Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes so far today.
TERM DEPOSIT RATE CHANGES
ANZ raised its term deposit offers for terms 1 to 5 years. However, the new rates just bring them into line with most of their main rivals.
ASKING TOO MUCH? OR, NO INTEREST?
Australia's Westpac Banking Corporation is to retain ownership of Westpac New Zealand after it's ownership review. It seems an odd result because these "strategic reviews" usually result in a divestment. You can't help but wonder why they backed down this time.
PLENTY OF DEMAND STILL
Treasury put up $350 mln in bond tenders today and got a bit over $1 bln in bids. The May 2026 $100 mln tranche attracted $408 mln in bids and went for a yield of 1.09%, just marginally ahead of the equivalent month-ago tender (at 1.06% pa). The May 2031 $100 mln had 27 bids worth $380 mln and went for 1.79% pa yield, which actually was less than the period 1.87% pa. The $100 mln April 2033 tranche attracted $205 mln in bids from 18 parties, but only two were successful at 1.96%, down from 2.11% at the prior event. The final $50 mln attracted only $69 mln in bids but from 21 parties, 14 or whom were successful and they got a yield of 1.12% plus CPI which was up sharply from the 0.87% plus CPI the last time it was offered.
EYES ON ECONOMIC GROWTH
The end of Q2 is now less than a week away. That will mean estimates of economic activity for the period will start to be made. Massey's GDP Live tool suggests it could come in quite strongly, up +4% in the quarter, and up +4% on a year-on-year basis.
NOT RECOVERED YET
Petrol pump prices are surging again, accelerating a trend that started in April 2020 just after the huge retreat in the first lock down. Auckland U/L91 are now $2.25/L, for the rest of the country it is averaging $2.12/L. But these prices are not yet back to the March 2020 levels quite yet. And this is despite the fact that in US$ terms crude oil prices are back at May 2019 levels. Competition and lower demand has meant that the oil company component to refine, import and distribute (and profit) has not recovered and is still below its 2015 to 2020 average.
WEALTH SURGE
The Aussie stats bureau released household wealth data today as at Q1-2021 and that had their "Wealth per capita" up at a record high of AU$492,055 and up a remarkable +15.3% in a year, its fastest growth in more than a decade. Rising house prices drove the gains with with property prices contributing +8.5 percentage points to the growth and superannuation balances +4.1 percentage points. Household wealth grew more in the last year than it did during the preceding three years combined. (New Zealand's household wealth position was published on June 4, but we will need to wait until September 3 for the housing valuation bit.)
SPREADING INTO NSW'S GOVERNMENT
Sydney's list of COVID-19 exposure sites continues to grow, with the heart of NSW's government now being added as a potential hotspot after a senior MP contracted the virus.
GOLD SLIPS
Compared to where it ended yesterday, the gold price is down -US$3 and now at US$1777/oz in early Asian trading.
EQUITY MARKETS GOING NOWHERE
The S&P500 ended the earlier Wall Street session down -0.1% after a late sell-off. Tokyo has opened up a minor +0.2%. Hong Kong has opened up +0.4% while Shanghai is flat in very early trade. The ASX200 is down -0.1%, while the NZX50 Capital Index is trading flat today.
SWAP & BONDS YIELDS HOLD
We don't have today's closing swap rates yet. If there are significant changes again today, we will update this item. They probably held, little-changed. The 90 day bank bill rate is down -1 bp at 0.33%. The Australian Govt ten year benchmark rate is little-changed at 1.52%. The China Govt ten year bond is unchanged at 3.11%. The New Zealand Govt ten year is unchanged at 1.82% and now above the earlier RBNZ fix of 1.80% (-2 bps). The US Govt ten year is up +2 bps to 1.49%.
NZ DOLLAR FIRMS AGAIN
The Kiwi dollar has firmed a little from this time yesterday and is now at 70.5 USc. Against the Aussie we are up too at 93.1 AUc. Against the euro we are up at 59.1 euro cents. That means the TWI-5 is now quite a bit firmer at 72.9.
BITCOIN SLIPS
The bitcoin price is now at US$32,632 down -3.8% from where we were at this time yesterday. It has had most of this fall in the past hour. Volatility in the past 24 hours has been high at +/- 3.5%.
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17 Comments
Commentators on financial television may gurgle about all the “cash on the sidelines” and speculate why it needs to “flow somewhere,” but these phrases are incoherent. It’s not there because lending has increased, or because “wealth” has increased, or because it’s “waiting to be spent.” It’s there precisely because the Fed replaced Treasury securities with base money that somebody has to hold at every moment in time. It doesn’t need to “flow” anywhere. It’s already there.
Banks are welcome to make more loans, but they do so only if there are creditworthy uses for the funds that the banks are willing to approve. Even then, every loan is both an asset and a liability. You can call these loans “money creation” if you like, but they are not new “savings” and they are not new “wealth.”
Individual depositors can try to get rid of their base money by purchasing stocks (provided that they are inclined to speculate), but the base money just goes to the seller. That’s how we find ourselves amid the most extreme financial bubble in U.S. history. Yet even changes in stock prices aren’t changes in aggregate wealth. The wealth is in the future cash flows, and the value-added production that generates them.
Whatever people choose to do with their deposits, the bottom line is the same. None of this “cash on the sidelines” is going to go away until the Fed removes it. The growth in bank deposits over the past decade has been a nearly mechanical response to the growth in base money that somebody has to hold, at every moment of time. Meanwhile, by encouraging years of yield-seeking speculation, the Fed has done enormous damage, in my view, to the long-term stability of the financial markets. We’ve adapted our discipline in a way that can navigate their speculative effects without embracing their premises, but I continue to have little doubt that it will all end in tears. https://www.hussmanfunds.com/comment/mc210614/
I finally gave up - a chunk of my previous TD’s sailed off to Milford Asset Management a week or so ago.
The rest basically sitting on call – with me scratching my head as to what to do with it.
It's just so ridiculous - interest rates, asset prices and risk settings are all fundamentally wrong.
I hear you. Nowhere to run and nowhere to hide while they suck all the value of currency and people's cash savings. So if you don't want to join their bubbles, the only real option is the trip to Queenie or that bloody spa pool (even if you'd prefer to save for a rainy day).
That is why I suspect so many older people moved their money into houses. So many must now be accidental landlords. They are likely one big reason for house prices increasing, and could be why these recent government changes haven't had any noticable effect. If many are passing cash, then the tax deduction changes may not affect them.
Clerical error, my ass
https://i.stuff.co.nz/national/politics/300341098/housing-minister-corr…
This tells a story. Commodity prices over last year...
Lumber: +104%
Natural Gas: +98%
WTI Crude: +81%
Heating Oil: +78%
Brent Crude +76%
Gasoline: +75%
Corn: +65%
Copper: +63%
Coffee: +57%
Soybeans: +49%
Cotton: +46%
Silver: +45%
Sugar: +43%
Wheat: +35%
Palladium: +35%
Platinum: +28%
Gold: +0.1%
https://twitter.com/michael_saylor/status/1408058985270349824
This tells a story. Commodity prices over last year...
Lumber: +104%
Natural Gas: +98%
WTI Crude: +81%
Heating Oil: +78%
Brent Crude +76%
Gasoline: +75%
Corn: +65%
Copper: +63%
Coffee: +57%
Soybeans: +49%
Cotton: +46%
Silver: +45%
Sugar: +43%
Wheat: +35%
Palladium: +35%
Platinum: +28%
Gold: +0.1%
https://twitter.com/michael_saylor/status/1408058985270349824
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