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
Kāinga Ora (HNZ) raised their floating rate by +14 bps today to 8.64%, and their 1 & 5 year fixed rates by +20 bps or more. ICBC raised all their mortgage rates, with their floating rate up +35 bps to 7.85% and all fixed rates were raised too.
TERM DEPOSIT/SAVINGS RATE CHANGES
NBS raised their term deposit rates for terms of 6 months to 2 years. But none are market-leading.
RESIDENTIAL BUILDING CONSENTS DIVE
The home building slump picks up speed again. The number of new dwellings consented last month was down over -5% on the previous month on a seasonally-adjusted basis, according to Stats NZ. Consent levels are down more than -25% from July a year ago. In Auckland the drop is -19%, Wellington -37% and Christchurch almost -30% from the same month a year ago
WMP HOLDS LOW
Following up our preview of the WMP Pulse auction overnight, there was something of a surprise result because it came in unchanged, ending a series of sharp falls from late July, and staying at US$2450/tonne. Another fall was expected. Still this locks in a level we last saw in August 2016.
THE NATS RELEASE SOME KEY TAX POLICY
National unveiled its tax policy, promising $250 more a fortnight for average households with children. This headline promise grabbed all the attention, but it also gave in to speculators/'investors' in the residential property market by promising full building depreciation and a reversion to a 2-year bright-line test. (A tax deduction for buildings that don't actually depreciate in market value terms is pretty shameless. It is just a tax cut for friends, and very bad public policy.)
FUNDING FOR GEOTHERMAL GENERATION
The NZ Green Investment Fund will supply up to $25 mln of debt funding for the construction of connection assets for the new ~50MW TOPP2 geothermal plant. Additionally, it will enable upgrades to the existing connection of the 25MW Te Ahi O Maui geothermal plant. These are owned by the Eastland Group, a specialist infrastructure company headquartered in Tairāwhiti that also operates Eastland Port and Gisborne Airport. They recently sold its electricity distribution business, and is recycling capital into its significant generation pipeline.
LEVERAGE & RETURNS
With the release yesterday of the RBNZ Dashboard, we have now updated our bank leverage metrics which you can see here, by bank. There has been little change in any of these metrics between March and June however. The bank with the highest returns for shareholders is ASB (15%pa), followed by BNZ (13.3%), ANZ (12.3%) and Westpac (11.6%). The banks with the highest leverage are Kiwibank (14.6x), Westpac (13.1x), TSB (12.6x), and ASB (11.9x).
SOME NZ BUSINESSES VERY CHINA-DEPENDENT
In a survey of members, the NZ Business Roundtable in China found that 36% of the New Zealand businesses surveyed relied upon China to contribute between 60-100% of their global revenue in 2022, with small and medium sized enterprises skewed towards a higher concentration in China. Most (71%) were either satisfied or more than satisfied with how the New Zealand Government has managed the relationship between NZ and China in the past 24 months. There were 51 companies in this survey.
EASING INFLATION
Australia's July monthly inflation indicator rose 4.9% from a year ago, a rate that is down from 5.4% in June. Annual price rises continue to ease from the peak of 8.4% in December 2022. Even though they came in lower than expected, the July levels are still far higher than the RBA needs them to be, but it will probably lock in a rate pause there because it is going in the right direction.
A BIGGER DROP IN AUSTRALIA
In Australia, their residential building consents fell at an -8.1% rate in July from June to be down -10.6% from a year ago. The private sector components are more negative than the overall results. Interestingly, these are falling faster recently than in New Zealand and both are fast month-on-month falls.
SWAPS SOFT
Wholesale swap rates were probably a little lower today, but the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is down -1 bps at 5.64%. The Australian 10 year bond yield is down another -5 bps at 4.07%. The China 10 year bond rate is little-changed at 2.60%. The NZ Government 10 year bond rate is down -7 bps to 4.99%, but still above the earlier RBNZ fixing of 4.95%, and down -6 bps. The UST 10 year yield is also down -6 bps from yesterday, now at 4.14%.
EQUITIES RALLY
The NZX50 is down -0.2% near today's close. But the ASX200 is up a strong +1.3% in afternoon trade. Tokyo has opened up +0.9%. Hong Kong is up +0.4% in its opening trades. But Shanghai is down -0.2% in a more restrained mood. Wall Street ended its Tuesday session up a solid +1.5%.
GOLD IN LARGER MOVE UP
In early Asian trade, gold is at US$1936/oz and up +US$14 for the day. Earlier it closed at US$1937/oz in New York, and earlier still at US$1930/oz in London.
NZD FIRMISH
The Kiwi dollar has moved up +¼c against the greenback, now at 59.5 USc. Against the Aussie we have held at 92 AUc. Against the euro we are marginally firmer at 54.7 euro cents. The TWI-5 is up slightly at 68.6.
BITCOIN GETS A LIFELINE
The bitcoin price has risen quickly today after a favourable court ruling against an SEC rule. It is now at US$ 27,418 and up +5.1% in the past 24 hours, although that is a scaled-back rise from earlier. Volatility over the past 24 hours has been +/- 4.3%.
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