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Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Still no market response to ANZ's shift higher for fixed home loan rates last Wednesday.
TERM DEPOSIT RATE CHANGES
Treasury today raised their Kiwi Bond interest rates, which has the effect of raising the risk-free rates in the market. The new 6 month rate is now 1.20%, up +50 bps, the one year is now 1.70% up +60 bps. The two year is now 1.90%, up +40 bps, and the four year is now 2.30%, also up +40 bps.
SLIP SLIDING AWAY
There was a substantial decline in the number of houses sold in February but prices held firm, according to the REINZ residential data out today. Nationally the volume drop was a third, down by -40% in Auckland. There were large increase in days to sell in February also showing that buyers aren’t willing to meet sellers’ price expectations. The number available for sale rose sharply as a result. The relaxing of the tougher edges of the CCCFA rules may not rescue this market because there have been a long set of other tightening measures put in place, and rising interest rates are yet to bite. ANZ expects house prices to fall -10% in 2022 and Westpac sees prices falling -10% over 2022 and 2023, Kiwibank economists see a 2022 -5% retreat.
LEAKING CONTINUES
Stats NZ data updates show that migration flows are still negative with a net loss of -7500 people over the 12 months to January. More New Zealand citizens left the country long-term in December and January than arrived back from overseas. The longer this goes on, the less of a prop migration is for housing.
GOING SOUTH AGAIN
The NZX wasn't insulated by last week's large risk aversion selloff. Capitalisation of the NZX50 fell by a rather sharp -2.8% during the week, wiping away almost -$3.5 bln in those five days. Worse, it took the year-on-year decline to just under -5%, and a net -$6.2 bln off the year's capitalisation. There were winners last week on the NZX50. One was Sanford (SAN, #46) which gained 3.6% in those five days. But most were losers. Fisher & Paykel Healthcare (FPH, #1), which alone is one seventh of the overall index, lost -2.6%, but Vista Grou (VGL, #43), Heartland (HGH, #26), Mainfreight (MFT, #4) and Toursism Holding (THL, #49) all lost more than -7.5% in the week. (A click on any of the codes in this item will take you to a profile of the company.)
NZD TRADING TURNOVER JUMPS
Turnover in the NZD in February was high, and surprisingly so in currency markets. More than $12 bln per day was traded in the month, the second highest ever for a February. But at $2.1 bln per day in spot trades, that was the most ever for a February and +11% above the previous high. For forwards and swaps, February 2022 was marginally lower than February 2021 when the all-time February highs were recorded.
WARWICK HUNT NAMED TO BNZ'S BOARD
BNZ has appointed Warwick Hunt, who has had a long career at auditing and financial advisory firm PwC, to its board. Hunt's set to become an independent non-executive director from November 1. He's returning to NZ from a role as PwC’s UK Managing Partner and Chairman of its Europe, Middle East and Africa Executive Team.
TRADE AT MERCY OF CHINA PANDEMIC RESPONSE
China is admitting to a much wider pandemic spread now, and for New Zealand's trade that poses special risks. The jump in COVID cases in major cities poses significant challenges for China’s growth target of +5.5%. Affected regions include major cities, like Shanghai and Shenzhen. The lockdown will disrupt some supply chain activity. Authorities may be adopting a more flexible and practical approach to case screening (for them) but cross border travel is unlikely to relax soon.
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GOLD FALLS
In early Asian trading, gold is lower today from this time Saturday, now at US$1975/oz and down -US$16 from where we last left it.
EQUITIES BIFURCATE
The NZX50 has started the week down -0.6%, on top of last week's drop. Going the other way, the ASX200 has started the week up +1.1% in early afternoon trade. Australia is being turbo-charged by rising commodity prices. Tokyo has also opened up +1.1%. But Hong Kong is down -1.8%, and Shanghai down -1.1%.The S&P500 futures has turned higher, suggesting that Wall Street will open tomorrow up +0.6%.
SWAPS PUSH UP FURTHER
We don't have today's closing swap rates yet. They are likely to have risen yet again in a further move higher. The 90 day bank bill rate is up another +1 bp at 1.49%. The Australian Govt ten year benchmark bond rate is up +6 bps at 2.42%. The China Govt 10yr is down -10 bp at 2.78%. The New Zealand Govt 10 year bond rate is now at 3.04% (up another +2 bps) and still higher than the earlier RBNZ fix for that 10yr rate at 2.98% (down -2 bps). The US Govt ten year is now at 2.04% and up another +4 bps from this morning.
NZ DOLLAR HOLDS
The Kiwi dollar is still at 68 USc where it opened this morning. Against the Aussie we are firmish at 93.5 AUc. Against the euro we softish at 62.2 euro cents. That means the TWI-5 is now just under 73.5 and little-changed from where we opened this morning.
BITCOIN LOWER
Bitcoin has retreated again, now at US$38,172 and and down -1.8% from where we opened today. Volatility over the past 24 hours has been moderate at just under +/- 2.3%.
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46 Comments
Be interesting to see where the bottom is for the likes of FPH and MFT -both been looking very frothy for a while...much like ATM was before crashing back down to earth.
NZX 50 down almost 15% from its initial peak back in Jan 2021.
If interest rates do rise to the inflation we are seeing - who knows where the new equilibrium will be found. Might be significantly lower yet. World share markets look like they are on the edge at present...another crack-up boom or bust?
MFT are probably tied into long term logistics contracts that expose them to changes in fuel prices.
New Zealand hasn't been as severely overvalued as some other markets however, my prediction for this year was that the S&P500 would finish lower than it started. So far, so good...
Treasury today raised their Kiwi Bond interest rates, which has the effect of raising the risk-free rates in the market. The new 6 month rate is now 1.20%, up +50 bps, the one year is now 1.70% up +60 bps.
That's not a bad 1 year rate, really, given that it's "risk free". Banks are only paying an average of 2.3% for the same duration, which isn't much of a premium given the amount of risk involved at the moment.
Last (9 March 2022) one year TBill tender realised 2.03% for participating banks - those that underwrite the whole show offered 1.70%. Despicable behaviour.
In the US private citizen participation (via Treasury Direct) in US Government Treasury auctions are always offered the high yield.
Off thread I realise, & not today but over the weekend I read. “ The world loved and adored you, but we were your world.” I marvel in these uneasy times that our society can engender and explain simply and humbly, all that our nation can offer to all and each of us. A great personality and now a great spirit forever on wings. Take stock, look around and be thankful.
If you have to ask this late in the trajectory, you are probably a huckster.
https://surplusenergyeconomics.wordpress.com/
Your evening homework - the first 3 or 4 should be enough.
You could read the businesses cases and find out yourself or spend 5 mins watching this which is still the best layman's explainer out there https://youtu.be/pCzCJzwrB_c
The government should urgently offer asylum visas to Ukrainians. If they need an economic motive to do so, here's one:
A 2019 study shows that the prevailing majority of Ukrainian developers and tech experts possess a degree. Around 82% of men and 87% of women have an academic degree. Among these graduates, roughly 41% of women and 64% of men have STEM-related degrees.
Very, very rare for an incumbent government, once on the slippery slope, to not head any direction other than south. Very, very difficult to reverse the force of gravity. This has always been a fickle & feckless government and they are too brittle, unwilling to bend. Hairline cracks now showing will soon become ruptures as self interest & survival instincts challenge the party line. Like a whole lot of alley cats, when someone fires a shotgun down the alley.
The problem is our election cycle is just a 1, 2 or rarely 3 term cycle of musical chairs between "dumb" and "dumber". Knowing what happened the last time they were in power, the opposition doesn't instill me with any confidence that they will have the desire or will to address the real issues that kiwis face.
Don’t disagree. Think though it is inescapable that the calibre & Integrity of our mps has declined markedly since the introduction of MMP. I voted for MMP like a lot of the electorate because of the shenanigans of Muldoon in his final moments. First problem being it was unnecessary to introduce another 30 or so mps. This diluted the talent pool and thickened the surrounding bureaucracy. Second when each mp was hitched directly to an electorate there was direct accountability to be faced up to. What NZ now has in parliament are far too many career politicians. In other words they are there to pursue their own career as first priority. I don’t regret voting for MMP but have to admit in this regard, I have been disappointed with the outcome. So my point is if we had greater sincerity, less self interest and ambition, and more application to the integrity and solemnity of parliament, we would have governments of much more durability, progress and production.
Completely disagree, MMP generally forces parties to find compromises and work together. List also insulates to a certain degree from minority and special interests in some electorates from holding the majority hostage. First past the post gets you US and UK where the tendency has been a move towards extremism at either end of the spectrum and an opposition that is forced to oppose everything the incumbent stands for, regardless if they agree or not.
This has always been a fickle & feckless government and they are too brittle, unwilling to bend
The Fabian motto, is "Remould it nearer to the heart's desire"
“O Thor! Th’Aysnior all expires of grief, Garm destroys Tyr, but Tyr in dying pierces……………… Like cat springs Loki and brandishes on high.” Well now, had to dust a bit off that old volume but leave it to you to substitute the modern players in said tragedy presently unfolding.
ps. epic. volume Oehlenschalagier 19th century, which found in charity shop in Boston some years ago. think Avengers scrip writers found it too?
The average kiwi is more scared of omicron than the average Kievan is scared of Russians. Project Fear went a little too far?
"On the 7 day average measure (right hand panel) Omicron has had more impact in temporarily reducing Wgtn and Akld traffic congestion than the war has had on congestion in Kiev."
profile,
Is this guy- 'a disciple for christ' for real? What is he saying? That there is nothing to see in Kiev because of traffic congestion? Could that be because of people trying to flee the indiscriminate shelling or is that fake news?
He is a nut case and you are no better for posting it. But of course, I forget that in your little world, climate change ain't real either.
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