Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
ANZ was the first to hike rates, by +15 bps. Kiwibank raised them by +25 bps. More here. ASB said it will base business interest rate unchanged through to the end of 2021.
TERM DEPOSIT RATE CHANGES
ANZ raised some savings account rates too by 5-10 bps. Kiwibank raised rates by between 10-45 bps.
CHANGED!
The OCR has been hiked by +0.25% to 0.50%, the first rise in seven years. Here is the RBNZ Statement. Here is our review of what it means. Expect floating mortgage rates to rise by +0.25% as a result. The currency rose by +20 bps immediately after the announcement. Wholesale interest rates rose by +2 bps across the whole curve within minutes of the announcement. The NZX50 ignored the change. The general reaction is modestly hawkish. Where all have since settled is reported on below. But one fact remains; this is just the first of their increases.
'FAILURE TO BEHAVE AS A RESPONSIBLE LENDER'
The Commerce Commission has extracted an enforceable agreement with Christchurch-based moola.co.nz who admits to failure to behave as as responsible lender. Moola.co.nz is controlled by NZ Fintech, in turn owned by Edward Recordan. Other brands include needcashtoday.co.nz and zooma.co.nz. NZ Fintech is currently a big advertiser on NZ Herald (paper and online) and other media where they are offering "Wholesale Investment Opportunity - 5.5 - 14% p.a. Returns". It has also in the Deloitte Fast50.
HAWKESBY STEPPING UP AT THE RBNZ
Christian Hawkesby will succeed Geoff Bascand as Reserve Bank Deputy Governor when Bascand departs in January. Hawkesby is currently Assistant Governor and General Manager of Economics, Financial Markets and Banking. Hawkesby will take on leadership of financial stability when he succeeds Bascand and remain a member of the Monetary Policy Committee. The RBNZ says a replacement MPC member, replacing Bascand, will be appointed in due course.
UNCHANGED
The dairy price was unchanged at today's GDT auction - in US dollars at least. In NZ dollars they were up +0.5%.
MODEST CHANGE?
Less than 24 hours after the RBA’s latest meeting statement flagged the importance of loan serviceability buffers, APRA has announced an increase in “the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications.” It has risen +50 bps to 3.0%. APRA estimates that “a 50 basis points increase in the serviceability buffer will reduce maximum borrowing capacity for the typical borrower by around 5 per cent.”
RISING DECEPTION PLOTTED
The scale of deception on the internet is broadening. More people are targeted and more people are falling for trickery of rising sophistication. Westpac has a useful summary.
TAXING ETFs
In Australia, their tax office is tightening scrutiny of increasingly popular exchange traded funds (ETFs) amid concerns about the failure to report capital gains from share sales and income from dividends and distributions.
PANDEMIC PRESSURE SHIFTED
Staying in Australia, the explosion of Delta cases in Victoria has risen to 1420 cases reported there today in a "very serious jump". There are now 14,410 active cases in the state. In NSW there were another 594 new community cases reported today with another 423 not assigned to known clusters. They now have 8,195 active locally acquired cases which is lower, but they had 11 deaths yesterday. Queensland is now reporting zero new cases. The ACT has 28 new cases. Overall in Australia, more than 57% of eligible Aussies are fully vaccinated, plus 23% have now had one shot so far. There were two new cases in New Zealand at the border, and 39 more in the community and one new death. So far, 50% of eligible Kiwis now have both shots, another 30% the initial shot. So far the New Zealand vaccination effort is faltering slightly (79.8% of Kiwis and rising more slowly) and the Australian is also slowing with theirs now up at 79.9%.
GOLD SOFT
Compared to where this time yesterday, the gold price is down -US$7 at US$1757/oz in early Asian trade. And it is down -US$3 from where the New York market finished earlier in the day, but up +US$4 from the London fix.
EQUITIES MIXED
The S&P500 ended its Tuesday session up +1.1% on Wall Street. The Tokyo market opened today up, but then has fallen and is currently down -0.3%. Hong Kong has opened down -0.2%. Shanghai is missing all this be being on holiday and won't reopen until Friday. The ASX200 is down -0.3% in early afternoon trade. However, the NZX50 is up +0.2% in late trade here.
SWAP & BONDS RATES MIXED
We don't have today's closing swap rates yet. They probably rose in a flattening pattern but the 1yr rate will be up +3 bps, the 2yr less. We will update this if there are significantly different changes when the end-of-day data comes through. The 90 day bank bill rate is up +2 bps at 0.64%. The Australian Govt ten year benchmark rate is now at 1.51% and up +3 bps from this time yesterday. The China Govt 10yr is now at 2.89% and unchanged. The New Zealand Govt 10 year rate is now at 2.03%, (+3 bps) and back above the earlier RBNZ fix for that rate at 1.99% (+1 bp) but that predates the OCR decision. The US Govt ten year is now at 1.55% and up +7 bps from this time yesterday.
NZ DOLLAR LITTLE-CHANGED
The Kiwi dollar is now back at 69.4 USc after rising to 69.8 USc immediately after the OCR news. Against the Aussie we are also holding at 95.5 AUc. Against the euro we are firmish at 59.9 euro cents. The TWI-5 is now still at 73.1 after the OCR flurry, and back in the middle of the 72-74 range we have been in for most of the past eleven months.
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BITCOIN FIRMER
The bitcoin price is now at US$51,169 and +4.0% above where we were this time yesterday. Volatility in the past 24 hours has been moderate at just on +/- 2.8%.
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31 Comments
Max is not only one who believes in bitcoin. https://www.rt.com/shows/keiser-report/536518-lawrence-lepard-goldbugs-…
Something I found interesting was the price of gas in Europe is now US$36/MMBtu (US is sitting pretty for winter at US$6/MMbtu) but to add some context that's the equivalent of paying over $200/bbl for oil in energy terms. This is a severe stress situation and it is far from assured that the EU won't freeze and go dark if this winter is cold.
Really?
In Russian there is an expression кучно пошло (it went closely-grouped, or heap) and Severodvinsk in one go, evidently, launched 3M22 Zircon while submerged. The missile performed as is expected and hit the target. But believe me, even this will not convince Western "experts" that Zircon is being deployed now, we all know that Western "experts" know it better than Russians themselves. They cannot forecast shit but they still know better. The interesting thing will be when not just Gorshkov-class frigates will begin to deploy (if not already) 3M22 but when project 949A (Oscar-II) SSGN Irkutsk will finish her modernization to pr. 949AM and will carry said Zircons, apart from P-800 and Kalibrs. These subs will be able to carry up to 72 missiles in containers and who knows what and how many on the shelves for torpedo tubes. Irkutsk is going to Pacific Fleet which is being strengthened constantly and appearance of new Yasens with pr. 949AMs and other Zircon carriers (such as pr. 20385 corvettes) and combined with air assets such as MiG-31K armed with Kinzhals and TU-22M3M getting them Russia solves the problem of making her Pacific approaches stretching deep into the ocean zone a completely forbidden zone for any surface force. Link
The US must avoid war with China over Taiwan at all costs
So must New Zealand.
Then they have been rational for 70 years. More than can be said for USA ref Cuba's Bay of Pigs. I hate the CCP and given the choice would certainly live in the USA rather than China however I can't help admiring China's willingness to take the long view. They may possibly be evil but they are not idiots.
If they invade Taiwan they are irrational idiots.
If they do, the best they can hope for is massive ostracism and trade bans that destroy their economy, while the worst is a big, potentially nuclear, war.
That's why it would be totally irrational. Yet, plenty of authoritarian morons have been irrational throughout history right? Maybe Xi is just the latest....
The dairy price was unchanged at today's GDT auction - in US dollars at least. In NZ dollars they were up +0.5%.
Commodities- Worild Bank Pink sheets
Looks like there's a second class action lawsuit against A2 Milk.
Not just the business model is broken, so is its reputation and credibility.
Can't wait to see if everyone will rush in to buy the dip to get some milk.
Slater and Gordon allege the repeated downgrades by a2 during the August 2020 to May 2021 claim period caught the market by surprise and revealed that a2 had been facing systemic and structural issues with its distribution networks at an early stage of the financial year.
Well that relates to the Daigou channel. While I understand it was all rainbows and lollipops to everyone, to me this distribution method is highly risky when you lose control of how product is reaching the consumer.
https://www.abc.net.au/news/rural/2021-10-06/a2-milk-company-facing-sha…
ANZ raised some savings account rates too by 5-10 bps
Cripes the ANZ Serious Saver account must have risen from 0.15% to 0.20%.
Hmmmm..
A $5,000,000.00 deposit to save $10,000.00 per annum @ 0.20% versus
A $6,666,666.66 deposit to save $10,000.00 per annum @ 0.15%.
A 25% increase in capital efficiency cannot be all bad.
Are we at the the fork in the road where forever currency debasement will just be a bad memory?
Pandora Papers and Aussie. Useful read.
Australia being seen as an easy place for the criminal and corrupt to park money has more downside though than inflating housing prices.
By effectively acting as accessories after the fact, Australia becomes a party to the criminal activity, to the looting of poor nations.
https://thenewdaily.com.au/finance/2021/10/06/michael-pascoe-morrison-p…
Snowden, one of the biggest leakers of our time, found the story "very serious" - but he also found humor in the fact that, even after two previous leaks, offshore operators "are still compiling vast databases of ruin, and still secure them with a Post-It Note marked 'do not leak.'"
Pandora Papers Reveal Secret Owners Of Over 1,500 Offshore-Held UK Properties Worth Billions
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