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
Nothing to report.
TERM DEPOSIT/SAVINGS RATE CHANGES
WBS has raised its TD rates today by +10 bps. But that takes their one year rate to 6.15% now.
'RUNNING AN ORANGE LIGHT'
According to the ANZ survey, Business confidence lifted another 5 points in July but is still negative although the July level is the highest since September 2021. The 'own activity' measure eased 2 points to +1. The economy is slowing, but certainly not coming to a sudden stop, notes ANZ. Inflation indicators mostly crept slightly lower, but cost expectations lifted, and the proportion of firms expecting to raise wages increased.
AUSSIE GIANT GETS NZ REGULATOR TO FINE LOCAL OPERATOR
The Commerce Commission has won a $500,000 penalty against the Mitre10 MEGA operator in Tauranga for trying to block a Bunnings Warehouse from opening nearby. This is a big win for the giant Australian Bunnings group (revenue AU$18 mln and part of the Wesfarmers Group. revenue AU$31 bln) against the very much smaller individual local Mitre10 local business (probably revenue of ~$175 mln). It will enable Bunnings to pick them off one-by-one.
REGULATING BANK TRANSFERS
In more activity from the Commerce Commission, they are eyeing regulation to boost options for making in-person payments directly between bank accounts. They say regulating bank transfers could level the playing field for new entrants to offer services for making in-person bank transfers.
RBNZ, TREASURY CONSULTING ON INCOMING DEPOSIT INSURANCE SCHEME
Treasury and the Reserve Bank have opened consultation on the funding approach and levies for the incoming bank deposit insurance scheme. Set to launch late next year, the scheme will mean that, in the event of a deposit taker failure, depositors will be eligible for compensation up to $100,000 per depositor, per institution. The scheme will be funded by an industry levy set by the Minister of Finance. Treasury says its first consultation focuses on the approach to building the Depositor Compensation Scheme fund, the estimated costs of the fund, determining a target size of the fund, if any, and a timeframe for reaching any target. The Reserve Bank says taking a proportionate approach to regulation means balancing its costs and benefits for deposit takers and the public. Treasury's consultation paper is here, the Reserve Bank's is here. And there's more on deposit insurance in our Of Interest podcast here.
TWO NEW TSB DIRECTORS
TSB has named Darren Linton and Liana Poutu as new directors. Linton is the CEO of GoSee and ex-CEO of Yellow NZ. Poutu is the representative on the board for TSB's shareholder, the Toi Foundation. The two new directors follow the retirements of Dion Tuuta, Anne Blackburn, Harvey Dunlop and Peter Dalziel. Other board members include chairman Mark Darrow, deputy chairman Mike Schubert, Mel Templeton, Natalie Pearce and Kevin McDonald.
MORE LENDING BUT SLOWER
Mortgage balances rose to $350 bln in June, (a new record high) with banks upping their share by +$1.26 bln and non-banks conceding -$85 mln. That is twice as fast a rise as in April. But year on year, the overall percentage rise was +3.1% the lowest such gain since November 2011. Banks also raised their loan books with business by +$0.5 bln and with the rural sector by +$0.3 bln. More here.
HIGHER INTEREST HONEYPOT
On the other side of the ledger, customer deposits rose +3.1% as well, to $437.4 bln (not a record high), of which $232.8 bln was in household deposits (which was a record high). Household term deposits were up +$2 bln or more per month for the fourth month in a row to $116.8 bln, and up +$25.6 bln in a year. But half that is because money has moved out of transaction balances (-$10.2 bln) and savings accounts (-$5.0 bln). Higher interest rates continue to motivate savers.
THE NEXT LIST IS OUT
The Labour Party list is out for the 2023 Election today. Review here.
CHINA'S FACTORIES STILL CONTRACTING, SERVICES EXPANSION MINIMAL
China's official factory PMI survey contracted the least in July in the last four months of contraction (49.3). But their official services PMI fell to its weakest level of the year, now with only a tame expansion (51.5). The private Caixin version is out tomorrow for factories, and Thursday for services.
SWAPS A BIT SOFTER
Wholesale swap rates are probably a bit softer 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 unchanged at 5.67% and now +17 bps above the 5.50% OCR. The Australian 10 year bond yield is up +4 bps from this morning at 4.01%. The China 10 year bond rate is up +2 bps at 2.71%. And the NZ Government 10 year bond rate is down -7 bps from this morning at 4.73%, and still higher than the earlier RBNZ fix which was down -10 bps at 4.63%. The UST 10 year yield is up +2 bps from this morning at 3.98% today.
EQUITIES MOSTLY HIGHER
The NZX50 is up +0.3% late in its Monday session. The ASX200 is unchanged in afternoon trade. Tokyo is up +1.5% in morning trade. Hong Kong is up +1.5% today in early trade. Shanghai is up +0.6%. This is built on imminent stimulus announcements in Beijing and it is surprising that the ASX200 isn't reacting in advance. The S&P500 futures are up +0.4% in weekend trade.
GOLD STEPS BACK AGAIN
In early Asian trade, gold is at US$1956/oz and down -US$3 from where we opened this morning
NZD MARGINALLY HIGHER
The Kiwi dollar is unchanged from Friday but up +20 bps from this morning's open, now at just on 61.8 USc. Against the Aussie we are off slightly at 92.5 AUc. Against the euro we firmish at 56.1 euro cents. That means the TWI-5 is up slightly to 69.9.
BITCOIN STILL STUCK
The bitcoin price is little-changed again from where we opened this morning, now at US$29,456 which is up a minor +0.2%. Volatility has remained low at just over +/- 0.8%.
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36 Comments
Be careful what you wish. I agree that objections should not be vexatious which is included in the law for this type of RMA consent but the demise of Mitre 10 will lead to a monopoly by Bunnings and would suggest ComCom only look at monopolies after they occur, not trying to prevent one.
The buying power of Bunnings gives them a huge advantage over Mitre10.
ITM and Placemakers are not competition as they largely exist for tradies.
Crikey. What did Mitre10 do that was actually illegal? Not one thing they did was actually illegal, but only because of the Commission's reasoning was the sum total of their actions found to be illegal. If a Kiwi firm tried that on in Aussie against the Coles Myer group, they would be laughed out before they got anywhere near a court.
This is all part of the future, where we will not be allowed to do any business, except with a foreign owned multinational shop, and by a foreign bank's digital payment system. We are already nearly there. My associated prediction is that we will not see any bank notes or coins with Charlie's head on them. I would love to be wrong.
The fine seemed tiny compared to how much these companies make. Doesn't the same advantages apply to the two supermarket brands in the supermarket duopoly? We don't have a bunnings in my region which means that we end up paying a lot more for building products and there range and stock levels is also poor compared to areas that have competition with Bunnings.
I agree, I've heard that the supermarkets use similar land covenants, so hopefully this enables more competition in that area.
I would hope that restrictive land covenants aren't the only thing keeping M10 alive, but if so they would probably die out eventually anyway.
There is a Bunnings in Tauranga already but its too far away for many because its way over in the Mount. Mitre 10 should not have tried to block Bunnings, they have plenty of places in NZ where you can short drive between the two of them. The also don't stock identical brands so there is room for both.
Why do so many people think it is a great idea to throw money overseas instead of keeping it in NZ? It drives me to despair to read such stupidity expressed here. Are so many people so stupid as to not see that $1.20 spent in town is cheaper than $1 spent out of town.
I don't believe I ever made a prediction on what would happen with listings, happy to be proven wrong?
You on the other hand said they were rising when they were clearly falling, and when called out on it, said they would rise, and now the opposite is (still) happening.
https://i.stuff.co.nz/national/politics/300939736/national-announces-fo…
Quickest transport policy U-turn in living memory. National walk back their 4 lane motorway between Tauranga and Northland. Joke party.
Joke party? Sure. But this Labour lot are simply laughable. Certainly have perfected their performance this year but plenty of rehearsals beforehand. Extraordinary really Labour running up to this election have virtually placed themselves in the state of disarray, disunity and dysfunction that National was demonstrating three years ago. If you ask me, none of our politicians, and their respective parties can inspire much confidence or reason for optimism for the nation’s future, and that really sucks.
Nobody expects Labour to be the competent party. Even the fanboys tout National as the party of business acumen, most competent to lead etc. So why is it even worth mentioning about how abysmal Labour is? Only a joke voter would spend so much time pointing out what the other party is doing wrong, except if they're trying to distract from their own party's abysmal issues.
Business acumen... had a good laugh at that one. Luxon left Air NZ at the height of the pre-Covid tourism boom and yet the company was in worst shape than when he joined.
Air New Zealand’s shares are down 12.6% this year, compared to the 17% rise of the broader market
How does one screw up an airline that is effectively a monopoly?!
US corporate bonds now yield 0.12% above the Fed funds rate. Last time it was at this level was 2007 prior to the GFC.
This scenario has been a great indicator of financial turmoil ahead (will this time be different?)
https://pbs.twimg.com/media/F2Vix8bbwAAXBF4?format=jpg&name=large
Source: Otavio (Tavi) Costa twitter
https://twitter.com/TaviCosta/status/1685862254057865216?s=20
"Americans have flocked to cash-like investments, lured by higher returns after years of little income. Assets in money-market funds have surged to a record $5.5 trillion. Banks are increasingly using CDs to lure back depositors. And one of the most popular bond exchange-traded funds this year has been an iShares ETF investing in Treasurys that mature in three months or less."
https://pbs.twimg.com/media/F2TafljbAAATQFL?format=jpg&name=medium
Mohamed A. El-Erain twitter https://twitter.com/elerianm/status/1685718603575054337?s=20
Reminds of my mean spirited grandfather. When I asked him for one of the nutty boiled lollies he often helped himself to, he would reply “you can have one tomorrow” except the next time the next day he would say “yes tomorrow, as I said.” That’s the thing this time and/or next time are as unknown and uncertain as any desire or fear, obviously whatever it is, is yet to happen.
Excellent piece at Macrobusiness on ‘Chimerica’:
https://www.macrobusiness.com.au/2023/07/the-death-of-chimerica/
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