A review of things you need to know before you go home on Monday; mortgage rate cuts, a TD 'special', winter house market very slow, contractors a happy lot, more fuel taxes, swaps up, NZD stays firm, & more

A review of things you need to know before you go home on Monday; mortgage rate cuts, a TD 'special', winter house market very slow, contractors a happy lot, more fuel taxes, swaps up, NZD stays firm, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
TSB cut its two year fixed mortgage rate offer to 3.85%. TSB had also set June 30 as the end of their "price-match promise" - but today they removed that deadline so this program continues "until further notice". SBS Bank has also cut its 2 year fixed rate to 3.85%, down -10 bps.

TERM DEPOSIT RATE CHANGES
FE Investments has a new 9 month 'special' of 4.50% for 9 months. NZCU Auckland has cut its 9 months to 2 years TD rates by -10 bps, now all at 3.35%.

SLOW WINTER
The realestate.co.nz monthly data for June shows new listings hit a record low in June. But buyers will still have plenty of choice with total stock levels up and asking prices generally weaker.

VERY SATISFIED
Statistics NZ has been surveying the part of the workforce that says it is self-employed as a contractor. The vast majority of contractors were satisfied with their jobs and wanted to remain in self-employment. Nine out of 10 contractors said they were satisfied or very satisfied with their jobs, similar to the figures for other self-employed people and employees. Additionally, 9 out of 10 contractors said they would prefer to continue being self-employed rather than have a paid job working for someone else. 77% said they had a lot of control over how their daily work was organised; 79% had a lot of control over how their tasks were done; 66% had a lot of influence on decisions that affected their own work. This official assessment kinds of undermines the political narrative that contracts or generally being taken advantage of. Just five percent of Kiwi workers are working as contractors, also far lower than lost assume.

THIS IS WHAT RELIEF LOOKS LIKE
The equity markets have opened today with a trade war relief rally - mostly. The Shanghai exchange is up +2.1%, Tokyo is up +1.8% as we write this. The ASX200 is up +0.5%, but the NZX50 is unchanged. Going the other way is Hong Kong which is down -0.3%. These signals suggest Asian investors like the trade war deferral and extended talking. But the key will be Frankfurt overnight and Wall Street tomorrow.

COMMODITIES SEPARATE
Meanwhile, the price of iron ore has reached a new five year high. But for this week's dairy auction, things aren't so positive. The NZX dairy futures market is suggesting that WMP might fall -3.2% on Wednesday and that is after a -4.3% retreat at the auction two weeks ago.

WHAT 'GREEN' COSTS
More details are now available for the proposed Auckland Council "green bond". It will be for $100 mln over six years (and the ability to accept $50 mln in oversubscriptions). The indicative margin will be 0.55% to 0.59%, so at today's rate that suggests it will pay about 2.20% pa. Given that the already issued Auckland Council 2026 bond is yielding 2.16% today, it looks like greenwashing bonds like this costs about +4 bps for the Council (investors get a +4 bps premium). But the exact result won't be settled until Wednesday, July 3.

HIGHER TAXES JUST KEEP ON COMING
The Government has raised three increases in fuel taxes since 2017, plus a regional fuel tax in Auckland (+11.5c*). Today another 4c/L kicks in taking the non-Auckland fuel tax to 81.06c/L*, along with +5.5c/km in road user charges for diesel users. All up these fuel taxes have grown +$0.5 bln in just two years, according to the Crown accounts and before today's jump. That's a 15.5% rise. (*= including GST on these taxes.) Sadly, these taxes are regressive.

TURNING UP AGAIN?
In Australia, CoreLogic is reporting that Sydney and Melbourne property markets have seen the first rise in values in June since their 2017 price peaks. They say the median Australian house value is now AU$516,700 (or NZ$539,350). The REINZ median house price in May was NZ$578,000. For those who are counting, that is a 7.2% premium for New Zealand.

SWAP RATES FIRM
Local swap rates have firmed again today, up +2 bps for two years, up +2 bps for five years, and up +4 bps for ten years. The UST 10yr yield is up +2 bps from this morning to 2.03%. Their 2-10 curve is a 'positive' +25 bps while their negative 1-5 curve is narrower at -14 bps. The Aussie Govt 10yr is up +3 bps to 1.34%. The China Govt 10yr is down -5 bp at 3.25%, while the NZ Govt 10 yr is also up +3 bps at 1.63%. The 90 day bank bill rate is down -2 bps at 1.62%.

NZ DOLLAR HOLDS
The Kiwi dollar is marginally softer at at 67.1 USc and less that might have been expected on the trade truce between the US and China. On the cross rates we're firm at 95.8 AUc. Against the euro we are up to 59.1 euro cents. That moves the TWI-5 up to 71.7.

BITCOIN STILL VOLATILE
Bitcoin is still very volatile. It is now at US$11,004, up from a 24hr low of US$10,612 this morning and a 24 hr high of US$12,039. This is +/- 7% volatility. This price is charted in the currency set below.

This chart is animated here.

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USD 
NZD
End of day UTC
Source: CoinDesk

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18 Comments

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11
up

To David, Greg and the whole team, congratulations on consistently producing good quality, non-partisan articles and not getting swayed by the numerous commenters who try to spin your stories and data

Well I usually disagree with you Yvil ;-) , but on this occasion well said!

.... petrol tax has increased 4 cents per liter today ... so , guys , what has this Labour coalition government given us over the past 18 months ...

No plastic bags .... just 202 kiwibuild homes ... no new licences for offshore natural gas exploration ... new taxes ... lots and lots of new taxes ... little change to our enormous immigration level ... charter schools shut down or subsumed into the state system...

Classic Labour policy, tax the poorly paid and get more people on the government teat. Scare the productive people overseas and tax the higher paid who remain into working less. Encourage investment into low productivity vanity projects. What could go wrong?

Yet each new generation falls for the tax more / we know what we are doing foolishness. At least the Aussies are showing us the way forward, big cheap houses, high paid jobs, exporting valuable commodities that cannot be made in a factory. Importing stuff that can be made in any factory anywhere.

RW,

I find it depressing to see someone,apparently intelligent,yet again spouting nonsense about scaring the productive people overseas and taxing the higher paid into working less. Presumably you believe in the laffer curve.
just show me some hard evidence of this. Here is a quote from Licence To be Bad,How economics Corrupted Us,by Johnathan Aldred; :The income tax cuts for the rich over the past 40 years were originally justified by economic arguments: Laffer's rhetoric was seized upon by politicians. But to economists his ideas were both familiar and trivial. Modern economics provides neither theory nor evidence proving the merits of these tax cuts".

Without attempting to place any spin and attempting to sway any individual , either happy or sad ,loved or unloved I note that the most recent Corelogic median Sydney dwelling value is 777000 AUD, and the REINZ Auckland median dwelling value is 860000 NZD or 824000 AUD .I appreciate that while posting these numbers that Corelogic/ REINZ may differ slightly in how they arrive at the median

Wow. Auckland now more expensive than the downward moving Sydney.

But Auckland has greenery and beaches and stuff.

10
up

AND London is £420,000 or NZ$795,000.
2.27 litres of milk are £1.10 or NZ$2.08 (except that’s for 10% more milk than we see for NZ$3.50.
The banks have done a cracking job on the housing propaganda, I think even Geobbels would be amazed by the success of it.

Better watch The Block tonight, followed by location location location, bit of George Clarke’s amazing spaces and finish off with some love it or list it Vancouver. All covered by some ANZ adverts with renovations sponsored by GEM finance and powered by lattitude..... and that’s not the distance Auckland is from the equator..

First of all, you shouldn’t compare the price of milk in two countries based on the nominal exchange rate. That really isn’t how it works. What point are you trying to make with that statement anyway?

Secondly, it’s hard to tell whether you are being disingenuous on purpose or by accident, but if you honestly can’t figure out why the median dwelling price in London might be lower than in Auckland then you should probably stop posting. It absolutely, absolutely does not mean that housing is more expensive here than it is there.

I recently spent a lot of time in Sydney and the same sort of people were everywhere there - the ones who couldn’t shut up about how it was more expensive than New York City. Like hell it is.

On an unrelated note, it’s odd when people make assertions like “MILK IS MORE EXPENSIVE IN AUCKLAND THAN IN LONDON WTF!” and just leave them hanging there in the air, implying that it’s just a foregone conclusion that that shouldn’t be the case without any substantiation. Flabby thinking begets flabby answers.

am-fek
I’m simply highlighting a further comparison with data, to add to the example the author gave gave about how high the NZ national median is now relative to Australia.

The milk is a cost of living comparison, which is daft when you think it’s one of our major exports.

What’s the cause of both - too much debt concentration in both household and agricultural sector.

Perhaps you may get some value from watching Digital Finance Analytics on you tube, I have a little bit there about credit bubbles, banks, the involvement of the media and the unregulated credit creation by the banking sector for financial asset transactions. There is a NZ playlist.

I don't know you at all but it's generally understood among any adult familiar to any extent with the two cities that the composition of the housing market in Sydney is radically different than it is in Auckland.

Therefore, while you may say that you are not attempting to spin the data, you should accept that it certainly appears you are trying to do just that given that your data point ignores the fact that Auckland's median dwelling is likely a freestanding 3 bedroom house on 500 square metres of land, and Sydney's median dwelling is likely a 60 square metre 2 bedroom apartment.

This is the same type of thinking that someone made below about prices in London being "lower" than in Auckland. Firstly, they are not - it really does not take much brain power to move beyond the crutch of median dwelling prices. Secondly, even if Auckland were more expensive than Sydney (it isn't), why is that automatically incorrect? You forgot the entire second half of your case, which is why that should not be. Because Sydney is bigger? Plenty of places are bigger than Auckland - what's the point?

Steve Forbes would like to see Facebook's new crypto-currency backed by gold in an open letter to Mark Zuckerberg.

https://www.forbes.com/sites/steveforbes/2019/06/25/open-letter-to-mark-...

"For a variety of reasons gold holds its intrinsic value better than anything else. It’s like a measuring rod. It no more restricts the money supply than the 12 inches in a foot restricts the size of a building you might wish to construct. All it means is that the Libra will have what no other currency has today: a fixed value. And that fixture will gradually make it the most desirable medium of exchange around the globe. People hunger for trustworthy money. "

Even better..... backed by bitcoin!

Listened to an interesting interview with the CEO of Greyscale about how younger Americans view digital currencies as an asset class. He said that when equities are at all-time highs and possibly any reasonable value; govt bonds offer little in the way of wealth building; and when property is priced beyond anything they can afford, then the internet of value (digital currencies) doesn't seem so ephemeral and outrageous.

Yield?

... and security of storage ?

And protection from future governmental regulation changes ?

lwnz,

You might want to read the article in which Forbes says: "no one in their right mind would write a contract for more than 24 hours in Bitcoin".

Fiat currency has value because we all agree that it does, and the moment we stop agreeing there will be trouble. How is gold different? Shinier, maybe? Ok, how about we back currency with bits of mirror.