Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
TSB tweaked some mortgage rates, with the 1 year up by +5 bps, and the three year down by -9 bps.
TERM DEPOSIT RATE CHANGES
Bank of China raised all their TD rates.
STRONG UP TREND
More than 14,000 new homes a year were built in Auckland in the year to June and that could increase by at least a third in the next 2 years. With almost 20,000 new dwelling consented in the past year, the additional housing stock being added in Auckland will almost certainly top 20,000+ per year within the next 24 months
FARM CONFIDENCE 'HOLDS'
Farmers aren't as grumpy as their public profile suggests. On-farm returns are rising. And a new farmer confidence survey from Federated Farmers shows now a net +4.4% of respondents expect their profitability to improve over the next 12 months, a 23-point increase on the January 2021 survey when a net -18.3% expected it to decline. A net 32.6% of respondents expect their spending to increase in the year ahead. "The most concerning aspect of the survey from Federated Farmers’ point of view is that nearly half of the July survey respondents said it has been harder to recruit skilled and motivated staff. That’s a further 13-point increase on the 35% of farmers who cited workforce shortage worries in January."
AUSTRALIA AT RISK
In Australia, it is becoming clear that a sharp drop in traffic levels and industrial production will have quite a depressing impact on their economic activity. Hopefully for them it will just be short term, but that is a 'wish' rather than a certainly at this time.
CHINA PRESSURES MIXED
China's consumer inflation came in marginally higher in July than expected, but still lower than for June. Retail prices for pork, beef and lamb are now all falling on a month-on-month basis. But their factory sector reported PPI up at +9.0% which was also higher than expected and matching the 13-year high reached in May. This is real pressure in a core component of the world's supply chain.
PRESSURE IN NSW REMAINS INTENSE
There were 285 new community cases in NSW today with another 170 not assigned to known clusters, so they are not getting on top of their outbreak. Victoria is reporting eleven new cases. Queensland is reporting 5 new cases with some in Cairns. Overall in Australia, more than 22% of Aussies are fully vaccinated, 44% have now had at least one shot. Aussie corporates are now starting to insist on 'no jab, no job' policies. There was two new case in New Zealand at the border (and a serious one in MIQ), but still none in the community. A ship at Tauranga has more than half its crew infected, and yet our harbour workers seem reluctant to get vaccinated. 319 of Tauranga port workers haven't yet had a single jab, of 530 at that port. In New Zealand 16.0% of the population are now fully vaccinated, with another 26.9% having had at least one shot.
GOLD MOVES DOWN SHARPLY AGAIN
Compared to where we were this morning, the gold price is down to US$1741/oz and a decrease of another -US$22/oz so far today. It was last at this level in April.
EQUITIES START POSITIVELY
The NZX50 Capital Index is up +0.2% to start the week. The ASX200 is up +0.1% in early afternoon trade. The Tokyo equities exchange is up +0.3%, Hong Kong is up +0.9%, and Shanghai is up +0.3% all in very early trade. Company earnings reports have generally been positive globally which is helping most markets stay near their record high levels. The S&P500 futures is suggesting Wall Street will open -0.2% lower however after a record high close last week.
SWAP & BONDS RATES HOLD
We don't have today's closing swap rates yet and if there are significant ongoing changes we will note them here. They are probably higher with the 1yr up +2 bps, the 2yr up +3 bps and the 5yr up +5 bps (H/T Nick Smyth). The 90 day bank bill rate is unchanged at 0.65%. The Australian Govt ten year benchmark rate is up +4 bps at 1.22%. The China Govt ten year bond is unchanged at 2.83%. The New Zealand Govt ten year however is up +1 bp at only 1.63% and now below the earlier RBNZ fix of 1.66% (+4 bps). The US Govt ten year is now at 1.31% and up by +7 bps today and firming on the back of the robust US payrolls data.
NZ DOLLAR HOLDS FIRM
The Kiwi dollar has been just marginally firmer than where we opened today, and now at 70.2 USc and basically holding. Against the Aussie we are unchanged at 95.4 AUc. Against the euro we are firmish at 59.7 euro cents. The TWI-5 is still at 73.3 and staying up.
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BITCOIN HOLDS HIGH
The bitcoin price is now at US$43,424 and virtually unchanged from where we started today. Volatility in the past 24 hours has been moderate at +/- 2.9%.
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27 Comments
https://www.stuff.co.nz/business/300378198/tegel-to-lift-chicken-prices…
“New Zealand’s largest poultry supplier Tegel is raising chicken prices from mid-August.It said the roughly 10 per cent price rise was a result of pressures on the industry, including increases in the cost of labour, feed and fuel impacting supply chain costs.”
Clearly there’s been an oversight in the Tegel release – I’m unable to sight any mention or indication of the increase being ‘transitional”.
Poor gold, what is happening to our stable store of value!
Volatility over the past week has been off the scale however at +/- 7.5%.
Sorry were you referring to Bitcoin or gold on that one? Over the last 2 days gold has dropped 7% from its daily open on Sunday.
https://twitter.com/egfalken/status/1424523555455262725?s=20
Yes. As a long-term PM and gold mining stock owner (owned and added to before BTC even existed), it's getting to the point where you cannot escape from asking yourself some serious questions. I would have been far better transitioning out of those gold holdings into BTC over the past 10 years. Nevertheless, looking in the rear view mirror will not change anything. But gold as a SOV has been really disappointing. There were signs in 2019-2020 that gold should be outperforming now and I subjectively "feel" that the price should be at least reflecting the change in money supply. May sound like conspiracy, but the market is totally rigged through the likes of JPM (who are still able to profit from the PM markets). I suspect they get away with it with the approval of the ruling elite.
It's not a conspiracy when they're admitting guilt and paying huge fines. Even though I don't have any gold holdings anymore, over the past few years gold has been a wonderful performer, especially in NZ dollar terms.
Even though gold is manipulated and is relativity driven by the 'paper/futures market' - I'd definitely look at building a position again around USD $1,300 per oz - if it goes that low.. silver probably has more immediate runway tbh.
ALSO: for those of you that don't know, 'The Wizard of Oz' is actually about banking and politics. Dorothy's slippers were actually silver in the children's book [silver coinage], the 'yellow-brick-road' represents the gold standard, the witches represent central-banking.. even liquidity is represented by that bucket of water at the end. I'll let you do your own research. Wizard of 'Oz' [gold].
Nothing has changed with gold price manipulation. What JPM got stung for was minimal in a wider context of what's going on with the gold markets and how the price is controlled.
Furthermore, gold has not "outperformed" in NZD terms. It's up approx 25%. In the greater scheme of things, that's par at best.
I didn't use the word "outperformed". I said, "gold has been a wonderful performer, especially in NZ dollar terms."
Remember gold is priced in US dollars, so in NZ dollar terms I had years where my gold holdings were increasing 10%+. But yes, the likes of JP Morgan make more from gold manipulation than they pay in related fines.
I didn't use the word "outperformed". I said, "gold has been a wonderful performer, especially in NZ dollar terms."
"Wonderful performer" means nothing without a benchmark or a relative anchor. Now let's assume you mean the purchasing power of gold vs NZD. I would agree to some extent that gold has "performed" but if you account for the expansion of the money supply, as an asset, its performance has been average at best.
Gold has done pretty well in NZ terms since the start of 2019, how ever, for it to maintain its purchasing power it has to continue to do well.
In USD terms, we are still below the price that it was in 2010-2011 except M2 has increased by trillions...
I was going to purchase some gold mid 2019, but I just asked myself, why would I buy this when I can buy Bitcoin and out perform gold (by almost a multiple of 10x as it turned out) and it just seems like a real pain in the ass to take possession of.
“and yet our harbour workers seem reluctant to get vaccinated. 319 of Tauranga port workers haven't yet had a single jab, of 530 at that port”
Ardern’s response this afternoon:
She said hesitancy and mis-information had slowed down the uptake in ports.
She pointed out that it was now mandatory for those workers to be vaccinated by the end of September "or it may mean job loss."
September?!? - This failure and delay could ultimately mean "job loss" for a lot more than just port workers.
"Ardern said 98 port workers who had dealt with the Rio De La Plata had been tested - but only nine of the workers were fully vaccinated.
She pointed out that it was now mandatory for those workers to be vaccinated by the end of September "or it may mean job loss"."
This is truly pathetic, have "they"(MOH + Govt) only just realised this.
China's consumer inflation came in marginally higher in July than expected, but still lower than for June.
Can one assume 1.0% annually?
A deal is likely because inflation could poison the Democratic Party’s chances at 2022 mid-term elections and return control of the US Congress to the Republicans. Cutting tariffs is the quickest way to reduce inflation. Beyond the arithmetic of electoral politics, a consensus is emerging that the technology sanctions that Trump imposed on China have failed and may even have backfired Link
Aussie crypto exchange Independent Reserve crying out for regulation but the govt obviously doesn't know what to do. Meanwhile, as explained in the article, Singapore has requirements for exchanges on "customer protection mechanisms, transaction screening, IT services, compliance structures, and AML/CFT processes." Another interesting takeaway is that Aussie banks are throwing up barriers to crypto businesses, regardless of how credible your proposition may be.
https://www.afr.com/technology/crypto-exchanges-beg-for-regulation-as-l…
Any exchange that custodies crypto assets on behalf of clients should have to be just as secure as a bank wrt asset storage.
This American Infrastructure bill debacle has really mobilised the entire crypto community which is great to see. But regulators are absolute brain dead idiots when it comes to anything crypto related.
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