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
WBS raised all its home loan rates today, including its floating rate.
TERM DEPOSIT/SAVINGS RATE CHANGES
Rabobank raised TD rates today. Their new 6 month rate is now 6.00% and their new 1 year rate is now 6.25%. Both are market-leading for these terms, above all other offers. WBS also raised rates although not to the Rabobank levels
AN UPTICK, BUT A TURNING POINT?
After falling a cumulative -13% over the four months to July, job ads bounced +2.2% in August, according to the BNZ/Seek job ads report. This was encouraging they say, at face value at least. But "it’s far too early to tell if the increase signifies some sort of turning point, or is just noise around a still-falling trend. The trend measure on job ads was surely still declining, albeit by a lessening month rate, of 1.4% in August."
UPDATE I: S&P AFFIRMS NZ GOVT CREDIT RATINGS
Credit rating agency Standard & Poor's has affirmed our sovereign credit ratings which are AA+ for our foreign currency rating, and AAA for our local currency rating. The Outlook remains: Stable. (Actually, the local currency rating is practically more important because the NZ Government only borrows in NZD.)
UPDATE II: NATIONAL RELEASES MORE ELECTION POLICY
The National Party was the only one releasing policy today. It related to their Education platforms. You can see all policies compared among parties here.
COW PROBIOTICS
AgriZeroNZ, a joint venture of major New Zealand agribusiness companies and the government, is the lead investor in a US start-up developing probiotics and natural enzymes that reduces methane while apparently improving cow health. The JV has invested $4.1 mln into Hoofprint Biome, in Raleigh, North Carolina, in its pre-seed funding round (totaling US$3.75 mln) to support development of its probiotic, into the animal trial proof-of-concept stage.
EXPANDING, BUT LESS SO
The Japanese economy expanded +1.2% in Q2-2023 from the prior quarter, compared with a flash reading of a +1.5% gain and after a downwardly revised +0.9% rise in Q1. This was the second straight quarter of growth, coming slightly less than market forecasts of a +1.3% rise, and despite being the fastest growth for a year, it was downgraded because of weaker-than-expected household consumption, and investment. Year-on-year, the Japanese economy was +2.0% larger.
SWAPS ON HOLD
Wholesale swap rates were probably on hold again today across the curve. 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 5.66%. The Australian 10 year bond yield is down a sharpish -7 bps to 4.10%. The China 10 year bond rate is unchanged at 2.68%. The NZ Government 10 year bond rate is down -4 bps to 5.02%, and still above the earlier RBNZ fixing of 4.97% which was down -4 bps today. The UST 10 year yield is down -6 bps from this time yesterday, now at 4.23%.
EQUITIES ALL LOWER
The NZX50 is down -0.6% near today's close and heading for a weekly loss of -1.5%. The ASX200 is down -0.4% in afternoon trade, on track for a -1.9% weekly drop. Tokyo has opened down a sharp -0.9% to start its Friday trading and that night turn their week to a loss as well. However Hong Kong is closed for yet another storm. They will end their week down -2.1%. Shanghai is down another -0.5% at its open and it that holds it will be down -1.3%. Wall Street ended its Thursday session down -0.3%, with continuing strong labour market signals creating uncertainty about more rate hikes from the Fed.
GOLD TURNS UP
In early Asian trade, gold is at US$1927/oz and up +US$8 from this time yesterday. Earlier it closed at US$1918/oz in New York, and earlier still in London it closed at US$1918/oz.
NZD IN MINOR RISE
The Kiwi dollar has risen more than +¼c to 59 USc, but it is really only a minor rise. Against the Aussie we are equally firmer 92.3 AUc. Against the euro we are also up +¼c at 55 euro cents. The TWI-5 is now at 68.5.
BITCOIN MOVES UP AGAIN
The bitcoin price moved out of its recent slumber, rising +1.7% today and now at US$26,218. Volatility over the past 24 hours has been modest at just on +/- 1.6%.
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73 Comments
by Pa1nter | 4th Sep 23, 12:33pm – “Money sitting in a bank accounts' probably the laziest thing I could do with it”
LOL! - at 6.25% thats going to attract a lot of "lazy" money. That said, if it wasn't for all this so called "lazy" money, the banks would have no choice but to pay even more to borrow. When forced to pass on the added cost, what would that do to borrowing rates?
Right now, this is where the smart money resides. People who have money have voted, TD's are very popular and will be for the foreseeable future.
I don't know what's worse, that you spent several days thinking about a response, or your need to string it out across multiple non related threads.
Its not hard to comprehend. I can put money to work at a better return than a TD, it obviously requires more effort than transferring a balance from one account to another.
I spent a fair bit of time in Raleigh, NC as a young'un. Dad was a research scientist with the Dairy Board at the time, pre Fonterra Research. It was a hub of pastoral science back then, 88/89/90. Good to see it's still progressing. I recall the weirdest thing (as a kiwi lad) was a) no footpaths, and b) whenever you walked somewhere on the wide grass berms, kind folk would pull over and ask "Y'all ok? Yer car break down? Y'all need a ride?"
Still makes some sense for a nation that's the world's largest oil producer and the second largest automobile producer to be designing its infrastructure around private vehicles.
The billions that we could have saved in fuel and car imports each year over decades if more effort went into making Auckland a more public transport-friendly city.
The problem is as well, that drive to the shop is given no more brainpower than a walking it. NZ drivers by far too much of a margin are selfish, intolerant, uncooperative and plain ignorant. Next time you are driving watch the tail lights of the car in front. Bet you nine times out of then the brake light goes on before the indicator. What does that indicate then.
I doubt that many high income earners would use a gold card at all.
I for one when I am retired will never use public transport. I will be more interested in charging up my car batteries and keep their brakes and suspension working on the few small trips that I will do. And will continue to avoid getting colds and the flu.
The RUCs National plan to bring in plus increasing electricity prices may not make EVs that much of a cheaper alternative. A lot of people use the free transport because of the problems parking, especailly in places like Wellington, and the hassle of driving in town..
The Japanese economy expanded +1.2% in Q2-2023 from the prior quarter, compared with a flash reading of a +1.5% gain and after a downwardly revised +0.9% rise in Q1.
Japan has never had two decades of economic stagnation when you look at real GDP in JPY instead of USD. Of course Japan has not had a 'strong economy', but it grew throughout the entire period of "zero growth."
Real household incomes in Japan have dropped so much not just because of prices, more so recently due to falling NOMINAL incomes. Since December, nominal incomes are down more than 7%. And people think Japan is red-hot because of its CPI. https://buff.ly/3sHq4ab Link
So, what are countries going to do when they can’t afford to pay the higher prices for energy? Well, Janet Yellen, who was the Federal Reserve head and [now] the Secretary of the Treasury says, ‘Well, what we’re going to do is use the International Monetary Fund to preserve America’s unipolar hegemony.’ I think she used almost those words. We have to keep American control of the world and we’re going to do it through the IMF. And that means in practice using the IMF to create special drawing rights, which will be sort of like free money, the bulk of which will go to the United States to support its military spending abroad for all of this huge military escalation. And it will enable the IMF to go to countries and say, ‘We will help you pay your debts and not be foreclosed on and get energy, but it’s conditional.’ On usual conditions: you have to lower your wages; you have to pass anti-labor legislation; you have to agree to begin selling off your public domain and privatize.
The energy and food crisis caused by the NATO war against Russia is going to be used as a lever not only to push privatization, largely under control of US investors and banks and financiers, but it’s also going to lock countries into the US orbit all the more, both the Global South and especially Europe.
One casualty is obviously going to be Europe and the euro. The euro has been plunging in value day after day after day, as people realize that it’s lost its export markets in Russia and much of Asia, and now at home, too, because exports require energy to be made. Its costs of imports are going up, especially energy. It’s agreed to use, I think, now $3 billion to build new port facilities to buy US natural gas—liquified natural gas at three to seven times the price that it’s paying now, which will make it almost impossible for German firms to produce fertilizer to grow crops in Germany. The euro’s plunging.
The largest plunge of all has been the Japanese yen, because Japan imports all of its energy and most of its food and is keeping its interest rates very low in order to support the financial sector. And so, the Japanese economy is being sacrificed and squeezed. And I think this is…you can’t say, ‘Gee, this is an accident.’ This is part of the plan, because now the United States can say, ‘Of course we don’t want your yen to go down so much that your consumers have to pay more. We will, of course, give you SDRs—special drawing rights—and we will give you American aid. But we do want you to rewrite your constitution so that you can have atomic weapons on your soil so that we can fight against China to the last Japanese. Just like we’re doing in Ukraine, let us do it for you.’
And, of course, the Japanese love that. The government loves that idea. They love sacrificing the population, which is what they’ve been doing ever since the Plaza Accord and the Louvre Accord of the 1980s that basically wrecked the Japanese industrial economy from this huge upswing to just a mass shrinkage.
So, those are the economic effects of the war. And in the newspaper, you think the war is all about Ukrainians and NATO fighting Russians, and it’s really a war by the United States to use the NATO-Russia conflict as a means of locking in control over its allies and the whole Western world, and in Janet Yellen’s words, re-establishing American unipolar power. Link Hudson
Heartland is in the business of lending in areas the other banks traditionally avoid. Bascially inherited from Perpetual Trust. As well as Reverse mortgages. As they move toward even more digital banking I expect to see some real growth especially from Australia. The lending in the rural arena has cooled. I watch how well Wrighties are doing with sales and then track it back. Mind you, Westpac as well as Rabo lend to farmers.
The hesitancy of farms exchanging hands it is what has been occurring under Labour and the Greens. Who needs the risk of buying a property and then discoverying the Maori have placed a special status over it?
One of the reasons I am voting Act. When we lose the laws we inherited from the Romans and the Magna Carta, ie our freehold then putting hard dollars becomes very risky.
Incidentally Maori are the biggest and largest Farm owners in New Zealand. Did you all note that wee fact?
Landcorp is New Zealand's largest farmer, with over $1.7 billion in total assets. It farms 117 beef, dairy, deer and sheep farms - 84 are owned directly by the company and the others are farmed on behalf of the Crown or private interests. Link
Last week, a friend of my mother came around to celebrate her 91st birthday. She claimed, her daughter's husband's 3100 acre dairy farm will lose $1 million this year. I hope Maori and Landcorp farmers will not endure a similar prospect.
Although is that rate any better than Rabos. Not sure if Rabos is compounding monthly or not, but I understand Rabos credit rating is higher. I understand Rabo used to have an even higher credit rating than the main banks, although that doesn't now appear to be the case.
I have yet to get covid. I still wear a mask if I enter a shop...rarely for me, and double mask when I have an appointment.
Most went through the vaccination without issues. I ..[had a stroke a wee while back] now have suddenly have high blood pressure, and muscle heart pains. I might add I have been awaiting for an urgent requested by the Cardiac specialist now 21 months. As you can see terribly urgent!
Do you wear googles too?
"Based on the existing literature, we assert that the eyes act as an additional entry point for SARS-CoV-2. "
https://link.springer.com/article/10.1007/s11010-021-04336-6
Cathie Wood files for Ethereum spot ETF. Spicy. Not getting the attention it deserves.
Seen her price predictions as high as $200K for ETH but $50K would be more realistic in the near term.
If you got in under $100, consider yourself lucky.
https://www.thestreet.com/cryptocurrency/markets/cathie-woods-makes-une…
Not sure I would trust her. The Ark Innovation Fund looks a bit sad, just huff and puff in my opinion. I like the idea of decentralised finance etc but not sure it will ever be allowed to happen.
Personally I think tech is one of the best future bets. I don't own any of their funds. Regularly adding to my ETH sack from 2017 though. Upside is wild and for L2s.
Credit rating agency has affirmed our sovereign credit ratings which are AA+ for our foreign currency rating, and AAA for our local currency rating. The Outlook remains: Stable. (Actually, the local currency rating is practically more important because the NZ Government only borrows in NZD.) Hmmmm...
https://debtmanagement.treasury.govt.nz/sites/default/files/2023-09/ECP…
Net FX swaps and basis swaps $1,950 millions Link
Great read if you have access to WSJ. The propadee doom loop in the U.S.
Today’s troubled market, fueled by rising interest rates and high vacancies, follows years of boom times. Banks roughly doubled their lending to landlords from 2015 to 2022, to $2.2 trillion. Small and medium-size banks originated many of those loans, and all that lending helped push up property prices.
That indirect lending—along with foreclosed properties, trading portfolios and other assets linked to commercial properties—brings banks’ total exposure to commercial real estate to $3.6 trillion, according to a Wall Street Journal analysis. That’s equivalent to about 20% of their deposits.
The volume of commercial property sales in July was down 74% from a year earlier, and sales of downtown office buildings hit the lowest level in at least two decades, according to data provider MSCI Real Assets. When deals begin again, they will be at far lower prices, which will shock banks, said Michael Comparato, head of commercial real estate at Benefit Street Partners, a debt-focused asset manager. “It’s going to be really nasty,” he said.
https://www.wsj.com/real-estate/commercial-real-estate-regional-banks-9…
Past time to eliminate overhead costs of rent extraction from national GDP accounting.
Whereas formal economic models explicitly state their assumptions (whether realistic or not), national accounting frameworks feature various implicit boundaries, which are not shown along with the data but are rather buried in technical notes on ‘methodology’. For example, the interest- based financial services mentioned above were originally considered mere transfers and thus outside the production boundary before 1968 (Christophers 2011). The 1968 System of National Accounts (1968 SNA) moved the production boundary by representing these services as inputs to an imaginary sector (thus making the assumption that they were ‘implicitly’ productive), whereas the 1993 SNA moved it further by considering such services to be the final consumption of households (and thus explicitly productive). The 2008 SNA went even further by stipulating that even the lending of banks’ own funds was a productive activity (dropping the pretense of ‘intermediation’ between savers and borrowers originally used to portray banking as a productive activity). In each of these cases the assumption of the level of productiveness of interest-based financial services was not explicit in the data, but rather implicit in the location of the boundary. Similarly, R&D expenditures by firms, governments and non-profit organizations were previously assumed to be intermediate inputs (or costs) of these entities, and thus deducted from GDP, but have been reclassified by SNA 2008 as investments in fixed assets, and are thus now counted in GDP. This adjustment added around $560 billion to US GDP in 2013 (when the country adopted SNA 2008) - more than Sweden’s entire output that year - and conveniently reinforced “America’s status as the world’s largest economy and [opened] up a bit more breathing space over fast-closing China” (EIU 2013). Different boundaries in the national accounts are thus based on different assumptions and lead to different results, but less explicitly than formal economic models. This contrast with explicit models is thus the second reason why MMT had not yet affected national accounting. Most economists do not even learn the details of national accounting in their professional training, and the measurement (or rather construction) of macroeconomic aggregates such as GDP is outsourced to official statisticians. It is simply not considered part of the conversation, neither in mainstream nor in heterodox circles. Link/GDP overhead
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