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/LOAN RATE CHANGES
Heartland Bank raised fixed rates today, each by about +20 bps. The Cooperative bank raise its 6 mth and 12 mth fixed rates by +10 bps. Heretaunga Building Society raised its 1 and 2 year fixed rates. Unity Money raised their fixed rates by about +20 bps. Westpac has also raised fixed rates for 6 mth (+10 bps), 1 year (+20 bps) and 18 mths (+6 bps). WBS raised theirs too.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ raised many term deposit rates today, taking their 6 mth rate to 5.75% and their 12 month rate to 5.90%. Those now match Kiwibank as the highest main bank offers for those two key terms. Unity Money pushed its one year TD rate up to 6.00%.
SMALL MONTHLY SURPLUS HOLDS OUR HUGE ANNUAL DEFICIT
There was some very unusual trade data out today. In June 2023, compared with June 2022 goods exports rose +$84 mln (or +1.3%), to $6.3 bln in the month while goods imports fell -$1.1 bln (or -14%), to $6.3 bln. That meant the monthly trade balance was a surplus of +$8.8 mln, taking the April to June quarter to a surplus of +$293 mln. Tiny, yes but an unusual surplus. In 2022 it was a deficit of -$515 mln. Longer term the perspectives aren't so positive. (For the year to June the deficit was -$16 mln and we have never had a June year deficit that large before. It is equivalent to -4.1% of GDP.)
STILL RESPONSIBE WITH CREDIT CARDS
Credit card balances were little-changed in June from May and only +2.8% higher than a year ago, failing to keep up with inflation by some margin. But we are not really seeing any overt signs of credit card stress yet. The proportion incurring interest has been stable at a level that is historically low at about 52%. That is a very long way lower than the ~75% of balances incurring interest just prior to the GFC. Credit card transactions are rising, even if slowly. We are keeping an eye on the level of transactions being driven by these cards when are are used overseas.
WESTPAC GOES TO THE WELL AGAIN TO BOLSTER CAPITAL
Westpac is looking to raise more Tier 2 capital from savers. It is about to "offer of up to $100 mln with the ability to accept unlimited oversubscriptions at Westpac’s discretion" in the form of unsecured subordinated notes. They will only be rated A- by S&P, compared to the bank's general AA- rating. The term will be 10½ years although Westpac could redeem them in 5½ years.
CONTRACTING, BECAUSE SERVICES ARE WEAKER
In Australia, business activity in their private sector fell for the first time in four months during July according to the Markit PMI. This retreat was due to a renewed contraction in their service sector as interest rate rises hit customer confidence and budgets. More positively, manufacturing output ticked higher and actually recorded only a tiny contraction.
EXPANDING, BUT MORE SLOWLY
The Japanese Markit PMI recorded a good expansion. Activity at Japanese private sector firms increased for the seventh successive month. Key was a sustained and solid improvement at Japanese service providers, while manufacturers noted a slightly softer downturn at the start of the third quarter and the survey found that new order growth slowed rather sharply.
SWAPS LITTLE-CHANGED
Wholesale swap rates are probably little-changed 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 down -1 bp at 5.66% and now +16 bps above the 5.50% OCR. The Australian 10 year bond yield is holding at 4.00%. The China 10 year bond rate is again little-changed at 2.66%. And the NZ Government 10 year bond rate is hardly changed from this morning at 4.66%, but still higher than the earlier RBNZ fix which rose +1 bp to 4.61%. The UST 10 year yield is very little-changed at 3.85% today.
EQUITIES MOSTLY HIGHER
The NZX50 has started the week on a positive foot, up +0.4% near the end of Monday trade. The ASX200 is up a mere +0.1% however in afternoon trade. Tokyo has started the week strongly, up more than +1.0% in early trade. However Hong Kong is down a sharp -1.0% at their open (although extreme volatility has become a hallmark in this stick exchange), and Shanghai is up +0.2%. Wall Street isn't open of course, but the S&P 500 futures have it trading +0.6% above its Friday close.
GOLD UNCHANGED
In early Asian trade, gold is at US$1960/oz and virtually unchanged from this morning.
NZD ON HOLD
The Kiwi dollar is little-changed from this morning, now at just on 61.6 USc. Against the Aussie we are similarly stable at 91.6 AUc. Against the euro we still at 55.4 euro cents. That means the TWI-5 is still at 69.5.
BITCOIN VIRTUALLY UNCHANGED AGAIN
The bitcoin price is down a minor -0.9% from this morning at US$29,840 and still in its yo-yo pattern. Volatility has been low at just under +/- 0.9%.
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83 Comments
East Aucklanders burn down state housing: https://www.nzherald.co.nz/nz/auckland-fire-blaze-rips-through-kainga-o…
I’d imagine the number of people getting lite sentences by way of ‘cultural reports’ will overwhelmingly be those that can blame the racist colonial system that made them that way! And if that doesn’t work, then the Maori Labour caucus will find another policy and pressure point to ensure the judiciary’goes lite on crime
Also, I don’t know about the UK, but public housing in NZ used to house quite a few people who actually worked and were productive. Over time, more of those people have been housed in the lower end of the private rental market, whereas public housing has accommodated more of the drop outs and trouble makers.
Social housing once upon a time was available to ordinary people. Try getting it today without the help of system wise social workers.
Within Housing New Zealand (and whatever the new name of that organisation is now), you need to be at least A12 ranked to get a social house. It was once a priority queue ranked A through Z. Now you only get a place if you are in A category, subdivided into A1 through A20. No obligation to maintain the houses (my youngest brother mows the lawns on behalf of social housing tenants), half the houses are destroyed inside and occupied by utter degenerates.
This is not the council housing and social housing, rent to own schemes of WW2 and before. Without a social worker to get you into the fortunate social housing class, expect to move tenancy once per year, paying the 15% property manager fee on top of your extreme rent prices.
Youre anti, social housing and the people who occupy it, that's obvious.
But you end the comment with the woes of being in market rentals. You've obviously had a bad run with private landlords and their property managers.
My landlord is a good guy and he makes improvements to the property. I guess he doesn't want to lose us.
Based on my own experience,
ordinary people are those that are in the housing solely due to economic need. They are often (but not always) single mothers, working hard, prioritising their kids, and trying to make a better life for themselves.
Then there are the other group. They also have economic need, but the main driver for their housing issue is that they have generally been kicked out of everywhere else due to various anti-social behaviours. They tend to destroy the property, intimidate neighbours, and show little to no respect for social norms.
The correct housing solution for the latter is Prison.
by Von Metternich | 24th Jul 23, 5:06pm 1690175170 Because no one wants the sort of people who are in social housing in their community
Residents will be worried about the effect this will have on their property values. That's why I'm glad to be a tenant. The gubmint has punished landlords and allows tenants to walk from fixed term agreements. Have cake and eat it.
I agree. This is truly Ku Klux Klan stuff. The other night there was a very good doco on the history of the KKK and this sort of thing was in their toolkit.
Also, this is taxpayers' money going up in smoke. Change is always happening. Areas change. If you don't like it sell up and move on or set up your own political party to change policy. Or emigrate to Queensland (or Queenstown).
I expect the police to fully resource the investigation, and the courts to throw them in prison for a very long term. And pay back the taxpayers.
i grew up in the 1960s where there was an experiment to include state housing within new subdivisions in West Auckland. On one side of us (my parents were rural white poor) were a troubled family (dispossessed Maori) where we could regularly hear the mother being beaten up. I played with the kids, though a wire fence separated us. Kids had glue ear, constant colds, constantly hungry. sometimes the only food they had all day was weetbix. It gave me a sense of something wrong with all adults and also as a child it was horrible to hear the mum screaming for help.
My grandma lived near us and she had state housing on either side. It was like she was living in siege conditions. Constant violence and week-long parties either side; drunk or drugged people or someone fleeing the cops always running through the property. Though she tried her best to get along and would give them veggies she had grown and took an interest in the kiddies. they too had glue ear, were hungry, didn't go to school hardly at all.
I grew up thinking all this was normal.And that was 60 years ago.
No. Arson is just the deliberate burning of something. Nothing else. Why would anybody commit arson?In this particular case it is obvious. The arsonist, and people in the existing community feel that the people who will be living in the social housing will do bad things to them. Will they? Ask the people who live near the emergency accommodation motels in Auckland. Maybe some commenter here does, and can give us an informed opinion. I have already heard stories about the goings on in these places, but would like a firsthand report.
Wow Westpac just raised the 1 Year fixed mortgage rate....last time they did that the 1 Year Interest rate swap was at 6.04%....it closed yesterday 5.85% (DOWN 0.19%) and they raise their 1 Year Fixed Mortgage Rate by 0.10%.....must be some demand for one year fixed mortgage rates or maybe they just put a plus sign in the press release rather than a minus sign.....that is banking for you debits/credits what is the real difference
That's likely because rates havent yet fully passed on all the increases in swaps... in 2008 when swaps were this high, 12 month fixed rate was 8% and 12 month term deposit was about 6.3%... looks like TDs are catching up but a bit of upside risk on home loans still.
Total private (business and household) debt is around $550 billion - but businesses and households have about $450 billion in the bank (and about $100 billion of savings / investments in the form of Govt Bonds). So private sector debt almost nets out - as you would expect given that loans are the source of deposits!
What is scary is that since December 2016, the banks have pumped $60M of new credit money per day into the economy, where it passes quickly through the housing ponzi scheme, into the economy, and then into the savings accounts of already wealthy people. Govt have also net spent over the last few years - adding around $15M of money per day. Again, this new money has found its way quickly into the bank accounts of the already wealthy.
Obviously, in a functional economy, 90% of our credit would not be flowing into property! We would instead be using credit to invest in things that make our economy more efficient and increase innovation and productivity. The most innovative thing we have done at scale in the last ten years has been converting lounges in rentals into an extra bedroom.
‘Rent often can’t cover the mortgage’: Investors go to auction
Almost a third of all auction listings in Sydney and Melbourne over the past week were investment properties, as higher interest rates and taxes force landlords to sell.
The surge in Sydney was strongest, with data from Ray White, Australia’s biggest estate agent, showing investor listings doubled to 30 per cent in the week.
12 countries get together in Australia to prepare and practice for WW3 against China in the Talisman Sabre military exercise with 30,000 troops.
At the same time, we're literally begging with the Chinese to migrate here and pay silly amounts of money for houses, education, milk powder, and whatever else we can hawk to them.
Nothing makes sense anymore.
https://www.abc.net.au/news/2023-07-20/talisman-sabre-war-games-townsvi…
No nothing makes sense any more. An understatement. Housing development in Tauranga reportedly desperately needed cannot proceed because the roading infrastructure is not in place and the roading infrastructure cannot be constructed because there are insufficient houses to justify it. The author captions it as Catch 22. Hell good as he was even Heller couldn’t have dreamt that one up! Ride forth the Brown Cardigan Brigade “All Authority No Responsibility.”
We wouldn't even win a world war, we lack the industrial capacity or the motivation. It isn't the 20th century, dominated by one way transmission of radio, television and newspapers which create consensus. There is widespread discontent with the economic inequality, the endless importation of slave labour, the everything bubble and so on. I'm not signing up to fight for this country again, nor should anyone else.
That's entirely unfair - and I haven't voted labour since '84.
She was blind but in the other sense; thought you should attempt to keep everyone alive. And, during Covid, did a good job of it.
But we are entering a period of global conflict over 'what's left'. I don't see any current politician, Left, Right or Centre, that I'd want to be in a wartime cabinet. Maybe that's the way it always is....
Worse than that. In war, in the trenches, I would want to be sure that any of our lot of politicians, were in front of me, not behind. However, to be fair and contradictory to that somewhat, the true politician would always be in the front line for medals and well behind the lines for action.
Please watch this documentary series (OK comedy) that hits the nail on the head perfectly: https://www.youtube.com/watch?v=sgspkxfkS4k
They also argued that since interest rates had now peeked that house prices would stop falling with immediate effect. Such short sightedness sidelines the lag effect of fixed interest rollovers for starters. They've only succeeded in making themselves the entertainment.
Sydney land prices have become too expensive for Amazon.
A new report from CBRE found Sydney had just a 0.2 per cent vacancy rate for buildings 5000 sq m and greater for the first half of 2023 – the lowest globally. The vacancy rate in some precincts is almost zero.
This lack of vacancy, a product of surging demand driven by e-commerce and a lack of supply due in part to a “broken planning system”, has pushed prime Sydney rents up by 38 per cent over the past year to $215 per sq m, compared with $119 per sq m in Melbourne, where the vacancy rate is 1.1 per cent.
https://www.afr.com/property/commercial/big-companies-mull-a-sydney-exo…
Land taxes, which have risen 100 per cent to 130 per cent this year due to a doubling of industrial land values to $800 to $1000 per sq m, are behind much of the increase in outgoings.
“Sydney landlords are now telling all their tenants their outgoings for the 2023-24 financial year are going up on average by $10 to $20 per sq m (in some instances it’s been up to $40 per sq m),”
The money's gone. Maybe all of it. Young hotshot who cut his teeth at Deloitte and BDO. CFDs in the mix.
Magnolia, started in 2015 by Atkins in the basement of his family home on the Central Coast of NSW, had clients across Australia and had $1 billion in funds under advisory.
Its investors included some of Australia’s richest families, including the family of Melbourne business magnate and philanthropist the late Victor Smorgon, as well as successful entrepreneurs, barristers and private investors with self-managed superannuation funds.
Magnolia claimed to operate the best-performing share fund in the country. It also ran a private lending business that helped to arrange loans for borrowers looking to complete property developments or buy more exotic items, such as a $1.2 million Ferrari, and offered investment in a fund holding a $30 million Lamborghini Essenza SCV12.
https://www.smh.com.au/business/banking-and-finance/everyone-thinks-i-m…
US yield curve remains deeply inverted. More inverted than prior to the deflationary recessions of the past 30 or so years.
More similar to the stagflation of the early 1980's.
Are we starting a new 40 year trend in interest rates?
1981 - 2021 were 40 years of falling rates (and the 1940's - 1980's were decades of rising rates).
Have we now turned a corner to a point where we see decades of higher/rising rates?
I'm not convinced we will ever see rates as low again as what we have just experienced - but nothing is guaranteed (other than 10% mortgage rates by xmas of course!)
Some of it'll come down to whether what's going on at the moment is mostly the result of covid era industrial and economic consequences, or whether covid was just a coincidence to some sort of greater cycle.
The former makes it really hard to put an inordinate amount of faith in the latter
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