Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today.
TERM DEPOSIT RATE CHANGES
ICBC have raised rates.
TEMPORARY CUT
AA Finance has reduced its car loan minimum rate to 5.95% from 7.95%. It is a limited-time promotion. But its maximum rate of 15.95% remains unchanged. (Personal loan rates are unaffected.)
2021-22 BUDGET ROADMAP
The 2021 Budget was released today. It's focus is on addressing 'social issues' with some big new spending initiatives. We have full coverage here. Having said that, the tax take rise is not especially aggressive and suggests only a modest rise in incomes is expected.
BRACKET CREEP CONTINUES
This Budget isn't changing the tax bands, which essentially means bracket creep continues and is being used to pay for much of the additional social spending in this plan.
HOUSE PRICE GROWTH TO EVAPORATE
The Budget papers assume the annual price growth for residential housing will completely evaporate by the middle of next year. This assumption is based on the expectation the recent extension of the bright-line test, and elimination of interest deductability for housing will do the job.
MUCH MORE DEBT
The Budget forecasts net core Crown debt will climb to 34% of GDP in 2021 and peak at 48% in 2023. Net debt issuance is expected to go from +$34 bln this year, $30 bln in 2022, $9 bln in 2023. This will take net debt on issue from $94 bln in 2020 up to $167 bln in 2023 and a +78% rise in four years. A new 30 year bond is to be issued.
NOTHING BIG ON HOUSING
Apart from the expectation that house price growth will evaporate, there is nothing generally on expanding the housing supply in this Budget. But there is new impetus and funding for much more housing for Maori.
Q1 RESIDENTIAL RENT UPDATE
NZ's average rent is now $491 a week, up $30 year-on-year. That means rent on newly tenanted properties is up +6.5%, but Auckland (much lower rises) and Queenstown (declines) differ from the rest of New Zealand with much lower rises.
THE FMA STAYS INHOUSE FOR A TOP ROLE
The Financial Markets Authority has appointed Liam Mason as its General Counsel.
INFLATION UP, HOUSE PRICES DOWN
The latest RBNZ survey of inflation expectations shows them averaging 3.4% in one year's time. This is their highest in seven years. The same survey records house price expectations, and they are now falling. They were averaging +6.4% in the March quarter, but now that expectation has fallen to +4.7% in Q2-2021.
AUSSIE JOBS WOBBLE
In Australia, their unemployment rate fell to 5.5% from 5.6% but that was because their participation rate fell. Actually, employment fell by -31,000 which was much worse than expected (+15,000) and compared with a March rise of +77,000
GOLD RISES
The gold price is now at US$1875 in early Asian trading and up +US$8 from this time on yesterday. And this is up +US$6 to the New York close earlier today at US$1869 which was unchanged in a day; London closed at US$1888/oz.
EQUITIES SHARPLY LOWER
The S&P500 sank in opening trade in today's New York session, but clawed all by -0.3% of those losses back by the end. Tokyo is trading unchanged in its morning session. Hong Kong is down -0.9% in early trade, and Shanghai is down -0.6%. The ASX200 is up +0.9% in early afternoon trade, and the NZX50 Capital Index is up +0.8% near the end of its session. Many majors are making gains today, including A2 Milk, Synlait, Infratil, Z-Energy and AIAL.
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. The 90 day bank bill rate is down another -1 bp at 0.33% and its lowest in six weeks. That is a -4 bps fall in a week. The Australian Govt ten year benchmark rate is down -1 bp since this time yesterday at 1.71%. The China Govt ten year bond is down -2 bps at 3.14%. And the New Zealand Govt ten year is down -1 bp at 1.89% and still above the 1.88% in the earlier RBNZ fix (-1 bp). The US Govt ten year is up +2 bps at 1.66% although at one point earlier it was up at 1.69%..
NZ DOLLAR FALLS
The Kiwi dollar has dropped -½c and is now at 71.7 USc. Against the Aussie we have softened marginally since this time yesterday to 92.7 AUc. Against the euro we are softer again at 58.9 euro cents. That means the TWI-5 is down -40 bps at 73.3.
BITCOIN SINKS IN EXTREME VOLATILITY
The bitcoin price is now at US$37,932 and down another -5.7% from this time yesterday. Volatility in the past 24 hours is off the scale at +/- 18%.
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36 Comments
'HOUSE PRICE GROWTH TO EVAPORATE
The Budget papers assume the annual price growth for residential housing will completely evaporate by the middle of next year. This assumption is based on the expectation the recent extension of the bright-line test, and elimination of interest deductability for housing will do the job.'
There is an old saying that to “assume” makes an “ass out of you and me”.
Ok if this assumption is founded on the introduction of these two measures then surely the question is why then were they not introduced earlier, much earlier in fact. Because th3 horse has bolted, way up over the hill, gone and far away. (no disrespect to the late great Gary Moore intended.)
The bitcoin price is now at US$37,932 and down another -5.7% from this time yesterday.
These kind of daily summaries are going to be unnecessary as volatility ramps up. The BTC price is up 7.55% on my exchange (Japan) and kicks in at 7 am. Similar on TradingView in USD on Bitstamp.
The tether volatility is also interesting. It briefly averaged (between exchanges) $0.90 right around the same time Bitcoin almost touched $30k.
https://www.coingecko.com/en/coins/tether
This data point may have a different value depending on your tracking website of choice. There are screen shots of lower values.
One theory for this may be that bitcoin is actually valued in tether by the market, since that is what the majority of bitcoin is exchanged for.
I don't think the mods like unsubstantiated links but there were tweets of a lot of more questionable stuff happening at this time too, which I don't know how to verify.
I'm not a participant but I do find watching from the sidelines fascinating. It's like the people with their techniques they used to manipulate regulated markets finally found a market without propper regulation and are going nuts.
Whatever crypto is its not the new gold or a currency hedge.
Interesting post going around with an image from 4chan (yes I know). Prior to the crash, an "insider" said that at a certain point in time, the PRC would be crashing BTC down to $30k with the aim of liquidating a particular "stakeholder" as punishment. BTC then crashed to $30k (right after $1B of deposits to exchanges) within 11 minutes of the prediction. Insider also says some big announcement is coming. Other rumors is the individual is Justin Sun (of Tron fame).
If you want to get some more narrative behind the conspiracies read though this for the last 24 hours:
https://twitter.com/DrHOSP1
I don't know how to verify any of it, so treat it with the scepticism it deserves, unless you know more than me. It's a "list" with editorial of shady activity but i don't know how you check any of this stuff for crypto.
That's some wild reading. The beauty of blockchain (unlike the "regulated" markets) is that it's actually quite transparent. If you want to know how much USD/T/B/C is on exchange at any given time there's good data available https://www.viewbase.com/exchange
It's not going to zero and I would guess the tether holders could probably push it back to >50k at will (its not like they can all cash out).
It's credibility as anything but a purely speculative asset must be on life support though. One twitter account, some news confirming what everyone expected (tether does not have the reserves to hold the pin in a shock event) and some news and rumors involving China and the price comes tumbling down. None of this is a legit reason for a price crash, especially with the way it occurred. All was crypto is effected and critical exchanges are having problems.
You can't hold this stuff instead of cash, you might have needed the money this week. You can't accept crypto as payment for a product or service you sell because it's value fluctuates so fast either you or your customer will be unwilling to accept the amount.
USDT should do the responsible thing that all our governments are doing and just do away with reserves altogether. Then they could expand their balance sheet to provide as much liquidity as required. Everyone now knows, that sound monetary theory and the path to eternal prosperity is simply achieved through credit creation.
With Covid closed borders.
This was a beyond once in a generation moment time to transition benefit recipients, transition recipients to employment. Part time, glide time WFH, accommodation provided, child care provided, etc, etc... the empowerment, the self esteem, priceless.
Absolutely cruel to leave people stranded in dependency.
Added to that, the ethic division of largesse just stinks.
Come to Australia. I walked into $200k plus job on fifo as sparky and there are well paid jobs everywhere. I am so glad I abandoned trying to buy a house in NZ. Will probably not come back ever unless house prices half (go back to 2016 prices). What a joke. Jacinda.... you have wrecked what could be the best country in the world. So very sad.
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