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 again today.
TERM DEPOSIT/SAVINGS RATE CHANGES
Update: The Co-operative Bank pushed through some minor increases to rates today.
THE FLOOD CONTINUES
More than 14,000 overseas workers and 12,000 overseas students arrived in the country during July. That took the total over the past year to more than +100,000 overseas workers who arrived in just the six months to July.
WEALTH SHRINKING
Kiwis' wealth per adult suffered an annual retreat, according to the Credit Suisse-UBS Global Wealth Report.
NOT TAKING IT ANYMORE
Producer price costs have got suddenly tamer in the June quarter from a year ago. There were up only +1.1% in June, far lower than the +4.5% rise in the March quarter and the +9.8% rise in the year to June 2022. From March they actually fell slightly. Clearly business can not longer afford to absorb high cost increases and are avoiding them now, or going without.
TOUGHER ON THE FARM
Farm expenses are rising faster than overall producer costs (+1.1%), and overall CPI inflation (+6.0%). They were up +7.9% in June from a year ago, with chunky rises for lime fertiliser (+9.2%), insurance premiums, (+8.3%) and interest costs (+43.8%). But they also benefited from a -24% fall in fuel costs over the same year.
65c OF SPENDING CUT BACK
DairyNZ has revised its national breakeven level to $7.51 per kg/MS for this season, down from $8.16/kg MS to reflect changes farmers are making now in light of the tough dairy market..
REAL COMPANY DEBT STRESS, YES. FOR INDIVIDUALS, NO
Credit reporting agencies are a source of stories and data about how debt stress is building. But that stress isn't being reflected in official data for bankruptcies nor No Asset Procedures (NAPs). In fact in July NAPs (bankruptcy lite) fell to their lowest level ever, since this option because available in late 2007. Only 24 people in the whole country went into a NAP in July. Only 46 went into bankruptcy, and while that wasn't a record low it was close (20 in January 2023). People are still coping. But there is evidence in ITS-administered company bankruptcies that pressure is rising - there were 33 in July, the highest monthly total since June 2014.
NZX50 PROFILE UPDATES
Regular users of our NZX50 profiles will want to know we have updated the financial profiles of these companies to reflect the March 2023 annual financial updates. They are for #26 ARG - Argosy, #28 ARV - Arvida, #6 CEN - Contact Energy, #9 FBU - Fletcher Building, #1 FPH - F&P Healthcare, #14 GMT - Goodman Property Trust, #4 IFT - Infratil, #8 MFT - Mainfreight, and #13 RYM - Ryman Healthcare. For investors who want to understand the New Zealand companies that make up the NZX50, and their key financials, these resource pages are an excellent place to start. Reading financial statements is one thing (and there is a lot of spin and dross to push through), so our summaries go to the heart of they key financial metrics, and show how they have changed over the past five or six years. If you want to be a knowledgeable investor, these are a good place to start. Updates are made when each company releases its annual results.
MORE POLICIES TO COMPARE
More Election 2023 policies are coming through. They include, Act - Education, Labour - Parental Leave, TOP - Women's Issues, TOP - Health, and NZ First - Senior Citizens. You can find all policies, compared between parties, here.
AUSSIE JOBLESS RATE LIFTS
In Australia, they released their July labour market data. Their jobless rate rose to 3.7% in July from 3.5% in June, above market expectations of 3.6%, and the highest level since April. There are now 541,000 unemployed in Australia, and increase of +35,600 in one month. Employment unexpectedly fell by -14,600 when analysts expected a +15,000 rise. Full-time employment fell by -24,200 while part-time employment rose by +9,600. Their participation rate fell to 66.7%.
MANY MORE LISTINGS THAN NEW BUYERS
In Australia, there is a listing surge underway in their housing markets, rising at a rate far higher than the market can absorb without selling price discounting.
SWAPS HIGHER
Wholesale swap rates were probably up sharply today on global moves higher but the real reaction will come after the press conference until the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged yet again at 5.64% and now +14 bps above the 5.50% OCR. The Australian 10 year bond yield is up +6 bps from this time yesterday at 4.28%. The China 10 year bond rate is unchanged at 2.59% and a three year low. And the NZ Government 10 year bond rate has surged up +12 bps to 5.12% and its highest since 2011, and still higher than the earlier RBNZ fix which was up +4 bps bps at 4.98%. The UST 10 year yield is at 4.29% and up a sharp +9 bps from yesterday and its highest since October 2022. Rising long rates are a global trend (except in China).
EQUITIES LOWER AGAIN
The NZX50 is down -1.2% today in late trade on a global risk-off vibe. The ASX200 is down -0.8% in afternoon trade, hurt by the China weakness. Tokyo has opened its Thursday session down -0.9% in morning trade. Hong Kong has opened down another -0.2% and Shanghai is unchanged. The S&P500 ended its Wednesday session down -0.8%.
GOLD FALLS
In early Asian trade, gold is at US$1892/oz and down a further -US$9 from yesterday. Earlier in New York it closed at US$1891, and earlier still in London it closed at US$1904/oz.
NZD LOWER
The Kiwi dollar is lower today, down -40 bps from this time yesterday at just over 59.2 USc. Against the Aussie we holding with a firmish tinge at 92.7 AUc. Against the euro we down -¼c at 54.4 euro cents. That means the TWI-5 is at 68.4 and llower.
BITCOIN LOWER
The bitcoin price is lower today, now at US$28,593 and down -2.1%. Volatility has been modest at just on +/- 1.5%.
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60 Comments
And yet the interpolated mid IR swap rate, for today's 4.25% 15/05/34 government tender yielding 5.096%, was - minus 13.71 bps at 4.9589%.
Quite simply, it takes some financial institution’s balance sheet capacity to take on an interest rate swap (the farther the maturity, the more capacity it requires). If balance sheet capacity (the real money in the system, therefore liquidity) is systemically impaired, as in a crisis, or a crisis that doesn’t really end, then to get dealers to give up their precious balance sheet capacity and engage on the other side of a swap someone would have to pay a hefty premium to make it worth it (risk-adjusted) for the dealer to do so. J Snider
They are totally not the same instrument.
One is a bi-annual coupon bearing government capital security which is repurchase agreement eligible and has a zero capital risk weighting.
An IR swap is an agreement between two parties to exchange a stream of cash flows calculated as a percentage of a notional sum calculated on different bases.
The principal or notional amount is never physically exchanged (hence the term 'off-balance sheet') but is used merely to calculate the interest payments.
The fixed-rate payer receives floating interest, and is said to be long or to have "bought" the swap. The long side has conceptually purchased a floating-rate note (because he receives floating interest) and issued a coupon bond (because he pays out fixed interest at periodic intervals). On the other hand, the floating-rate payer is said to be short or to have "sold" the swap. The short side has conceptually purchased a coupon bond (because he receives fixed interest) and issued a floating-rate note (because he or she pays floating interest).
So they spend $millions on nonsensical & futile projects such as “Road to Zero” and then have to admit they have been wasting their time and taxpayers’ money, rather than attending as a priority, basic maintenance and safety upgrades, and now they are going to additionally tax and surcharge the public in order to attend what they never should have neglected in the first place, but essentially to more cover up their incompetence and ideological fantasies. Blimey did this Labour lot even go to school. They really are clueless, always have been, and allowed to get away with it for far too long.
Road to Zero is not futile and nonsensical. It is one of the most evidence based policies that Waka Kotahi is pursuing.
If you're furious about deferred maintenance and effective safety upgrades then focus your venom on National's Roads of National Significance (now apparently also being pursued to Labour to a lesser extent). This is what chewed up all the transport budget at the cost of basic maintenance. National is proposing to restart the world's most expensive road in the East West link.
The US 10 year treasury is worth keeping an eye on. It appears to be breaking out higher again which will impact global markets.
It is appraoching GFC levels again, which could mean trouble ahead for risky assets.
"10-Year Treasury Yield moved up to 4.28%, highest since December 2007. The Real Yield (adjusted for breakeven inflation) of 1.96% is the highest since July 2009"
https://twitter.com/charliebilello/status/1692023638566768892?s=20
Something is going to break (in my opinion). The US (and other heavily indebted nations) can't afford for the cost of debt to keep going up. Interest payments on that debt are going vertical.
"The Treasury spent $872 bn on interest payments in the past 4 quarters, $260 bn more than the year before. The US government is expected to spend 10% of its budget in interest payments this year"
https://pbs.twimg.com/media/F3GwYSCaIAA3-Mw?format=jpg&name=large
This isn't good.
https://www.scoop.co.nz/stories/PA2308/S00113/act-would-abolish-the-min…
This should be reported in the election coverage. 121k of Prezzy Cards spent in one year.
Yes, because they are brown. Letting pakeha mates buy our state owned assets well under market value, that's capitalism.
https://www.nzherald.co.nz/business/telecom-jackpot-how-privatisation-m…
I think it might be more the stupidity...and I do mean stupid.... of the politicians who sold those assets .... rather than the people who bought them.
Nothing to do with colour of skin..... Private sector operators will dance around them every day of the week !
If Politicians and bureaucrats had "skin in the game" and were personally accountable for the decisions they made.... maybe there would be far less bad decisions...... and wouldn't take the path of least resistence...so to speak.
I still remember the "mantra" of privatisation back in the 1980-90's.... as if it was something "magical" that would benefit all....and somehow create wealth... Same with the mantra " foreign direct investment "...
I have very little confidence in any of our politicians or their policies....... white...brown... or pink...
Maybe that is the flaw of democracy..... We are not thoughtful/wise enuf to consider good long term policy and vote in good people ???
As a racist white guy myself, I don't really care about these minor grifts in government. They are perpetual and these ethnic orientated government agencies are largely regarded as sinecures with no real power or influence. They exist primarily to manage ethnic tensions and to direct propaganda campaigns towards the non-white population.
Lots of complaining about these professional dole bludgers, but no complaining about the billions sucked dry in Usury from mortgage holders, credit card holders and in car loans? Every working person spending 50% of their income on a mortgage or rent is far worse than any aristocrat, bishopric or miser of the past. It is straight up theft of 50% of the wage of productive people to feed unproductive assets, entirely directed by and enabled by the big banks.
Worth 10 mins of my time (China's youth unemployment and property prices spook global markets | The Business | ABC News).
Many in NZ have their heads in the sand regarding the reality in China (or they're just not interested). Good references to the property bubble and the wealth effect. NZ has more in common with China than it realizes.
Michael Every, head of financial markets research at Rabobank, says China's economy is "really stuck" and there's no easy way to get it out of its rut. The country's flagging economy is under pressure and the Western world is feeling the pain. Australia's biggest trading partner has posted a string of big data misses as it grapples with a property crisis and an economy-wide slowdown. Policymakers have announced a cut to key interest rates, but markets remain deeply pessimistic about Beijing pulling the trigger on major stimulus measures.
More gold from Maccy B. Telling it like it is. I also like to include Team Cindy and Team Chippy in the 'fake left' camp.
Why do centre-left governments like the Albanese and Trudeau administrations hate the working class so much that they actively deprive them of housing and jobs?
https://www.macrobusiness.com.au/2023/08/fake-left-governments-fan-hous…
Justin Trudeau’s comments on housing in Canada.
2015: “prioritize investment in affordable housing”
2021: “first home out of reach, it’s time to change that”
2023: “housing is not my responsibility
https://twitter.com/WallStreetSilv/status/1691824200271413470?s=20
Sounds just like the same approach that John Key and Jacinda Adern took here. 'I will solve housing affordability'....'actually I have no interest in solving housing affordability'
Doesn't have the charming smile to go with the BS unfortunately.
Xindy never had the charming smile when she had to 'reject the premise'. It was facial contortions and overly animated body language. Hands flapping like a performing seal and she would lead forward with the ear - which is a Helen Clark-ism.
- Obtaining by deception – false representation (Section 240(1)(b) Crimes Act 1961)
- Intentional damage under section 269(1) of the Crimes Act 1961
I believe they lied their way in (Haven't delivered anything they said, yet are working away on lots they didn't mention), and have now moved from unintentional to intentional damage of the NZ Economy and Citizens.
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