What happened Tuesday

A review of things you need to know before you go home on Tuesday; foreign buyers sell down, Crown bank balance swells, NEVs take 16% car share, ASB refunds 73,000 customers, swaps stable, NZD stable, & more

4th May 21, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
TSB has raised its three year fixed rate to 2.79%, a rise of +14 bps. Update: Westpac trimmed its one year special by -4 bps to 2.25%.

TERM DEPOSIT RATE CHANGES
No changes to report here. Update: Westpac has raised many TD rates. It raised its 2 and 5 month rates by +5 bps, then all rates from 9 months to 5 years by between +10 bps to +70 bps increasing as the term lengthens.

SLOWING DOWN
Barfoot & Thompson's auction rooms were busier last week but the sales rate stayed at 50%. This rate has declined from 70%-plus at the peak of the summer selling season.

SELLING DOWN
Foreign buyers purchased 714 New Zealand homes in the year to March and sold 1473 over the same period.

GOING DOWN
The Labour Party polling is slipping but it remains the most popular political choice among all political options. The latest Roy Morgan poll reveals a 41.5% level, well down from the 2020 election night level of 50%. And well down from its peak of 56.5% a year ago.

GOING UP
The Crown Settlement Account at the RBNZ now has $42 bln in it, a record high as funds pour in from taxes, and borrowings. As a consequence, Treasury is expected to issue less debt than planned, as NZ weathers the COVID-19 storm better than expected.

MORE DETAIL
Yesterday we reported that sales of new cars and new commercial vehicles are still running hot, especially for an April month. Today we can report that SUV's accounted for 79% of all passenger car sales, a new all-time high. The hottest subsegment is for the compact versions, which now account for half of all SUV sales, also an all-time high. And we can report that NEVs (new energy vehicles) won a 16% share of all car sales in April, marginally ahead of the ytd 14% and above last year's 10%. NEVs include pure electrics, plug-in hybrids, and petrol hybrids.

REFUND COMING
ASB dobbed itself in to the Commerce Commission after finding it failed to give 73,000 home loan and personal loan customers the necessary information under the Credit Contracts and Consumer Finance Act. The Commerce Commission then agreed with it that $8.1 mln will be repaid to the affected customers. That is an average of $110 refund per customer.

ANOTHER BNPL SERVICE PROVIDER ARRIVES IN NZ
Klarna, a buy now pay later service provider founded in Sweden, has arrived on New Zealand's shores. Klarna, in which ASB's parent Commonwealth Bank of Australia is an investor, officially launched in NZ today.

EYES ON DAIRY PRICES
There is another dairy auction tomorrow morning. The dairy futures markets suggests that prices for WMP might rise +2% in USD, those for SMP might rise +2.2%. But in the past the futures pricing isn't always a reliable guide for the actual auction outcomes.

WHERE INVESTORS ARE STILL KING
In Australia, new home loan commitments for housing rose +5.5% in value in March to a new record high of AU$30.2 bln. Lending to investors accounted for more than half of the March rise in housing loan commitments. The number of first home buyer loan commitments fell.

RBA REVIEW
The RBA will review their policy rate settings today, and are universally expected to leave everything unchanged. But they will probably upgrade their economic outlook.

GOLD FIRMS FURTHER
The gold price is rising further and sharply today. It is now at US$1790/oz and up another +US$17 from this time yesterday as trading opens in Australia and Asia.

EQUITIES RISE
On Wall Street, the S&P500 ended up +0.3% in today's session. Shanghai and Tokyo are both closed for respective holidays, but Hong Kong is back trading and is up +0.3% in opening trade. The ASX200 is up +0.3% in mid-day trade, while the NZX50 Capital Index is up +0.7% in late trade.

SWAPS & BONDS MIXED
We don't have today's closing swap rates yet. If there are significant movements today, we will note them here later when we get the data. They are probably little-changed. The 90 day bank bill rate is unchanged at 0.36%. The Australian Govt ten year benchmark rate is down -2 bps at 1.68%. The China Govt ten year bond is unchanged at 3.19%. And the New Zealand Govt ten year is unchanged at 1.69% and still above the level of the earlier RBNZ fixing at 1.68% (+3 bps). The US Govt ten year is down -2 bps at 1.61%.

NZ DOLLAR STABLE
The Kiwi dollar is now at 71.8 USc and little-changed from this morning, and giving up the overnight rise. Against the Aussie we are also little-changed at 92.8 AUc. Against the euro we are stable at 59.6 euro cents. That means the TWI-5 is still at 73.7.

BITCOIN FADES
The bitcoin price is now at US$55,629 and down a sharp -4.2%% from where we were this time yesterday. Volatility has been a high +/- 3.9%.

This soil moisture chart is animated here.

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Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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24 Comments

by CWBW | 4th May 21, 4:11pm 1620101483

Looks like the national economy is getting back on track. Happy days!

by Tom Valen | 4th May 21, 4:39pm 1620103147

Yes, one track only.

by Uninterested | 4th May 21, 6:05pm 1620108333

Narrow gauge too.

by Burni | 4th May 21, 6:56pm 1620111386

Has to be on track as do many roading projects getting canned.

by printer8 | 4th May 21, 4:47pm 1620103642

Looks like it.
According to Robertson: "Standard and Poor’s gave New Zealand the first ratings upgrade of any economy since the pandemic began and the first for New Zealand since 2003. And in the last couple of weeks Moody’s reported on the New Zealand economy, maintaining our AAA rating and noting our “very strong institutions and policy effectiveness”, along with our “robust fiscal position when compared with its peers”.
Despite Covid, Government and RBNZ actions have unemployment low and most businesses supported protecting most people's jobs and incomes. Some indicators in the article such as vehicle sales etc suggest support of that.
A bit of pain though for some - affordability issues for FHB and falling TD interest rates for oldies in retirement. However really only a single consequence as we can overlook the later as it doesn't seem to count on this site. :)

by Rosenstein | 4th May 21, 5:02pm 1620104534

So the economically vulnerable are thrown under the bus, but that's cool because it makes the rest of us more wealthy. So we can stop the incessant lecturing about equity of outcome, when it's clear the system favors the already asset rich. Meanwhile we harp on about the effects of colonization. The banks today have colonized NZ and dispossessed the ordinary Kiwi of a secure future. The good news is that under the Treaty both Pakeha and Maori can participate in the modern day plunder of future generations.

by J.C. | 4th May 21, 5:30pm 1620106257

So the economically vulnerable are thrown under the bus....

Collateral damage in the kindness agenda and policy. Wonderful comment in its entirety Rosey.

by realterms | 4th May 21, 4:19pm 1620101942

16% nevs. Pretty sad, and even that includes traditional hybrids.

Of course given the number of people I see who don't even switch off the engine while they sit endlessly in their cars outside school, I shouldn't be too surprised.

by mfd | 4th May 21, 4:45pm 1620103522

Given it was 10% last year, I actually see a 60% increase as quite impressive without any major new encouragement from the government

by realterms | 4th May 21, 4:58pm 1620104288

Needs to accelerate. These cars are going to be on the road until 2040.

by Uninterested | 4th May 21, 6:10pm 1620108617

Lots of people will be holding off because they cost a lot. But unfortunately, when they are a bit cheaper, a road user tax will come in so the economics will still be rather iffy.

by realterms | 4th May 21, 6:49pm 1620110940

RUC will cut into the savings in fuel, yes, but they'll still be substantial. Up front cost is an issue, but it's not as if all these new petrol/diesel suvs are cheap to buy...

by Burni | 4th May 21, 7:04pm 1620111871

Will see the demise of the motorhome and caravan holiday for both kiwis and tourists. Try towing something with and EV.

But hey with Cindy's captains call on gas exploration there'll be no gas for cooking camping or whatever and Nashy only wants rich tourists anyway. Add that to his ill-informed attack on Freedom camping through tougher vehicle self containment standards well all be spending holidays at home. Seems we need tougher self containment standards than all of Europe. But as we've seen before, this government thinks it can pursue the same failed policies tried overseas but with a different outcome.

by realterms | 4th May 21, 7:43pm 1620114214

> Try towing something with and EV.

I do. All the time. Presumably you haven't...

Beside the point anyhow. Nobody said anything about 100%. EVs aren't good for every use case, but they are excellent for a lot more than 16% of them. Be honest, what fraction of those new petrol/diesel suvs do you think will ever tow anything more than the bunnings hire trailer?

by youngdumbandbroke | 5th May 21, 8:40am 1620160828

Game changer will be when trucks and utes come to market that can match diesel equivalents. But as to when that is remains to be seen

by Spiceeh | 5th May 21, 2:26pm 1620181606

"Because electric motors are so efficient (90 per cent of available energy to drive the wheels versus about 30 per cent for IC vehicles) and can belt out maximum torque at zero revs, they are the ideal towing motor."

https://www.caravancampingsales.com.au/editorial/details/is-your-next-t…

by frazz | 4th May 21, 4:53pm 1620104026

And of course they need a SUV to pick up little Liam and Lily as well.

by Cowpat | 4th May 21, 4:38pm 1620103123

Wishing Mr Orr a speedy recovery as Mr Bascand takes the reins for tomorrows FSR. If a country the size of New Zealand has 1.5 trillion NZD in apparent housing wealth( excluding vacant land) does that have a destabilizing effect whether it falls over or not.

by delboy | 4th May 21, 5:16pm 1620105396

Sedans are heading for extinction much like video rentals and printed newspapers have in recent years.

SUVs or as we used to call the compact versions “hatch-backs” are far more practical.

by Uninterested | 4th May 21, 6:15pm 1620108923

I've never driven an SUV. On long trips like Ak to Wn, does anyone know if you get thrown around and fatigued by your brain getting thrown from side to side because you are higher up? ie A narrower track width vs seat height compared to a sedan.
I have noticed that State Highway 1 is now very very bumpy.

by Beanie | 4th May 21, 5:50pm 1620107449

NZFirst on 1% in the Roy Morgan poll. Hard to see them ever getting back to parliament.
Greens and Act unlikely to ever threaten to jump sides, so its possible the Maori party may one day hold balance of power. Their current leadership would drive a hard bargain.

by Uninterested | 4th May 21, 6:01pm 1620108089

"This latest New Zealand Roy Morgan Poll on voting intention was conducted by telephone – both landline and mobile "
How on earth can they select a sample of people to ring based upon their mobile numbers????

by Beanie | 4th May 21, 6:10pm 1620108608

Its easy to obtain demographic data attached to phone numbers. Or they just ask the person on the phone.

by Uninterested | 4th May 21, 6:17pm 1620109022

Yeah but who has a list of cellphone numbers? I have never been rung up by a random. Except by error.