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
None to report today, so far at least.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either.
A BOUNCE FROM A LOW BASE
New mortgage lending (C31) rose in August from a year ago, up +6.8% on that basis and confirming the rise in house sales transactions that REINZ earlier signaled. But it is first home buyers leading the return, with mortgage lending at more than +21% above year ago levels and up more than +10% above July levels. Existing homeowners are staying put though. Investors are coming back too, but more modestly. Having notes all that, none of the August 2023 data was anywhere near as strong as the August 2021 data. So yes, we are seeing a recovery, but from a lowish base.
NOT SO GLOOMY
The ANZ Truckometer monitoring threw up something of a surprise result - there was a "late winter flurry" of activity, belying the doomsters. Not only was that seen in more car traffic, the commercial traffic "rebounded" sharply in August from July. ANZ said they suspect the improvement is more to do with strong migration and improved tourism; individual households are still feeling the squeeze.
BUT AIRFARES WON'T BE GOING LOWER
Although it has had a successful trading period so far, Air NZ (AIR, #22) today declined to give investors any guidance of what its current year results will be. "Given the uncertainty and volatility of some of these macroeconomic factors, the airline will not be providing guidance at this time." The upcoming cost of fuel is a major concern. "Although we reported our annual results only four weeks ago, fuel prices have risen substantially higher, and the cost to purchase that fuel in USD is even more expensive due to the weaker New Zealand dollar. Inflation continues to bite, driving increased costs across the whole business." AirNZ shares have slipped slightly today but they are down -11% from September 4.
MORE ELECTION POLICY RELEASED
Labour has released new policy on Social Housing, and on Climate Change. The National Party released its "speed up the traffic" policy, as well as more on Benefits and Income Support, including reintroducing some sanctions. You can find these and much more in our policy comparison tool.
YIKES
In Australia, farmers are flooding markets with sheep, trying to offload them ahead of the expected stress from the El Nino weather change. The pressure is so strong, Meat & Livestock Australia said it will now report on all sales from AU$1/head, down from the previous low bound of AU$10/head. Most are not selling that low of course, but the MLA market monitors can see the change coming, and fast.
SWAPS JERK HIGHER AGAIN
Wholesale swap rates are probably very much higher today and across the whole curve, especially at the long end. But the real reaction will come at the close. Our chart will record the final positions. However, the 90 day bank bill rate is down -1 bp at 5.71%. The Australian 10 year bond yield is up a very sharp +12 bps from yesterday to 4.44%. The China 10 year bond rate is up +2 bps at 2.73%. The NZ Government 10 year bond rate is up +8 bps to 5.29%, and still well above the earlier RBNZ fixing of 5.20% which was up +4 bps today. The UST 10 year yield is up another very sharp +11 bps to 4.57%. The UST 2yr has risen on +2 bps, now at 5.14% so there is a strong curve steepening going on (or more accurately, a strong unwinding of the inversions).
EQUITIES MOSTLY WEAKER AGAIN
The NZX50 is little-changed near the close. The ASX200 is down -0.5% in early afternoon trade. Hong Kong has opened down -0.9% to start its Tuesday trade after falling -1.9% on Monday. Shanghai has opened down -0.2%. Tokyo is down -0.7% to start its Tuesday trade. The S&P500 ended its Monday trade up +0.4% in defiance of the bond market moves.
GOLD SOFTER
In early Asian trade, gold is now at US$1916/oz and down -US$8 from this time yesterday.
NZD FIRMER
The Kiwi dollar is slightly firmer from this time yesterday, now at 59.7 USc and building on its recent gains. Against the Aussie we are up at 92.9 AUc. Against the euro we are up at 56.4 euro cents. That means the TWI-5 is up over 69.6 and a new 45 day high.
BITCOIN SLIPS A BIT MORE
The bitcoin price is marginally lower today, now at US$26,234 and down a mere -0.3% from this time yesterday. Volatility over the past 24 hours has been low at just under +/- 0.8%.
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37 Comments
Of course mainstream media sees large US banks borrowing more emergency cash and thinks QT/bank reserves rather than correlations w/global monetary breakdown. SMDH. No, not alarm on reserves, alarm on stuff that actually matters. https://buff.ly/3LCVNA9 Link
The borrowers will be pissed if they knew about Josh 'Downtown' Brown's long chat with Jeremy Grantham. Fortunately, low awareness of this kind of stuff means it's not debated at the water cooler.
"Forty years of lower and lower interest rates push asset prices up, particularly housing through the mortgage mechanism. How can it not? If you can afford to pay more for your house because the mortgage rates are 3%, sooner or later you pay more for it. And so the competition bids the price up to fill the available affordability. Now the mortgage [rate] is 7%. The same thing will happen in reverse. It doesn't happen overnight. Everyone in the market wants everything to happen yesterday. But with interest rates and mortgages, it can take a long time to percolate through. But you can be absolutely certain that it will."
"Real estate is a global bubble. It has driven house prices provably to multiples of family income all over the world: Beijing, Shanghai, Sydney, Adelaide, Canada, London. It used to be multiples of three and a half times family income. London is now 10 times. Toronto is worse. No one can afford to buy a house. No young kids come out to buy a house. This is not a stable equilibrium," Grantham said.
"House prices will come down... 30% would be a pretty good guess."
NHK Japan (English) uses a metric to suggest JPY is currently as weak as it was in the 1970s. It's great for foreign tourists, but terrible for Japanese traveling abroad. An Australian tourist says that eating out in Tokyo was "almost free."
This is also terrible for:
1) Japanese consumers who want to buy any imported products
2) Foreign workers, many of whom work in Japan expecting to send remittances to their family abroad
3) The Japanese government's big defense spending plan, which involves buying foreign arms
3.) Fongterror and Zespri
while I love them, I am not an onsen expert IT Guy - J.C. Might offer some thoughts - but this time we will have a couple of nights in Hakone, which I always enjoy. We will also be in Hokkaido and I am planning to get to Noboribetsu. I would love to get to Kyushu one day, and some of their nice looking onsen.
A few years back we went to Takayama which has some great sake and craft beer, and some good onsen not far away from it.
Not a resort however I've travelled to Takayama several times over all seasons over 20 years. My late wife's spiritual organisation has its HQ there. Spectacular train trip through mountain gorges.
https://en.m.wikipedia.org/wiki/Takayama,_Gifu
We have travelled on our own however mostly used Kintetsu travel (expensive+competence) & stayed in the traditional Haichibei ryokan
http://www13.plala.or.jp/hachibee/sp/index.html
OMG I was in hakone once for some festival at a temple with huge drums, got food poisoning from some yoghurt type drink and had stomach cramps for 12 hours..... but it was cute place. Off to turangi next week for skiing trout fishing, sadly no onsen, Takaanu hot pools lacks that special feeling, I run my spa at 40.5C some like it HOT
I was the same HM but committed to getting ‘good’ at it one summer and once you have it, it is extremely addictive. Also fantastic therapy standing in a river casting, listening to the flow, the birds, and taking nature in. (I’m introverted so it is my way of relaxing over summer and getting away from the noise). Ended up tying my own flies - catching your first trout with your own fly is very rewarding and worth aspiring to - if not now, then into retirement when time frees up a bit.
I also struggle with freshwater fishing vs my saltwater preference however coincidentally I'm currently reading a couple of John Gierach's old fly fishing books, these would definitely encourage you.
I don't know where you're based however Wellington high school run a pretty good flyfishing course including flytying.
Interest.co.nz certainly covers a wide range of "financial" subjects ;)
What resorts would you recommend HM?
It's not a resort but there is an onsen in downtown Osaka (Naniwa Onsen). It's the real deal. Not a bath house. Entry about NZD10.
If you're talking ski resorts, I used to group-rent a cabin for the season in Hakuba. Plenty of onsens there for a song.
One place I'd love to go back to. Went as a kid for a Soccer exchange tournament in 1998.
Started in Tokyo and a 6 hour bus ride to Hanamaki where the tournament was held. Vending machines everywhere. Driving in the middle of nowhere, farms everywhere, and there's a Coca Cola vending machine hooked up to a power pole.
Yield curve appears to be starting to normalise - if history repeats, then recession/asset price destruction could be ahead in the next 12 months (approx). I.e what we have witnessed so far has possibly just been the warmup/introduction. Main event could yet be ahead of us.
Not a forecast - just an observation of past events and how they have played out and the possibility of the same happening once more.
farmers hate the greens and labour anythiong but the left.... NZ First and winnie have now been that bad in the past expcept putting labour in..... so many on the right will hold their nose and vote for winnie so he brings 5-6 seats in, farmers are smart enough to see how MMP works
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