What happened Friday

A review of things you need to know before you go home on Friday; some mortgage rate changes, shunning credit card debt, NZ Govt pays off 6% coupon bond, swaps slip, NZD holds, US moves against cryptos, & more

21st May 21, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
Bank of China cut their special 1 year & 18 month fixed rates to 2.15% and raised 4 and 5 years to 3.05% to 3.35% respectively. Update: SBS Bank has raised its 4 and 5 year fixed rates.

TERM DEPOSIT RATE CHANGES
Nothing here today.

WELCOMING FEWER
The overseas student numbers here continuing to decline, while overseas worker numbers are stabilising. The number of people on work or student visas has declined by -63,417 since its peak in February 2020.

BANK CEO MOVING ON
Co-operative Bank CEO David Cunningham has resigned and is leaving the bank at the end of July after four years in the role and eight years with the bank.

WE ARE STILL USING CREDIT CARDS ...
Spending on domestic credit cards rose in April from a year ago (of course given April 2020 was at the start of the pandemic), but spending using these cards is also higher than for April 2019. On a seasonally adjusted basis, it is up +4.1% from March.

... BUT JUST NOT FOR DEBT
April credit card balances rose from March and they rose from the same month a year ago. But the base effect distorts this rise. From April 2019 these latest balance levels are down -14.4% over the two years. Prior to this April data, there had been 18 months of consecutive decline. Banks are struggling to keep credit card debt relevant and the effort just isn't working in the face of the BNPL challenge.

POPULAR BUT ONLY AT HIGHER YIELDS
The latest Government bond tender offered $300 mln today which attracted $1.3 bln in bids. There were 71 bidders but only 23 won any supply. The May 2024 bond went for a yield of 0.52% pa, up from the 0.49% at the prior equivalent tender two weeks ago. The May 2028 bond went for a yield of 1.46% pa vs 1.35% two weeks ago. The April 2037 went for 2.39% and up from 2.27% two weeks ago. We should also note that last Friday, the May 2021 bond matured which had a coupon of 6.0%, which was the most expensive in their portfolio. This will save Treasury significant interest cost now it is paid off given it had $11.3 bln on issue. The next highest cost existing bond is the April 2023 $16.2 bln with a coupon cost of 5.5%. (The RBNZ holds a minor $250 mln of that one.)

GREEN SELLS
Precinct Property's (PCT) green bond offer was a success closing with full oversubscription. It's final yield was 2.85% pa for these six year secured, fixed rate bonds.

PRO-VAXXERS DOMINATE
Update: Latest research shows more New Zealanders in major demographic groups will get a COVID-19 vaccine, as the number of doses administered reaches half a million.

WHERE IT ALL GOES
We are part way updating our handy Budget summary pages. LIve now is the overall spending plan presented in yesterday's budget. You can much more easily see where the money is going in this summary table. One interesting takeaway is that since the last National Party budget in 2016/17 until now, the total mount of committed spending has risen from $83.7 bln to $146.9 bln, a +76% rise in five years. (We will have drill-down access, plus the tax-take analysis released early next week.)

JASPER BREAKS THE $100 MLN AUM BENCHMARK
Jasper, the technology-led commercial property fund manager, has completed a third acquisition of an A-grade Wiri, South Auckland industrial building to seed its latest industrial property fund. That takes its assets under management to $103 mln.

GOLD SLIPS
The gold price is now at US$1871 in early Asian trading and down -US$4 from this time on yesterday. And this is down -US$6 from the New York close earlier today at US$1877; London closed at US$1878/oz.

EQUITIES SHARPLY LOWER
The S&P500 ended its session on Wall Street up +1.1% earlier today. Tokyo is trading up +0.4% in its morning session. But Hong Kong is down -0.3% in early trade, and Shanghai is down another -0.6%. The ASX200 is flat in early afternoon trade, and the NZX50 Capital Index is up +0.2% near the end of its session. For the week, the New Zealand index is heading for a +0.6% rise.

SWAP & BONDS YIELDS SINK
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 0.32% and its lowest in six weeks. That is a -5 bps fall in a week. The Australian Govt ten year benchmark rate is down -3 bps since this time yesterday at 1.68%. The China Govt ten year bond is down another -2 bps at 3.12%. And the New Zealand Govt ten year is down -5 bps at 1.84% and now below the 1.87% in the earlier RBNZ fix (-1 bp). The US Govt ten year is down -3 bps at 1.63% as markets sip back into a risk-off tone.

NZ DOLLAR HOLDS
The Kiwi dollar has risen then fallen since this time yesterday and has ended slightly softer at 71.9 USc. Against the Aussie we have softened marginally again since this time yesterday to 92.6 AUc. Against the euro we are little-changed at 58.8 euro cents. That means the TWI-5 is still at 73.3.

BITCOIN RISES IN HIGH VOLATILITY
The bitcoin price is now at US$41,276 and a +8.8% recovery from this time yesterday. Volatility in the past 24 hours is extreme at +/- 6.1%. Janet Yellen's US Treasury Department announced that it is taking steps to crack down on cryptocurrency markets and transactions, and said it will require any transfer worth $10,000 or more to be reported to the US IRS. This will probably cause a flight of international crypto holders from US crypto exchanges.

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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49 Comments

by J.C. | 21st May 21, 4:16pm 1621570582

Janet Yellen's US Treasury Department announced that it is taking steps to crack down on cryptocurrency markets and transactions, and said it will require any transfer worth $10,000 or more to be reported to the US IRS

Will be good for funds like Grayscale and ETFs. I wonder if Yellen will get a fat envelope from them for her support. No doubt they attend her outrageous fee-driven presentations.

On that note, all NZ banks except for ASB will not transfer funds to legitimate crypto exchange Independent Reserve in Australia. I asked IR for an explanation and they couldn't give one. Not sure about the legality of the banks' actions. Arguably the bank should not be able to block their customers from transferring funds belong to accounts that comply with the law.

by realterms | 21st May 21, 4:29pm 1621571362

I imagine it's a minefield for banks, sorting out AML regs and crypto exchanges.

by lowercase capitalist | 21st May 21, 4:38pm 1621571886

Seems odd, Ive transferred to easycrypto, kiwicoin and bitstamp from my BNZ and Kiwibank accounts without ever having any issues.

by J.C. | 21st May 21, 4:41pm 1621572075

Seems odd, Ive transferred to easycrypto, kiwicoin and bitstamp from my BNZ and Kiwibank accounts without ever having any issues

Sure is. Probably the best exchange in Australasia with OTC services too.

by Ezy | 21st May 21, 9:27pm 1621589226

If you can handle waiting 7 days for the swift transfer to clear. Dinosaur technology.

by Galloleous | 24th May 21, 9:54am 1621806880

This is for businesses that receive over $10k in cryptocurrency as a forms of payment. It is no different to the current cash reporting rules.
Also it is not coming in until 2022.

So doesnt make any difference to private transactions or moving between wallets.

by Whatwillhappen | 21st May 21, 4:25pm 1621571141

Something that has bugged me for a while: a decrease of -65k is an increase of 65k. Double negative...

by Galloleous | 21st May 21, 4:54pm 1621572892

It always annoys me when the report the new number before the old number. eg In Australia, their unemployment rate fell to 5.5% from 5.6%.
That is just bloody backwards, time is chronologically forward so should be from 5.6% to 5.5%. It also provides the base reference first otherwise the new number is meaningless without reading the old number.

by Uninterested | 21st May 21, 7:30pm 1621582213

Not all of us are like Dr Spock. Some are diverse.

by Rob Reid | 21st May 21, 9:26pm 1621589163

Oh yeah.
Another one I dislike is "x is 60% less than y" (x=y-0.6y).
Dr. Spock (and I concur with him, of course) would say "x is 40% of y" (x=0.4y), because that would be logical.

by General Comment | 22nd May 21, 12:52am 1621601543

Ah yes, Dr Benjamin Spock. Paediatrician, would-be politician were it not for tragic events, Olympic gold-medalist, and lightning rod for conservatives. A man of great intellect indeed.

Mr Spock from Star Trek was a fan of logic too.

;)

by Groat | 21st May 21, 5:48pm 1621576092

It is concerning how often the NZD is softening lately. I am despetate to get the money out of NZ, that I had wanted to use to buy a house but the exchange rate keeps getting worse. Do I leave it there at risk from a bank bail in or do I take a loss.

by Yvil | 21st May 21, 5:03pm 1621573433

Just blame the landlords, I mean the speculators, no the specuvultures or is it the darklords?

by Groat | 21st May 21, 5:09pm 1621573741

Well, you guys are the ones who have risked the NZ economy by borrowing into oblivion for pure greed which is why the RBNZ and government are panicking and doing everything to stop the ponzi from collapsing which will bring down the whole NZ economy so maybe yes, I will blame your chums you listed.

by Yvil | 21st May 21, 6:27pm 1621578420

You guys ?
Re-read your post and try not to laugh, com'on do it

by Groat | 21st May 21, 7:12pm 1621581147

I will, but as I have found out that someone reports most of my posts and get them taken down I have to now be very careful what I say.

by Yvil | 21st May 21, 7:45pm 1621583127

If you get banned again, no doubt you will yet again resurface under a different name, one has to admire your tenacity

by Bananafishbones | 21st May 21, 5:13pm 1621573998

There's always someone else to blame.

by Groat | 21st May 21, 5:46pm 1621575986

Like all the parents of our kiwi young people for not breeding 20 years earlier so they could have got onto the ponzi earlier? Think about what your saying? The 18-25 years olds have not got a chance. The 0-18 year olds will have even less of a chance, and the not yet borns probably won't be because their parents can't afford them because they are paying rip off rents!

by Yvil | 21st May 21, 6:23pm 1621578194

You're a real barrel of laughs Grumpy Goat, have a miserable weekend, I'm sure you'll revel in it

by Groat | 21st May 21, 6:38pm 1621579126

Sometimes its easier not to see how fortunate one has been by sheer luck. But thats ok. Have a great weekend Yvil, I think you are probably not as mean as you make out.

by Yvil | 21st May 21, 6:28pm 1621578507

"There's always someone else to blame"
That's right, it helps not having to have a good look in the mirror

by Groat | 21st May 21, 6:48pm 1621579689

I can categorically say that I believe that Adrian Orr is reponsible for making house prices go to the moon post COVID. I blame him. I am now in Oz because of him. For a time there he made my life hell and still is to many people stuck renting in NZ. Personally though, maybe I should send him flowers as I now feel that we dodged a bullet. NZ is a mess and Oz is looking after us better than I could have ever of imagined. Thanks Orr for showing me that NZ is not what I thought it was. The people are different to how they used to be and I no longer feel tge pull I once did.

by Yvil | 21st May 21, 7:43pm 1621583026

Hey Groat, we agree on something! Indeed I agree house prices in NZ having been skyrocketing as a result of A Orr's slashing of the OCR and remove of the LVR's which was incredibly reckless

by Fairlyfrank | 21st May 21, 7:45pm 1621583104

I moved back from oz 3 years ago quite shocked at situation in nz have children and grand children here otherwise I would return

by JimboJones | 21st May 21, 7:54pm 1621583651

Isn’t the official cash rate lower in Aus than here?

by Groat | 21st May 21, 8:10pm 1621584601

Yes but Oz has stamp duty and capital gains taxes like normal OECD countries.

by JimboJones | 22nd May 21, 8:32am 1621629162

So why the hatred for Orr? He can’t bring in either of those!

by Zack Brando | 21st May 21, 9:11pm 1621588314

The Downlow on Crypto

- The ‘Long Squeeze’ that Fell Short?:
Following recent reports of the highly leveraged positions of many ‘crypto traders’ - some large holders of Bitcoin (Bitcoin Whales) sold down their positions. The resulting price decline caused a chain-reaction; leading to ‘retail buyers’ panic selling and the huge liquidation of leveraged [long] positions.

Following this successful Long Squeeze, many Bitcoin Whales are said to have brought back their Bitcoin holdings at lower prices. Perhaps shorting on the way down, though only exchanges and short sellers themselves could provide such short-statistics.

- The Dark Web Conspiracy and Falling Short:
Rumours and Conspiracy theories claim this was a coordinated attempt to crash Bitcoin’s price and enacted at a fortuitous time [tax-week, news-cycle, altcoin-valuations, buyers-fatigue, high-leverage, etc]. Though leveraged Bitcoin traders were stomped out of the market, Bitcoin is currently taking refuge around USD $40K. Bullish Bitcoin Whales and Retail Traders are happily providing support at this level. Alt-Coin Holders though might find themselves sheared on the way to the slaughter house.

- FED Shocked by Bitcoin’s Support/Rebound:
Fed Chair Powell came on camera today; with a dry mouth and somber demeaner – clearly spooked by Bitcoins resilience. Powell announced the serious possibility of someday having a crypto version of the US Dollar. One say.. FED Coin [CBDC] would be equal to USD $1.00. Powell’s comments at times seemed incongruent as such a system would replace the current American/Global Banking System. As such he mentioned ‘stable coins’ – coins like Tether which are listed on Crypto Exchanges, alongside hundreds of other centrally controlled alt-coins. Such a system could lead to people holding their savings in Bitcoin and converting Bitcoin into FED Coin for spending - allowing some government influence. This is perhaps the best Powell can hope for.. a "Bitcoin Standard" if you will.

by J.C. | 21st May 21, 4:59pm 1621573151

96.9% of wallets hold less than 1 Bitcoin and only make up 5% of total BTC supply. The bulk of BTC holdings are among reasonably wealthy people. They're not going to be shaken out so easily.

https://insights.glassnode.com/bitcoin-supply-distribution/

by Zack Brando | 21st May 21, 5:05pm 1621573537

Dollar-Cost-Averaging has and continues to work well for me :)
I like when BTC goes on sale.

by J.C. | 21st May 21, 5:45pm 1621575925

Good for you. Just no 'have fun staying poor' jibes though. People are starting to stand up to the ultra-orthodox factions of the crypto community.

by Zack Brando | 21st May 21, 5:59pm 1621576790

@ J.C.

Hey dude, please explain what you mean by "People are starting to stand up to the ultra-orthodox factions of the crypto community" I'm genuinely interested.

I imagine you're alluding to the concept of 'Bitcoin Maximalism'. In any event please elaborate.

by J.C. | 21st May 21, 6:11pm 1621577474

The ultra-orthodox are easily identifiable: the laser eyes nonsense; the terrible expression I referred to (mocking poor people is dreadful); the evangelical diatribes; the constant use of 'sheetcoin' to describe altcoins they don't like; the horrendous imagery they fling around social media; the attacking of their own gurus who demonstrate an open-minded thinking or go against groupthink.

by Zack Brando | 21st May 21, 9:05pm 1621587959

@ J.C.

Like the Climate Agenda you rightly point out Bitcoin has a ‘religious fervor’ and many evangelists. The evangelists, developers, nodes, miners, etc have enabled alt-coins/projects. Many cryptography researchers over the decades have put their lives at risk by releasing classified [and ‘buried’ unclassified] research which has enabled not only crypto-currencies [trap-door, elliptic-curve-signatures, SHA-256 mining, ..] but the likes of basic-internet-security (SSL). Their opinions carry weight. Some people are more attack-dogs than evangelists though aren’t they.

Now here’s the evangelical thing; some people, like socialists and the climate-folk believe utopia is possible here on earth, denying the human-condition/fallen-nature. They will fail. These kinds of people are probably more attack-dogs.

Now the “true” evangelists realise Bitcoin effectively digitises trust, it’s a truth machine. “Bitcoin is the Truth” an evangelist might cry. Prof of Work requires a lot of mining (hashing) power to ensure Bitcoin won’t be corrupted by fraudulent transactions. If you control 51% of the mining (hashing) power you can attempt various attacks. The Bitcoin Network easily has more hashing power than all the World's Government’s Supercomputers PUT TOGETHER.

It's reasonable.. well it’s true.. to make the argument that Proof-of-Work crypto-currencies are the only way to make a truly decentralised digital-currency. People obviously want their crypto [Bitcoin] secure, this has hashing requirements (alluded to above). The world might only be able to handle 2 or 3 truly secure (Proof-of-Work) Global Crypto-Currencies.

Bitcoin has an excellent ‘monetary policy’, leading to it being an ever better store of value. It’s certainly less risky than alt-coins which are often pre-mined, centralised, 51% attacked, have their monetary policy changed regularly, pay a percentage of mined coins to their creators, ICO’s with coins held back for their owners to dump, etc, etc.

Alt-coins are trying to run with the Bitcoin hound, yet they often piss like puppies. Now alt-coins have a place and certainly they aren’t even all claiming to be currencies. Many work together like how Dogecoin piggybacks off Litecoin’s mining algo. Some alt-coins will be a good investment long-term. Yet I’d argue holding Bitcoin has proven to be a good/better strategy – less risk, secure, great returns and no tax obligations like alt-coin day traders potentially face. From a stock-to-flow model and technical/network-effect perspective; the vast majority of crypto-projects are s***-coins.

If people want to buy/speculate on alt-coins that’s capitalism, my only concern would be that a get rich quick mindset takes hold and leads to losses – people blowing up their portfolios. You seem savvy enough J.C. and that’s great. Yet you and I both know there are many people whom are getting in over their head and investing in ridiculous projects – so some calling out of such behaviour/projects is understandable.

It's probably anger inducing for staples in the crypto market to be lumped in with the worst-of-the-worst. Oh, and there is a place for Proof of Stake, I’m not saying there isn’t btw :). The crypto-ecosystem has acted like a laboratory too, with the likes of Litecoin and Vertcoin implementing core updates which later get implemented into Bitcoin.

It’s a Brave New World. I always enjoy reading your comments J.C.
Hope the majority of your crypto holdings are in BTC though.

by Jonny.Foe | 21st May 21, 11:31pm 1621596719

Donkey

by youngdumbandbroke | 21st May 21, 7:03pm 1621580629

Hopefully you don’t regard Elon Musk as one of these gurus

by Galloleous | 24th May 21, 9:47am 1621806452

https://www.coindesk.com/the-decoder-have-fun-staying-poor

I thought you would actually understand the ethos behind the HFSP phrase?
"Have fun staying poor" basically means "I care enough to shame you into reading more and doing better"
It has nothing to do with mocking poor people, its mocking people that are intellectually too lazy to not research how Bitcoin works, but still spread misinformation or thoroughly debunked ideas.

by Carlos67 | 21st May 21, 5:51pm 1621576295

Thats a really bad thing not a good thing. So if only a handful of people the the very top decide to get out, basically its all over. Its only a question of who blinks first.

by Zack Brando | 21st May 21, 8:55pm 1621587329

You can have a look at the 'Bitcoin Wallet [Address] Wealth Distribution' here:
https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html

Just keep in mind that addresses containing large amounts of Bitcoin often belong to Exchanges and Institutions. That is to say many thousands of people many have a financial interest in such address. ALSO, regarding address containing smaller amounts of bitcoin; multiple of such address are often held by one person.

by J.C. | 21st May 21, 6:12pm 1621577553

Glassnode analytics paint a far better picture of distribution (as I referred to above).

by Hummy | 21st May 21, 7:19pm 1621581543

Did hear PM say that rents would not go up now because of budget, she would make sure. Are we looking at a rent freeze?

by Independent_Observer | 21st May 21, 7:26pm 1621581985

Interesting tweet from Zollner:

11.5% inflation experienced by the poor - yet the richer you are, the less inflation is impacting you. Looks like a very broken system.

https://twitter.com/sharon_zollner/status/1395572257607409666?s=21

by J.C. | 21st May 21, 8:01pm 1621584096

Ironic that she posts this don't you think? Her employer is ultimately the enabler in all this.

by Independent_Observer | 21st May 21, 8:19pm 1621585153

Yes - question is, why does she continue to share this type of data?

by HouseMouse | 21st May 21, 9:05pm 1621587952

Because she's hired as their socially conscious clown. She gives them a veneer of social responsibility.

by Independent_Observer | 21st May 21, 9:13pm 1621588413

A socially responsible bank that has the biggest exposure to potentially one of the biggest property bubbles the world has ever seen?

One has to laugh.

by redcows1 | 22nd May 21, 6:33am 1621622000

Or cry.

by JimboJones | 21st May 21, 7:49pm 1621583371

“ the total mount of committed spending has risen from $83.7 bln to $146.9 bln, a +76% rise in five years” those are scary numbers, especially as we aren’t getting anything for it. Is that just a one off due to Covid or has spending genuinely risen by that much? If so on what?