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
None here either.
'BAD TIME TO BUY' A HOUSE
The latest quarterly ASB housing confidence survey taken before the latest RBNZ MPS shows that house price expectations have wobbled but remain high despite government policy changes. Buyer sentiment has turned more negative with a net 21% saying it is a bad time to buy. The rate of house price growth is expected to slow over the second half of this year, something both Treasury and the RBNZ independently forecast too. But this ASB survey isn't suggesting the falloff to be a sharp as those official views suggest.
GOOD TIME TO BUY AN APPLIANCE
Consumer confidence has rebounded after the pandemic shock, but it is nowhere near back to pre-pandemic levels, according to the ANZ-Roy Morgan consumer confidence survey for May. The proportion of people who believe it is a good time to buy a major household item, a key retail indicator, lifted 1 point to +19. Inflation expectations remained in their recent high range at +4.4%. Consumers regularly overestimate CPI inflation but their views still matter when assessing consumer confidence. House price inflation expectations were little changed at +5.9%. We will get ANZ's business confidence survey results on Monday.
MORE JOBS NOW THAN PRE-COVID
The Stats NZ release of employment indicators for April shows hiring continued to pick up in April, with filled jobs up a further +0.3% for the month. The number of jobs is now slightly above its pre-Covid peak. As Westpac notes, this growth in employment does not suggest that firms are having increased difficulty in filling vacancies in recent months. Still, the RBNZ sees the jobless rate falling only to 4.3% in three years. (It's currently 4.7%.) Others think the RBNZ is too conservative.
MORE ETHNIC DIVERSITY ON THE WAY, SLOWLY
New Zealand’s population is projected to become more ethnically diverse over the next two decades, Stats NZ said today. Currently, the broad European ethnic group makes up 70% of our population and will fall to 64% over the next 20 years. Māori will shift from 17% to more than 20%; Pacific from 8.6% to 10.7% over the same time frame. No other group will reach 10% in these projections.
POWER PRICE STRESS IS BACK, BIG TIME
After falling last week, wholesale electricity prices have risen steadily and quite steeply again this week, reaching almost $400/MWhr and actually its highest wince November 2018 except for the one-day spike on March 24. If it doesn't revert quickly, major users will no doubt start shutting down NZ production. Recall, the average wholesale price over all of 2019 and 2020 was $113/MWhr. The average for 2021 has been more than double that at $235/MWhr.
A HIGHER SEASONAL RISE
Grocery prices are on the rise again. This one is seasonal, marginally higher than in 2020 (+2.2%) but much higher than 2019 (+10%) and earlier years.
A BIG WINNER
The RBNZ is reporting (T43) that total KiwiSaver balance rose almost +30% in the year to March reaching $82.2 bln, a rise of a massive +$18.7 bln in one year. That is the fastest rate of growth since 2015. (Of course, balances rise through a combination of contributions plus earnings.) New Zealand based investments underperformed, growing only +$6.8 bln or +20%. But offshore investments rose almost +40%, rising in value by +$11.9 bln.
DEFICIT BENCHMARKING
In the US, their new Administration has launched its Budget with projections of spending and deficits out to 2035. The numbers are very large. There is already partisan pushback. But the US budget deficits are expected to run at about -US$1.3 tln per year over that period and that is about -5.8% of US GDP, falling to under -5% by 2026. (For 2022 the deficit is -US$1.8 tln.) For perspective, the New Zealand budget deficits are expected to run at -4.5% of GDP this year and -5.2% next year. Both governments are weighing against the damage the pandemic has done, and the US is also weighing against the damage done by the previous administration. Both will take years to rectify.
GOLD HOLDS
The gold price is now at US$1895 and down only -US$1 in early Asian trading from this time yesterday. The NY market closed at US$1896/oz and London closed at US$1891.
EQUITIES VERY MIXED
The S&P500 ended its Wall Street session today gaining a minor +0.1% and falling away in the late afternoon session. But the very large Tokyo market has opened its session very strongly indeed, up +2.0%. Hong Kong is up +0.3%, but Shanghai has opened flat. The ASX200 is up 1.2% early afternoon trade and heading for a record high, while the NZX50 Capital Index is down by -0.4%. This index is heading for a weekly fall of -1.9%.
SWAP & BONDS YIELDS EASE BACK
We don't have today's closing swap rates yet. If there are significant changes again today, we will update this item. The 90 day bank bill rate is unchanged at 0.33%. The Australian Govt ten year benchmark rate is up +4 bps since this time yesterday at 1.64%. The China Govt ten year bond is holding at 3.10%. But the New Zealand Govt ten year has dipped today, down -4 bps at 1.86% and now below the 1.88% in the earlier RBNZ fix (unchanged). The US Govt ten year is holding up at 1.61% after the gain on Wall Street earlier.
NZ DOLLAR HOLDS MOST OF YESTERDAY'S RISE
The Kiwi dollar has stayed high at 72.7 USc although it is down from 72.9 USc earlier in the day. Against the Aussie we are have eased back to 93.9 AUc. Against the euro we are still firm at 59.7 euro cents. That means the TWI-5 is softer at 74.3 and giving up a minor part of yesterday's rise.
BITCOIN LITTLE-CHANGED TODAY
The bitcoin price is now at US$38,212 and up a net +2.0% from this time yesterday. Volatility in the past 24 hours is still very high at +/- 4.3%.
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37 Comments
Got to love the ASB disclaimer in their public information.
Any valuations, projections and forecasts contained in this document are based on a number of assumptions and estimates and are subject to contingencies and uncertainties. Different assumptions and estimates could result in materially different results. ASB does not represent or warrant that any of these valuations, projections or forecasts, or any of the underlying assumptions or estimates, will be met.
You're on your own possums.
That's ridiculous! First, this is a survey of what other people think. Secondly, it is general in nature and not advice, so the disclaimer needs to be there in case anyone is silly enough to take it as advice. And thirdly, every economics consultancy has exactly the same disclaimer. You need to read these surveys and analyses as just a part of the resources you access to form your opinions. Just as readers of other comment in this thread, don't take one data source as gospel, ever.
Take a look at the interest.co.nz terms and conditions. We make a similar disclaimer. Trying to shame ASB or anyone else offering researched analysis based on a footer disclaimer is just silly.
You need to read these surveys and analyses as just a part of the resources you access to form your opinions.
OK. Then ASB should give a description of their survey methodology if this content is a basis for 'forming opinions'. For ex, What's the sample size? Who are they speaking to? How is the data collected? If ASB is going to publish surveys of public opinion, what is their motivation for doing so if there is no rigor to the data?
Furthermore, the words in the disclaimer are NOT a warning about public opinion. They're about 'valuations, projections or forecasts'. They are protecting themselves and not even affixing a correct disclaimer about interpreting public opinion.
Net 64 percent say that HP will increase
10 percent dont know
15 percent say that prices will fall or stay flat
79 percent say that prices will rise
(Note these are my assumptions, they should not be relied upon)
So near 80 percent believe prices will rise. Still net 20 something percent think it is a bad time to buy ... whatever the hell that means
I don't have a problem with the research (even if I don't know the methodology) and I don't know why David got bent out of shape. Anyways.
Assuming that the survey data is robust and consistent, those who think it's a 'good time to buy' is approaching the lowest level ever recorded in the survey tracker.
Then lends it back out due to pristine collateral shortages - View RBNZ bond lending facility.
I believe Meridian have the largest excess capacity (generating more than they sell direct to customers), but they're also the ones suffering from low lakes.
Regardless, when a company is priced on the cashflows from the next few decades, one year of weather related feast or famine shouldn't make too much difference, although the market does sometimes get overexcited one way or another.
That's definitely not now - mortgages still running hot as of April. Maybe in a few months.
https://www.interest.co.nz/property/110563/april-mortgage-borrowing-has…
Good news regarding the jump in grocery prices over the last couple of years – these are clearly all discretionary purchases and should be given a near zero weighting when calculating the everyday cost of living.
As an aside - tonight I’m planning on a delicious meal of grilled tender laptop in a creamy cpu sauce followed by a slice of flamed data stick – cooked with gas obviously – thankfully I can swap between electricity and gas effortlessly – can’t everyone?
Sleeping well tonight - there is no inflation.
More good news – my employer says he’s prepared to “look through” my current employment contract and will temporarily increase my salary to whatever extent to necessary cover these “short term” price aberrations that may impact my purchasing power or quality of life.
Here we go then - nice, juicy steaks and red wine on the menu tomorrow.
I thought that was pretty good of the company – but then I imagine everyone is probably in the same fortunate position.
"Consumers regularly overestimate CPI inflation" is true so far as it goes, but in the world that I live in the "CPI inflation" is not the actual inflation in the cost of living. I know this will vary for each individual, but the Consumer Price Index is just not currently a good measure of real inflation.
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