Here are the key things you need to know before you leave work today.
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MORTGAGE RATE CHANGES
ICBC raised rates today.
TERM DEPOSIT RATE CHANGES
ICBC also updated their TD rates.
LOCKDOWN TO EASE
All of New Zealand south of Auckland will move to Level three after Tuesday. More here. Auckland could stay at Level 4 for two additional weeks.
WARNING SIGN
Consumer confidence slipped in August as measured by the monthly ANZ-Roy Morgan survey, but it may be understating the weakness. They report that the four-week sampling period closed on 22 August, and it’s unlikely more than 15% of the sample was post-lockdown. This survey shows that the proportion of people who believe it is a good time to buy a major household item fell 11 points to +13. Inflation expectations lifted again to 5.1%, back at its previous high. But house price inflation expectations were little changed at 6.3%.
MORE THAT JUST SKILL SHORTAGES
Pre-lockdown the labour market was strong. As Westpac notes: "The monthly employment indicator, which is derived from tax data, shows that employment continued to gain momentum through the middle of this year. The number of filled jobs rose 0.8% in July, on top of a 1% rise in June. Jobs are now 2.4% higher than their pre-Covid peak." If we bounce back again like after the previous lockdown, these pressures are likely to return fast. The pressures in the labour market are not simply about skill shortages; this comes in the context of strong demand for workers.
GUILTY OF OVERCHARGING FEES
Ending a long-running dispute. Harmoney has entered into a settlement with the Commerce Commission, admitting that Harmoney’s platform fees were unreasonable, and agreeing to compensate 37,000 borrowers about $7 mln. This is just the latest in a long list of Commerce Commission actions against finance companies, including UDC, Moola, Auto Finance Direct, Acute Finance, and Rapid Loans. Cash to You Loans was banned from lending after investigation.
OVERBUILT AGAIN?
Mike Blackburn is reporting that in the Christchurch region, the number of residential building consents issued across all three Councils has exceeded 500 over the last five months. This sustained period of new construction is equivalent to the peak of the Earthquake rebuild in 2014. Back then, he notes, that market was faced with the situation that it had overbuilt by an estimated 2,000 new homes and the level of work fell away sharply. Are we about to see the same situation?
MORE DOWNS BEFORE UPS
In Australia, their decline in retail sales in July highlights the impact that lockdowns are having on the Aussie economy, and with lockdowns spreading and intensifying in August, sales will fall further before they rebound. Retail sales dropped -3.1% in July compared to the same month in 2020.
PANDEMIC PRESSURE STAYS INTENSE
There were another 882 new community cases in NSW today with another 773 not assigned to known clusters, so they are completely out of control. They now have 13,884 locally acquired cases. Victoria is reporting another 79 new cases today, so it is still bad there too and their lockdown is extended. Queensland is now reporting two new cases. ACT has 21 new cases. Overall in Australia, more than 32% of eligible Aussies are fully vaccinated, plus 23% have now had one shot so far. There were no new cases in New Zealand at the border, but 70 more in the community, all in Auckland. So far, 25% of eligible Kiwis now have both shots, another 20% the initial shot.
GOLD HIGHER
Compared to where we were this time yesterday, the gold price is up +US$9 at US$1797 in early Asian trade. And that is up +US$6 from the closing New York price and up +US$15 from the afternoon London fix.
EQUITIES HESITANT
In New York, the S&P500 closed its Thursday session down -0.6% as a late sell-off built. Today, Tokyo is slipping again and is down -0.5%. Hong Kong is down another -0.1% but Shanghai is flat in their early trade. The ASX200 is down -0.1 in afternoon trade and heading for a weekly rise of +0.4%. The NZX50 Capital Index is up +0.2% near the end of trading, also heading for a modest weekly rise of +0.4%.
SWAP & BONDS RATES ON HOLD
We don't have today's closing swap rates yet. They have probably little-changed. We will update this if there are significant changes when the end-of-day data comes through. The 90 day bank bill rate is up +1 bp at 0.46%. The Australian Govt ten year benchmark rate is up another +3 bps from this time yesterday at 1.21%. The China Govt ten year bond is back up +1 bp at 2.89%. The New Zealand Govt ten year is also up +1 bp at 1.69% and now above as the earlier RBNZ fix of 1.67% (-1 bp). The US Govt ten year is now at 1.34% and unchanged from this time yesterday.
NZ DOLLAR SLIGHTLY LOWER
The Kiwi dollar is now at 69.4 USc, and slightly lower from this time yesterday. Against the Aussie we are firmer at just under 96 AUc. Against the euro we are slightly lower too at 59.1 euro cents. The TWI-5 is now at 72.8 and still near the middle of the 72-74 range we have been in for ten months.
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BITCOIN SLIPS
The bitcoin price is now at US$47,348 and down -2.9% from this time yesterday. Volatility in the past 24 hours has been moderate at +/- 2.7%.
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4 Comments
Syndicate for Launch of 15 May 2051 Nominal Bond Announced
Financing the redemption of the $16.195bn 5.50% 15/04/23 government security begins.
Some bank entered into a $500m repurchase agreement (FLP) with the RBNZ yesterday.
RBNZ has penciled in GDP of 0.8 growth for the September quarter, New Zealand bank economists have penciled in three quick OCR hikes, yet in Australia, the same banks are looking for the RBA to reverse course on taper , let alone OCR hikes as growth stutters. With New Zealand spring rutting season being deferred indefinitely , when will some of this enthusiasm be tempered.
A2 milk, deservedly hits a 12 week low, having been milked on share buybacks and potential takeover malarkey.
Stunning read out of Aussie. Banks are rorting their own bail-out fund – called the Committed Liquidity Facility. Quote: "no other country in the world allows their banks to buy other banks’ bonds and count them as liquid assets."
As the banks are leveraged, or geared up, they make 15% returns on their home loans. And because their own bonds are higher risk and higher return than sovereign bonds, they make terrific returns on these as well.
Therefore it is not too far from the mark for cynics to use rude words like Ponzi is relation to the banks because – rather than keeping safe Commonwealth bonds in their bail-out fund – they are effectively using other people’s money – and newly created money via QE – punting their own higher risk bonds and home loans at a time of record house prices and record household debt.
https://www.michaelwest.com.au/verging-on-ponzi-how-the-banks-are-rorti…
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