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
Nothing to report today. We are in the shadow of tomorrow's RBNZ OCR.
TERM DEPOSIT/SAVINGS RATE CHANGES
Nothing here either.
THUD - 'BACK TO REALITY'
Latest NZIER Quarterly Survey of Business Opinion suggests the post-election bounce in business confidence was short-lived. Business confidence is waning in the face of weak demand. Worse, all this is coming without relief in inflation. Cost increases over the last three months remained high, and expectations ticked higher again this quarter.
ADJUSTING
Under-fire milk processor Synlait reduced the size of its senior leadership team by two at the end of February (from 10 to 8). Today it announced who were filling the roles that were changed.
THANK YOU
Thank you to all our wonderful supporters. Over the past year you have been crucial in our ability to grow our team of journalists. If you are not currently a supporter, can you please consider supporting us now? More here.
DOWNGRADE
Standard&Poor's today lowered its financial strength and issuer credit ratings on Asteron Life to 'A+' from 'AA-' placed them on CreditWatch with negative implications. They did this because from the impending sale by Suncorp to unrated Resolution Life removes core 'extraordinary support' for Asteron Life.
EYES ON DAIRY PRICES
There is another GDT Pulse auction event overnight for SMP and WMP. Both rose at the past GDT event, so all eyes will be on this next limited event to check whether those increases have held.
UPGRADE
Westland Milk today announced an after-tax profit of $56 mln for 2023, more than double its target and above 2022’s $39 mln record result (and a +$120 mln rebound on 2021). Retail butter is a strong category for them, especially to the US. Westland Milk is now owned by China's Yili. It will pay its farmer suppliers +10c/kdMS above the Fonterra payout (currently expected to be $7.80/kgMS).
PERSONAL LOANS SECURITISED
Humm Group securitised $94 mln of its credit card and personal loan book originated in New Zealand. The investors who took the AAA-rated $30 mln got a yield for their 1 year exposure of 6.74%. Those who chose the $12 mln A-rated portion got a yield of 8.09%pa for a 15 month exposure.
EYES ON THE OCR
Also tomorrow is the RBNZ's Office Cash Rate Review. It will be simply marked with a press release at 2pm. We will have full coverage of course. No-one is expecting any change from the current 5.5%. But markets have priced in some cuts later in the year. However, the pricing for those reductions has been getting wound back somewhat in recent activity. This is because of growing scepticism that inflation is falling fast enough for the RBNZ. (It may not be falling at all presently.) Tomorrow's Statement will be read closely for any changes hinted at because of sticky inflation.
SWAP RATES RISE FURTHER
Wholesale swap rates are likely to be higher yet again today on both global trends and OCR scepticism. Our chart below records the final positions. The 90 day bank bill rate is unchanged yet again at 5.63%. The Australian 10 year bond yield is up +1 bp at 4.24%. The China 10 year bond rate is unchanged again at just under 2.30%. The NZ Government 10 year bond rate is up +8 bps from this time yesterday at 4.84% and the earlier RBNZ fix was at 4.75% and up +4 bps. The UST 10yr yield is down -2 bps from this time yesterday to 4.41% and its highest since November 2023. Their 2yr is up at 4.79%, so the curve is now inverted by -38 bps.
EQUITIES UP, EXCEPT THE NZX50
In late trade today, the NZX50 is down -0.6% perhaps sensing the "inflation-risk" tone in tomorrow's OCR review. The ASX200 is up +0.5% in early afternoon trade. Tokyo has started its Tuesday session up +0.5% on top of yesterday's good rise. Hong Kong has started today up +0.9%. Shanghai opened unchanged. Singapore is up +0.8% at its open. And the S&P500 ended unchanged on Wall Street in its Monday session, just as expected.
OIL PRICES RISE
Oil prices have risen +US$1.50 to just over US$86/bbl in the US while the international Brent price is now just over US$90.50/bbl.
GOLD UP
In early Asian trade, gold is up +US$27 from this time yesterday at US$2344/oz and back near its all-time high.
NZD FIRMS MARGINALLY
The Kiwi dollar has risen +¼c to 60.4 USc. Against the Aussie we are a touch firmer and back at 91.5 AUc. Against the euro we are also marginally firmer at 55.6 euro cents. This all means the TWI-5 is now at 69.4 and up +20 bps from this time yesterday.
BITCOIN RISES
The bitcoin price has risen today to US$71,496 and up +2.7% from where we were this time yesterday. Volatility of the past 24 hours has been moderate at just under +/- 2.6%.
Daily exchange rates
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
68 Comments
Solana is eating no one's lunch but the memecoin market, and you can keep that. Dreadful performance with regularly failing transactions and the infamous, repeated periods of going offline. Ethereum L1 may have high transaction costs some (most) of the time - but it is at least reliable. Layer 2's have the fees, traffic and performance of Solana beat.
Solana Is Cryptoeconomic Socialism
https://www.zerohedge.com/crypto/solana-cryptoeconomic-socialism
Solana is eating its lunch..fees, traffic, performance - (sorry for the majority here who have no idea what we are talking about).
Generally speaking, Solana is also winning the narrative. SBF has been recommending SOL to prison guards and prisoners.
Arthur Hayes is an ETH diehard.
Hmmmmmmm
I dunno about that.
Solana has been dead for about 3 days. Literally unuseable and its overloaded by spam.
Just try evening sending Sol to binance. Doesn't work. I managed to claim and sell an airdrop today - took me an hour of just spamming transactions with "ultra high" gas fees. Still can't actually send the Sol.
I quit all my sol farming activities 2 weeks ago as something seemed very off.
Meanwhile all the activity is moving to Ethereum layer 2s - just look at Base chain for example. And 1 cent fees.
Ethereum is clawing its way back up after its hard fork in March. It fell to NZD$5273 shortly before, but is back up to $6180, but not anywhere close to the $6700 it was at shortly before the fork.
Happy days. My lowest price paid for ETH was back in March 2020 - a 26x (highest price paid was approx USD3,500 in Nov 21). Should have been stacking solidly throughout 2019 been easy to say in hindsight. Stacked from 2020 up to the crash and was expecting it to go as low as USD600. Honestly speaking, I didn't really understand well back in 19-20 when it was still proof of work.
Hmm I can understand them not going down the route of coin watch apps (with hundreds of minor tokens that are not significant) but yes ETH has been a major and it is odd if bitcoin is included that ethereum is not. Perhaps it is the level of industrial investment and % of market that is keeping it off the list.
You guys are still pricing things against the NZD? The Eth/BTC is a very precarious situation.
You need to price it against the thing you are trying to accumulate more of, and in the long term that should be Bitcoin. No one is holding NZD under their mattress for the next 20 years.
Westland Milk today announced an after-tax profit of $56 mln for 2023, more than double its target and above 2022’s $39 mln record result (and a +$120 mln rebound on 2021). Retail butter is a strong category for them, especially to the US. Westland Milk is now owned by China's Yili.
Yes. Westgold butter is a winner. It is the #1 foreign butter brand in Japan and they take brand activation seriously in Asia markets. Why does it work? First, the product delivers on sensory appeal. Basically it tastes good. Secondly, since Yili has been involved, there has been a focus on winning in-store. That means standing out; being positioned at the right price points; and being highly visible and available to shoppers.
Wasn't aware that Westgold is making solid moves in the US market. The Walmart tie-up is a winner.
Glad tidings, perhaps some comfort contra the above survey evidencing business confidence once again sagging. If NZ is to revert to its traditional claim of the agricultural sector coming to the fore in time of need then the negative financial results such as Synlait, Silver Fern Farms and Alliance are worrying. No other word for it. In the past a devaluing NZ$ was a frequent tool. Not now though. Some hard slog ahead without doubt.
SFF were marketing their beef as 'Net Carbon Zero by Nature' in the US.
Have you ever heard anything so ridiculous?
Dame Jacinda Kate Laurell Ardern GNZM was present to spin this silly narrative at launch.
https://thefeed.co.nz/news/beefed-up-silver-fern-farms-usda-approved-ne…
That’s May 2022 and as an embarrassment hopefully forgotten. Quite a while ago a then giant NZ processor Waitaki International Ld, launched in the USA a brand “Wellington Select.” About the same time Fletcher Challenge were launching “Pastons” to revolutionise NZ lamb. Both outfits are gone. With all due respect to our previous PM in terms of beef, for what it was worth her promotion was simply the same bullshit as those two prior examples. The only functionaries in any market that actually need NZ meat afraid to say, are those that can still make money out of it. As again long ago, a purchaser for TESCO in the UK said, I would just as easily sell gateaux. Carbon Zero etc etc as Gareth Morgan said about a similar NZ Export slogan “who gives a toss.”
Sneak preview of OCR review tomorrow...
Sorry kiwis, increases in the cost of living are basically nothing to do with excess demand, but we need to keep our foot on the neck of the economy to show how serious we are about reducing demand to tackle inflation. I know it sounds crazy, but nothing is more important to than RBNZ being seen to be credible in the wacky world of reckonomics and central banking.
Haven't listened to all of this yet, but will. Thanks.
So far some interesting economic history. Really makes you think that we've lost something of our 'economic imagination'.
You see a whole flowering of economic thought that occurred in the 19th century leading up to World War I, and the whole world was going in such a positive direction. And then World War I interrupted the whole momentum. People stopped talking about socialism. They stopped talking about public infrastructure. They stopped talking about land and finance, and everything became a trade and goods that people exchanged— “exchange theory”. “Price theory” was: no concept of unearned income, no concept of money, wealth being different from actual, tangible capital formation.
As a young student at the ANU I remember being really disappointed that it wasn't until third year that we got to economic history. I guess they had to indoctrinate us first.
Fair call, but jeez if the heavy hitters doing the damage continue to be oil, rates, insurance and rent not spa pools and ford rangers then carrying on choking the economy will surely have a brutal outcome, especially considering the lag effect needed before any cuts actually help. Ah well, guess us average punters out here need to try and pull off a lieutenant Dan moment and hope like sh*t we are still "afloat" after the economic hurricane that is going to be the next 12..18...24...more months?
I would put it differently.
Our housing ponzi (aka increasing private sector debt) supported low Govt debt, high consumer spending, asset price inflation, and a sustained 20-year current account deficit. As long as the net inflow of bank-created credit money hovered around 6% of GDP, we could sustain a GDP growth of 3% on paper - providing interest rates stayed low. The increasingly cheap goods we were able to import gave us the false impression that our economy was supporting an improving quality of life.
We are now being found out.
Remember that old gem that property doubles in 'value' every 10 years?
It requires a per annum rate of return on 7.2% (Rule of 72).
Well, here's an example from todays auctions of a property that actually did. Sold today for $820k.
https://homes.co.nz/address/auckland/kelston/28-laura-street/5orDE
Thoughts?
Growth? "Money" expansion, price increases via fear, scarcity induced false metrics is not growth. CPI inflation must be growth too and we should be crowing about it. It should be following the same 7-10 year doubling and be applauded. Obviously one of these is fake.
Real growth would be admitting that whilst beneficial for a few for a short period of time, overall it's abusive and harmful and the consequences are far greater than the benefits. Real growth would be saying that maybe this isn't the best way of doing things, how can we do better and achieve better results for society and humanity?
Only thing mysterious is to expect that last 10 years to be like the next 10 years. Average Family Income in Auckland increased from $86k a year in 2012 to $148k currently. The Ratios of Median Price to Income are getting more and more out of whack, and the chances of afforadability advancing in the next 10 years to allow for a doubling of House Prices is a bet I wouldn't like to take.
Yes west Auckland does have a large amount of untapped 1950s/1960s homes that are sound structurally, on decent plots of land that many could allow for subdivision or cross lease and did have rapid rises in price, over 50% was in four years for us for one property. A median wage job could not match that. That property shows it is in the mixed housing urban zone, 300sqm minimum. Which can mean $$ for that land area.
However some things to watch for West Auckland had a fire to consents and property details so for some properties records are patchy. There may have been roof replacement in the past with an asbestos tile product popular in West Auckland. Our full asbestos removal and replacement with a decent roof costs were 25k in one property but the benefits were greater; nowadays that work of roof replacement will cost much more. You might find it far more useful to remove the houses entirely and have sub development done sooner. Even at the old price of around 400k these houses were often in need of a lot of renovation (e.g. full rewiring, insulation to bring it up to standard etc) and were not worth even half the price. Many are around poorly maintained waterways & streams that the council intentionally lets flood, and they may need work to bring them up to rental standard (insulation, ventilation, repairs where lack of exterior maintenance leave things like windows etc to rot).
So while they were a good choice 10 years ago (the land value to cost was good and flooding risks were lower with more council maintenance) it is a bit more of a quandary now given renovation cost increases, scale of essential repairs needed, new build costs, lack of council maintenance and the new lower quartile median price in the market around those suburbs. The area was always a bit semi industrial, good for renting not as good if you yourself were living there. But then NZs population is booming so I would say it is probably worth it...
Except that house is already a too far gone health hazard that needs removal stat. The maintenance required was deferred far too long, there is many leaks (from forgone maintenance) and lack of ventilation in key areas, substantial black mould growth making it unrentable. I suspect it was a property that was owned by either absentee owners or ones that were just too ignorant or unable to do (or book) any basic maintenance themselves. Even a single mother with 2 jobs and their kids could do their own flooring, painting, window repair, cleaning and maintenance (with the electrical work, roofing and plumbing being limited by legal reqs). I have an almost odd desire to go test how rotten the window frames are because there are parts I am sure I can get a finger through.
Yikes that this property sold for above 800k is pretty shameful in NZ. As in it makes my West Auckland investments look like gold mines of mansion quality if there were not other considerations that made me transfer to even more profitable areas.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.