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
ASB cut its 3 and 4 year fixed rates, taking them down sharply to 6.39% and matching some rivals. More here.
REVERSE EQUITY RATE JUMPS +52 BPS
Heartland Bank has raised its variable reverse equity interest rate from 9.98% to 10.5%. (Heartland Bank's normal floating rate is 7.99%. Main bank floating rates average 8.64%. These reference rates remain unchanged.)
TERM DEPOSIT/SAVINGS RATE CHANGES
ASB also trimmed some longer term TD rates as well, for all terms 18 months and longer.
BIG MOVE
Fonterra has put a swathe of of its assets on the block including brands such as Anchor and Mainland. In a surprising announcement, the dairy giant plans to divest its consumer business, along with operations in Australia and Sri Lanka.
CONSERVATIVE STANDARDS ALREADY IN EFFECT
Updated data to March from the RBNZ shows that current lending practices on a Debt-to-Income (DTI) basis are running well below the maximum standards the regulator has signaled it will impose. so when those regulations come in to effect later this year, there is unlikely to be any immediate impact. Banks have already adopted these standards with substantial margins below. BGI (Borrow Gross Income) standards are also very conservative.
SOFT UNDERBELLY
The latest NZGB bond tender had a soft underbelly today. The $250 mln May 2031 tranche was well supported with 29 bids worth $615 mln. But the May 2034 $250 mln only attracted $355 mln in 25 bids and most of those had to be accepted (22).
THE ONE MULTIFUNCTIONAL CARD
A single Visa payments card can now switch between debit, credit - and buy now, pay later options. More here.
WINTER IN FARM CAPEX
New tractor registrations were low in April at 157, and apart from the pandemic that is the lowest April month since 2017. For the year to April, this is the lowest since 2011.
RBNZ CONSULTS ON PRUDENTIAL STANDARDS
The Reserve Bank (RBNZ) is consulting on policy proposals for new prudential standards to be made under the Deposit Takers Act. This covers four core standards to be used as the criteria for determining the eligibility of banks and non-bank deposit takers for licences under the Act. The four are; capital, liquidity, the Depositor Compensation Scheme standard, and a disclosure standard. The RBNZ is using a proportionality framework for these standards, placing deposit takers into three groups, depending on their size. The deadline for submissions is 5.00pm on July 26.
HAPPY TO SELL AT A DISCOUNT
Aucklanders who know Shortland Street in the CBD might be interested to know owner Kiwi Property Group has conditionally sold the 38 level Vero Center "to a Hong Kong China based conglomerate for $458 million." That is less than they had it valued at, a -1.9% discount to the building’s September 2023 valuation. The deal is subject to OIO approval.
EASING OFF
The Aussies released their monthly April labour force data today. Their jobless rate rose to 4.1% from 3.9% in March. (NZ was 4.3% in March.) That means 593,000 of their 14.9 mln labour force are without work. Full-time employment fell by -6100, part-time employment rose by +44,600. It was tougher in NSW where full-time employment fell -16,300 and part-time employment only rose +13,100.
COPPER JUMPS AGAIN, IN SHORT SQUEEZE TERRITORY
The copper price has breached US$11,000 and an all-time high and now we are into the crazy world where short sellers are being squeezed, and having to buy their way out of the frenzy which bids up the price further.
SWAP RATES SLIP
Wholesale swap rates are likely to be lower on global forces today, especially at the longer end. Our chart below will record the final positions. The 90 day bank bill rate is down -1 bp at 5.63%, a level it has hovered around for more than 70 days. The Australian 10 year bond yield has dropped a remarkable -13 bps to 4.24%. The China 10 year bond rate is still at 2.31%. The NZ Government 10 year bond rate is down -9 bps to 4.63% and the earlier RBNZ fix was at 4.59% and down -8 bps from yesterday. The UST 10yr yield is down -12 bps from yesterday at 4.32%. Their 2yr is now at 4.72%, so the curve has shifted out to -40 bps inverted.
EQUITY MARKETS MIXED & ONLY MOVING MINOR AMOUNTS
Finally, the NZX50 is having a banner day. It is up +1.2% in late trade. The ASX200 is up +1.6%. Tokyo is up +0.7% in morning trade. Hong Kong is +1.1%. Shanghai is up only +0.3% however. Singapore is up +0.6%. Wall Street ended its Wednesday session up +1.2% on the S&P500 as 'risk' returned to equities in a rush.
OIL HOLDS
The oil price is little-changed from this time yesterday, still at just over US$78.50/bbl in the US, while now also still at just over US$82.50/bbl for the international Brent price.
GOLD STILL RISING
In early Asian trade, gold has continued its rise, up +US$27 from this time yesterday and back at US$2387/oz. Some of this is because the USD is falling.
NZD RISES
The Kiwi dollar has risen nearly +¾c from this time yesterday, now at 61.2 USc. Against the Aussie we are up +½c at 91.6 AUc. Against the euro we are also higher at 56.2 euro cents. This all means the TWI-5 is up at 70.3, and a +40 bps gain.
BITCOIN JUMPS
The bitcoin price has risen to US$65,899 and up +6.7% from this time yesterday. Most of the gain however came last night. Volatility of the past 24 hours has been very high at +/- 4.1%.
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47 Comments
Updated data to March from the RBNZ shows that current lending practices on a Debt-to-Income (DTI) basis are running well below the maximum standards the regulator has signaled it will impose. So the perfect opportunity to lower the DTI numbers............surely
- Ever since the investor tax changes of late-March 2021 I have said that the buyers disappeared but there was no evidence of a wave of investor selling. Now I think there is - or at least a growing ripple.
Hey look the tide is going out... lets run down and pick up some pipi's......
Even The Comb is a bit worried about the tide here
ripple -> wave -> really big wave
Only a fool thinks there are easy capital gains to be had for the next few years, the recession is here, Governments have been changed because of it, we do not know how deep it will be, but current OCR and inflation issues may well prevent any stimulus package... Those who where smart battened down the hatches some time ago, reefed the sails, and are now set for the coming storm.... here it comes
TA is certainly getting worried and singing a vastly different tune these days.
"These two specific worries (galloping insurance / rates) may also be acting as a trigger for the many older investors who have been holding their property to fund retirement to actively plan to sell it. Paying soaring rates on one’s home and a rental asset at the same time is too painful for many. Given that virtually all these older investors will be selling their investment property at a price multiples above what they paid for it, the current weakness in prices may not really matter much to them"
It would seem TA has nothing further to gain in polishing this up to be something other than what it is. There is a potential avalanche of Boomer sellers in the wind. Where there still be plenty of equity to realize, plenty of selling can potentially ensue. Then there's 01-July Brightline jumpers too.....
"Given that virtually all these older investors will be selling their investment property at a price multiples above what they paid for it, the current weakness in prices may not really matter much to them"
For a professional economist, his understanding of behavioral economics often seems woeful to me.
For Ponzi assets like NZ housing, the boomers form mental expectations of their fiat value. For ex, if they think their suburban dump is worth $1 mio in the hand but then discover it's only worth $700-800k if they want to 'release the equity' here and now, this most definitely does matter to them. Why? Because they have factored their expectations into the prior, current, and future behaviors. When this experience is relayed to others via the water cooler and neighborhood barbies, the fear has the potential to be let loose.
Stick that into your smirk and smoke it.
Thing is Bully Hayes,"" head down and to the grindstone"" is a basic fundamental to a successful life. I would recommend you do it for more than one year. There is an old saying "overnight success usually takes 20 years". And I would say most of that would be on the grindstone.
Never a dull day at the moment:
-- Michael Burry has disclosed a brand new $7.6 million buy into Sprott Physical Gold Trust - gold is now his 5th largest position.
-- Silver closed last night at levels last seen in Feb 2013. Charts look incredible. A silver short squeeze would be devastating and the likes of Jamie Dimon would be furious.
-- Hedgie RenTech bought 1 million GameStop shares at the end of March according to new filings. Something deeper and darker? Let your imagination run wild.
Piggy, does that comment make your ego feel better?
A really naive comment. You demonstrate a total lack of understanding of the nature of economic forecasting and I very much doubt that you have actually read ANZ and other bank forecasts to understand their assumptions, and the limitations and caveats that they place on their economic projections.
Remember that the bank economists are the ones that are setting the bank's current and out to five years mortgage rates so they will have considerable insight, as well as expertise and experience, into making decisions. It is only fools or over-inflated egos who dismiss them.
CONF
That's not an "ouch".
Too many keyboard warriors on this site outright rubbish and dismiss bank economists, RBNZ MPC, Treasury, a whole range of economists etc . . and put themselves up as all knowing oracles. As said, the bank economists are the ones who set mortgage interest rates and it is only a fool who outright dismisses them as Piggy does - naive.
HouseMouse is also a prime example. A couple of years ago he rubbished ANZ as "fools" (as he does with all of the above) in their predictions that interest rates were going to go high for sometime (and implicit that 2.99% for five years was likely). He claimed that interest rates would be back to 2 to 3% by 2022/3. On his mortgage at the time of $500k (he put that in the public domain) and having to renew last year and again for the next two years (he has also put that in the public domain) that has and will cost him over $12K+ a year / $500 fortnightly (after tax income) for three years. Now, for Housemose that is an "ouch."
Comments such as Piggy's are by those who are both naive with over-inflated egos. :)
Maybe some should read the May 2024 ANZ report and note their reasons, assumptions and caveats rather than simple one line throw away lines to impress.
May 2024 Quarterly Economic Outlook Report as a PDF found here: https://www.anz.co.nz/about-us/economic-markets-research/economic-outlo…
Are you a bank economist?
Yeah I rubbish bank economists, RBNZ, Treasury, most mainstream/orthodox economists, monetary policy and economic theory. Mainly because I don't have any vested interest in any of it, mortgage rates, financial assets, blah blah. Secondary because I also studied it and had a career/professional qualifications in an associated field. Over inflated ego or did I realise it's all lies designed to manipulate the masses?
I rubbish them because they're unable/unwilling to see outside their dogma, blinded by their own belief as all knowing oracles. Sitting in their lofty ivory towers believing that reality must fit their models, and manipulating it until it does. Calling for hardship on others when it's their own practices and business models that create the situation - they should be the first to fall on their swords.
Do bank economists really set the interest rates or are they just the mouthpieces, the false prophets that instruct the flock to follow their misguided wisdom?
Good to know the coalition's fast track legislation isn't just being used to approve mines for Shane's mates that were blocked by the courts for being catastrophic for the environment.
It's also being used to fast track nationally significant infrastructure for *checks notes* super rich retirees yachts (nobody check if the applicants made donations to the coalition parties please, we're already being portrayed as being increasingly corrupt under this coalition)
https://www.nzherald.co.nz/business/hopper-developments-plans-300-berth…
Surprises me Hoppers are looking to do another B grade marina.
If I had to pick another market that will tank in a few years, I’d pick big boats and B grade marina berths. Boomers are going to be selling them and there won’t be a lot of buyers.
The old people I know with decent boats all struggle to use them and as soon as they pass their kids will sell them.
LOL. Just seen the Flick Ekectric add on tv. Brilliant!
To watch: https://youtu.be/_jIZkObso6Q
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