Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
TSB is the latest bank to raise its fixed home loan rate offers. The Co-op Bank, and the Bank of China also moved higher. Details here (in the table) and here.
TERM DEPOSIT RATE CHANGES
Kiwibank cut its hot 200 day rate, and raised its 1 year rate. But a review of last weeks changes (including who has the highest offers for each term) is here. China Construction Bank have raised rates too. As did Christian Savings.
SERVICE SECTOR EXPANDING FASTER
New Zealand's services sector was in expansion mode for the fourth consecutive month, according to the BNZ-BusinessNZ Performance of Services Index (PSI). The PSI for June was 58.6. This was 2.3 points up from May, but still below its highest ever result of 61.1 in April. Both the 'sales' and 'new orders' categories were stand-outs, but none more so than 'employment'. Interestingly, it was the retail sector that was one of the weakest. As good as the services sector is, it isn't as expansionary as the factory sector (PMI).
OVERALL MEDIAN MULTIPLES HIGH & STEADY
For readers who follow the median multiple changes (the relationship between median household incomes and median house prices), you should note that we have updated our tracking of this measure for most urcan areas through to June 2021. (It is not a metric we particularly respect, but many general news sites get excited by it, so we track it on a first-principles basis, nationwide.)
NZX50 PROFILE UPDATES
Last week ended with a small -0.5% fall in the capitalisation value of the NZX50, but for the month it is up +0.8% to $130.1 bln. You should note that we have updated the profiles of Serko (SKO, #37, Pacific Edge (PEB, #38), Investore Property (IPL, #39), and Trust Power (TPW, #41).
TRACTOR MARKET ALMOST DIES
New data out from Stats NZ shows that only 10 new tractors were registered in June, the lowest for any month ever, and lower than for any month in the 2020 lockdowns (14). In the past four months only 59 new tractors have been registered. The average per month over the past 47 years is 184.
PETERING OUT?
ANZ's commodity tracker is suggesting that the strong recovery growth in commodity demand and prices may be petering out. High frequency data are pointing to a soft patch ahead for commodity markets. Nevertheless, the absolute levels of demand growth is still high they say. Ongoing supply side issue across many markets may support prices for a while yet however.
NO PRESSURE LET-UP
There were 100 new cases in NSW today (98 in the community) and another 11 in Victoria (10 in the community). Neither levels give confidence the Trans-Tasman travel bubble will re-open anytime soon. There were 3 new cases in New Zealand, all caught at the border, none in the community.
GOLD'S DROP STABILISES
Compared to where we were this time on Saturday, the gold price is up +US$2/oz to US$1814/oz in early Asian trading.
EQUITIES GENERALLY LOWER
The NZX50 Capital Index has slipped a minor -0.1% in late trade today. The ASX200 is down -0.9% in early afternoon trade. It is worse in Tokyo which is down -1.5% in morning trade, and -2.0% in opening trade in Hong Kong. Shanghai is down -0.7% in early trade. The S&P500 futures index suggests Wall Street will open down -0.4%.
SWAP & BONDS RATES FLATTEN FURTHER
We don't have today's closing swap rates yet and if there are significant ongoing changes we will note them here. They probably fell for 2 years and longer but were up for 1 year. The 90 day bank bill rate up at 0.47% with an unusual +4 bps daily leap. The Australian Govt ten year benchmark rate is down a chunky -6 bps at just on 1.23%. The China Govt ten year bond is unchanged at 2.97%. The New Zealand Govt ten year is down -6 bps so far at 1.59% and below the earlier RBNZ fix of 1.61% (-6 bps). The US Govt ten year is down -2 bps from this morning at 1.28%.
NZ DOLLAR SOFTISH
The Kiwi dollar has eased from its morning start to just on 69.8 USc. Against the Aussie we are little-changed at 94.36AUc. Against the euro we are also little-changed at 59.2 euro cents. So the TWI-5 has slipped to just under 72.8.
BITCOIN HOLDS
The bitcoin price is now at US$31,652 and virtually unchanged from where we were at when we opened this morning. Volatility in the past 24 hours has been low at +/- 1.8%.
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44 Comments
Sydney retailers believe lockdown may push the industry to the brink because welfare payments have been reduced according the AFR. Remember, a butterfly flapping its wings can cause all kinds of disturbances. The team of 5 million might scoff but best not to take these thing lightly.
https://www.afr.com/companies/retail/retailers-say-reduced-welfare-paym…
I recon that we would be best to just close the boarders completely apart from a trickle of carefully controlled returning Kiwis. The risks of dealing with the Australians is just too large. They cannot control it interstate and it is only a matter of time before we get caught. We can only be lucky so many times. Look at how once the Delta variant gets in it is un-controlable. Our previous measures are not fit for purpose with the new variant. As for allowing these delta infected fisherman we are mad. Now that we have started word will get round and we will be inundated.
Close everything down and go like hell until we are all vaccinated. From what we have seen the net contribution of the bubble with Australia is very small if not negative. We don't need it.
Jacinda would need to put out an official international broadcast that international fishing boats are not welcome with sick crew and thats never going to happen we are way to soft. Our quarantine facilities are hopeless for the Delta variant, its only a matter of time before it gets out as its twice as contagious. Like you said all boarder traffic should now cease except for Kiwi's returning home. We still have no dedicated MIQ facility despite having over a year now to build one.
I find it interesting that while ANZ's commodity tracker suggests that the strong recovery growth in commodity demand and prices are petering out, they are advocating for a urgent interest rate rise through their inflation scare communications over the weeks through their economics department.
I find it interesting that while ANZ's commodity tracker suggests that the strong recovery growth in commodity demand and prices are petering out, they are advocating for a urgent interest rate rise through their inflation scare communications over the weeks through their economics department.
Do you think ANZ and RBNZ are trying to spook the sheeple?
I think a growing story in NZ is the broken infrastructure. For so long the reporting has only been on the need to expand infrastructure.
$120 to $185 billion is estimated to be needed for "water care" alone. Here in Christchurch alone we have 100's of kilometers of leaking pipes. Wellington has seen the emergence of spontaneous water features. Auckland could probably use a dam.
That's just water infrastructure, not to mention other infrastructure.. let alone the quality of our waterways.
So who's going to pay for all this? Rates.. are councils going to up Rates? Or are renters/workers expected to pay for this? Our cities seem to be crumbling, even protected heritage buildings seem to be deathtraps.
Can workers afford to pay for this? I don't think they earn enough. Who is going to fix this? The same imaginary workers building the Cycle Bridge [which we all know won't happen].
Both Science and Religion agree natural disasters will increase.. surely insurance companies have worked this out too? Who will pay the increased insurance costs.. renter/workers?
Renters and Workers are going to need to earn a lot AND in a low inflationary environment to afford these costs..
My bet is very little will get built or fixed. Rates could 3x I suppose - the gnashing-of-teeth would be extreme.
That worked for a while. The boomers were just the upper deck Titanic passengers, though: it hits them later but it still hits them.
But the first comment re infrastructure is the kicker; entropy is setting in - as it is all over the 'developed' world. We're getting into Red Queen territory; running faster and faster to stay on the same spot, while the floods, wildfires and storm-surges get worse meaning it's a compound maintenance problem.
Hans, you forget that the country is being run (LOL) by a bunch of academics and career poli's that have never had a real job or exposure to the real world! They don't even understand where the income comes from to run the place! NZ is heading quickly to a very bad place!
ChCh is said to have $6 billion or so of assets pertaining to water supply. Purely a book figure, fixed assets, surely. Leveraged about $1 billion against them. So to be simple, if the creditor came to collect, what to do? Dig up the pipes, dismantle the pumps, take out the meters, and sell them off elsewhere? Don’t think so. Alternatively they take possession and start charging the city for using the parts they now own, imagine that. What’s it all about then!
Having read Mr Wong's morning article, alluding to the legal requirement , that the RBNZ commence lifting the OCR, I cannot wonder if the RBNZ will again , as in 2014, commit another policy error urged on by the same banks. Although the RBNZ has not sent out any speakers to dampen the banks crescendo , the NZD is barely moved
Looking at the reported numbers, I would say Demand had already dropped off, or was starting to before covid hit. So thats a demand problem.
Post covid, I would say that new regulations and expenses have been weighing on buyers minds. On top of this banks have been hammering rural loans with the new capital requirements so there is a rstriction of borrowing. Makes farmers just put off a new tractor purchase.
Would be interesting to look at the second hand tractor market in conjunction though, as this is just new registrations.
Since covid, then supply def would be a factor so they probably couldn't even buy one if they wanted to.
I still think it is a pretty big leading indicator of the sentiment of the rural sector if they aren't looking to spend big with a good predicted payout. They are more focused on paying down debt and bills with the potential for interest rate hikes as well as increased operating costs.
Well I was curious enough to reach out to someone I know who manages a tractor dealership, and he said they are on track to easily double last years tractor sales numbers, so who knows how Stats NZ have come up with their figures. My reliable source says they are very pleased with how things are going.
Did Stats NZ lose the rest of the paperwork maybe? Happens to the best of us.
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