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/LOAN RATE CHANGES
None again today.
TERM DEPOSIT/SAVINGS RATE CHANGES
SBS Bank has ended its 6.7% one year TD special. But they have raised their nine month offer to 6.15%, among other minor changes. That leaves Rabobank's 6.30% the highest bank one year offer, closely followed by BNZ's 6.25% 'special'.
LESS FOR MORE
The size of new homes is declining while the cost of building them keeps going up. The average size of new homes has shrunk by a third in the last 10 years.
A RARE TENDER
Both Westpac Banking Group and subsidiary Westpac NZ have put their external audit out to tender. Westpac has used PwC (or its earlier versions) since 1968. PwC isn't invited this time. PwC was group at the center of the awful integrity issues at the ATO. PwC Australia is responding with sharp job cuts as work dries up. Large corporates are moving into an era of audit rotation.
'TRADIES WILL BUY EVs'
BMI/Fitch sees new vehicle demand falling -7.1% this year as household buying power and the clean car discount distortions bite. But they see a recovery next year although not back to 2022 levels. Interestingly, they see demand for utes rising as tradies start adopting EVs, especially feature laden versions from China.
MORE POPULAR BONDS
The Local Government Funding Agency (LGFA) issued $150 mln in bonds today in three tranches. They got 40 bids worth $580 mln. The $50 mln April 2027 went for a yield of 5.26% pa (6 winners). The $50 mln April 2029 went for a yield of 5.42% (2 winners). And the $50 mln April 2033 went for a yield of 5.76% (3 winners). Interestingly, the April 2027 LGFA yield was lower than the recent equivalent NZGB (5.32%). But the other two went for premiums of +20 to +25 bps over the equivalent NZGBs.
PROGRESS
The influential RBNZ survey of expectations shows a small but significant drop in the expected level of inflation in two years time, and a sharp drop in expectations of one-year-out inflation. House prices expected to rise.
HUGE OUTAGE
In Australia, major telco Optus has been hit with a major outage, one that is affecting more than 10 mln people. Their Government is not happy.
SWAPS SHIFT LOWER
Wholesale swap rates have probably eased back today. The real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 5.63% and now +13 bps above the OCR. Financial markets no longer price in any chance of an RBNZ rate rise over the next three years. The Australian 10 year bond yield is down a sharp -18 bps from yesterday to 4.59%. The China 10 year bond rate is little-changed at 2.68%. And the NZ Government 10 year bond rate is down another -11 bps at 5.18% from yesterday, and the earlier RBNZ fixing was at 5.15% which was down -10 bps today. The UST 10 year yield is down at 4.58% and down -6 bps from this time yesterday. The UST 2yr is now at 4.94% and up +8 bps, so the curve inversion has deepened to -36 bps.
EQUITIES MOSTLY LOWER
The NZX50 is down -0.6% in late trade today. The ASX200 is down -0.4%. Tokyo has opened down -0.8%. Hong Kong is down -0.7% at its open. Shanghai has opened -0.3% lower. Singapore is also -0.3% lower at its open. Wall Street ended its Monday session up a minor +0.2% is confused trade today.
GOLD DOWN
In early Asian trade, gold is now at US$1968 and down -US$7 from where were this time yesterday. Earlier it closed in New York at US$1969/oz. Earlier still it closed in London at US$1971/oz.
NZD STABLE
The Kiwi dollar has moved -20 bps lower to 59.3 USc. But against the Aussie we are +20 bps firmer at 92.1 AUc. Against the euro we are also a little softer at 55.4 euro cents. That means the TWI-5 is little-changed at 69.
BITCOIN FIRMS
The bitcoin price is firmer today, now at US$35,401 and up +1.3% from where we were this time yesterday. Volatility over the past 24 hours has been modest at just under +/- 2.0%.
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42 Comments
In Australia, major telco Optus has been hit with a major outage, one that is affecting more than 10 mln people. Their Government is not happy.
Optus is the S'porean company that has given disgraced ex-Premier of NSW a cushy gig (nobody really knows what she does). Optus pays soft bribes to both major polit parties and claims it’s not a “foreign donor”.
Well well well.
Nouriel "Dr Doom" Roubini (whose articles occasionally show up here) perhaps the most famous and vocal critic of bitcoin and (especially) crypto / blockchain has capitulated. He is launched his own coin - of course!
Its the usual blend of AI, blockchain, climate change etc etc with a whole lot of technobabble. They even had a fake binance partnership! (despite Nouriel saying Binance was a scam)
https://crypto.news/btcs-top-critic-creates-token-behind-binance/
Oh my. I thought this was possibly some kind of 'fake news'. And it possibly is or perhaps it's a fly-by-night scam who have taken Roubini's image. Here's the website. https://www.atlascap.io/
Project clients are offered to earn money by investing in climate-resistant real estate and infrastructure, environmentally friendly goods, as well as short-term and inflation-indexed sovereign bonds and gold.
Re inflation-indexed gold, it already exists in digital tokens. And Tether is essentially like owning short-term treasuries.
Imagine if Princess Cindy launched her own 'kindness' token - save the planet from climate change and kids from being poor.
"Princess Cindy"..still taking up quite a bit of your head space JC?
Fair call. Just to clear any confusion, I don't doubt her sincerity at all. But then again, I don't want child poverty or the negative impacts of climate change as well. I suspect neither do most people.
And if it takes celebrity to make the world a better place, then we should probably all stand behind our ex-PM.
Right?
Luxon will not be a 'Prince' then because he only talks about cutting taxes and sending more people to jail? Not humanitarian issues.
And Luxon is not a celebrity as his party didn't get as many votes, because people don't really like his personality?
Just trying to figure out your perspective.
So WeWork files for bankruptcy. From $47B valuation to nearly $19B in debts.
Documents also show that WeWork plans to break leases on 70 properties in New York City.
Unfortunately 40 of these locations are completely empty.
A kind of commercial property Armageddon.
https://www.nytimes.com/2023/11/06/business/wework-bankruptcy.html
Iconic and historic San Francisco commercial property goes under. Nothing new, but the numbers behind the the current situation are mindboggling.
The building recently sold for $15 million which equates to a shockingly low $150 per square foot.
The building last sold for $64 million ($641 per square foot) in 2018. So current sale is a 76% discount.
The sale comes after the previous owner defaulted on a $71 million loan - their remaining loan balance was more than $65 million.
https://therealdeal.com/sanfrancisco/2023/06/15/swift-defaults-62m-loan…
1.1M Owed to unsecured creditors.
How do you rack up so much debt and doesn't have to repay anyone when you have other restaurants doing verry well?
Nic Watt’s award-winning Inca Newmarket owes creditors $1.1m: Who wants money? - NZ Herald
you just make sure you are not a personal guarantee of the company debt.... this is often achieved by starting with cash payments for supplies ie direct debit before delivery after a few years most suppliers will then give you terms.... or you threaten to move
no one starts to fail, the owners will have some loss.....
they*
“historically these rates aren’t even high” ah yes, when we compare these rates to the instability of the early 00s.
unfortunately that is like comparing the efficiency and safety of a 2001 Toyota Corolla ICE vehicle with a 2023 full electric. Fortunately there have been efficiencies and structural mechanisms that have changed most developed economies since then.
if you’re talking about the neutral interest rate being higher long term, well the jury is still out on that one. IMF has a view that structurally we’ll be back to long term approaching 0% - I’ll trust that guidance for now.
“but but it was 8% in 2009” ok. LMF(AO)
Interestingly, they see demand for utes rising as tradies start adopting EVs, especially feature laden versions from China.
The only electric ute on the market in NZ is being pulled, because they've sold less than 100 in a year. By comparison, over 7000 Ford Rangers were sold, and over 6000 Hiluxes.
Around half the EV makers in China are pegged to go under. Ford has lost $35k per EV sold, and most traditional car makers are pulling back on plans to build and grow EV lineups.
It'd seem like most people really into paying the premium for an EV have done so, unless there's a significant price breakthrough, it's hit a saturation stall.
Reasons we bought second-hand ICE instead of EV/hybrid:
1. Price. Even at current fuel prices, the cost differential doesn't stack up over our expected future use of the vehicle (was 4 years till emigration, now much much shorter. Ironically, an EV would've probably appreciated over the time since we bought, but that's just because we moved our emigration date into the very near future).
2. Price. We're tenants, so no cheap credit for us!
3. Practicality: We often tow substantial distances.
4. Practicality & Price: Larger family, the hybrids we tested that fit our family were heavy and sluggish. Not what I was expecting at all, tbh.
5. Price: As the cost of fuel goes up in the future, I expect the cost of all vehicles will go up in the future, as they will cost increasingly more to manufacture. Including EV's.
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