Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
ASB is the last major to announce its floating rate rise. Theirs is the full +50 bps to 5.85% but that leaves them about -10 bps lower than ANZ, BNZ and Westpac. Kiwibank has settled on 5.50% so lower again. Basecorp raised their standard floating rate to 6.95%.
TERM DEPOSIT & SAVINGS RATE CHANGES
ASB raised its Headstart savings account rate by +20 bps to 1.25%. Xceda raised all their TD rates. Treasury hiked their benchmark Kiwi Bond rates too. See here.
BUSINESS RATE INCREASES
ASB has also increased all its business base rates. Their Floating Base Rate has increased from 3.10% to 3.43%, their Rural Base Rate has increased from 6.86% to 7.36%, their Business Base Rate has increased from 9.62% to 10.12% and their Corporate Indicator Rate has increased from 4.03% to 4.53%, all effective immediately.
A HARDER BITE I
Dominant Auckland realtor Barfoot & Thompson says its median selling price is now -9.3% lower than at the November 2021 peak. Its stock levels are now at an 11-year high for this time of year, and they say selling prices are falling.
A HARDER BITE II
Our nationwide auction monitoring covered 261 auction events last week, but only 27% sold under the hammer.
INFLATION IN ACTION
The cost of building an average three bedroom home increased by more than +20% over the 12 months to April, according to QV's CostBuilder construction cost database. The biggest cost increase was for reinforcing steel which increased in price by +29% over the 12 months, followed by other metalwork +18%. Other major increases were for stairs and balustrades which were up +17% due to the rising cost of precast concrete and structural steel, while substructure costs were up +10%, site preparation +9.7% and exterior doors and windows were up +8%. The average construction cost of non-residential buildings was up almost +14% since April last year.
CAR IMPORTS STRONG FOR NEW, WEAK FOR USED
There were 10,575 new cars registered in May, boosted by strong demand from rental car operators. Demand for small EVs held up too. That is a high level for a May, and represents an unusually large cost on the country's balance of payments exceeding $0.6 bln just for one month. Keeping that level from booming further were unusually weak used car imports. Apart from the 2020 lockdown, they may be the lowest since 2012.
MOST OK, BUT SOME FIND IT TOUGHER
Federated Farmers reports that their banking satisfaction survey isn't showing material changes. Farmer satisfaction with their banks is relatively stable but more are feeling under pressure and costs of finance are on the rise. They report that banks’ conditions for lending became tougher rather than easier for all farm types. And now more than a fifth of all sharemilkers report "undue pressure from banks".
UNRESTRICTED AGAIN
The RBNZ has removed the handbrake it imposed on bank dividend payments (mostly to their Aussie parents) during the pandemic stress period. It will lift all restrictions on retail banks in NZ paying shareholders dividends from July.
SOLID DEMAND, RISING YIELDS
At today's Government bond tenders, demand was solid for the two issues on offer with $568 mln bid for the $200 mln available. The April 2027 $100 mln got 29 bids and 10 were successful at an average yield of 3.41% which was up from 3.32% two weeks ago. The May 2051 $100 mln got 33 bids and 18 were successful at an average yield of 4.09%, up from 3.92% two weeks ago.
SERVICES SHELTER
Monthly we get a look at the merchandise trade results, exports of goods less imports of goods. But trade also includes services and this data only arrives quarterly. In some respects this is a surprising story. In the March quarter of 2022 we ran a -$1.9 bln deficit in services. But it isn't quite where you might have thought. Our largest services deficit was with Australia at -$635 mln in that period, followed by Switzerland at -$424 mln and the EU at -$405 mln. Then Bermuda is next at -$110 mln. Even the Cook Islands is in this list where we ran a -$92 mln deficit. But with China, we ran a +$165 mln surplus. With the US our services surplus was +$240 mln. We were in balance with the UK, just a +$1 mln net surplus. The presence of Switzerland, Bermuda and the Cooks strongly suggests international companies are using these domiciles to shelter tax due.
STRONG TERMS OF TRADE
Our export prices rose faster than our import prices, so our terms of trade improved in Q1-2022. We are not quite back to the records set in September 2021, but close. Export volumes fell sharply, dropping -7.0% q/q, while the decrease in import volumes was more modest, at -2.6% on the same q/q basis.
TOUGH FOR RETAILERS
Payments network Worldline (ex Paymark) is pointing out that the tough retail environment is not improving as spending in May barely topped year-ago levels, despite raging inflation.
FAT SURPLUSES, RECORD HIGH
Australia has booked yet another AU$10+ bln monthly trade surplus in April, continuing a long run of these fat surpluses. That takes the annual surplus to +$129 bln, a record high for any 12 month period.
SWAP RATES RISE AGAIN
We don't have today's closing swap rates yet but they have probably firmed. (Update: They ended little-changed.) The 90 day bank bill rate is back up +1 bp today at 2.47%. The Australian 10 year bond yield is now at 3.50% and up another very strong +7 bps ahead of Tuesday's RBA review. The China 10 year bond rate is now at 2.81% and unchanged. The NZ Government 10 year bond rate is now at 3.61%, and down -3 bps from this time yesterday and now well below the earlier RBNZ fix for this bond which was up +4 bps at 3.68%. The UST 10 year is now at 2.93% and up +6 bps in a continuing rise.
EQUITIES MOSTLY LOWER
On Wall Street, the S&P500 ended its Wednesday session down almost -0.8%. Tokyo has opened down -0.2%. But Hong Kong has opened down a very sharp -1.7% (on new lockdown threats?). Shanghai has opened flat, and not really getting any new boost as their lockdown eases. The ASX200 is down a sharpish -1.1% in afternoon trade. The NZX50 is down -0.3% in late trade. That is despite Mainfreight putting on an impressive +2.6% today. Fisher & Paykel Healthcare shed another -1.5% and A2 Milk can't hold its recent run up, down -0.5% today
GOLD UP
In early Asian trade, gold has risen +US$9 from this time yesterday to US$1844/oz.
NZD SLIPS FURTHER
The Kiwi dollar is moving down again, now at 64.8 USc and almost -½c lower than this time yesterday. Against the AUD we are softer at 90.4 AUc and a similar retreat. Against the euro we are holding at 60.8 euro cents. That all means our TWI-5 is down to 71.8.
BITCOIN FALLS
Bitcoin is now at US$29,812 and down a rather sharp -6.5% from this time yesterday. Volatility over the past 24 hours has been very high at +/- 4.3%.
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