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
ASB trimmed two key rates today. An analysis of falling retail rates while wholesales rate rise, is here.
BILLION+ TICKET CLIP
Real estate agencies' commission revenues were flat for each of the last four quarters to the end of March, taking in $1.6 bln bln in that annual period, updated analysis shows.
$900 MLN MISSES OUT, LOOKING FOR A HOME
The latest NZGB tender drew 81 bids worth $1.4 bln for the $500 mln available in three tranches. The May 2030 $275 mln went for a yield of 4.73%, up +35 bps from the prior equivalent event 11 weeks ago. The May 2032 $175 mln went for 4.82% pa yield, up +10 bps from the prior event one week ago. And the May 2051 $50 mln went for a yield of 5.16% pa, up +12 bps from one week ago.
FARMERS' WALLETS CLOSING
New registration data for tractors shows that March 2024 had the lowest level for a March month (excluding pandemic-affected March 2020) since 2010, at just 164 nationwide.
'ENHANCED TRADING'
Fonterra has teamed up with Sharesies to offer its farmer/owners a new way to trade Fonterra FCG shares among themselves on the Sharesies platform and app. It will replace the NZX facility currently being used. The new platform is claimed to be easier, cheaper, and comes with more options and flexibility..
DIA ACCEPTS ENFORCEABLE UNDERTAKING FROM ACCOUNTING FIRM & DIRECTOR/SHAREHOLDER
Anti-Money Laundering and Countering Financing of Terrorism Act supervisor the Department of Internal Affairs (DIA), has accepted an enforceable, written undertaking agreement from ABC Accounting Services following a breach of the AML/CFT Act. The DIA says Alex Bob Cijffers, the sole director, shareholder and AML/CFT compliance officer of ABC, and ABC "will not carry out certain specified business activities," including; acting as a formation agent of companies, acting as a nominee director or nominee shareholder and providing registered office, business address or correspondence address services for a legal person. The DIA says ABC’s continued non-compliance with the AML/CFT Act, especially its failure to establish an effective compliance programme, led to a DIA investigation resulting in the enforceable undertaking. The DIA doesn't assert that Cijffers or ABC were engaging in money laundering or the financing of terrorism. Cijffers has previously featured in interest.co.nz articles as a provider of NZ company formation and financial service provider registration services to overseas entities.
START QUICKER?, BUT MORE TIME TO GET IT DONE
The Government is bringing the earthquake-prone building review forward, with work to start immediately, and extending the deadline for remediations by four years. The goal is to clear away regulatory impediments to get much of the stalled and required work started quicker.
TOWER’S NET PROFIT UPGRADE
General insurer Tower told the New Zealand Stock Exchange on Wednesday that its full-year underlying net profit is now expected to be greater than $35 million. This is the second time this year that Tower has hiked its net profit guidance, having already told the market in mid-February that it expected its full net-year profit to “be at the upper end of or exceed” of its previously advised range of $22m-$27m. “This updated guidance assumes full utilisation of the FY24 large events allowance which is conservatively set at $45m. No large events have been recorded in the financial year to date,” the company said. Tower is going to provide further details on its performance at its half-year results in May. In a research report from wealth management firm Forsyth Barr on Thursday, analysts James Lindsay and Will Twiss said “pleasingly, both upgrades have been driven by improved operational performance in the business”. They said two key drivers of improved performance have been lower-than-expected business as-usual claims and stronger-than-anticipated gross written premium (GWP) growth because of favourable retention.
JOBLESS RATE RISES MODESTLY BUT STILL LOW
Australia's jobless rate ticked higher to 3.8% in March from February’s five-month low of 3.7% but below analysts expectations of 3.9%. The number of unemployed individuals increased by +20,600 to 569,900 while total employment fell -6,600 to 14.3 mln. Those looking for full-time jobs rose +19,300 to 371,300 and those looking for part-time work rose by +1,300 to 198,600. There are now 9.9 mln people in full-time work, up +27,900, and 4.4 mln people in part-time work, down -34,500. Part-time roles make up 31.1% of their employed workforce. Their participation rate slipped to 66.6%. (The updated New Zealand jobless rate for March will be released on May 1. As at December it was 4.0%.)
TONGA REDUX
We should keep a close eye on the Mount Ruang, Indonesia volcanic eruption in the past 24 hours. It has been enormous and will affect the upper atmosphere, with a good chance it will modify our weather for years. More here. And remember this.
SWAP RATES HOLD
Wholesale swap rates are likely to be little-changed today. Our chart below will record the final positions. The 90 day bank bill rate is little-changed at 5.65%, a level it has hovered around for 30+ days. The Australian 10 year bond yield is back down -6 bps at 4.36%. The China 10 year bond rate is still at 2.27% and an all-time low. The NZ Government 10 year bond rate is down -7 bps to 4.97% and the earlier RBNZ fix was at 4.92% and down -5 bps. The UST 10yr yield is unchanged at 4.58%. Their 2yr is down -6 bps at 4.92%, so the curve is now -34 bps and marginally deeper.
EQUITIES MOSTLY HIGHER
But the NZX50 is heading to a -0.7% retreat near the close of trading. The ASX200 was up +0.6% in early afternoon trade. Tokyo opened its Thursday trade up +0.3%. Hong Kong opened today up +1.3%. Shanghai is up +0.6% at its open. Singapore opened up +1.2%. All this comes after Wall Street closed its Wednesday session with the S&P500 down -0.6%.
OIL FALLS FURTHER
Oil prices have fallen back another -US$2 to just on US$82.50/bbl in the US while the international Brent price is now just on US$87/bbl.
GOLD DIPS
In early Asian trade, gold is down -US$11 from yesterday, now at US$2373/oz.
NZD LITTLE-CHANGED
The Kiwi dollar has recovered slightly from this time yesterday to 59.2 USc and up +20 bps. Against the Aussie we are down -20 bps at 91.8 AUc. Against the euro we are unchanged at 55.5 euro cents. This all means the TWI-5 is now at 69 in a less-than +10 bps gain.
BITCOIN FALLS
The bitcoin price has fallen today from this time yesterday, now down to US$62,029 and a -3.3% net retreat. Volatility of the past 24 hours has been very high at just under +/- 4%.
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42 Comments
Bond prices move inversely to yields. I.e. If buyers see risk in the bond - the price falls and the yield rises.
[NZGB tender] The May 2030 $275 mln went for a yield of 4.73%, up +35 bps from the prior equivalent event 11 weeks ago. The May 2032 $175 mln went for 4.82% pa yield, up +10 bps from the prior event one week ago. And the May 2051 $50 mln went for a yield of 5.16% pa, up +12 bps from one week ago.
Many buyers of NZGB will be overseas, or overseas owned. They see FX risk. I.e. they worry they may cash in their bonds at a FX rate well below today's. Thus, the price falls but the yield rises.
The price/yield of a bond is a simple relationship that has no significance at all to market sentiment. It's simply how the proceeds of the bond are calculated. If the bond is bought at a yield higher than the coupon, then the the price is below par (100) and vice versa (I'm referring to clean prices, not dirty which has the accrual). The bond always redeems at par. So if you buy a bond at 90c and, then you will get the coupons * 100c, plus 100c on maturity. The 10c extra is the discounted difference of the yield you purchased the bond at in the open market and it's fixed coupon.
This has no bearing on the fx rate for investors. It's quite possible to buy NZ$ bonds and not transact spot FX. You can fund them via repo or forward fx (this isnt spot fx). Many overseas investors do this or do currency overlay, they want to take the spot risk out.
I know how bond prices work.
My point, that you have appeared to have missed, is that bond holders can sell their bonds at anytime before maturity. Many do. The price goes up and down over the lifetime of the bond, and as economic situations change - particularly short, medium and long term interest rates relative to their bond's fixed rate.
Thus, should they believe that they would sell at NZD at a profit in NZD, or wait until maturity for the same, but then have to transfer their NZD back to their home currency - AT A FX LOSS from what they purchased the bond at - then they will demand a higher yield at issue.
I have a bid, somewhere down here in the gloom
many big players are prepared to ride out a lot of FX risk on the basis of long term reversion to the mean etc.... until we have one of those ... events
its normally covered by the risk premium of NZD over USD... but, if we have to cut before fed we may not have a premium... hence the problem, and a sudden rush .. for a locked exit door, in a smokey theather when someone shouts FIRE
US is drowning in debt, Im not sure the reasons. Seriously though, US economy is doing well under Biden, he is making America Great, with great output, he's also fighting to get living costs and housing costs lower.
Biden admitted he's not able to help all, he recalled he met a man drowning in debt and finding life tough. He told him "sorry Donald, but I cant help you"
Sorry, it wasn't clear what you know/don't know.
Many bond investors don't have NZ$ exposure, I explained that, so they are agnostic to the currency. Those that do have Kiwi exposure, ie bought Kiwi sold domicile currency - then for some it matters and for others not. Most large fixed income investors are just going to reinvest in other Kiwi bonds and will see out any Kiwi weakness. It's just a rounding error for the large guys. The small guys will mostly hedge the currency.
You said, "Many bond investors don't have NZ$ exposure [...] so they are agnostic to the currency". But then you also say, "The small guys will mostly hedge the currency." Why wouldn't the big guys likewise have FX consideration? And who are the bug guys? (Hint: they're not locally owned.) Are you sure you have firm grip on how this all works?
Not going to engage further. But suffice to say, any player, big or small, that can get a seat at the NZGB auction and buying long bonds in the NZD currency, will have the their FX exposures well and truly sorted before placing a bid.
When it becomes clear that the other person is out of their depth, to engage further is rubbing the other person's nose in it, and is IMO not a nice thing to do. The fact that you couldn't see that suggests you likewise understood none of it.
But thanks for comparing me to Socrates. That's quite an honor. But whether Socrates ever did 'run away' from a question, we'll never know as all his utterances were written by his students who may, or may not, have embellished them and/or left out the less nice parts, and perhaps even attributed words to him that he never actually said. Socrates reportedly did start many discussions with the suggestion "he knew nothing". Have you ever tried that, Pa1nter? Or does your ego prevent it?
Depends which NZX stocks you own. We have several standouts in our portfolio. Strong dividend payouts along with imputation credits. Capital gains a bonus and some stocks have delivered plenty. Plus we can get our hands on 5k or 50k or significantly more in less than three days if our family needs it.
Those of us who through the election claimed labour and national were exactly the same brand of uselessness are again proven correct.
On RNZ .An application has been made to continue the use of motels as emergency housing in Rotorua.
People voted FOR this bollocks.
Considering they had nowhere for the people to move to the last govt signing up to that was pretty likely to break agreements. Its like a new years resolution to quit doing some highly pro social activity, join and regularly go to a gym you don't have time for and to increase investments by 30%. Is it likely to happen no, but it sounds good at the time and you don't actually need a plan to follow through when you announce the promise.
The US now sharing the concern that the Koreans and Japanese feel about the tanking of their currencies. Sh*t is starting to get real.
Finance leaders from the United States, Japan and South Korea agreed to "consult closely" on foreign exchange market developments in their first trilateral meeting on Wednesday.
The finance leaders also acknowledged "serious concerns of Japan and the Republic of Korea about the recent sharp depreciation of the Japanese yen and the Korean won," according to a joint statement released after the meeting.
https://www.marketscreener.com/quote/currency/US-DOLLAR-RUSSIAN-ROUBLE-…
It's time to get worried kids
https://youtu.be/29ECwExc-_M?si=w9xzk8CjrgkuToP-
This was the previous incarnation
It's very real.
Robot 'muscles', unlike non-insect animals, can work both contracting and expanding, or not just pulling but also pushing. And 360 degree - or infinite - rotation isn't unusual. Nothing new there. They've been doing this for decades. Watch the videos of robots in factories. Whether you use two 'muscles' like a human joint, or just one that can both the push and pull, comes down to cost.
But when the robot is in human form - then, yeah, looks totally weird.
Edit: The robot showing extraordinary agility is likewise completely real. It uses the same 'systems' we have in the human body. Our balance systems (ears, eyes, internal organs, etc.) are done in robots by gyroscopes and 3D motion detectors (accelerometers) like we have in phones (and planes, cars, ships, kids games, etc.) (They actually use many more than are in phones and they provide far greater accuracy and at far greater speed than phones, etc.) The robot's mass, and its distribution, is programmed into the 'balance software' that does exactly what the human brain does (without us even thinking) to maintain balance. Just very complex, but very cool, programming. While it looks like A.I. It really isn't. Where it becomes A.I. is when the instructions to do something are delivered in a few sentences that a human would understand. Like, "See that deer over there? I want it for dinner". And the robot tracks it down, kills it, skins it and cooks it for you ... all in time for dinner.
We should keep a close eye on the Mount Ruang, Indonesia volcanic eruption in the past 24 hours. It has been enormous and will affect the upper atmosphere, with a good chance it will modify our weather for years. More here. And remember this.
Thank you for this, I just went long wheat for 25/26. Anyone got any other ideas? I have more cash I could put to work.
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