Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Housing NZ has reduced its one and two year fixed rates by -10 bps and -6 bps respectively.
TERM DEPOSIT RATE CHANGES
No changes to report here.
JUNE GLOOM
Businesses are not looking ahead positively. The Government can claim a bias, but this ANZ survey has gotten worse and worse as the year has gone on. When businesses were asked what they thought about business conditions in the year ahead, a net -39% of businesses were pessimistic, -12 points worse on one month and back at post-election lows. Even the "own activity" measure fell sharply, although it is still on the positive side. Retailers are the least positive, manufacturers the most.
MAY EXPORT HIGH
But on the trade front, Kiwi businesses are exporting more, especially those based on the rural economy. Exports were up +10% in May compared with the same month a year ago. Exports to China were up +27% on that basis. Dairy exports are our largest but these were up only +3%. Meat, logs, and fruit however all gained +17%, +26%, and +10% respectively on that year-on-year basis. All this delivered a larger trade balance in May than analysts were expecting of almost +$300 mln, three times the expectation and +50% more than in April.
POWER PRICE SPIKE
Wholesale electricity rates have spiked higher today, to their highest level since July 2017.
FIRST HOME BUYERS ARE OUT IN FORCE
For the first time since these records have been released by the RBNZ, first home buyers signed up to more than $1 bln in new commitments in May. That was +34% higher than in May 2017. Lending to investors is down -36% on the same basis. More here.
GREENWASHING MONEY
Auckland Council has successfully raised $200 mln in its first 'green bond'. Other than the funds raised will be for more trains, it is not entirely clear what a bond being 'green' really means. They will pay 3.17%. All that seems to have happened is the Auckland Council have paid a fee to the Climate Bond Initiative to be able to call them 'green'. Failure to meet its green credentials is specifically noted "is not an event of default". Greenwashing. Still I suppose if investors want that sort of superficial banding, why not take their money? Read the termsheet and see if you can see anything real about their greeness. An identical outcome would have resulted if this was a vanilla issue.
FRAUD INVESTIGATION STARTED
The RBNZ has issued a statement saying they and the Serious Fraud Office are investigating CBL Insurance."The Serious Fraud Office and Reserve Bank of New Zealand are each investigating matters relating to CBL Insurance and associated entities. The Reserve Bank is co-operating with the Serious Fraud Office investigation. The Reserve Bank is also co-operating with the Financial Markets Authority’s investigation relating to issues of market conduct and disclosure by CBL Corporation."
BETTER THAN FIRST CLASS
In England, details are emerging of "staggering spending" by top officials at the Bank of England. Staff parties cost £100,000. The travel costs of just three top managers, including the Governor, were £700,000 over two years.
BENCHMARK INTEREST RATES DOWN
Local swap rates are lower again today, with a -2 bps drop across the curve to five years, and a -1 bp drop for 10 years. The UST 10yr is now at 2.88%, down -1 bp. The Aussie Govt 10yr is at 2.64, up +1 bp, the China Govt 10yr is at 3.61% (unchanged), and the NZ Govt 10 yr is at 2.92%, down -1 bp. The 90 day bank bill rate is down -1 bp to 2.02%.
BITCOIN DOWN
The bitcoin price is now at US$6,078 which is -2.2% lower than at this time yesterday.
NZD LOWER
The NZD is still falling and now at 68.2 USc. That is a -¾c drop in one day. The poor business confidence data didn't help it. On the cross rate we are at 92.5 AUc and 58.5 euro cents, both lower too. That has dragged the TWI-5 down to 71.5, its lowest since November 20, 2017.
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22 Comments
@zombie ......... retailers ARE uncertain , in 2 days time , their supply -chain transport costs are about to go up by 11,5 cents per litre , and their customers are going to pay 11,5 cents per litre more to arrive at their shop to buy goods .
The minimum wage just shot up, and the 90 day trial -period is gone , AND the LRA is going for reinstatement as a remedy , so the internal shoplifter , or recdivist late arriver or disengaged staffer could become your long term liability.
No one is certain just how this is going to play out .
Then you look at industry , and they were gobsmacked at the banning of oil and gas exploration without consultation , or even a hint it was coming .
Not good for certainty , and markets need certainty and predictability
You are clutching st straws. Retailers are wholly dependant on consumer spending. The regional fuel tax barely moves the needle, changes to the minimum wage are more relevant, but if wallets slam shut due to falls in property prices and tighter credit retailers will bear the direct brunt of that. So that’s what retailers are worried about, that other stuff barely moves the needle
@frazz , I dont care much about how long permits run for , its the Gung-ho way in which they came out of the caucus meeting and announced a BAN on a major NZ industry doing research into where a resource is located .........without even a word of warning , let alone consultation or discussion .
And lest we forget , our very own NZ Super bought ALL of Shell Oils retail outlets and rebranded them Z .
So with a Government agency owning major stake in retail oil , you would have thought and oil-industry -wide consultation would be the least they could do .
This is they type of stuff that rattles markets and business confidence
Boatman - even our abject media (who dodge the two biggest elephants in the room, namely the limits to growth and overpopulation) have got climate change, and discussions have long been had about the fact that you cannot sequester, you have to cease.
Nobody in the oil industry can claim not to know what was coming. That's why they spin their spin.
As for NZ Super buying in, Norway's Statiol has the same problem. No investment is worth anything at all, sans energy, and at this point in proceedings most pension/investment/savings bets are unlikely to be honoured in full. A situation which can only deteriorate. There is no answer to the forward-bet problem in a reducing-energy, reducing resources, more competition scenario.
And once the Iran fiasco is worked around , the price of oil will drop again . Demand has peaked , supply has stayed the same , just the way it is distributed will take a while to adjust . I.e , Iran 's oil going to China and Russia, removing them from other oil markets.
@bobster , right now there is no evidence of a collapse in consumer spending , the stats show credit extension still growing , albeit slower than before .
Business Confidence is more about perceptions and gut feel, and relates to things like investment decisions (new plant ) or taking on more staff , or opening new branches ( expansion ) .
Consumers are still spending and buyers are still buying houses
On many points Boatman you're absolutely correct, It does all point to a credit crisis and asset price crash. The culprits however still managed to eek out another $6,000,000,000 of new mortgage lending last month just to make sure that every last drop of kiwi blood flows their way during the upcoming recession.
Perhaps someone more competent than myself could comment on how much lower exchange rates have impacted on recent export returns and whether given exports add to GDP - Imports subtract a lower exchange rate would impact on GDP / Capita as a measure of productivity through higher exports thus higher GDP ?
Not so long ago the US $ was delivering close to US 0.90 to exporters once remitted !
Help please ?
Gold is peaking toward deflation, as noted earlier today, a textbook monetary case that has over the last eleven years corresponded with these reflation/deflation cycles. The Bank of England custody figures are not the only numbers that line up dead against the crap.
http://www.alhambrapartners.com/2018/06/26/the-money-of-metals-more-gol…
“The benchmark Shanghai Composite closed officially in bear market — referring to a decline of at least 20 percent from recent highs”
I find this surprising – this market isn’t really a market in an open sense – why is this being “allowed” – what are the authorities signalling.
This will be causing pain to the average investor – who firmly believe the benevolent command economy will protect them from market ills.
There could be a multitude of explanations.
Somewhat puzzled as to which or what of the multitude it could be.
A disingenuous comment considering if you actually read the ANZ Business Outlook PDF it says
"Business confidence has been falling since June last year as economic headwinds have strengthened"
How about actually reading the source document rather than making assumptions based on the headline.
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