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A review of things you need to know before you go home on Monday; some big retail interest rate changes, service sector pumping, immigration dives, house building surges, OCR predictions, swaps stable, NZD firm, & more

A review of things you need to know before you go home on Monday; some big retail interest rate changes, service sector pumping, immigration dives, house building surges, OCR predictions, swaps stable, NZD firm, & more

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

MORTGAGE RATE CHANGES
ASB launched a 1.79% floating rate for new builds. More here.

TERM DEPOSIT RATE CHANGES
Kiwibank raised a set of term deposit rates, including a new 1.10% 100 day rate. More here.

EXPANDING FASTER NOW
New Zealand's service sector expanded at a record pace in April, and it was a surprisingly strong showing. The actual expansion was an index of 61.2 and miles stronger than the 'good' 52.9 level recorded in March. The strength was widespread, with major components like new orders/business, activity/sales, and employment leading the charge higher. In combination with the April factory sector rise (58.4), this strongly suggests a decent bounce in Q2 economic growth is brewing

SEVEN YEAR LOW
New Zealand gained just 6,600 net new long term migrants in the full year to March 2021. It is the lowest level since September 2013. It involved a net gain of NZ citizens and net loss of non-New Zealand citizens, and was a very sharp reduction from the year to March 2019.

POPULATION UPDATE
Our population has just gone through 5.125 mln, rising by one birth every 8 minutes and 43 seconds, one death every 16 minutes and 38 seconds, and one net migrant every 1 hour, 4 minutes and 48 seconds. On that basis, it will be 5.15 mln by the end of 2021, and 5.2 mln by the end of 2022.

HOUSE-BUILDING SURGE
The number of new homes being built in Auckland is at its highest level since records began in 2013.

MORE GREEN BONDS
Precinct Properties (PCT) is going to market for up to $150 mln of fixed rate "secured green bonds". The interest rate will be no less than 2.85% but will depend on the book-build demand, which will end on Friday May 21, 2021. The 'green' bit means they are financing or refinancing buildings in their portfolio that are rated 4-star or higher on an energy or building basis. See this term sheet.

SKYCITY WINS
SkyCity's bond raising was a success, raising the full $175 mln. The interest rate for the bonds has been set at 3.02% pa. This reflects an issue margin of 1.60% over the underlying swap rate.

UPDATED PREDICTION
ANZ economists have updated their expectations for the next moves in the OCR. They are now forecasting the current 0.25% OCR will start moving up in August 2022, with gradual but steady increases thereafter taking the OCR to 1.25% by the end of 2023.

SUBSIDING PETROL
Australia has decided to subsidise petrol two oil refineries (in Victoria and Queensland) in the name of "fuel security". The cost will be about AU$2.5 bln over the next nine years and will work to keep the cost of petrol and diesel down. Investors in these two aging refineries have now agreed to keep them open, the last two in Australia.

GOLD FIRMS
The gold price is now at US$1850 and up +US$29 from this time on Friday in early Asian trading. And this is +US$6 higher than the New York close on Saturday (NZT) at US$1844; London closed at US$1838/oz.

EQUITIES TURN UP
The NZX50 Capital Index is up +0.4% in late trade today. In early afternoon trade the ASX200 is up +0.5%. The S&P500 futures trading is down a minor -0.1%. In early trade on the very large Tokyo market, they are down -0.5%. However Hong Kong is up +0.6% and Shanghai is up +0.8% in their opening trades.

SWAPS & BONDS LITTLE CHANGED
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 flatter as a risk-off tone spreads in financial markets. The 90 day bank bill rate is down another -1 bp at 0.35%. The Australian Govt ten year benchmark rate is down -3 bps since Friday at 1.71%. The China Govt ten year bond is unchanged at 3.15%. And the New Zealand Govt ten year is down -1 bp at 1.90% but still above the 1.89% in the earlier RBNZ fix (+1 bp). The US Govt ten year is down -4 bps at 1.62%.

NZ DOLLAR MIXED
The Kiwi dollar has fallen today from our open and is now at 72.2 USc, but that is still nearly +½c higher than this time Friday. Against the Aussie we are up at 93.2 AUc. Against the euro we are little-changed at 59.5 euro cents. That means the TWI-5 is firm at 73.9.

BITCOIN'S EXTREME VOLATILITY CONTINUES
The bitcoin price is now at US$45,027 and has been on a volatile ride over the past few days, sparked by Elon Musk musings and rumours. Net, it is down -10.9% from where we left it on Saturday, and down -4.5% since where we opened this morning. Volatility remains extreme at +/- 6.8%.

This soil moisture chart is animated here.

Keep ahead of upcoming events by following our Economic Calendar here ».

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End of day UTC
Source: CoinDesk

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27 Comments

20
up

Seriously cannot understand the need to keep the OCR at current levels till August 2022. If the economy is back up to pre Covid levels, keeping the OCR at these historic lows only to stimulate the property market to me is bonkers. OCR needs to start increasing from August 2021. Savers need to see their deposit rates increase. Saving for a rainy day is now replaced with borrow till broke and more.

And negatively impact bank profit and the speculator risk proxy's - common get serious...

13
up

I agree. Actually, the OCR should be raised back to 1% as soon as practical, at the latest as part of the next OCR review. It should then go up progressively to at least 2.5% within the next 9 to 12 months.
This would have the great benefit of controlling a potential surge in inflation, finally cutting the head of the NZ housing Ponzi, properly re-pricing risk as per normal capital markets environment, and promoting capital accumulation and savings creation.

That strategy to look through inflation has long been the rbnz and fed reserves stated intentions, dont you know. They could not have signalled it anymore.... where the bloody hell are ya

The gold price is now at US$1850 and up +US$29 from this time on Friday.
The US Govt ten year is down -4 bps at 1.62%.

Money Correlations
Is Warren Buffett Beautiful?

The correlation is strong in this one

https://www.rnz.co.nz/news/political/442745/australia-pm-scott-morrison-...

“At 6pm, MP Damien O'Connor - standing in for Immigration Minister Kris Faafoi, who is unwell - will be making the case for policy change, which will re-focus on attracting highly skilled migrants.”

I feel for poor Mr Faafoi and understand completely – I’m somewhat sickened by the whole immigration debacle myself.

I think this government would help themselves immensely by simply asking – “what is the problem we want to solve via immigration”.

Focus on that and the “need” for more ethnic hole in the wall eateries disappears, the need for more $2 stores disappears, the need for more stuffed “hello kitty” stores disappears along with the need for more convenience stores every 20 meters.

The “need” for low skilled forecourt attendants, checkout and shelving operators as a means to residency disappears.

Well targeted, highly skilled migrants that fill a real, genuine need that can work alongside and train existing NZ’ers – yes!

Here is some insight.
He Puapua is founded in an United Nations Declaration. Nothing to do with Treaty language or Ops.

From the He Papua author.
However by 2010 the Canadians and Australians had performed an about-turn and joined the Declaration, with the USA signalling they would do the same; faced with being the only country in the world to oppose it, Aotearoa decided to join up as well.

Eight years later, we had a plan: Te Puni Kōkiri commissioned a working group to write a document, outlining how we could give effect to the UN principles we had signed up to.
That document is He Puapua.

The report - and also us, as authors - were really motivated by unity, rather than division. By this idea that to have a successful and flourishing Aotearoa New Zealand, we need to recognise our founding constitutional document, and that Māori are failing in this system.

https://www.newshub.co.nz/home/politics/2021/05/the-detail-he-puapua-aut...

As if the United Nations knows what's best for us all and all our children.

I have followed aggregate and flow of listings Trade Me since the start of March . In the three areas followed , New Zealand, Auckland and Waiheke, listings are all trending down. Supply/Demand.

Listings of what?

Life coaching and counselling services for males..

Mr Musk is not a very popular man.

Musk is a sideshow. Tether has really amped up in the fear index.

Musk, a modern day pied piper – genius, crazy or both.

“pied piper came to describe a person who is easy to follow but who may not always care about his followers’ wellbeing ultimately.”

Mr Musk is much more popular than Mr Orr.

A2 shares down another 5 percent today. Clearly December 1 or share buybacks cannot come soon enough.

The P/E starting to look quite appealing, but who knows how far the earnings are going to fall going forward. Can remember a few years ago the P/E was something crazy like 60-70 and I thought, wow this isn't going to end well.

The mature Meridian MEL is on a crazy PE of 65. At least A2 was a high growth company.

Growth companies now have a PE of 1000. Didn't you get the memo?

Worlds gone mad

Another update today : Tauranga and Rotorua House prices touched New Milestone

https://www.nzherald.co.nz/bay-of-plenty-times/news/tauranga-house-price...

Totally on track for my predication that Tauranga will hit $1Mill by Christmas. What's is really going to boost the confidence it is that the new RV's are due out on 1st July down here.

KIwis used to walk around their sections and check their pegs and boundaries.
https://www.stuff.co.nz/national/politics/local-democracy-reporting/3003...
And how can a section be only 101m2 ?!

When every square inch becomes sacred, madness follows.

.