Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Westpac raised some rates today. More here.
TERM DEPOSIT RATE CHANGES
BNZ raised most TD rates today, keeping up with their rivals. Westpac did late yesterday too. And now, so has Asset Finance.
AUCTION ACTIVITY DIVES
Barfoot & Thompson's total auction numbers dropped sharply last week but the sales rate shot up to 77%. The real estate agency took just 64 residential properties to auction last week (28 August to 3 September), down from 105 the previous week.
BASCAND TO LEAVE
RBNZ Deputy Governor and head of financial stability Geoff Bascand is to leave the central bank in January 2022.
THE MONEY SHOWS THE PRIORITIES
The Government has topped up the National Land Transport Fund with a $2 bln "loan", allowing a record $24.4 bln of infrastructure investment over the next 3 years. 69% of this money is going for roads, 25% for rail and other public transport, with 6% for walking/cycling/coastal shipping.
EYES ON THE DAIRY AUCTION
There is another dairy auction tomorrow morning. Signs are that this one could be more positive than the last one two weeks ago. We think the signs indicate WMP could be up +3% and SMP up +4% in US dollars. Unfortunately, the NZ dollar has risen +2c or about +3%, so that will wipe out any gains that may eventuate. In international markets, supply is a little constrained at present, another factor that could elevate USD prices.
MORE FLP FUNDING
There was another $100 mln draw on the Funding for Lending program at the RBNZ yesterday. That takes the total to $7.8 bln drawn down of the $28 bln allocated.
UMBERS JOINS RYMAN
Ryman Healthcare (RYM, #8) has appointed Richard Umbers as its new CEO, an "experienced retail leader". He was based in Melbourne working for Kaufland/Lidi, previously Coles Meyer (where he was dumped as CEO), AustraliaPost, and Woolworths/Progressive. All these priors feature vast armies of low-paid staff. He will be based in Christchurch.
INVESTMENT ENERGY
The energy sector of the NZX50 has a good week last week, rising +1.9% in the week to be +1.9% higher than a year ago in terms of capitalisation. The sector now represents 18.7% of the NZX, up from 7.9% a year ago. Contact rose +3.0% last week, Chorus rose +3.8% and Vector rose +3.1%. Only Mercury fell in this category.
RBA REVIEWING
None of the data out of Australia today was very positive. But they do have a central bank policy review due at 4:30pm today NZT and markets don't expect any rate changes. But they will be on the lookout for tone signals in their statement, especially around tapering their QE.
AUSSIE DATA WEAK
Australian services PMI data sank sharply into contraction in August, all based on the NSW and Victorian lockdowns. Building permit levels were also confirmed as quite weak. (Of course, if we had similar data in New Zealand today, it would likely be weak for the same reasons.)
QUIET AT HOME, HOT IN TRADE
Exports from China surged almost +26% in August 2021 from a year earlier, far above market estimates of +17% and accelerating from a +19% rise in July. This is the 14th straight month of growth in exports, despite pandemic-induced port congestion, container shortages and higher commodity prices. With exports this strong, and factory activity quite weak, it does indicate that domestic demand for manufactured goods must be really struggling. But imports were strong too.
PANDEMIC PRESSURE INTENSE BUT EASING A LITTLE
In Australia, there were another 1220 new community cases in NSW today with another 1120 not assigned to known clusters, so they remain completely out of control. They now have 25,690 locally acquired cases. Victoria is reporting another 246 new cases today, so it is still bad there too. Queensland is now reporting no new cases. The ACT has 19 new cases. Overall in Australia, more than 38% of eligible Aussies are fully vaccinated, plus 25% have now had one shot so far. There is a kind of partisan civil war erupting in Australia with Canberra showing favourites to NSW, much to the ire of the other states. There were no new cases in New Zealand at the border, and 21 more in the community, all in Auckland and all but 4 within existing isolated bubbles. So far, 31% of eligible Kiwis now have both shots, another 29% the initial shot.
GOLD STABLE
Compared to where we were yesterday, the gold price is ever so slightly lower at US$1826/oz in early Asian trade. But that is up +US$4 from where it finished in London yesterday.
EQUITIES MIXED
The NZX50 is down -0.1% in late trade today, and unable to hold on to earlier gains. The ASX200 is down -0.4% in early afternoon trade and falling. Tokyo has opened strongly again, up another +1.1% in early trade and to a new all-time record high. Hong Kong is up +0.7%. Shanghai has opened up +0.5% in their early trade. Wall Street is closed and will be until Wednesday NZT. The S&P500 futures however still point to little change when they reopen tomorrow.
SWAP & BONDS RATES RISE AGAIN
We don't have today's closing swap rates yet. But markets are feeling a bit better around the local delta case numbers again today. We expect them to still show another small rise, especially at the long end. 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 another +2 bps at 0.52%. The Australian Govt ten year benchmark rate is now at 1.28% and up +2 bps from this time yesterday. The China Govt 10yr is now at 2.86% and up +1 bp. The New Zealand Govt 10 year rate is now at 1.93%, up another +3 bps, and above the earlier RBNZ fix for that rate at 1.91% (+3 bps). Essentially the market is convinced the RBNZ's policy bias for rate hikes is still in place. The US Govt ten year is now at 1.34% and it has gained +1 bps this afternoon. Don't forget the US (and Canada) are on a long-weekend holiday, reopening tomorrow.
NZ DOLLAR STAYS FIRM
The Kiwi dollar is now at 71.5 USc, and little-changed from where we were this time yesterday. Against the Aussie we are softish at 95.9 AUc. Against the euro we are also little-changed at 60.1 euro cents. The TWI-5 is still at 74.2 and just above the 72-74 range we have been in for most of the past ten months.
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BITCOIN FIRMS AGAIN
The bitcoin price is now at US$52,634 and up +1.4% from where we were this time yesterday. Volatility in the past 24 hours has been modest at +/- 1.7%.
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13 Comments
Three out five homeowners would not be able to afford their property if they had to buy it at the current valuation, Consumer NZ has revealed.
Consumer NZ spokesperson Gemma Rasmussen said housing was respondents' biggest concern, even above Covid-19.
Labour only want property investors to buy residential property at these prices. That's the reality now.
To continue Labour's desired inflation in house prices, FHBs income and savings are required by landlords. Increasing interest rates will probably mean home-ownership-rates fall further.
Some survey out recently noted Kiwis are more concerned about housing than covid - which is hopeful I suppose. A lot more housing suffering is required before things change.
Labour (on the down low) might need to start building accommodation for highly skilled migrants.
Three out five homeowners would not be able to afford their property if they had to buy it at the current valuation, Consumer NZ has revealed.
This is consistent with the Ipsos research that shows that approx 65% of homeowners couldn't afford their own homes based on their previous and current income.
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