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 to report again today.
TERM DEPOSIT/SAVINGS RATE CHANGES
In case you missed it on Friday (because we briefly did, sorry SBS), SBS Bank raised its 4 month rate to 4.30%, its 5 month rate to 5%, and its nine month rate to 6.15%.
SETTLING IN HIGH
New Zealand's population growth from migration appears to have about doubled from pre-Covid levels. In February, a net +7630 people arrived, but the annual net flow is back a little to a still-high +131,000. While arrivals have largely held the line, departures have continued to trend higher over the last year. Westpac says they see this as a combination of catch-up movements after the Covid border closure, and people looking for opportunities elsewhere as job prospects deteriorate in New Zealand.
'ABOUT TURN'
The local services PMI has now shifted from expanding (February and prior) to contracting in March and the shift was as substantial as it was sudden, and killing the recently upturn. Of particular concern is the drop in new orders. And BNZ commented: "Combining today’s weak PSI activity with last week’s similarly weak PMI activity, yields a composite reading that would be consistent with GDP falling below by more than 2% compared to year earlier levels. That is much weaker than what folk are forecasting."
FEBRUARY TOURISM ACTIVITY STRONG BOTH WAYS
Inbound, there were 362,800 visitor arrivals in February, an increase of +94,100 from February 2023, so up +35%. About one-third of this increase was attributable to visitors from China. The 37,900 visitor arrivals from China is the highest number of monthly visitor arrivals from China since 50,300 in January 2020, shortly before pandemic-related travel restrictions were introduced worldwide. We get a peaking of Chinese inbound tourists this time of year because of the timing of Chinese New Year. For outbound travelling, there were 204,500 New Zealand-resident travellers who arrived back from short-term overseas trips in February, a record for any February month and the first to exceed 200,000. The previous record for a February month was 190,600 in February 2019. (The record number of New Zealand-resident arrivals for any month was 345,100 in July 2018.) In February, Australia was the top destination for Kiwi travellers, followed by China, India, the United States, and Fiji.
WHAT IS THE NEUTRAL RATE NOW?
New RBNZ analysis shows that due to high inflation expectations locally, the OCR would currently need to be about 3.9% to neither tap the brakes nor push on the accelerator of the economy. The current OCR – at 5.5% – is reducing capacity pressures and inflation they say.
ONE-YEAR MLF RATE UNCHANGED
Just for the record, the People's Bank of China had its monthly review of its benchmark One-Year Medium-Term Lending Facility Rate, which is the main rate at which the central bank lends to big commercial banks, and it held it unchanged at 2.5%.
SHIFTING UP
In Japan, machinery orders jumped +7.7% in February from January, reversing the -0.7% fall in January and far exceeding market expectations for just a +0.8% gain. That put them a healthy +9.4% higher than year-ago levels.
SQUEEZE TIGHTENS
Media companies in Australia are reacting with horror that their Federal Government is reportedly planning to ban advertising of unhealthy food options. It is an idea promoted by independent Teal MPs. This comes as it is expected Meta will stop paying for news content it takes for its service. The squeeze is making most of them uncomfortable about their future business prospects. 'Free' news access is under threat there, as everywhere.
SWAP RATES UP AGAIN
Wholesale swap rates are likely to be lower today although the change won't be large it seems. Our chart below will record the final positions. The 90 day bank bill rate is up +1 bps to 5.65%, a level it has hovered around for 30 days. The Australian 10 year bond yield is up +1 bp at 4.27%. The China 10 year bond rate is holding at 2.29%. The NZ Government 10 year bond rate is down -7 bps from this morning at 4.88% and the earlier RBNZ fix was at 4.82% and down -2 bps. The UST 10yr yield is up +1 bp from this time morning to 4.53%. Their 2yr is down -3 bps at 4.91%, so the curve is now little-changed, now by -38 bps.
EQUITIES GO MOSTLY RISK-OFF
In late trade today, the NZX50 is down -0.8% to start the week. The ASX200 is down -0.5% in a similar risk aversion mood. Tokyo has opened down -1.2%. Hong Kong is down -1.0% at its open. Shanghai is up +0.6% however to start its week. Singapore is down -1.1%. The S&P500 futures suggest Wall Street will open tomorrow bucking the trend. up +0.2%.
OIL PRICES HOLD
Oil prices have held at just under US$85/bbl in the US while the international Brent price is now just over US$89.50/bbl.
GOLD IN SMALL RECOVERY
In early Asian trade, gold is up +US$12 from this morning, now at US$2355/oz but well off its recent highs.
NZD HOLDS LOWER
The Kiwi dollar has firmed marginally from this morning's open to 59.4 USc. Against the Aussie we are a touch lower at 91.7 AUc. Against the euro we are now unchanged at just on 55.8 euro cents. This all means the TWI-5 is now at 69.2 and actually little-changed.
BITCOIN RECOVERS
The bitcoin price has risen today from its morning open, now up to US$65,634 and a +2.7% gain. Volatility of the past 24 hours has been high at just over +/- 3.0%.
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84 Comments
If they did, I think you'd be surprised.
Remember banks will add 2% to the OCR so that implies mortgage rates of 5.9%.
Further, economies are like oil tankers. Slow to start, slow to stop and turn in huge circles that take a long time (assuming they are actually in waters in which a turn is possible!). It would be over a year before the economy reverses its downward spiral and starts ticking up, and at least that long, more like18 months, before mortgage holders saw more money in their pockets.
Further, nervousness will prevail amongst consumers, so combined with reduced savings from the cost of living shock, they'll be slow to start spending freely. Saving and rebuilding buffers is what many will be doing.
The one big issue is that there's been a group of people for whom there has been zero effect. These people have no debt and won't enjoy lower rates from their TDs. This group will be dangerous if the RBNZ can't reign them in. Stricter LVRs and DTIs can do some of the job. Alas, government has just given them an incentive to buy houses by restoring the tax advantages. Maybe the NACTF will do what must be done to further restrain them by implementing a CGT? I live in hope.
I'd have no problem with them making a big cut to the OCR at this time. But they won't. It would a further admission that they've been doing it all wrong. They'll role out exchange rate risk reasons and the cuts will small but hopefully frequent. Like I say, I live in hope.
It could be a lot quicker than usual as many are on short terms at the moment. If the OCR and mortgage rates dropped 1.6% then when I refix in July I will have an extra $150 a week. Sure I’d save most of it, but I’d also spend some of it. Does the economy have enough capacity for people to increase their spending to that extent- debatable I guess.
They're a small team of humans that sometimes make mistakes. They probably don't have the resources to have personal assistants at hand to give second look at articles before being posted.
You're the first person I've seen to bring this up, so it's really a non-issue except for the hyper anal-retentive.
Stop being grumpy. I now mentally think when I am in the car that the rant is Himself opining to reduce my irritation of hearing how Fulton Hogan workers have many not working but leaning on a shovel. Let's hope the proposed mega tunnel for the Capital isn't given to Fulton Hogan. Himself sounds almost a vehement at Lendich!
The best western air defense failing to intercept a couple of small volleys of missiles and drones from (not Russia or China but) Iran is not on the approved narrative list, especially when this failure supposedly cost a billion dollars. This leads to many inconvenient questions.
Yes, I know the headline figure is 99% percent interception but there's cellphone footage of impacts and satellite images and other interception percentages from different sources, there. Air bases and air defense were hit and this is kind of stuff you cover up.
Please point us to those sources. What goes up must come down - somewhere. According to most reports over 300 missiles and drones where sent - not a small attack. Why drones - it sort of announced Iran's intentions long before the drones got anywhere near Israel. You comment sounds more like rage that the attack didn't do the damage that was hoped - just saying.
Iran considers the matter closed - why?
The balance of power in the region I would suggest is overseen by the nuclear armament capability of Israel in so much there has been precedence now set by both Moscow & Beijing in that deployment of such is fully justified in the context of an existential threat to the homeland. Israel therefore must obviously have severe concern over Iran attaining any sort of similar nuclear capability.While Israel’s elimination of a perceived senior participant in the Hamas attack can thus be explained what might be more the purpose is a provocation of Iran to retaliate and thereby allow Israel to justify a counterstrike specifically, if able, at the the perceived nuclear build up. That might explain why Iran has not maxed an attack, for the time being at least. Who knows? I don’t but it is very much a powder keg looking for a detonator right now.
Both sides will have a limited nuke stockpile even if they both officially deny it. There's a country (guess but I don't want to get into that) that might help Iran out if has not managed to refine enough uranium yet for a "full" stockpile.
The key piece of information you are missing is how little work the US or Israel has done on improving their missile arsenal in the last 40 years. All their stuff is old and expensive and thus in short supply.
Israel has about 100 Jericho 3s that's their only missile will reach the whole of Iran. These have to reserved for nukes and they have no lesser escalation options. Just think on that. MAD is not that simple.
Isn't the operational doctrine of Israel or the US significantly different to Iran though, they don't depend on ballistic missiles to deliver conventional ordinance, instead they depend upon their Air Forces.
Plus when US flies a bomber around a region, tensions are heightened, but generally there can be several hundred different reasons why a bomber is coming around the region aside from “they’re gonna nuke us”. However, if the US launches a ballistic missile and it starts heading a towards direction to a certain country, everyone’s first thought to this is going to be “DEAR GOD, THEY JUST LAUNCHED A NUKE” and you start that series of decisions that would lead to M.A.D.
The same might go for Iran if they develop nukes, them firing their missiles could be interpreted as a nuclear attack which could lead to a lot of mess to put it lightly, given they currently claim to not have nuclear capabilities them launching those missiles is less concerning than if the US or Israel were to do the same.
Go look into combat radius of these planes and then look at were Tehran is on a map and draw some circles and look up what combat radius actually means. Iran has modern AD as well.
I think US will be able to strike the north west of Iran for a very short while but refueling over Iraq or Syria will be a problem.
The point is if Israel uses nukes they loose even harder than just taking the hit and they don't have a lesser to escalate with, plus Israel is tiny to cover with nukes.
I don't care to get into the topic of if Iran could possibly have nukes. I am just assuming they have.
The USA deploys its strike force predominantly in 90 plus nuclear powered subs, whereabouts unknown at any one time. In terms of nuclear warfare though, even when considering only the Middle East region, who has got or hasn’t got so much of what is immaterial and nor does it need to be anything more than simple afraid to say. One nuke detonation, delivered anywhere by any means, whether in attack or retaliation, will be sufficient to inflict the proverbial Armageddon at said target(s.) There will be no victor. Pyrrhic would hardly describe it.
Intercontinental warfare changed almost indescribably, after Japan 1945. If you consider the American civil war of the 19th century the North through great industrial superiority ground down the South. In WW1 & WW2 the same applied for the victors. Yet the wars were protracted, fought over years. Nuclear strikes do not need to have an industrial base and the impact will be sudden. The 1945 detonations are minuscule compared to the weapons of today. Odds don’t then matter. Regardless of who strikes first the retaliation will be just as devastating. Nuke missiles don’t need to hit targets, just in the vicinity will do, shooting one down will make no difference. %Those in the 60s, Lord Russell, Michael Foote, the ban the bomb protests etc, knew all about it and it’s only got worse.
https://www.youtube.com/watch?v=4J_HusAqXNE
The middle camera is best. You can see hits from the missiles going down on the same places the interceptors came up from. When you decide you don't like that source go find me some stock footage of the attack that actually shows mass missile interception above Israel. I think the 300 number is very inflated with decoys and boosters.
"You comment sounds more like rage that the attack didn't do the damage that was hoped - just saying."
I would suggest you read it again and also Iran's comments on the matter.
Is 120 Ballistic missiles a "small volley". Do you have any examples of larger missile attacks?
In the Iran-Iraq war Iraq fired 177 missiles over the course of the entire war. In the first Gulf-War Iraq fired a total of 88 missiles during the entire war.
The largest volley of missiles that I could find which were all fired at once was during the gulf war where 88 Tomahawk cruise missiles were launched.
I was only referring to the ballistic missiles and not including drones/cruise missiles. It would be a large volley for any country including Iran. I doubt they were decoy ballistics since by the time you've launched a missile may as well give it a warhead as well considering the rocket part is probably the most expensive part.
It's supposedly 1% of their stockpile. It might be a week or two of production.
Do you have a source for this? That would mean they have 12,000 missiles sitting around which seems like a lot.
I think Iran played it fairly smart here, what they did was pretty significant but not enough to escalate stuff further (hopefully). Iran gets to say they sent a warning and Israel gets to claim it's defenses prevented catastrophe. Hopefully they can both leave it at that as a war between the two would be disastrous for everyone.
https://letmegooglethat.com/?q=how+many+missiles+does+iran+have
The US stopped counting at 3000 BM in 2022. No I don't have a source that you would accept for an actual estimate, that's why i used the word supposedly.
Again the defender is counting radar signatures that they are incentivized to inflate. They may not have been 120 missiles.
https://letmegooglethat.com/?q=how+many+missiles+does+iran+have
The US stopped counting at 3000 BM in 2022. No I don't have a source that you would accept for an actual estimate, that's why i used the word supposedly.
I googled it myself and it said what you stated above, I am genuinely curious about another source here as I couldn't find one. I doubt the US is being 100% honest in their estimation but another source of information wouldn't hurt, I know you used the word "supposedly" but surely you have got that information from somewhere?
I did try to get the source for the amount of missiles from Al Jazeera which I assume is slightly less biased than some other media outlets when it comes to inflating the amount of missiles, although the source is the IDF so maybe they are inflating it. Iran obviously knows how many missiles it fired, and the US/Israel probably knows exactly how many but from where we are there is no way to know for certain.
It's well beyond Al Jazeera. This is social media where people occasionally find satellite images of booster stages stacked up outside like big pipe sections. 12k would be a lower bound for the generally accepted stockpile count some of them older than others.
The MSM does not even understand that BM have booster stages that drop off about half way to the target and report it as downed missiles. You at least have go read actual reports from the US, these do get posted online.
Sadly the case of denial of womens rights to education, denial of women being of another religion, choosing what they want to wear & to travel independently, death sentences for being gay or transgender and imprisonment for being of another religion is just path of the course. But sure lets ensure the world keeps a fascist, human rights denying, fundamentalist, terrorism ideology & increases in targeted hate laws and genocide against other religious, ethnic, and sex groups. What could go wrong. It is a massive blind spot to say most people would not suffer significantly with rights removed and their comparative life chances or the right to being alive at all would not be affected significantly under such rule.
We even have fascist fundamentalist groups in NZ but here is a clue on why they are fundamentally flawed: they actually protest against things they widely accept and promote amongst themselves. Abuse of children, Check they condone both denial of education, assault, sexual assault and incest marring children and grandchildren amongst themselves. Abuse of finances, theft, fraud and abuse of the poor. Check they run active fraud schemes that pillage incomes, deny minimum employment rights & don't pay taxes for business income, and illegally claim benefits to spend on elite luxury goods for the fraud operators. Condoning of violence and death threats against innocent people. Check yep here too the have programs that encourage spousal abuse, attacks on members of the public without cause and more child abuse .. do I need to go on, I think the first 2 points means the organizations should have no ability to operate in NZ and shutdown, any more after that is just overkill. But ah when it is a charity or religious org doing crimes in our own country, NZ, where we actually have laws against doing those things and those orgs are promoting doing them it is aok. Halo effect cognitive bias in action.
I think it's a little disingenuous to ignore the obvious context here. That being that relative to Israel Iran look like the responsible actors in this situation.
Who is committing what looks like genocide?
Who has bombed a consulate?
Who looks most like they are provoking a war?
Who is doing a better job of mistreating and murdering the people they are responsible for?
The Iranian regime is quite simply despicable in many regards, but right now - today - Israel has lost the plot. They had an opportunity after the atrocities committed last October to come away with a more secure nation enjoying widespread compassion and support. Instead they have gone on a murderous rampage. And you know why? Because the right wing in Israel needs this. They need it to stay in power and keep anyone with an ounce of morality out. Fascists are like that. They thrive on a fearful populous.
I can't imagine how difficult it must be for the very many Israelis who have a decent sense of morality. It must look totally hopeless. Probably partly why half a million have left the country in the past 6 months.
According to this article from the 8th October, Netanyahu introduced policies to support Hamas as he wanted to divide the West Bank Palestinians from Gaza's to stop any chance of a one state solution. He also bombed Irans embassy to provoke a response so that he could justify an attack on Iran. Why do the West back him, he is playing them all for fools.
because it has only little to do with inflation itself , Instead they will keep it at a "restrictive level" for as long as they can before finding reason to hike it even much higher e.g. to 10% mark (they are brewing those conditions now carefully like geopolitical issues, new sanctions which will bring up commodities prices etc etc ) remember the Great Reset - means Reset of the rates from Zero to Hero
I haven't read the bulletin yet, but from the way it's described above it's pretty ridiculous to pretend the neutral rate can be established with any accuracy at any particular point in time. The neutral rate, as I understand it, is - at best - a long term 'reckons'. And only as an indicator of how expansionary or contractionary a central bank believe their funds rate is. Perhaps they've come up with a way to quantify it with greater precision? Or maybe they're come up a 'reckons' methodology that they'll be using from now on? Dunno. As I say, on my reading list.
LMAO
https://www.oneroof.co.nz/news/market-warning-homeowners-jumping-around…
Bong said Debedee the talking jack in the box
Oh dear said dougal
The chart for days to sell hasn’t really moved in the last two years once seasonal differences are adjusted for. This suggests the data set is stuffed.
tgere are so many houses sitting on the market (agree they are unsold) but this should have staged to significantly move the dial.
New ports and ferries or save 15 minutes getting through wellington at rush hour? Tough choice. I think these people in such a rush to get to the airport have fooled themselves into thinking they are being productive and more important than getting actual freight around.
Or it's just a boondoggle for mates.
National have said they expect cycling projects to have a genuine business case, it would be interesting to see the business case for this project. A city of 450k people needs a multi billion dollar tunnel just for the airport? Probably cheaper to build a new airport I imagine.
Who said that it was just for the airport? A significant proportion of Wgtn city live East & South of the Terrace Tunnel.
450k includes the Lower & Upper Hutt Valley, Jville, Karori, Khandallah, Porirua West & East, Plimmerton, Paremata, Whitby...actual Wgtn City is about half that & most will benefit from a comprehensive solution.
Assume you mean move airport North? South is Cook Strait.
Someone suggested Newlands a few years ago, frequently foggy and misty. Then there's the cost & timing of such a major infrastructure change to no benefit.
As I said, the airport traffic is the minor component of the congestion from Cobham drive to the Terrace tunnel. Moving the airport will make no significant difference, likely even worse with increased housing.
BTW, I live in Miramar.
No, I don't think that, based on my 50 years of prior experience of the situation before the expressways.
I was down in ChCh recently, the post earthquake bypasses around the city perimeter do a great job of mitigating congestion and providing smooth traffic flows avoiding the CBD. Exactly what Wgtn needs.
South & East of the Terrace tunnel will connect to the proposed route. Quite a few suburbs.
However, if I were a betting man I'd put a bob on Wgtns airport to motorway road still being argued about in 50 years time, just as it has been for the past 50 years.
(My personal opinion is that it would be a lot cheaper & quicker to cut a 4 lane motorway thru Alexandra park, across the front lawn of Govt house & the Basin Reserve to join up with the motorway (less than 1 test a year last time I looked, there's plenty of other places to play cricket for the handful who still do, they're well outnumbered by motorists).
Strangely, not everyone agrees with me.)
And BNZ commented: "Combining today’s weak PSI activity with last week’s similarly weak PMI activity, yields a composite reading that would be consistent with GDP falling below by more than 2% compared to year earlier levels. That is much weaker than what folk are forecasting."
Should be "some folk" ... Many here had very good reasons to expect exactly that.
Speaking of rentals. This landlord must be pissed.
One man’s artistic wonderland, created secretly in rented apartment, given protected status
Not really the trust is the landlord as they BROUGHT the whole building including the apartment.
"Together they established the Wirral Arts and Culture Community Land Trust (WACCLT), which launched a crowdfunding campaign through the website Ron’s Place, applied for listed status and eventually bought the building last year."
The trust can do what it likes with their own property they brought outright and the original owner is probably glad they don't have to deal with the excessive hoarding mess that was there after the guy died where the door could not even be opened. Selling it as an ongoing concern to people who would do all the work to make it liveable or useable again is actually the definition of a win win.
Keep this on hand for when Profile pipes up with his regular fossil fuel sponsored "facts".
https://www.theguardian.com/us-news/2024/apr/14/climate-disinformation-…
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