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
TSB raised most of its fixed rates by +5 bps to +20 bps. Cooperative Bank raised its floating rate by +25 bps to 8.40% (and still below main bank levels). Bank of China has raised fixed rates by between +10 bps and +30 bps.
TERM DEPOSIT/SAVINGS RATE CHANGES
TSB raised some term deposit rates either +20 bps or +25 bps. But none are market-leading. Their 6% one year rate is unchanged. Bank of China has raised all its TD offers, although they trimmed their market-leading 6.18% one year offer back to 6.10%.
STILL UNHAPPY
Consumer confidence remained very low in August, just as it has been every month since the start of 2022. If you are looking for a 'green shoot', you will have to be satisfied with the fact that, although still deeply negative, more consumers say it is a good time to buy a major household item. Most still say 'no' but it is fewer people saying that in August. Inflation expectations were virtually unchanged at 4.6%.
CREATIVE WRITING TO THE FOREFRONT
Realestate.co.nz and CoreLogic both released August real estate market reviews, both stretching to find positives as the market exits a tough winter. The realestate.co.nz report revealed that unsold inventories are now up to 22 weeks (from 19 in July) at current sales rates. (However they were as high as 28 weeks at the start of the year.)
OFFLOADED I
Auckland Council has sold down 7% of Auckland International Airport Limited shares, as earlier signaled. They sold them at an average share price of $8.11 per share which has returned $833 mln, which will be used to reduce council debt. It retails an 11.1% holding. AIAL shares traded at $8.10/share after the announcement. Yesterday they closed at $7.88/share. In 2023 they peaked at $8.94 in late March.
OFFLOADED II
HSBC has sold its $1.4 bln mortgage book to non-bank finance company Pepper Money. HSBC is closing its retail activities here, ahead of upcoming regulator requirements for bank branches. For a bank to buy it, they would have had to allocate more than 10% of the mortgage book value they bought in capital, making it a tough ask for any smaller bank. And for a large bank, that mortgage book wouldn't move their needle. A non-bank lender currently doesn't have these capital considerations.
LONG DRY SPELLS AS EN NINO ARRIVES
NIWA's Spring Seasonal Climate Outlook today said El Niño may arrive during September. Spring rainfall is most likely to be below normal in most regions except the west of the South Island. Spring may be marked by unusually long dry spells for several regions, they say.
ICE IS ONLY FOR USED IMPORTS NOW
Car sales rose in August from July, but July was unusually low. In fact, apart from the pandemic disruption, new car sales were their lowest for an August in a decade. And they were down -36% from year ago levels. But used car sales were up +10% on the same basis. Among new cars, most sold were either electric or hybrid models, making up 57% of the new car sales totals, a new high. There were less than 3000 new ICE cars sold in each of July and August, probably the lowest since 1991. It is rather remarkable how fast new-car buyers are rejecting ICE passenger cars. Sales on new commercials were unusually low in August too, down -27% from a year ago, on top of July's -42% drop on that basis.
SUBSTANTIAL LONG TERM PROGRESS
The RBNZ reported the over banking system Core Funding Ratio as at July today. While the ratio was just a whisker below its all time high of 91.2%, total loans and advances were a record high of $524 bls, and core funding was also at a record high of $475 bln. The current 90.7% CFR is a huge improvement from when the RBNZ brought in the Core Funding limits in 2010 when they were at 78%.
CURIOSITY
The RBNZ also reported its coin minting levels for the first half of 2023. Unsurprisingly they minted nothing in this period. Apart from the pandemic spurt, they have essentially minted no new coins since 2016.
AUSTRALIA SURPRISE (NOT A GOOD ONE)
New home loan lending fell -2.3% in July from June to be -14% lower than a year ago. This same metric fell -3% in June and was expected to bounce-back in July, but that didn't happen. Lending for commercial property dived -33% on the same basis as lenders took fright at how that sector could hurt bank exposures.
CHINA SURPRISE (A GOOD ONE)
In China, the Caixin factory PMI surprised with a small expansion when a small contraction was anticipated. Given the official factory PMI out yesterday showed a contraction, this is a double surprise. The Caixin survey has been volatile about the 50 point mark for a number of months now. Their survey noted a rise in new orders overall and the downturn in new export orders easing. This wasn't what the official factory survey found however. But both surveys noted that selling prices are falling now.
SWAPS HOLD
Wholesale swap rates were probably little-changed today, but the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 5.65%. Global markets are generally treading water ahead of the US non-farm payrolls and the long US holiday weekend. The Australian 10 year bond yield is down another -6 bps at 3.99%, all of that last night. The China 10 year bond rate is up +2 bps at 2.62%. The NZ Government 10 year bond rate is down -8 bps to 4.89%, but still above the earlier RBNZ fixing of 4.85%, and down -6 bps. The UST 10 year yield is unchanged from yesterday, now at 4.11%.
EQUITIES MAKE BIG WEEKLY MOVES
The NZX50 is down -0.3% near today's close, again. But if it holds that it will end the week up +0.4%. The ASX200 is down -0.4% in afternoon trade but even after that it should end its week up +2.2%. Tokyo has opened up +0.6% again and heading for a weekly rise of +2.8%. Hong Kong is closed because the city is under a typhoon watch. If it doesn't trade it will have ended its week down -0.7%. But Shanghai is down -0.4% and is heading for a -2.7% weekly drop. Wall Street ended its Thursday session down -0.2% with an end-of-session drop.
GOLD LOWER
In early Asian trade, gold is at US$1940/oz and down -US$6 for the day. Earlier it closed also at US$1940/oz in New York, and earlier still at US$1942/oz in London.
NZD EDGES UP
The Kiwi dollar has held at 59.7 USc. Against the Aussie we have risen marginally to 92.1 AUc. Against the euro we are almost +½c firmer at 55 euro cents. The TWI-5 is firm at 68.8.
BITCOIN RETREATS
The bitcoin price has slipped sharply from yesterday. It is now at US$26,032 and down -4.3% in the past 24 hours. Volatility over the past 24 hours has been high at +/- 3.6%.
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82 Comments
Here we go again: https://www.oneroof.co.nz/news/44172
"These up to the minute coalface readings from agents on what is happening out there tells us clearly that buyers are increasingly entering the market and we are now into a seller’s market once more though only to a slight extent. And it is worth noting all these readings, plus data from REINZ showing rising sales and prices, have occurred while mortgage interest rates are at high levels and have risen slightly in recent months. The economic hit from falling exports to China will have to be extreme to offset the extra housing stimulus to come when interest rates in fact fall."
Surely the only reason to buy one now is if it's something you really want (i.e. goes beyond mere utilitarian transport) or has some kind of feature set not yet offered with an EV, for example I'm not sure there are many EVs yet that can compete with a Toyota Land Cruiser if you need to take things off road.
I'm on the market for a new (to me) ICE car purely as there are a few I've always fancied and want to buy before they disappear. Stick in the garage, enjoy on a nice weekend drive and show the kids as they get older how we used to burn old dinosaurs to move from A to B. I mostly ride a bike everywhere, so petrol doesn't bother me at all cost-wise for my own vehicle. Trying to find the best one I can within my budget, and there seem to be some deals popping up all of a sudden.
However, we are also wanting to upgrade the family wagon and that will - at the very least - be some kind of hybrid, if not PHEV or full EV. Nearly pulled the trigger on a new PHEV as it would do everything we need around town on battery but give extra touring range and AWD but am a bit concerned at the risk of PHEVs being 'double dipped' when RUCs come in next year - don't want to pay RUCs for the KMs that are being done only on petrol if that makes sense?
Yeah the government really need to clarify their intention with respect to double dipping PHEVs. At the moment it seems like you will pay both RUCs and petrol tax at the same time. I doubt that will actually happen, there will be some last minute lightbulb moment, but why not sort it now? Or do these vehicles already have two odometers, one for petrol?
EDIT: Here is what the next transport minister (god forbid) has to say:
National’s transport spokesperson Simeon Brown said the preference was that all electric vehicles were charged through RUCs eventually, once they made up 2 percent of the light vehicle fleet, which is expected to be around April next year.
He said a reduced rate for hybrids seemed the “cleanest” way of dealing with it but if a full rate with an ability to claim back fuel excise was needed as an interim measure, he’d support that.
But he told Newsroom he’d like to see fuel excise eventually scrapped and all vehicle owners charged through road user charges.
100%. That's the only thing stopping me emailing the salesperson back and placing the order immediately, as I don't want to find they are double taxed and nek minnit the car is worthless (as then factoring in depreciation would be better financially to keep the old Subaru Outback running on a steady diet of BP's finest fuel).
Should be sorted clearly in advance, e.g. 'PHEVs will attract 50% RUC cost', or perhaps PHEVs don't pay RUCs but have an additional licence fee.
Consider those people who can actually afford to buy new cars. Probably majority are Govt, SOEs & Companies who will mandate their virtue signalling with other peoples money & those wealthy enough to "justify" their Teslas to their neighbours.
Noting also that commercial vehicles are a seperate component of the new vehicle market (Rangers, Hi Lux, Triton...)
Real people will have their Betamax's for a while longer
The price of a new electric car is still up there so was looking at a second hand one but this put me off...
https://www.stuff.co.nz/motoring/300949702/ev-car-owner-wins-dispute-af…
Will sit back and wait a bit longer
It is rather remarkable how fast new-car buyers are rejecting ICE passenger cars.
Not really. The new passenger car market is the domain of boomers and people who care what others think of them. What's another 30% on the purchase price to change the energy storage medium.
For anyone doing the day to day, it'll be ICE for a while yet. Or Nissan Leafs with 20 kilometres remaining range.
Agreed, that is the appeal.
90% of the time the family wagon just drives around town - perfect candidate for EV usage. Wife drives probably 10km a day on average around town, e.g. to daycare, work and back. Yours truly sits at home ranting on Interest.co.nz
However, from time to time we go on big road trips around the South Island, we go skiing, and take the car places that really requires AWD and the ability to have no range anxiety to do comfortably.
Normal EV just wouldn't suit for this.
Other alternative is will get a cheap EV for town and keep the current AWD wagon but with the way car insurance prices are going (and the fact that there is always more maintenance than you think on a car) it might not be economical.
Correct. For anything than driving around town EVs are useless.
Towing a boat or caravan. Useless
Going off road. Useless.
Going on holiday with long driving distances. Useless.
the concept is good, but they are Powerless, take far too long and there is nowhere to charge them anyway unless you are in the city. So there are many many weakness that are obvious and need solving before they have much use. It’s likely a different alternative will be found before these issues are resolved.
Peter Jackson rewards the country for all the tax payer funds poured into making his f**k-awful films by stopping 700 apartments in their tracks.
https://www.rnz.co.nz/news/business/497061/controversial-500m-shelly-bay-development-cancelled
...they have essentially minted no new coins since 2016.
The Swiss are actually planning constitutional protections for cash: https://www.bloomberg.com/news/articles/2023-08-30/swiss-kick-off-consu…
In early Asian trade, gold is at US$1940/oz and down -US$6 for the day.
In Kiwi pesos, NZD3,253.
It's never been this high for 99.99999% of its history. Could be ATH by next week. But anything can happen.
Silver still needs another 50% to get to all-time highs. Adjusting for inflation, it would probably need to 5x.
Yeah I'm talking much longer timeframes.
What you're talking about should only worry those with boatloads of cash sitting about. Most everyone else struggles to earn it in the first place.
I guess you could make some moonshot bets, skip the wealth accumulation part.
Any asset should be at historic highs almost all the time because fiat is designed (quite rightly) to inflate
That all depends. The price of gold can be suppressed by financialized instruments such as derivatives.
Furthermore, the gold price was the same in 1980 as it was in 2006, Regardless of the expansion of the money supply.
"Value" can be determined by a number of different benchmarks.
For ex, you can compare gold and fiat in terms of purchasing power over time.
Arguably gold maintains that purchasing power while fiat doesn't. That is why it is considered a 'store of value', while fiat is not.
It's only arbitrary depending on perspective.
For ex, the RBNZ does not hold any gold as it's deemed to be unassociated with their function and objectives.
OTOH, Eastern central banks are buying gold because it's deemed to manage risk from currency holdings and to promote stability during economic turmoil.
The income numbers look nothing like what most people assume has been a red hot economy and labor market. Take away Uncle Sam's handouts and the situation looks so much different. Once the savings are gone, this is what's really left. https://buff.ly/45WvRqR Link
Vampire Squid doesn't really give a rats about anything except making moolah.
Goldman Sachs has used a fund set up with Chinese state money to buy a series of US and UK companies, including one with a cyber security business that provides services to the British government, even as tensions rise between Beijing and the west.
The Wall Street bank has struck seven deals using cash from a $2.5bn private equity “partnership fund” it set up in 2017 with the sovereign wealth fund China Investment Corporation, according to multiple people with direct knowledge of the fund and its operations.
https://www.ft.com/content/792fae47-8e2f-4363-99e9-176b33ccc09a
We all know its a con job, but at this point people are going to be grateful for any meagre amount that can be thrown their way. Meanwhile, The Herald also details the absolutely disgusting spending spree this Govt has been on that has resulted in not just zero benefit to citizens, but an actual lowering of service standards. Where on earth has all the money gone???
https://www.nzherald.co.nz/business/bruce-cotterill-my-pride-in-new-zea…
Consumer confidence remained very low in August, just as it has been every month since the start of 2022.
Given that inflation has been far higher than wage growth for about two years, eroding workers wages, I would have questioned the survey itself if it said everything was just peachy. Wouldn't you?
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