Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today.
DEPOSIT RATE CHANGES
No term deposit changes, but we have had some savings account changes from Christian Savings, TSB Bank, and NZCU Baywide.
OUR PROSPERITY MEASURED BY CAR SALES?
June car sales were very strong. New registration data shows that 10,181 new cars were sold in June, the highest June ever, and only bested once in October 2016 (and the unusual 1984 data). Commercial vehicle sales were even stronger, coming in at 5,804 units, and an all-time record. (Look at our chart !) That means in the past year, more than 157,000 new vehicles were registered, also an all-time high. We don't have the June used imports data yet, but it will not surprise if that is a record high as well.
PROSPERITY SIGNALS
Today's release by NZIER of their June Quarterly Survey of Business Opinion reveals signs of inflation. Headline business confidence held steady with a net +18% of firms expecting the NZ economy to improve over the coming six months. Firms' outlook for their own domestic trading activity eased a touch, with a net +23% of firms expecting their own business to improve. The mix of sectors feeling upbeat about the outlook has shifted, with the services sector the most confident, while building firms were feeling less optimistic about the general economic outlook. Firms are starting to follow through on intentions to lift prices more convincingly, which (if continued) will feed through to greater inflation pressure.
NOT LOOKING POSITIVE
The futures market signals for tomorrow's dairy auction are line-ball. It could go either way with the derivatives contracts signalling unchanged prices for WMP and a possible -6% fall for SMP.
MANIPULATION?
Readers of our weekly petrol price charts, including our unique 'oil company component' margin chart may not be surprised to hear that MBIE "cannot definitely say that fuel prices in New Zealand are reasonable, but we have reason to believe that they might not be.” They studied data from Z Energy, BP, Mobil and Gull, and looked at pricing regionally. Tellingly, prices and margins dropped suddenly last week, just prior to the release of the Report. Maybe the petrol market is not competitive in a normal way. Will MBIE call in the Commerce Commission?
PRESSURE RELEASE
Total housing debt was $236.4 bln in May 2017, which is growth of +0.55% in May from April, the slowest month-on-month change (excluding the summer break) since April 2015. Compared with the same month a year ago, housing loans were up +7.9%, the slowest growth since March 2016.
DEPOSITS GROW 7.5%
Separate Reserve Bank figures, meanwhile, show household deposits grew 7.5% in May year-on-year to $159.892 billion. That's the fastest annual growth rate since November last year.
PRESSURE BUILDING
Perhaps the debt appetite is shifting to personal consumer debt (credit cards and personal loans, like car loans). We now owe banks $10.6 bln and finance companies $4.7 bln for this type of high interest lending. Borrowing from finance companies is up +7.4% in May from the same month a year ago and that is the fastest rate of growth in over twelve years.
WHERE THE DEBT ISN'T
Business debt is up to $104.4 bln and growing at a +7.2% clip. Rural debt is now up to $59.2 bln but is growing at a far more modest +2.2% rate. The gross levels for May are record highs for both. In total ($163.6 bln) these two commercial sectors have only a debt load that is a third lower than the household sector. Government's debt load is just one third the household sector.
AUCKLAND DECIDES
The order in which 137,000 future homes can be developed in Auckland in largely greenfield areas of the north, north-west and south has been approved with the adoption of the Future Urban Land Supply Strategy Refresh. The original strategy was adopted in 2015 identifying development potential for 11,000ha of future urban land. The Auckland Unitary Plan increased this to about 15,000ha causing changes to be made to the sequencing of land to be made ready for development over 30 years. The proposed sequencing of large future urban areas is: Brought forward - Warkworth North, Wainui East, Silverdale (business), Red Hills, Puhinui (part), Wesley (Paerata), Opaheke Drury, Drury West (stage 1), Drury South. part of Takanini south. Moved back - Kumeu Huapai, Riverhead, Whenuapai (stage 2), Drury West (stage 2), Puhinui (part), Red Hills North, Warkworth North East, Takanini
A SURPRISE
Aussie retail sales in May have beaten expectations for a second straight month, led by strong spending on household goods.
WHOLESALE RATES IN CORRECTION
Even though the UST yields rose strongly in the earlier New York session, that direction has been rejected in our local markets. The Aussie swap market saw raised rates today, but not ours. We have unwound yesterday's strong rises. The two year is down -5 bps, the five year is down -5 bps, and the ten year is down -6 bps today. The 90 day bank bill rate is unchanged at 1.99%. All this as the UST 10yr rose to 2.35% earlier. (NZGB yields rose by +5 bps today, however.)
NZ DOLLAR WEAKER
The Kiwi dollar is weaker across the board today. Locally, the NZD is slightly weaker at 72.7 USc. On the cross rates we are also a little lower, trading now at 94.8 AUc and at 63.9 euro cents. That takes the TWI-5 to 76.6. Bitcoin has risen today, up +4% from this time yesterday to US$2,614.
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6 Comments
The 90 day bank bill rate is unchanged at 1.99%
Interest in today's NZDMO T Bill tender was minimal. The total offering of $300 million across three maturities gained one $20 million 3mth accepted bid. Tender results Are Aussie based US bidders the main buying interest for short NZ government IOUs?
Rehypothecation fraud losses for Natixis, ANZ?
For all the high-tech wizardry of modern financial markets, there’s one corner of the commodity world that still depends almost entirely on printed paper -- making it an easy target for crooks.
Buyers and sellers of base metals like copper, aluminum and nickel use documents known as warehouse receipts to prove every pound involved in a transaction actually exists and who owns it. The receipts, from a long list of issuers who often stamp them with holograms and secret codes, have become the linchpin of bank loans backed by the metal as collateral.
But like most pieces of paper, warehouse receipts can be faked, and there are signs that more lenders are being ripped off by crooks exploiting weaknesses in what commodity businesses refer to as trade financing. For the second time since 2014, some banks are facing hundreds of millions of dollars in losses after being tricked into making loans secured by goods that didn’t exist. Read more
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