Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
The Bank of China cut its fixed home loan rates for terms 6 month to three years. Most of these cuts are impressive, matching ICBC for 6 months and 1 year, making its 18 month rate 4.85%, its 2 year rate 4.95% and their three year rate down to 5.05%, and all market leading. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
Bank of China raised all its rates (yes, raised), off the low levels that prevailed before this move. Unity Money cut all its savings account rates rather hard, most by about -45 bps. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
NO CAPITAL GAINS & NOW NO RENTAL GAINS
There has been no growth in residential rents for the past five consecutive quarters. Our Residential Rent Report finds that the national median rent has stagnated at $600 a week with no sign of rental growth in the current market.
SENTENCED
Two IT contractors for Spark New Zealand were today sentenced to three years’ imprisonment in the Auckland High Court for their roles in a Serious Fraud Office (SFO) bribery and corruption case involving more than $4 million in kickbacks. In April 2023, the SFO filed charges against the IT contractors, both of whom are Australian citizens. Sean Bryan pleaded guilty in September 2024 to two representative charges of giving gifts to an agent. Mark Lester pleaded guilty in October 2024 to two representative charges of accepting gifts by an agent. They both had interim name suppression until now. This was New Zealand's largest-ever private sector corruption case.
NZX HOLDS ON
As at 3pm, the overall NZX50 index is up +0.2% so far today. It is down -1.1% for the past week, down -3.2% since the start of the year, and up +7.8% from this time last year. Spark, Fletcher Building, Tower, and Meridian lead the gaines as Serko, F&P Healthcare, Mainfreight, and Vulcan Steel top the decliners.
SOLID EXPANSION OF THE INFRASTRUCTURE PIPELINE
The March 2025 Pipeline update also shows that the overall value of initiatives in the Pipeline with a confirmed funding source has increased +3.4% since December 2024, up +$3.7 bln to $111.6 bln. A year ago, this Pipeline recorded projects valued at $92.3 bln, so a +21% rise since then.
EYES ON THE NEXT DAIRY AUCTION
Tomorrow morning's full dairy auction might see the SMP price hold but the WMP price fall back a little. At least that is what the derivatives pricing is suggesting. But these small shifts are unlikely to influence a change in the milk payout levels.
CHINA CUTS KEY BENCHMARK RATES TO RECORD LOWS
China has cut its key lending rates to record lows at today's May fixing. The one-year loan prime rate, the benchmark for most corporate and household loans, was lowered by 10 basis points to 3.0%, while the five-year LPR, which is the basis for mortgage rates, was cut by the same margin to 3.5%. These changes were what markets were expecting and the first reductions since October. It is another in the string of monetary easing measures announced earlier this month aimed at supporting a sluggish economy and cushion potential fallout from the ongoing trade tensions with the US.
THEIR FOUR PILLAR BANKS FOLLOW WITH TD RATE CUTS
That official move was immediately followed by the four largest Chinese state-owned banks who cut deposit rates by between -5 bps and -25 bps. Those four core SOE banks are Bank of China, China Construction Bank, ICBC, (all of whom have New Zealand subsidiaries) and the Agricultural Bank of China.
SWAP RATES STILL ON HOLD
Wholesale swap rates may be little-changed at the short end again today and across the curves. Keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was down -1 bp at 3.33% on Monday. The Australian 10 year bond yield is down -4 bps at 4.52%. The China 10 year bond rate is down -1 bp at 1.68%. The NZ Government 10 year bond rate is down -1 bp at 4.69% but was up +1 bp to 4.57% in the earlier RBNZ fix today from yesterday. The UST 10yr yield is on 4.454%, down -5 bps.
EQUITIES HOLD FIRE
The NZX50 is up a minor +0.1% today, and the ASX200 is up +0.5% in afternoon trade. Tokyo is also up +0.5 in early Tuesday trade. Hong Kong has risen +1.0% at its open while Shanghai is up only +0.1%. Singapore has opened up +0.2%. Wall Street ended its Monday session with the S&P500 up a minor +0.1%.
OIL LITTLE-CHANGED
The oil price is a little lower at just over US$62/bbl in the US, and still just on US$65.50/bbl for the international Brent price.
CARBON PRICE FIRMS MARGINALLY
The carbon price firmed slightly today, up +50c to NZ$56/NZU on small volumes. The next official carbon auction is on Wednesday, June 18, with a $68 floor price. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD FIRMS
In early Asian trade, gold is lower, down -US$17/oz from this morning at US$3211/oz.
NZD STILL ON HOLD
The Kiwi dollar is up +20 bps from yesterday, now at 59.2 USc. Against the Aussie we are down -10 bps at 91.8 AUc. Against the euro we are unchanged at 52.7 euro cents. This all means the TWI-5 is now at 67.6 and marginally firmer.
BITCOIN RISES
The bitcoin price is at US$106,093 and up +1.4% from this time yesterday. Volatility has remained moderate at +/-2.2%.
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15 Comments
NO CAPITAL GAINS & NOW NO RENTAL GAINS
'Tis but a scratch.
Unless of course, you have the skills to create your own capital and rent increase by adding value.
I used to know a couple of Irish builders in WGTN that could partition a big bedroom into two in a student hovel in weekend, adding an old door and make the entire thing look distressed enough that no one would ever know... they where masters of the value add....
Would takes you longer to have it added to the LIM, but they did not seem to care about such issues. Big old houses turning 4 rooms into 6 can really help your bank account and students do not care.
[ unacceptable comment removed. Ed ]
Forget about credit downgrades (nobody takes any notice in any case) this is what the world has to learn to cope with....
https://www.youtube.com/watch?v=0eRXy7BHziU
....may all the gods help us.
Trump's reply to journalist's specific questions:
I think something's going to happen
As you say Frank, "God help us"
ZH has an article but it's for sub's so I'll use Wolfstreet. Not good news for holders of JGB's, 40 year finished at 3.59%
Japan, which now has substantially more inflation than the US – 3.6% overall CPI and 3.2% core CPI – is watching in astonishment as its very-long-term bond yields spike in a dramatic manner, while the Bank of Japan has accelerated QT this year, which it started in mid-2024.
The superhero is the 40-year JGB yield, which jumped another 11 basis points at the moment, for a spike of 100 basis points since the beginning of April, to 3.56% at the moment. A rising yield means a falling price.
Hope big insurance companies have long dated bond yield protection hedges
I'll try and be somewhat fair and balanced with my links.
The U.S. Federal Reserve just pulled off something stealthy — over four days last week, without fanfare, the Fed vacuumed up $43.6 billion in U.S. Treasurys. That’s $8.8 billion in long-dated 30-year bonds on May 8 alone, plus another $34.8 billion earlier in the week. Not exactly small change.
Quietly returning to the quantitative-easing trough isn’t standard Fed housekeeping — it’s like a bank robber returning to the scene because he forgot his car keys.
Let’s talk straight: This isn’t tightening. It’s stealth easing. It’s monetary policy on tiptoes. Some traders have begun to notice, and smart investors should too.
Financial analyst Lyn Alden counters that the Fed is simply reinvesting proceeds from maturing bonds to prevent rapid balance-sheet shrinkage. Technically true — but let’s be clear: bond buying is bond buying, whatever label you slap on it.
ZeroHedge always has the good dirt first.... I have been reading it since before "I am Chumbawamba", must have been about 2009 when it started.
Central bankers typically have fewer tells than professional poker players, but right now they’re twitching.
TV1 news:
The man who wrote the art of the deal and claimed he could end the war in Ukraine on the first day in office, is now far from reaching any deal, and he is contemplating abandoning Ukraine altogether
Yes, and when discussing his call with Putin in the Rose Garden - he mentioned how much Putin went on about how he admired Melania - well, of course, so much so that they featured her nudes on Russian state-run TV;
https://www.snopes.com/fact-check/russian-tv-melania-trump/
Trump is so, so stupid he has no idea when he's being made fun of - straight to his face.
In parts of the Donbas, the front line is only 35-40km different then this time last year.
Putin the super power seems to be... bogged down. Now sending people to the front line with only a months training, the Ukrainians are picking them off with no mercy, the Russians have lost many more men then the Ukrainians
RBA goes DGM
The Reserve Bank of Australia has cut the cash rate to 3.85 per cent and downgraded its key economic forecasts over concerns Donald Trump’s trade war will cause consumers to save more and force businesses to rethink investment plans.
Releasing its quarterly economic forecasts on Tuesday, the RBA lowered its projections for growth in exports, business investment, and household consumption as it slashed its forecasts for US economic activity.
“The outlook for the global economy has deteriorated since the February statement. This is due to the adverse impact on global growth from higher tariffs and widespread economic and policy unpredictability,” the RBA said in the statement on monetary policy.
“Economic policy uncertainty has increased sharply alongside recent global developments, and this is expected to prompt some households to increase their precautionary savings and some businesses to postpone some investment decisions.”
=> lower inflation => lower interest rates.
I'm so surprised... NOT !
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