269055

Hmm, lemme see. Carry the divide by 1000...carry the 2...OK - for 500 bucks I could be a trillionaire, in PePeCoin...

by Rob Reid | 5th May 23, 6:48pm 1683269319

No wait - For $1184 I'd be a trillionaire (in PePeCoin, whatever that is). Phew, lucky I checked - almost made a bad investment decision

by JimboJones | 5th May 23, 10:30pm 1683282632

It’s bullshit to the extreme but respect to anyone who makes money out of it, if people are dumb enough to give you their money you may as well take it. The world is completely insane.

by JimboJones | 5th May 23, 10:37pm 1683283055

“I sold way too early” - but how long can you hold something that is stupid, pointless, ridiculous and laughable?

by Audaxes | 5th May 23, 5:13pm 1683263623

Conditions have rapidly deteriorated. Bad steepening has hit both ends. Rate cuts now close.

Both the Fed and ECB hiked rates this week (in successive days), each claiming inflation is still their greatest threat. German and Treasury markets didn't care one bit, altogether pricing unmistakable deflationary dangers that aren't in the future. They're happening right now. As one consequence, central banks are now priced to turn around into cuts by mid-summer. Maybe even late spring.

by Squishy | 5th May 23, 6:20pm 1683267607

They [RBA] seem more worried about weak housing markets than inflation stealing savings. Perhaps they are trying to inflate their household debt away? They seem to have little tolerance for meaningful action on inflation.

#TeamTransitory rides again. "Maybe inflation will solve itself if we ignore it!!!"

by Palmtree08 | 5th May 23, 6:28pm 1683268120

Well, debt defaults are nasty for the big end of town, stealing Grannies savings are the preferred option.

by The Person | 5th May 23, 7:23pm 1683271392

> Asian-portion of HSBC set free from the UK dominated historical institutional ownership

What historical UK ownership? The Asian domiciled HSBC created the UK domiciled HSBC in the 90s by purchasing the UKs Midland bank as a hedge against the Chinese takeover of Hong Kong. Quite a wise move in retrospect.

by The Person | 5th May 23, 7:25pm 1683271530

> Users can also directly transfer funds just by tapping another phone (even if internet signals or coverage is weak or down).

How do you get a transaction recorded on a blockchain if there is no connectivity? Or is the e-yuan not a crypto currency?

by J.C. | 5th May 23, 7:34pm 1683272092

The e-yuan is not a cryptocurrency and has no need for a blockchain protocol. That's not to suggest that it can't happen in the future.

Following is a good summary.

https://digichina.stanford.edu/work/lets-start-with-what-chinas-digital…

by rolande | 5th May 23, 9:47pm 1683280046

Definitions get interesting.

It has one electronic ledger, similar to many cryptos.

It's centralized, like some cryptos.

It's different to traditional forms of yuan, which are either in cash, but mostly decentralized plural ledgers across many banks.

All transactions settle to one ledger . Banks reason for being changes overnight.

All transactions can be seen and controlled . And taxed. All.

So not really crypto, but qualitatively different from existing 'money'.