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.
HURT, BUT NOT MAIMED
The latest ANZ Business Outlook Survey shows an 'encouragingly robust' early response to the new lockdown from businesses. But inflation expectations are now at a ten year high.
AND RATES WILL STILL RISE
NZIER thinks the current lock down will likely see supply constraints in the economy become more acute, reflecting the reduction in the workforce as affected staff self-isolate and social distancing restrictions reducing the operating capacity of businesses. They also reckon inflation will persist and not be transitory, and that higher interest rates are still on the way.
CONSTRUCTION'S LONG TAIL FROM HOUSES ...
Building consents for residential housing are holding at their recent high levels, with July 2021 just marginally lower than the record high recorded in June, +24% more than in July 2020, and +23% more than for July 2019. These levels are being held up by strong consent approvals for attached townhouses and detached houses. In July 2021, there was also an unusual spike in approvals for retirement units, a record 398 given the greenlight in July 2021. Consent approvals are especially strong in Auckland (11.2), Tasman (10.4) and Canterbury (10.5), all of which report more than 10 new residential approvals per 1000 residents. That is a lot of work planned.
... TO COMMERCIAL CONSTRUCTION
The value of non-residential consents grew +14% in July 2021 from a year earlier. This strong month helped to offset weakness in June, bringing activity for the three months to July up 5.3% on the same period a year prior. Infometrics noted: "Based on the experience of last April’s lockdown, businesses can have more confidence that economic activity will bounce back to normal as we move back down alert levels. As a result, we expect less volatility in the numbers than last year."
MORE CORPORATE BONDS
Transpower is seeking up to $200 mln via a 5 year unsecured, unsubordinated fixed rate bonds from both retail investors and institutional investors. They have suggested an indicative margin of 0.35% to 0.40% above swap, so as of today that looks like these bonds may carry a yield of 2.00%-2.05% pa. (But they also note that "The actual issue margin may be above or below the indicative margin range".)
INSURANCE GUARANTEE
The RBNZ is looking for feedback on a proposed insurance policyholder guarantee scheme to pay out claims in the event of an insurer failing.
FILLING OUR DAMS
Heavy rain in Auckland, and especially in the Waitakere Ranges, has seen water reservoir levels jump almost +10% and now sit 72% full. Normal for this time of year is 90% full so some way to go yet. While the Waitakere dams are now full, the much larger Hunua system still needs a lot more.
FILLING OUR BOOTS
Our collective appetite for home loans rose yet again in July, according to the latest RBNZ data (C5). It was up +12.2% from a year ago, to $320.3 bln, 98% of it at banks. A +12.2% rise is the fastest pace since January 2008, and is +$37.4 bln more in a year, and the most ever.
NOT FILLING OUR BOOTS
Meanwhile, lending to businesses stopped falling in July, which is notable because it had shrunk for the previous eleven consecutive months. But lending to rural businesses is still falling and that has shrunk for 17 or the past 18 months.
WHERE THE LIQUIDITY IS
Meanwhile, customer deposits at banks (S40) jumped +$7.3 bln in July from June, the second-fastest leap ever (after the March 2020 one). That was driven by swelling business bank accounts. But households only raised their bank accounts by less that +$400 mln in July from June. Household term deposit balances leaked another -$355 mln to $81.8 bln, their lowest since January 2017. Overall, households have 50% of all bank account balances, a little-changed proportion, but it is slipping slightly.
USE LOCKDOWN TO UPGRADE
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PULLING BACK
In Australia, their residential building consents are falling. They fell -8.6 in July, declining for a fourth consecutive month to be -25% lower than the peak recorded in March.
DIGGING UP DIRT, SELLING IT AT HIGH PRICES
However, the Aussie current account surplus increased to a record +AU$20.5 bln in the June quarter and to +AU$68 bln for the year to June 2021, also a record.
PANDEMIC PRESSURE STAYS INTENSE
There were another 1164 new community cases in NSW today with another 1010 not assigned to known clusters, so they remain completely out of control. They now have 17,921 locally acquired cases. Despite that, they are still announcing further restriction easings. Victoria is reporting another 73 new cases today, so it is still bad there too and their lockdown is extended. Queensland is now reporting zero new cases. ACT has 13 new cases. Overall in Australia, more than 34% of eligible Aussies are fully vaccinated, plus 24% have now had one shot so far. There was only one new case in New Zealand at the border, but 49 more in the community, all in Auckland. So far, 27% of eligible Kiwis now have both shots, another 23% the initial shot.
GOLD STABLE
Compared to where we were yesterday, the gold price is down just -US$1 at US$1813/oz in early Asian trade, after getting as low as US$1810/oz in New York and US$1799/oz at the afternoon London fix.
EQUITIES MIXED
The NZX50 is up another +0.3% in late trade while the ASX200 is up the same in early afternoon trade. Tokyo has opened down -0.2% today while Hong Kong has been hit with the frighteners and is down -1.5% in very early trade. Shanghai is down -0.5% in early trade. Earlier the S&P500 closed up +0.4% ending at a new record high. But the Dow fell, and the Nasdaq rise +0.9%
SWAP & BONDS RATES SAY 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 unchanged at 0.46%. The Australian Govt ten year benchmark rate is at 1.15% and down -4 bps. The China Govt 10yr is now at 2.87% and little-changed. The New Zealand Govt 10 year rate is now at 1.73%, unchanged, but still above the earlier RBNZ fix for that rate at 1.72% (+1 bp). The US Govt ten year is now at 1.27% and -4 bps lower than this time yesterday.
NZ DOLLAR RISING
The Kiwi dollar is now at 70.2 USc, and firmer than where we opened this morning. Against the Aussie we are much firmer at 96.3 AUc and a sixteen month high. Against the euro we are also slightly firmer too at 59.5 euro cents. The TWI-5 is now at 73.4 and creeping to the upper end of the 72-74 range we have been in for most of the past ten months.
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BITCOIN DROPS
The bitcoin price is now at US$46,777 and down -3.8% from this time yesterday. Volatility in the past 24 hours has been moderate at +/- 2.1%.
This soil moisture chart is animated here.
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