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 here again today,
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either.
BOUNCING ALONG THE BOTTOM
Q1-2-24 retail sales figures broke a run of eight consecutive quarterly falls, but overall retail volumes are still below those of last year. The Stats NZ figures show that retail sales volumes were down -2.4% on the volumes recorded for the same quarter in 2023. This as all consistent with recent retail card spending reports, and retail industry reports. Sadly there is little evidence that things are about to turn up.
MODERATELY SUCCESSFUL
Today's three NZGB tenders were moderately successful. $848 mln was bid in 65 bids for the $500 mln available that went to the 29 winning bids. Yields were generally lower that at the prior equivalent tenders.
BNZ TO GET $103M FIRSTCAPE BOOST
BNZ says the sale of BNZ Investment Services to FirstCape is expected to result in a pre-tax gain of about $103 million before transaction costs. The gain will be included in BNZ's September half-year financial results. The creation of FirstCape brings NAB's JBWere NZ and BNZ Investment Services businesses together with Jarden Wealth and Harbour Asset Management. FirstCape is owned by BNZ's parent NAB, Jarden and funds managed by private equity group Pacific Equity Partners.
WE STILL DRINK A LOT, BUT LESS
Updated data for Q1-2024 shows that we drink about 6¾ litres of alcoholic beverages per person per year (yes, a calculated average of everyone 1 day old to 101 years old). But that was -7.5% less in Q1 than the same period in 2023. For the year it is -5% less, and since its peak in early 2013 it is -13.5% less on the per capita basis.But it isn't the lowest; that was 6.4 liters per capita in 1998. So in effect, it has varied in a fairly tight range since the data started in 1985.
STRUGGLING FARMERS DON'T LIKE BANK PRESSURE
Farmers who borrowed from banks and are now finding their businesses are struggling to meet the borrowing terms or repayment schedules are unhappy that banks are calling them out. "Rural banking issues are nearing crisis point and farmers are quickly losing confidence," Federated Farmers says. Banks have not allowed borrowing exposures to rise (C5), but some borrowers (and FF) are demanding "more support". Satisfaction with banks is at its lowest point since these surveys began in 2015, but in fact 51% of those surveyed still say they are satisfied with the relationship.
JAPAN PMIs RISE
The internationally-benchmarked May S&P Global (Markit) PMI for Japan delivered its fastest expansion in nine months. Their previously shrinking factory sector rose to a minor expansion (50.5) while their service sector expansion slipped slightly (53.6).
MUSCLE FLEXING
China has suddenly launched surprise military drills surrounding Taiwan.
AUSTRALIA PMIs EASE
The internationally-benchmarked May S&P Global (Markit) PMI for Australia delivered another small contraction in the factory sector (49.6) but a good expansion in the service sector (53.1). But both levels were lower than March and April. New orders retreated in both sectors, but to be fair the reductions were slight and the least in the past three months.
OPINIONATED AI NEWS
OpenAI is paying NewsCorp for access to its right-wing news content (NZ$400 mln) so it can be used in its AI models. While the deal does not include FoxNews, it does include other out-there NewsCorp mastheads like The Australian, the New York Post, and the Sun (England), all highly curated for Fox-type news content. Strikingly these titles have had reporting integrity issues. Interestingly, the other content deal OpenAI has is with Reddit. That seems to be about it. Presumably it will purloin the content with others? (us, for example?) But perhaps some others are in the works?
SWAP RATES RISE & QUITE QUICKLY
Wholesale swap rates are likely to be firmer again today with the surprisingly hawkish RBNZ MPS motivating offshore investors to re-evaluate their positions. The US Fed minutes are also playing their part with the long end rising as well. Our chart below will record the final positions. The 90 day bank bill rate is still little-changed at 5.62%, a level it has hovered around for more than 70+ days. The Australian 10 year bond yield is up +2 bps to 4.31%. The China 10 year bond rate is now at 2.32% and little-changed. The NZ Government 10 year bond rate is up +7 bps to 4.80% from this time yesterday and the earlier RBNZ fix was at 4.75% and up +11 bps from yesterday, straddling the MPS. The UST 10yr yield is unchanged from yesterday at 4.42%. Their 2yr is now at 4.87%, so the curve has shifted out marginally to -45 bps inverted.
EQUITY MARKETS MIXED AGAIN
The NZX50 is ending today little-changed, up +0.1% after settling from yesterday's modest gain. The ASX200 is down -0.6% in afternoon trade. Tokyo is uop +0.8% in late morning trade. Hong Hong has retreated again after yesterday's bounce, now down -1.5% bounce and Shanghai is down -0.8% in early trade. Property woes still weigh. Singapore has opened up a minor +0.1%. Wall Street ended its Wednesday session down a modest -0.3%.
OIL FALLS
The oil price is -US$2 lower from this time yesterday, now just on US$77/bbl in the US, while now also now at just over US$81/bbl for the international Brent price.
GOLD RETREATS
In early Asian trade, gold has retreated -US$55 from where were yesterday, now at US$2368/oz.
NZD EASES
The Kiwi dollar has slipped -¼c to 61.1 USc today as things settle after yesterday's action. Against the Aussie we are firmer at 92.2 AUc. Against the euro we dipped to 56.4 euro cents. This all means the TWI-5 is now at 70.3.
BITCOIN EASES SLIGHTLY AGAIN
The bitcoin price has slipped slightly again, now to US$69,441 and down another -1.1% from this time yesterday. Volatility of the past 24 hours has remained modest at +/- 1.2%.
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 ».
82 Comments
The internationally-benchmarked May S&P Global (Markit) PMI for Japan delivered its fastest expansion in nine months.
This is Philipp Wong, Chief Scientist at TSMC and legendary Professor of Electrical Engineering at Stanford University. He's undoubtedly one of the, if not THE world's leading scientific figure in the field of semiconductors. Here's what he says:
If you look at papers, publications, data from key conferences in the chips business. [...] You basically flipped. Years ago the US had the majority of the papers. I remember there were roughly about 40 to 50% of the papers from the US. And China, maybe 20-30 years ago, they were nowhere to be found. Today, China and Asia, the papers, are more than 40%, almost close to 50%. And the US has steadily declined from 40-50% to 30 to 40%. And the rest of the world, principally Europe and Japan has basically fallen off a cliff. So the research and development, the research capability in Asian countries, China, Korea, Taiwan, Singapore and so on have really become the strongest region. In terms of producing good quality research. I'm not just talking about quantity, it's quality. Link
TAs cautionary warning
"...we are entering the most dangerous part of it where many business owners will have to face the reality of their inadequate cash flow position. It seems better than those of us who’ve lived through cycles of the past and seen the damage choose to walk the path some now need to follow with them, rather than trying to pick up the pieces of what is left of their lives a year from now."
https://www.oneroof.co.nz/news/tony-alexander-in-the-most-dangerous-par…
TA telling people to sell now before they lose everything.... An incredibly sombre piece for One Roof, I wonder how this got through the editorial team?
I guess ABC (always be closing) on a heavily discounted sale is better than 100% on no sales.
It seems even the most Panglosian of market spruikers are rolling over and preparing for the worst....
No sales. Spruiking narrative spent.
They have told him that the vendors price expectations are too high and he needs to get them to drop them to try to get the market moving. Remember the real estate industry can't take their cut if nothing is selling.
Still completely in line with being corrupt.
Makes me angry - so much of what is being dumped on people is because of the actions of over paid muppets at the top -especially Mr Orr
and we still have thousands arriving to make it all worse
I dont need to sell or close my business but I wonder why continue battling idiots
and lots of those who do will bugger off to elsewhere so NZ Inc loses - depressing really
"TA telling people to sell now before they lose everything.... An incredibly sombre piece for One Roof, I wonder how this got through the editorial team? "
Real estate agents live on sales. No sales = No income for real estate agents.
Ergo, sell at a loss, or gain, they can continue to to feed their families.
Pretty simple. I'm surprised that astute observers like Te Kooti miss this.
T.A. is simply market signaling to sell, sell, sell.
It’s interesting that TA specifically says developers of multi-unit buildings. IMHO builders doing individual homes will be hardest hit. The economics of those are far worse.
That said, I don’t think there is a single plce to hide from this construction downturn, maybe data centres? But that pretty niche. Everything else appears to be heading for an extended period of nothing.
China has suddenly launched surprise military drills surrounding Taiwan.
China blacklists Boeing over arms sales to Taiwan
Washington is quietly arming Taipei 'to the teeth' amid opposition from Beijing
Last night the U.S. House of Representatives passed the “Financial Innovation and Technology for the 21st Century Act,”. This is an important moment for the digital asset ecosystem globally.
Now, I have had comments about Nancy Pelosi removed here before so will be careful what I say. Pelosi voted in favor of the crypto bill.
SEC Commissioner Jaime Lizárraga worked as Pelosi’s financial policy advisor for 10 years. Lizárraga voted against crypto during his time at the SEC.
But Pelosi voted in favor of crypto today.
Make of it what you will. Watch what they do, not what they say.
Young Aussies are partly to blame for their predicament for voting for Mad Albo and his team of tricksters. Following comment sums it up.
"If Labor continues to go along this route of saying the right words without meaningfully addressing the actual systems and structures that enable these crises to continue, things like housing and cost of living, then they will be failing young Australians."
https://www.abc.net.au/news/2024-05-22/young-australians-economic-crisi…
Apparently Chinese military activity around Taiwan is designed to weaken Taiwan's defences and punish Taipei. It's hard to see how this would be accomplished. Wouldn't it be just as good a training exercise for Taiwan's military? The BBC is reporting it as "grey zone warfare tactics" yet according to my friendly AI military exercises are not really in the grey zone suite of offensive tactics. I imagine a real invasion would use different tactics to those used in exercises in order to surprise the defenders.
No Pearl Harbour surprise these days. Not with satellites up there.Very tricky, treacherous waters, offer only about a three month window for seaboard landings Otherwise a fleet might be kamikazed just as Japan was saved twice all those centuries ago. Suitable beach heads are few. Heavily fortified. Hidden pipelines of oil can ignite the sea. Very difficult to get boots on the ground. That leaves airborne and that means airborne retaliation. Not an easy nut to crack. Mountainous topography and high density urban populations. Civilian casualties would astronomical. Just need to consider Russia’s difficulty in overcoming just towns in Ukraine or Israel’s moving through Palestine.
And yes they dropped a lot of bombs before, that helped the allies prevail in WW2. But you don’t get it do you. It’s not a question of who has done what, or who has got what to do it again. It is a question of any human with any sense of humanity doesn’t want any of it again and in that light, counting out if tit is bigger than tat is rather irrelevant isn’t it.
No but we must learn from the knowledge of those that were there. I was down to follow my father into the military but bad eyesight and a taste of unnerving discipline ended that. But only in his last years did my father, who was attached to US General Murray’s headquarters in Guadalcanal, recount the horror that he had witnessed from travelling through the many battlegrounds. What both sides had suffered. There were obviously too civilian casualties and tragedy. Bloody ridiculous and criminal, that any power anywhere would wish for it to be re-enacted I would say.
Because nothing screams quality like a product that's probably been designed by an alcoholic Muscovite and made on the night shift at the TEMU factory by a 12 year old, right?
Not that American made is much better these days, I picked up a new Gibson guitar recently and let's just say the oldies are the goodies.
That was a harbour attack and bad enough at that. Pacific Islands, for instance Tarawa, Saipan, Iwo Jima, Okinawa were extraordinarily difficult landings and invasions for the US Marines with horrendous casualties. Likewise beforehand for Japan trying to dislodge the Marines from Guadalcanal. Amongst all of that carnage though there was not the added complication of combat with millions of civilians alongside as would be the case in Taiwan.
China is strong but they don’t need to hide it. After the exploitation by the West, and being coerced hopelessly militarily outclassed into the opium wars and then the West ushering in Japan in Tsingtao to launch their invasion and genocide, the Chinese powers that be, in 1949 decreed that will never be allowed to happen again ( I am paraphrasing Rewi Alley here,) and in this they have succeeded. Hence their military understandably is vastly geared to land manoeuvres.The Khans, Ghenghis & grandson Kubla, created the greatest empire the world has even seen the Yuan dynasty hence today’s currency. My pick is Taiwan is nothing but a diversionary tit bit but given Russia’s precedent in reclaiming historic territory best not overlook, that the Yuan dynasty reached as far west as south east Ukraine. Out of all of that it, suggests to me as hardly an expert, that Russia might well be the one appearing strong when they are weak and China is observing the escalation of the latter with quite some interest.
"Updated data for Q1-2024 shows that we drink about 6¾ litres of alcoholic beverages per person per year"
Seems like Frank and I are holding our ends up. The rest of your are slackers! Get with the program! ;-)
No it’s alcohol. As I said below the average NZer over 18 drinks 13 standard drinks a week or 130 grams of alcohol. That is 6.7 kg of alcohol per year.
https://www.stats.govt.nz/information-releases/alcohol-available-for-co….
In 2023, the average number of standard drinks available per person was:
- 1.86 standard drinks a day (per person aged 18+), down 5.3 percent from 2022, following a 1.0 percent fall in 2021
By my calculation it is 9.8 4% beers per week per person. And a large number of the population would have none or very little.
Anyone care to check my maths: 6750ml / 0.04 / 330ml / 52 weeks
Edit: just read a bit more about it, the average person over 18 drinks 13 standard drinks a week. So if you exclude the non drinkers and the occasional drinkers, it’s probably safe to assume at least 20 a week on average.
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.