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 Wairarapa Building Society (WBS) cut it 12 and 18 month fixed rates today. And in case you missed it yesterday, Kāinga Ora trimmed all their fixed rates. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
The Heretaunga Building Society (HBS) trimmed some rates today. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
'GLACIAL'
Two major bank's have analysts saying house price gains 'remain glacial'. Both ANZ and BNZ economists have downgraded their 2025 house price forecasts, but they are expecting stronger increases next year.
'WE'RE WATCHING YOU'
The FMA is telling the financial services sector 'we are watching you'. Their latest Financial Conduct Report highlights conduct problems they are following and what are the areas of regulatory focus.
EXPORTS SURGE, IMPORTS DON'T
NZ has recorded its fourth consecutive monthly goods trade surplus in May. The primary sector is continuing to provide bumper exports, which saw exports rise +9.7% and imports fall -7.2% in the month for a monthly goods trade surplus of over $1.2 bln in the month, similar to April. And apart from the import-suppressed pandemic, we have never before has two consecutive months of $1 bln+ trade surpluses before. The combined +$3.75 bln surplus is the most for a consecutive run (but also apart from the pandemic period).
WHAT IS SELLING, WHAT ISN'T
Apart from the big year-on-year dairy (+17%), meat (+10%), and fruit (+41%) gains, it is probably worth noting that gold (+29%) and medical equipment (+17% - FPH?) were also big gainers. Notable for its [small -0.3%] decline is the export of wine. Aluminium was up only +0.4% and steel products fell almost -9%.
WHO IS BUYING, WHO ISN'T
In May we ran much largest trade surpluses with China, the USA, Australia, and Korea, and a much smaller trade deficit with Korea. Our trade deficit with Singapore is now a big deal, basically because we buy most of our fuel oil from their refineries. Our May trade deficit with Singapore exceeded that with Korea now.
NZX50 BARELY HOLDING
As at 3pm, the overall NZX50 index is up very marginally today, but down -1.2% for the past week. It is down -4.0% since the start of the year although up +7.9% from this time last year. Scales, Channel Infrastructure, Vista, and Argosy gain; Fletcher Building, Goodman Property, Air NZ, and Investore decline.
FINTECH BUYS FINTECH
Xero is doing a major equity fundraising to finance the US$2.5 bln/NZ$4.2 bln purchase of an Israeli-owned US dominated SME payments platform, Melio. Melio has a good growth history but has struggled through a number of growth imbalances and many layoff rounds. Some analysts say they operate in a "crowded market". Indigestion when expanding into the giant American market is a common fintech problem, one Xero themselves have experienced.
LONG TERM 'ESTIMATES'
StatsNZ does labour force projections, and it updated them today by looking ahead 50+ years. That covers one working life, taking those entering the labour force today at 15 who will be 68 in 2078. It will be no surprise that they found our labour force will age over that period. But it might be a surprise that it won't age as much as some may have assumed. Today, 71% of the population is now of 'working age' (15-64). By 2051 it will be between 64% and 75%. By 2078 is will be between 57% and 73%, they say. Whatever it is, they reckon average hours worked will be little different to now.
MONOPOLY PROTECTION
Winston Peters has moved to protect the Entain/TAB gambling monopoly in New Zealand. British sports betting company Entain is to be protected from any competition here.
MORE SECURITISATION
Hot on the heals of the Spiers securitisation we noted yesterday, Avanti Finance has announced it will be securitising $250 mln of their mortgage-based debt. They operate at the end of the market banks tend to avoid. These mortgage loans can support vehicle or other personal loan requirements. Their variable home loan rates range between 6.90% and 9.30%. Their 'specialist first mortgage loan' rates range from 8.34% to 10.94%. They also offer 'bridging loans'.
INFLATION DIPS
In Australia, their monthly inflation indicator fell to 2.1% in May, down from 2.4% in both March and April. That is a seven month low, and lower than the 2.3% rate expected. The main influence for the reduction were fruit & vegetable prices (from +6.1% to +2.8%), and travel & accommodation (from +5.3% to +0.6%).
MORE LIQUIDITY
In China, their central bank injected ¥300 bln into financial institutions through a one-year medium-term lending facility (MLF) into the country's banking system. This is what was expected.
SWAP RATES GO SOFT
Wholesale swap rates are likely notably softer today in a shift. 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 3.29% on Tuesday. The Australian 10 year bond yield is down -2 bps at 4.15%. The China 10 year bond rate is holding at 1.64%. The NZ Government 10 year bond rate is down -5 bps at 4.54% but was down -3 bps at 4.53% in the earlier RBNZ fix today. The UST 10yr yield is now down -5 bps from this time yesterday, back to 4.30%.
EQUITIES MIXED
The NZX50 is now down -0.1% so far today on weak sentiment. The ASX200 is unchanged in Wednesday afternoon trade. Tokyo is down -0.1% in early Wednesday trade. Hong Kong is up +0.7% at its open while Shanghai is up +0.1%. Singapore has opened up +0.5%. Wall Street ended its Tuesday session up +1.1% on the S&P500.
OIL PRICES FALL AWAY FURTHER
The oil price is -US$1.50lower in the US, back to just over US$65.50/bbl and now just under US$68 for the international Brent price.
CARBON PRICE HOLDS
The carbon price is unchanged at NZ$59/NZU but with few trades. The next official carbon auction is on September 10, 2025. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD DIPS AGAIN
In early Asian trade, gold is down -US$22/oz from yesterday at US$3328/oz.
NZD FIRMER
The Kiwi dollar is up +20 bps from this time yesterday at 60.3 USc. Against the Aussie we are up +20 bps at just on 92.8 AUc. Against the euro we are up +10 bps at 51.9 euro cents. This all means the TWI-5 is now at 68.1 and up +10 bps.
BITCOIN RISES AGAIN
The bitcoin price is now at US$106,593 and up another +1.7% from this time yesterday. Volatility has been low though at just on +/-0.9%.
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11 Comments
Nice story on Sam Bankman Fried. He bought 56.27 million shares of Robinhood in 2022 for an average of $11.52 per share. So $648 million for ~7.6% stake in the company.
Robinhood is currently trading at $82.18 per share. If he still owned those shares, they'd be worth $4.6 billion.
The DOJ seized them all after FTX imploded, and Robinhood bought them back for $606 million.
Guy who preached effective altruism just made the most expensive donation in history.
https://www.investopedia.com/robinhood-bought-back-usd606m-of-stock-pre…
In the U.S., there are approximately 500,000 more home sellers than buyers. This equates to about 1.9 million active home listings versus 1.5 million buyers—a 33.7% surplus of sellers. That's the worst since the 2008 housing crisis.
The average American h'hold has two-thirds of their retirement in their home. If the market breaks, she all goes.
It doesn't help when DJT wants houses to be shelter and people to make income from productive activity.
https://www.stessa.com/blog/record-500000-more-sellers-than-buyers/
The note about bridging loans recalls a feature in the downfall of RSL. An individual sells property A and buys property B and needs to pay for B before A is settled. Except having got the bridging finance the sale of A not only collapses but it is found to worth considerably less than what the sale price had been. Moral of the story - don’t overlook to back up the loan book with a guarantee, collateral from the borrower
Settlement risk is real
Why are banks glum...
is the panic frenzy of easy lending as the population furiously swaps houses back and forth for ever stupider prices over. Or are they sweating an continuing return to mean (still a ways off) will force them to start shooting the over leveraged.
If yes hold onto your hats it's 1987 again baby.
Next update is the expect 0.5% gains
The banks are obviously all sweating...... and basically demanding/praying for property price growth.
Its profit growth/bonus - existential for them all.
Take the filthy Bankers - economists prayers, with a huge grain of salt!!!
Have I missed commenters thoughts on Iran and what could happen next? It seems to me Iran has rolled over too quickly. Either the damage isn't as bad as Donald is saying, as The Pentagon is saying, or Iran is looking at retaliation later, once the dust settles. Also, if the damage is less, will Donald / Israel escalate again. I'm thinking, yes they will.
Too much chatter to be sure of anything. Both 'sides' are pumping propaganda; Trump is a (shallow) box of fireworks; there isn't enough to go around anymore - what could possibly go wrong?
Best not to overlook the secondary market. Iran has oil, Iran wants nukes. Nth Korea has nukes, Nth Korea needs oil and/or $ a billion or so. Much overland or friendly sky passage to avail the transaction.
'Whatever it is, they reckon average hours worked will be little different to now.'
Garbage in, garbage out.
We'll be working more than we ever have - real work. That's what the displacing of low-entropy energy will force.
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