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
Late last night ANZ raised all fixed rates to three years, and cut its four and five year fixed rates. More here.
TERM DEPOSIT/SAVINGS RATE CHANGES
ANZ has raised all its term deposit offers for terms 1 year and longer. BNZ tweaked its 9 and 12 month rates marginally higher by +5 bps. Kookmin Bank raised most key rates, including its 12 month rate to 6.00%.
WHOLESALE RATES JUMP
If you normally skip the swaps review below, make time to read it today. Rates are on the move sharply higher for longer terms (2+ years) driven global factors. Tomorrow's US non-farm payrolls report will be crucial setting up the financial markets tone for the rest of the month. The RBNZ reviews its rate on Wednesday, July 10. And the US Fed reviews its rate on Thursday, July 27, 2023 (NZT).
FORMER TRADE ME CEO JOINS KIWIBANK'S BOARD
Ex-Trade Me CEO Jonathan Macdonald has been appointed to Kiwibank's board as an independent director. CEO of Trade Me between 2008 and 2019, Macdonald has also worked for HSBC and Deloitte, and is a director of Contact Energy, Mitre 10, My Food Bag and Sharesies. His appointment to Kiwibank's board follows that of Xero executive and ex-ASB executive Anna Curzon earlier this week.
STILL VERY TOUGH FOR RETAILERS
Retailers aren't reporting any let-up in the tough trading conditions that face, but they are reporting that inflation is easing (even if they still say it is too high). An the tough conditions are confirmed by the Worldline (Paymark) transaction tracking.
SWAPS RISE SHARPLY
Wholesale swap rates are probably up sharply for the two and three year terms, maybe as much as +20 bps. 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 unchanged at 5.70% and now +20 bps above the 5.50% OCR. The Australian 10 year bond yield is up +16 bps from this time yesterday at 4.27%. The China 10 year bond rate is unchanged at 2.70%. But the NZ Government 10 year bond rate is now up +14 bps at 4.92% to a 12-year high, and still higher than the earlier RBNZ fix which rose +8 bps to 4.80%. That's its highest since December 2013. The UST 10 year yield is now at 4.05% and up another +8 bps from this time yesterday. It is unstable today.
EQUITIES ALL SOLIDLY LOWER
Wall Street was subdued today and the S&P500 ended down -0.8% ahead of tomorrow's non-farm payroll report. Tokyo has opened its Friday trade down another -0.6%. Hong Kong is down another -1.1% in early trade, but Shanghai is down just -0.3%. The ASX200 is down -1.6% in early afternoon trade and heading for a weekly loss of -2.1%. And the NZX50 is down -0.9% in late trade, wiping out all the gains of the past few days and heading for a weekly loss of -0.5%.
GOLD LOWER
In early Asian trade, gold is lower again at US$1911/oz and down -US$8 from yesterday. Earlier it closed in New York at US$1911/oz as well and earlier still at US$1919/oz in London. So far there is little evidence the gold price is reacting to recession fears.
NZD SLIPS
The Kiwi dollar is down -¼c from yesterday, now at just on 61.6 USc. Against the Aussie we are up slightly at just under 93 AUc. Against the euro we are down nearly -½c at 56.6 euro cents. That means the TWI-5 is down at 70.2.
BITCOIN SLIPS AGAIN
The bitcoin price has again slipped lower today and is now at US$30,099 which is down another -1.3% from where we were this time yesterday. Volatility has remained moderate at just under +/- 3.0%.
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59 Comments
What's the point? 25 bp will do absolutely nothing now. They had a chance to drive a stake into the heart of Inflation at the last call, by changing the CPI big figure to a phycological 6, and (for whatever reason) didn't. "Higher for Shorter" in other words. Now we'll get Higher for Longer. (e.g. And so it goes on - "Midwives to get 15% pay rise")
Besides, there's an election due in a few weeks time, and there should be some sort of amnesty by the RBNZ in the name of fairness.
Great link from CN on another article today. https://www.stuff.co.nz/national/politics/300238808/reserve-bank-govern… . Many didnt listen thou.
Why ? There are a lot of crappy AUS stocks that are funded by cheap credit that will soon go bust, yes, that is true, but there are many proper stocks that will be reporting good profits next week, and some will surge as a result. But overall you could be right. If you are invested in this crap (much like housing here), you are in trouble.
If you normally skip the swaps review below, make time to read it today. Rates are on the move sharply higher for longer terms (2+ years) driven global factors.
Epic battle for control over interest rates. Who is winning? Who's even fighting?
Central banks want rates to go up but markets have largely resisted. Upping the ante, the FOMC admits there's going to be a recession but claims it will raise its rates anyway. As a result, this pushes the Fed pivot somewhat further into the future by raising the bar for any rate cuts.
Yep. Dumb and Dumber. Is that the total spend or the amount spent on the kits we never used? 60% of which were duds anyway. I do wonder how many of the kits that actually were passed out were ever used at all. I know I went through the airport coming in and got the compulsory kits that I supposedly had to use on day 1 and day 3 or something. On each occasion, they went straight in the bin outside customs on the way out. So, the total waste is going to be massive. Chump change though when compared to the total destruction of the economy and society though. But, they saved 80,000, aren't they great.
'On each occasion, they went straight in the bin outside customs on the way out.'
That doesn't reflect badly on those issuing the kits - it reflects badly on the selfish -------- who threw the kits away.
People are either part of their community - or they're not. Funny how some folk claim rights, while avoiding obligations.
The last link I gave you - wasted, I know - was a textbook by a Professor at UCLA; an astrophysicist.
Some people, however, have a very strong need to believe whatever it it that underpins their idea of themselves. And some folk don't like to acknowledge that maybe they punted wrongly - I get that.
The trouble with rabbit-holes, is that you tend to keep falling.
Let us be very clear - I referred you to a UCLA Professor's textbook.
https://open.umn.edu/opentextbooks/textbooks/980
I asked you to read it.
You needed not to - fiercely. So you called that reference 'searching the internet' - which allowed you to lie to yourself, in effect. To give yourself an excuse not to go there.
If I ask why? All I can think of is: Fear.
Good luck with that, but the existential predicament facing humanity - the polycrisis - won't be solved by such an approach. Have a weekend.
Been reading some American travel forums,where they are discussing certificates and tests still required to attend even small functions.
Fact is we did really well, maybe through good luck as well as good management, but it was certainly possible we would have needed that many tests. Imagine the howls if they weren't available.
Looks about right.
Central banks have yet to engineer anything remotely like the demand destruction...needed to satisfy their price stability mandates.
https://www.afr.com/wealth/personal-finance/house-prices-highlight-wher…
The mighty Chris Joye in bear mode. Here's some highlights.
The curve ball has been the gigantic cash buffers households saved during the pandemic, which have allowed them to resist the otherwise suffocating influence of tighter monetary policy more than they might have done in the past.
As these cash buffers are spent, they have allowed economies to continue to maintain excess demand, which has kept the global jobs market artificially tight notwithstanding an enormous spike in borrowing rates.
This has pushed the wage cost of businesses producing their services (aka “unit labour costs”) to unacceptably high levels, which is feeding a wage/price spiral that is evident in elevated services inflation.
The problem, of course, is that this demand-side driver of inflation tends to be highly persistent and is propagating an iterative, multi-year battle to wrest it back down to earth. (Recall that the current inflation challenge was apparent all the way back in 2021.)
Wow! Thx. Did not know about this.
On first glance I thought you were pointing me to some infernal dark web site that would require me to buy an obscure machine, install Linux, somehow work out how to get Tor, pay to get back access to my hard drive, then from the command prompt...etc
But no - works like magic, from dirty old Edge.
Just as the deflationary forces of the past 10 years were in part caused by reduced costs (e.g. falling interest expense costs on the balance sheets of households and businesses didn't put pressues on prices and wages to balance cash flows going in and out of households and businesses).
Reserve Banks: "We are trying to create inflation by reducing everyone's cost of debt (interest rates) and as a by product create debt/asset bubbles!"
IO thinking: "well raise interest rates and you will create inflation" (by increasing household and business debt/interest expense, forcing wages/price higher while simultaneously avoiding the issues caused by debt/asset bubbles).
One of my arguments is that for the last 10 years, we should have been raising interest rates, not dropping them. Risk was increasing as debt to income ratios exploded across many number of metrics/areas, and the laws of finance (risk/return) say that in this instance, the required return should be increasing, not decreasing for debt exposed to that risk.
But our central banks did the exact opposite of what the laws of finance demanded.
Fan of the Erdogan method for fighting inflation huh?
https://www.duvarenglish.com/turkeys-independent-academics-announce-ann…
Tomorrow's US non-farm payrolls report will be crucial setting up the financial markets tone...
US jobs growth has consecutively beaten expectations for about a year now haven't they? Even if a disappointment I wouldn't take it as an indication the economy was in peril, just that jobs are very difficult to forecast in an economy with an aging population.
Tarric Brooker notes that the course of the unwinding of the NZ house bubble is far steeper than that of the U.S during the GFC.
Be careful out there.
https://twitter.com/AvidCommentator/status/1676871827329798150
Goldman has downgraded many of the big Chinese banks, largely because of their heavy exposure to local-government debt. This has led some people to claim that Goldman is effectively predicting that local governments will default on their debt.
https://www.caixinglobal.com/2023-07-07/goldman-slashes-stock-ratings-o…
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