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 here today, so far. But some banks are offering juicy incentives rather than lower rates. You can stay up-yo-date with these offers here.
TERM DEPOSIT/SAVINGS RATE CHANGES
UnityMoney has raised its 1 year term deposit offer by +5 bps to 6.00%.
SOMETHING FOR EVERONE
Today is all about Budget 2024.You can follow our extensive coverage here. Supporters and opponents can cherry pick their areas of interest. Balanced readers will get the full picture.
GETTING SLOWER
There were 2,926 new homes consented in April 2024, up +6.0% compared with April 2023. But that was because there were 20 working days in April 2024 but only 17 in April 2023 (plus +17%). Adjusting for that, residential building consent issuance nudged lower, even lower than for March. The tougher conditions resulting from the large increases in both build and financing costs is biting harder now. Year-on-year the weakness has been widespread, down -23% nationally. Consent numbers in Auckland are down -27%, Wellington is down -30% and Canterbury is down -16%.
RURAL SALES DECLINING
Fewer farms are selling and prices are slumping as the rural property market wilts. The Real Estate Institute says farm sales are subdued with a 'general decline in farming sales across multiple sectors'. They released this data in a report headlined "Rural Sales on the Rise", I kid you not. They won't be fooling buyers, nor sellers, (nor us). Why they can't be realistic baffles me.
DE-RISKING, DIVERSIFICATION, OR JUST OPPORTUNISTIC?
Statistics from the Meat Industry Association show the US became a more lucrative destination for red meat sales than China in April. It is a diversification shift and a turn away from what was a fast-growing 'new market'.
OPEN BANKING D-DAY ARRIVES WITH ANZ NOT QUITE THERE
Today's the day by when ANZ, ASB, BNZ and Westpac NZ were required to make Payments NZ's first open banking initiation standard available to third parties under an implementation plan agreed in May 2023. Payments NZ's implementation reporting shows ANZ not yet quite there. ANZ's reporting amber "on the basis ANZ has submitted an exemption application for redirect flow to web." Nonetheless Payments NZ is trumpeting "a massive day for open banking in Aotearoa New Zealand. In short, it’s the date set for the four largest banks to be ready to link up with registered third parties to offer open banking payments." Payments NZ says all four banks have now entered into partnerships with at least one third party to use the open banking standard.
UP BUT VERY BRITTLE
Non-residential building consent values rose +11% in April (by value) from a year earlier, but again after adjusting for that "Easter effect', they actually fell slightly. They were held up by some large Auckland projects. Other than Auckland, these consent values fell -7% s.a., and -38% from April a year ago. And that is compounded when you take into account the higher build costs/m2 and the higher financing costs.
MOODY'S UPGRADES ASB
Credit rating agency Moody's has upgraded its long-term issuer rating on ASB to Aa3 from A1 with a stable outlook. The move follows Moody's upgrading ASB's parent, Commonwealth Bank of Australia, to Aa2 with a stable outlook. Moody's has an A1 rating on ANZ NZ, BNZ and Westpac NZ. See credit ratings explained here.
DELEVERAGING PROGRESS
Bank leverage is now down to at least a 16 year low. With an average of bank assets 11 times higher than shareholder investment, that is down from the highest leverage level of 15.7 times n March 2009. Now Rabobank is the least leveraged at 7.0 times, while Kiwibank is the most at 13.9 times. The RBNZ slow-but-sure moves to make banks build their shareholder investments in these utilities is now showing some momentum - overall leverage has reduced for six quarters in a row.
UP BUT SUSTAINING IT MIGHT BE A CHALLENGE
Vehicle finance company MTF Finance has reported earnings up +17% to $47.5 mln and its loan book has grown +10% to $1.1 bln. But they also warn that; "Towards the second half of the year, MTF believes that the economic headwinds will impact lending volumes in the short term."
MORE NZGBs
Here is an item that is Budget-related. The bond issuance program for this 2023/24 year is unchanged at $38 mln. But it has been raised by +$2 bln in 2024/25. For 2025/26 the increase is +$4 mln, and 2026/27 it is increased by +$4 bln as well.
AUSSIE BUILDING CONSENTS SLIP TOO
In Australia, there was also a small rise in residential building consent levels in April from March (+1.3%) but also lower when seasonally adjusted for Easter. Markets weren't expecting that dip. Year-on-year however, these consent levels are more than +13% higher.
SWAP RATES FIRM
Given the continuing theme is that inflation isn't beaten yet, international rates are still rising. Wholesale swap rates are likely to be a bit higher again. Our chart below will record the final positions. The 90 day bank bill rate is still unchanged at 5.63%, a level it has hovered around for more than 70+ days. The Australian 10 year bond yield is up +5 bps to 4.51%. The China 10 year bond rate is now at 2.31% and up +1 bp. The NZ Government 10 year bond rate is unchanged at 4.96% from yesterday and the earlier RBNZ fix was at 4.92% and up another +4 bps from yesterday. The UST 10yr yield is up +6 bps from yesterday at 4.62%. Their 2yr is now at 4.98%, so the curve has shifted to be less at -36 bps inverted.
EQUITIES SINK
The NZX50 is down -0.9% in late Thursday trade, with no obvious reaction to the Budget. The ASX200 is down -0.5% in afternoon trade. Tokyo has opened down a chunky -1.5%. Hong Kong is down another -0.9%, while Shanghai is down a minor -0.1%. Singapore is down -0.4 at its open. Wall Street ended its Wednesday trade down -0.7%. All markets are grumpy on the prospect of consequences from higher-for-longer policy interest rates.
OIL EASES BACK
The oil price is -US$1 lower from this time yesterday, now just on US$79/bbl in the US, while now at just on US$83.50/bbl for the international Brent price.
GOLD EASES
In early Asian trade, gold has fallen by -US$28 from this time yesterday, now at US$2330/oz.
NZD EASES AGAINST THE USD
The Kiwi dollar has eased back another -+¼c to 61.1 USc today but that seems to be nothing to do with the Budget announcement. Against the Aussie we are unchanged at 92.4 AUc. Against the euro we are also unchanged at 56.6 euro cents. This all means the TWI-5 is now back at 70.4.
BITCOIN SLIPS MODESTLY AGAIN
The bitcoin price has slipped again today, now to US$67,904 which is down -0.8% from this time yesterday. Volatility of the past 24 hours has been modest, also at +/- 1.3%.
Daily exchange rates
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.