Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
None to report today.
TERM DEPOSIT RATE CHANGES
ASB has cut its TD rates hard, setting new low benchmarks and many key ones now below BNZ. The Firefighters Credit Union also trimmed their rates.
DEMAND SURGE
The housing market just went 'boom' with record house prices in Auckland and in seven other regions. Prices were supported by strong sales volumes in August. Auckland median prices have hit $950,000, and sales volumes were unusually strong for an August, up +25% nationally from August 2019.
HITTING AFFORDABILITY LIMITS
Median rents however fell in August. For a 3 bedroom house in Auckland, they are down to $675/week from $692/week in July. In Wellington they are up to $660/week from $655/week in July. In Christchurch they are down to $430/week from $440/week in July.
AUCKLAND KNEECAPS NZ MANUFACTURING
Factory activity essentially stopped expanding in August after a good expansion in July. Obviously Auckland contracted in L3, but surprisingly so did Otago. Elsewhere factory activity expansions were quite healthy.
BITING HARD
Food prices are inflating strongly now, up +4.2% in the year to August and that is the same as it was in July. On a year-on-year basis fruit and vegetable prices increased +19%, meat, poultry, and fish prices increased +0.3%, grocery food prices increased +1.6%. and restaurant meals and ready-to-eat food prices increased +3.8%. Eating healthy is suddenly much more expensive.
GUILTY OF ALL CHARGES
Pegasus Markets and its New Zealand-based director, Michael Reps, have been found guilty of all criminal charges brought by the Financial Markets Authority for breaches to the Financial Service Providers (Registration and Dispute Resolution) Act (FSP Act).
"NOT GUILTY" PLEAS
Two men who worked for the Christchurch Earthquake Recovery Authority (CERA) and Ōtākaro Ltd have pleaded not guilty to corruption charges brought by the Serious Fraud Office. Gerard Anthony Gallagher (62) and Simon Carl Nikoloff (57) had sought name suppression, but the Christchurch High Court declined those applications.
'NEWLY RESTRICTED'
BNZ reports: "With New Zealand’s COVID-19 restriction levels re-tightened on 12 August, it was no great surprise to see the recent recovery in job advertising take a knock in the month. It slipped a seasonally adjusted 3.1% – the first backward step since April. This caused advertising to slip a bit on an annual basis also – to -32.5%, from -31.5% in July."
MAXIMUM DEMAND AT MINIMUM PRICE
Retirement village operator Summerset got its full $150 mln for its seven year bond issue and at a final interest rates of 2.30% being 2.00% above the seven year swap rate.
TOUGH LOCKDOWN
In Indonesia, their capital Jakarta will be locked down with 11 mln people restricted to their homes for at least two weeks, as the pandemic bites fiercely there. Hospitals are swamped. Seabourne escapes to Australia will worry Canberra.
GOLD PRICE DIPS
In Asian markets, the gold price has fallen -US$8/oz since the New York close which lost almost -US$20 from the London close. The current Asian price is at US$1939/oz. That is a -1.4% fall in a day. Silver has fallen -1.8% today.
EQUITIES UPDATE
On Wall Street, the S&P500 ended the day up down -1.8% after sliding all day after the weak jobless claims report. Shanghai has opened flat, Hong Kong is up +0.5% in early trade and Tokyo is up +0.3% building on yesterday's unusual rise. The ASX200 is down -0.7% in early afternoon trade and heading for a weekly fall of -0.8%. The NZX50 Capital Index is down -0.5% in late trade and heading for a weekly loss of -0.7%. The S&P500 futures trade suggests Wall Street will open tomorrow up +0.6%.
SWAP RATES STAY VERY LOW
Yesterday, local swap rates rose marginally across the curve, from next-to-nothing to just stuff-all. The two year and three year swaps were 0.03% (or $2.50 in interest per year for every $10,000). We don’t have the final data for today yet and if it is significant we will update it here. The 90 day bank bill rate is unchanged at 0.30%. The Australian Govt ten year benchmark rate is 0.91% and down -3 bps. The China Govt ten year bond is at 3.11%, up +1 bp. The New Zealand Govt ten year is now at 0.60% and also unchanged. The US Govt ten year is little changed at 0.68% but in-between it has been quite volatile.
NZD SOFT
The Kiwi dollar has held at 66.6 USc, unchanged since this morning but down slightly from this time yesterday and down -50 bps in a week. Against the Aussie we are at 91.6 AUc and marginally softer. Against the euro we are at 56.3 euro cents, also marginally softer. That means our TWI-5 is now at 69.6 and and -30 bps in a week.
BITCOIN FLAT
Bitcoin has hardly changed today, now at US$10,281.
This soil moisture chart is animated here.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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37 Comments
In light of the confirmation that the property bubble is alive and well, the AFR also noted that sentiment is changing in Australia and things are not as bad as they might appear in relation to the Aussie bubble. One of the biggest DGMs was CBA who had forecast price falls up to 30%, but they have been revised down to 5%. The AFR suggests that debt serviceability is the key driver. Given that both the Aussie and NZ economies are so dependent on asset price rises, the current economic 'pandemic' climate should be like 7th heaven.
This deserves a press conference from Adrian Orr; a cheerleading media front from Scomo; and a new TVC from the ANZ telling the punters that they're there to help.
https://www.afr.com/wealth/personal-finance/house-price-bears-becoming-…
And high street retailers don't seem to be doing that well in Auckland either. Drove through Parnell earlier today and noticed that every second or third shop was empty with huge 'To Let' plastered all over them.
House prices are officially on the rise. Shoppers will be out in force as soon as they can.
If they've increased their debt levels due to buying a home, they're not likely to have much disposable income left for high street spending so not convinced by your comment. Sadly there are lots of professional people who have had their salaries cut (Some by as much as <20%) or have been made redundant which is also affecting high street spending.
"On a year-on-year basis fruit and vegetable prices increased +19%"
"The housing market just went 'boom' with record house prices"
Is this inflation or the beginning of hyper inflation? If you have money in the bank good luck to you. The property market is where the smart money is heading.
Lets say that I have $500k in the bank. I can buy a house outright right now and after a hyper inflation event still have a house to show for it or I can leave the money in the bank and after a hyper inflation event still have $500k in the bank but a house now costs $200 Billion. Which position would be preferable do you think? It is correct to say that in NZ we have never had a hyper inflation event but we had also never had a COVID-19 event had we?
Oh that was a smart post and comment. Fruit and vegs up 19% so go and buy a house to protect any money you might have. There are far better hedges against hyperinflation than NZ houses. In fact, NZ has never experienced hyperinflation so you have no idea that the 'smart money' is heading towards houses.
Elimination is marvelous, the world will love us, flock to us. Oh the money we will make....
And NO.
https://www.rnz.co.nz/news/sport/425843/nz-quarantine-rules-critical-to…
SANZAAR singled out the issue in its statement awarding the rights to Australia.
Chief executive Andy Marinos said: "SANZAAR ultimately determined that based on government-required quarantine protocols [for entry and training prior to the tournament] and commercial underwriting, the Rugby Australia submission was the most desirable and workable in terms of tournament logistics for the essential pre-tournament preparation period and the six-week tournament itself."
It sounds like NZ covid systems are not that good compared to others (interesting given NZ is advised by same/similar/joint ANZ medical associations - same expert advice), so the system slack was taken up by the NZ quarantine demands, meaning NZ lost.
Too funny the PM off in her own little DreamWorld.
https://www.nzherald.co.nz/sport/news/article.cfm?c_id=4&objectid=12364…
Sanzaar and New Zealand Rugby bosses have expressed surprise at Prime Minister Jacinda Ardern's suggestion that "politics" was behind the decision to award the Rugby Championship hosting rights to Australia.
Sanzaar CEO Andy Marinos and NZR counterpart Mark Robinson were baffled by the comments, insisting instead that the more favourable quarantine regulations across the ditch was the reason for the revamped four-nation tournament moving there.
https://www.newshub.co.nz/home/sport/2020/09/rugby-championship-jacinda…
NZ Prime Minister Jacinda Ardern has distanced herself and the Government from New Zealand potentially losing the Rugby Championship, blaming "SANZAAR politics"
Queenstown's mayor says he is "gutted" that New Zealand won't be hosting the Rugby Championships, while the Government says it is not to blame for New Zealand missing out to Australia.
https://www.odt.co.nz/sport/rugby/all-blacks/rugby-champs-decision-real…
Question: who is charge of quarantine, you know, the border. Who is running this elimination lark?
Who is telling business, vote Labour and we will let your workers into the country?
Nope, they tell the same story.
Everyone is trying to get richer - or preserve their richness.
But none are making anything; there's nothing being done. So housing is a ponzi, being kept afloat by zero-and-below interest rates, and gold is a hope it will be respected as a tradeable token, post ponzi-crash. None of them understand what wealth really is.
CNBC's Jim Cramer and renowned 'Mad Money' host has apparently gone to Bitcoin.
https://u.today/cnbcs-jim-cramer-now-owns-bitcoin-has-he-changed-his-mi…
Cramer has a habit of making a call, after resisting it for a while, just before the reverse happens.
Here's Cramer's advice, word for word: “No! No! No! Bear Stearns is not in trouble. If anything, they're more likely to be taken over. Don't move your money from Bear."
The aftermath was not pretty. “On March 14, Bear Stearns stock fell 92 percent on news of a Fed bailout and $2-a-share takeover by JPMorgan.
On Nov. 20, 2012, Cramer urged his “Mad Money” viewers to get out of Hewlett-Packard, based on his dim view of its corporate culture, and other perceived issues.
So what happened? In six months, HP shot up about 100 percent.
https://www.msn.com/en-us/money/savingandinvesting/10-of-the-worst-wall…
Housing market is very strong not only in NZ but in all developed countries wherever money has been printed and distributed along with mortage deferral.
Interesting to see if this euphoria in stock and house market continues even after the subsidies and stimulus ends. Many FHB are under pressure /FOMO.
Also understand that market is in such boom state that the very thought of of any correction seems impossible for now though it should unless this is the new norm that government keeps of printing and distributing easy and cheap / free money.
Ludwig von Mises nailed it
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved." ~ Ludwig von Mises
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