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
Westpac raised all its fixed rates for terms 1-5 years. Details here. All current mortgage rates are here. And note, you can compare mortgage offers with our new calculator that takes into account other costs and cashback incentives, here.
TERM DEPOSIT/SAVINGS RATE CHANGES
Westpac also raised its term deposit rates for terms 1-5 years. Heartland Bank also raised many rates. Ditto AMP. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
FOOD INFLATION IS RISING
StatsNZ said food prices were +4.5% above year-ago levels in February driven by higher prices for meat, poultry and fish. That is up from a +4.2% rise in the year to January. But the month-on-month January and February changes are a bit dodgy. (StatsNZ was supplied inconsistent data in January by one large supermarket chain and they didn't pick it up at the time. They have now, so there has been some not-insignificant revisions in the January data.)
RENTS ARE FALLING
The same StatsNZ release included a fall in rents in February. As Westpac has noted: "The most notable feature of today’s update was the 0.1% fall in average housing rents. That is the first fall in nationwide rents in the past 20 years (the furthest back we have monthly data). The summer months are usually the peak period for new rents. However, with low population growth and large numbers of properties available, there has been downwards pressure on rents in many parts of the country. That includes major urban areas like Auckland and Wellington. We expect rental growth will remain subdued over the course of this year."
FEBRUARY VERY AVERAGE, WORRIES ABOUT MARCH
The conflict in Iran is coinciding with what is usually the busiest month of the year for residential real estate. The housing market may be about to face its biggest challenge since the pandemic. Our February Housing Market Activity Report shows languid activity in the month, the one just before what is traditionally the year's strongest month in March. But sudden economic uncertainties are expected to take the top off March activity.
TAKE A BREAK AND DO OUR QUIZ
Our quiz has been updated for this week's edition. You can do it here. And a new one will be added every Monday.
NZX50 DECLINES AGAIN
As at 3pm, the overall NZX50 index is down -0.3% so far today. It is heading for a +0.3% rise over the past five working days, and is down -0.8% from six months ago. From a year ago it is now up +7.9%. Market heavyweight F&P Healthcare is down -1.4% so far today. Kathmandu, Investore, Vista, and Genesis top gains as Mercury, Serko, F&P Healthcare, and EBOS are the big decliners.
ANOTHER BIG BOND OFFER COMING
Gentailer Mercury said today that it is seeking bond funding of up to $250 mln for a 7 year unsecured, unsubordinated, fixed rate "green bond".
NO DECLINE SIGNALED YET ...
A look at today's derivatives pricing suggests that tomorrow full Dairy auction should see prices hold or firm slightly.
... BUT THE CHALLENGES ARE MOUNTING FAST
ANZ's latest Agri Insight sets out the risks of the Middle East conflict on the rural sector. They say higher global fertiliser and fuel prices are going to hurt, compounded by distruptions to significan trade with the Middle East, especially for dairy products. "It’s not clear how long this conflict will last, but the longer and more destructive it is, the longer global energy markets will take to recover. The situation is challenging, but it’s not time to panic. New Zealand’s agri sector is in a much better place than it was in 2022 when the Russia-Ukraine war began."
LINKING LAUNCH FUNDING TO LONG TERM FUNDING
While we are talking about the rural sector, it is worth noting that major rural financial advisers NZAB has launched a new debt capital platform (initially of $500 mln) to the agri sector, a private credit option for funding on-farm projects that don't yet meet bank criteria. This funding is intended to bridge the phase until the project can get bank support.
EYES ON THE RBA
At 4:30pm today, the Australian central bank will release the outcome of its review of its cash rate target settings with a backdrop of high and rising inflation before the Middle East war started. The RBA is the first central bank of at least nine this week to review monetary policy in these changed circumstances. Markets have priced in a two-thirds chance of a +25 bps rate rise to 4.1%. Most analysts have come to the view it is the likely result too. The RBA is prioritising its inflation fighting mandate, they expect. After 4:30pm you can see details of their decision here. Update: They raised their cash rate target to 4.10%. But it was a close-run thing. Five members voted for a rise, four to leave it unchanged.
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SWAP RATES ON HOLD
Wholesale swap rates are likely to be little-changed today. Keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was up +1 bps at 2.53% on Monday. Today, the Australian 10 year bond yield is down -2 bps at 4.96%. The China 10 year bond rate is up +1 bp at 1.84%. The Japanese 10 year bond is up +4 bps at 2.28% today. The NZ Government 10 year bond rate is now at 4.74%, unchanged from this time Monday. The RBNZ data is now 'prior day' with the Monday rate up +7 bps at 4.73. The UST 10yr yield is down -2 bps from yesterday, now back at 4.24%.
EQUITIES MOSTLY POSITIVE
The local equity market has fallen -0.3% in Tuesday trade so far. The ASX200 is unchanged in afternoon trade. Tokyo has opened on Tuesday up +0.5% in its opening trade. Hong Kong is up +1.5% but Shanghai is up +0.4%. Singapore is up a startling +1.3%. Wall Street ended its Monday trade up +1.0% on the S&P500, a level it held all session.
OIL EASES SLIGHTLY
American oil prices have fallen -US$2.50 with the WTI benchmark now at just over US$96/bbl, while the international Brent price is down -US$1 to just over US$103/bbl. There are still no ships transiting the Straits of Hormuz, other than a handful of ships with Iran's blessing.
CARBON PRICE UNCHANGED
There have been a few larger trades so far today on the secondary market, but the price is unchanged at $44/NZU. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD FIRMS
In early Asian trade, gold has stopped falling, up +US$10/oz and now back at US$5022/oz. Silver is up +US$1 to US$81/oz.
NZD HIGHER
The Kiwi dollar is up +50 bps from this time yesterday against the USD, now at just over 58.5 USc. Against the Aussie we are down -20 bps at 82.6 AUc. Against the euro we are up +20 bps at 50.9 euro cents. This all means the TWI-5 is now just over 62.2 and up +40 bps from where we were this time yesterday.
BITCOIN HIGHER
The bitcoin price is now at US$75,188 and up +3.4% from this time yesterday. Volatility has been moderate at +/- 2.5%.
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31 Comments
Across the pond, it appears Team Albo's cunning plan to lure the punters in to home ownership at the top of the market with 5% deposits and govt guarantees is looking shaky.
The punters are swimming in debt. If interest rates are going to start rising, so will their debt obligations.
Fresh APRA data revealed a dramatic jump in risky mortgages: loans with loan-to-value ratios of 95 per cent or more soared from $3.3billion to $5.4billion in the December quarter.
Ponzi cheerleaders, bank economists, media, etc will say risky mortgages are a tiny proportion of the total mkt. This data is always understated and no doubt people will also be hurting at the top end of town.
https://www.dailymail.co.uk/news/article-15649531/five-percent-albanese…
auction clearance rates have plunged in the lucky country last couple of weeks into the 50's %, ours 39%
There is a big difference between auction clearance rates here from there.
Here we [interest.co.nz] are strict. If a property doesn't sell on the hammer drop, we say it is passed in. Because it is.
In Australia, those reporting their auction activity let the R/E agents determine whether it 'sold at auction'. So subsequent negotiation that results in a sale very often gets counted as a successful auction. Many days may pass. After all, it is attractive marketing to claim high clearance rates. There is a wide variety of interpretations. We don't know of anyone using the hammer-drop standard in Australia.
So you can't really compare clearance rates between the two.
people will also be hurting at the top end of town
This is the end of town about to be bent over by AI
Sounds more like robotics than AI
RBA OCR increased 0.25 to 4.1%
Looks like a line call "Today's policy decision was made by majority: five members voted to increase the cash rate target by 25 basis points to 4.10 per cent; four members voted to leave the cash rate target unchanged at 3.85 per cent."
Pathetic, 0.25% was more than justified before the recent events.
Their inflation is running at 3.8%, since then a war has significantly increased the price of fuel, and 4/9 of them voted for no change? WTF? I would have voted 0.5%
Just imagine Jimbo if their inflation was 0.8% out of band in the opposite direction (ie 0.8% deflation). There would be emergency rate cuts and money printing going on and alarm bells going off.
But inflation that destroys the value of money and domestic living standards - well who cares?!
I continue to ponder in bewilderment at the bias and realise the entire system has corporate capture (even though we are meant to believe the RBNZ is independent and free from any bias) - to the retail banking industry and private debt - and not towards the living standards of the average person in society. If they valued the living standards of the average person in society over retail banks and private debt, then the action to tame inflation would be immediate and equal in response as it is when they face deflation. But it isn't....The system has been captured to protect the interests of retail banks (and in my opinion has become corrupt).
Any opportunity to cut rates is taken and taken swiftly. Any need to dramatically hike rates to tame inflation is taken extremely slowly and seemingly with significant regret - and yet inflation is a cancer on society and living standards, but they don't seem to care about it.
And watch the press conferences, when they announce rate cuts it is almost with a sense of glee and happiness, but when they have to hike rates, its as if it is done with significant pain and discomfort. It should be neither if they are impartial and just focused on their 1-3% mandate.
Did they employ the guy from Turkey? It looks like Turkey's inflation rate has improved immensely since they got someone reasonable.
The system has been captured to protect the interests of retail banks (and in my opinion has become corrupt).
so join them, your hedge is golden and shiny... and live rural with firewood and veges and free meat, good water supply and solar panels... I HATE chocks but will get if The SHTF
To join you need enough money to buy freehold land, gold, solar, etc. Sounds like a boomers only club.
Then blame the younger generation for their obsession for growth.
Yes, making money in a recession is normally a rich mans game.
Most do not understand they can short things
but I note you can trade proxies for all these things on margin via CFD
Normally the best way is to buy low. Shorting is what you do before the recession.
US Equities are still at nose bleed levels, maybe prudent to buy out of money puts here (or on a squeeze even cheaper), Vix is very low, rather then raw futures exposure.
Markets take the stairs up and the elevator down, but if the war ends we going to see elevator up
and the top was Oct 2021! for nz
Good point
less then 1% of the average joes even realise and have a way to short.
maybe 1% of 1%
that would be 1 in 10000 , I think its probably less then even this who have Saxo or CMC markets accounts at retail level, more kids probably trade crypto
Normally the best way is to buy low. Shorting is what you do before the recession.
That's like saying you can only buy at the lows as we come out of a recession.
You can buy or sell at any point in any market, sometimes entry is better via options for sure,
I 100% disagree that "the best way is to buy low" it totally depends on the time and situation, its just that joe sheeple has been told just to keep $ averaging down... spray and walk away!
Hedge funds are sitting on their largest short book against US stocks since the 2022 bear market, setting the scene for an explosive rally in the world’s biggest sharemarket if there is a sudden de-escalation in the Middle East.
Speculative investors have been upping their bets against Wall Street since the Iran war broke out just more than two weeks ago.
The war has pushed oil prices above $US100 a barrel and threatens to reignite inflation. Investors are also looking to make money from artificial intelligence disruption.
Sell that squeeze!!! at the top if you can... or maybe buy gold as it dips is a smarter move, as NZD will rise.!!!
markets often form double tops, expect the new shorts to emerge close to S&P 500 highs if this occurs
In all of this excitement , lets not forget the last 3 retail banks are about to lift MORTGAGE rates and the same time petrol is goin nuts!
Green shots now someway behind us in the rear view mirror!
I wont invite you to my next party.
Mate I can bring the home brew, moonshine and dancing girls!
OK you're in
Green shots? You mean green snots. Big surprise sneeze will do that.
I do find it odd that the same people that accused Orr of looking through transitory inflation are now saying the RBNZ should look through this transitory inflation.
I wouldn't say its time to panic, but OCR increase has to be on the cards.
The banks raising rates mean that the OCR will now climb much sooner then Oct/Sept track predictions.
Oil shocks are an international event , our tail just wags
We are now, one RBNZ meeting short, for a raise now.
So double hike, 50bps, on the 8th of April incoming.
Set your sails accordingly..........
I suspect they will hold off from a 0.5% even though its probably justified.
So what does this all mean for the election?
- Will people say this difficult time needs the supposedly economically competent National party?
- Or is it another rebel vote for the opposition party?
- Or will Hipkin's ex wife have the final say?
Labour got a second term in 2020 because they went "hard and early" in response to a crisis. How is the current government's performance when judged through that lens?
Winston First might do well?
But who bloody knows.
Do we feel better that Winston & Judith are our Foreign & Defence ministers following Nanaia & Peeni?
Has Hipkins worked out what a woman is now?
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