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
No changes to report again today.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either today.
RETREATING
Electronic retail sales value data from Statistics NZ shows that retail sales figures - which are not adjusted for inflation - are now -1.6% below the levels of a year ago. They are also down on a transaction basis as well now. Per capita, they will be even worse, confirming household financial pressures.
"SHAKE UP KIWISAVER"
The Retirement Commission wants the Government to implement a higher default KiwiSaver contribution rate, and require employer contributions for over 65s and under 18s.
YIELDS EASE
For the first time in a while, less than $1 bln was bid for the $500 mln available in the NZ Government bond tender in three tranches. The $250 mln April 2029 portion went for 4.50% yield, down marginally from the 4.56% three weeks ago. The $200 mln May 2032 portion went for a yield of 4.60%, down from 4.67% also three weeks ago. The final $50 mln April 2037 went for 4.81%, down from 4.93% two weeks ago.
THE SURGE HAS PASSED
After the huge post-border closure spurt, work and residence visa numbers are declining to more normal levels according to Immigration Dept data.
NEW THREAT
Watch out for new phishing campaigns against local organisations. Phishing emails sent via Microsoft OneDrive and Sharepoint are sharing invitations from trusted contacts, used to lure Kiwi victims.
STAYING PART-TIME
Australian payrolls rose by almost +40,000 in May, more than the expected +30,000 rise. Full-time employment rose +41,700 and part-time jobs fell by -2,100. There are now 14.458 mln people in Australia jobs, 31.4% of them part-time and their highest level since mid-2021. (The highest ever was in October 2020.) Their actual jobless rate is now 3.9% and their participation rate 67.2%.
CAPPING THE SIZE
Staying in Australia, their Treasury is consulting on reforms to the accounting, tax and auditing firms who are currently allowed to have 1000 partners. Their Greens are calling for that to be limited to 100. All this is in reaction to the PwC tax scandal and the drive to reform the profession.
SWAP RATES HOLD
Wholesale swap rates are likely to be easing today on global influences. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 5.62%, a level it has hovered around for almost 90 days. The Australian 10 year bond yield is down -10 bps from yesterday at 4.25%. The China 10 year bond rate is down -1 bp at 2.31%. The NZ Government 10 year bond rate is down -4 bps at 4.75% from yesterday and the earlier RBNZ fix was at 4.68% and down -3 bps from yesterday. The UST 10yr yield is down another -9 bps from yesterday at 4.31%. Their 2yr is now at 4.76%, so the curve is little-changed at -45 bps inverted.
EQUITIES MOSTLY HIGHER
The NZX50 is up +0.6% in late trade today. The ASX is up +0.5% in afternoon trade so far. Tokyo has opened its Thursday trading little-changed. However Hong Kong is up +0.6% and Shanghai is down -0.2% today in early trade. Singapore is up +0.6% in early trade there. The S&P500 ended its Wednesday trade up another +0.9% on Wall Street earlier.
OIL UNCHANGED
The oil price is unchanged from this time yesterday, still just on US$78/bbl in the US, and just on US$82/bbl for the international Brent price.
GOLD LITTLE-CHANGED
In early Asian trade, gold is slightly firmer, up +US$3 from this time yesterday at just on US$2315/oz.
NZD HOLDS
The Kiwi dollar is marginally firmer than this time yesterday, now at 61.7 USc but volatile in between as the US data flowed though the FX landscape. Against the Aussie we are marginally softer at just on 92.8 AUc. Against the euro we are also a tad softer at 57.1 euro cents. This all means the TWI-5 is now still just over 71.
BITCOIN HOLDS
The bitcoin price is up +0.9% today from this time yesterday, now at US$68,033. Volatility of the past 24 hours has been moderate at just under +/- 2.1%.
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87 Comments
The specter of negative equity stalks the land..........https://www.msn.com/en-nz/news/national/thousands-of-first-home-buyers-…
IT GUY: "the bit about how long it takes someone on a30 year mortgage to build 20% is sobering "
Say what?
So you've never read my posts about keeping mortgage terms short? I.e. < 20 years?
Nor used interest.co.nz's excellent advanced full function calculator?
The calculator that shows how much equity you build up per year? No? (A calculator that no bank offers - for obvious reasons!)
The expression - pearls before swine - springs to mind.
Agreed that keeping mortgage terms short is a good idea if you can do it, but it kind of ignores the reality of buying a first house in Auckland over the last 5 years or so. With house prices being so stretched relative to incomes that just isn't possible for most people
Yes, that's one way to do it.
The other is to go for a 'reducing' mortgage over as long a term as possible, and then smash the principal as much and as fast as you possibly can. The end result is way less interest paid overall, and the mortgage paid off much sooner.
Table mortgages have a lot to answer for in my book.
1% of 2000 = nothing to see (no disrespect to anyone with a change of circumstance who will be doing it extremely tough). What should be looked into is the banks “special” rates which are not special at all and how they can justify the additional margin on lower equity customers.
Imagine if the last 25 years of vested spruik had not occurred and houses were indeed 50% of today's number. Imagine if that allowed the one million kiwis in Australia to have had an option to stay in NZ because they could afford a house. Imagine if the balance of that lending had gone into establishing business in NZ that employed eveyone that stayed. Imagine if the tax rinsed by specvestor debt loading had been captured and spent on doctors, teachers and police.
Imagine indeed.
The bulk of new home buyers are entering the same limited market, competing against much deeper pockets.
When I was in my early 20s, I realized I'd never be competing to buy a house in somewhere like Epsom, Remmers or Herne Bay. A) most of the houses in Epsom are already occupied and B) I'm unlikely to become a plastic surgeon, high paid lawyer or chief executive anytime soon. Now it looks like the boundary has just gotten bigger.
Electronic retail sales value data from Statistics NZ shows that retail sales figures - which are not adjusted for inflation - are now -1.6% below the levels of a year ago. They are also down on a transaction basis as well now. Per capita, they will be even worse, confirming household financial pressures
Undoubtedly households will be under pressure, but how much over purchasing of electronics took place over 2020-2022?
It's worth a look at how spending patterns are changing across the stats NZ card categories. ANZ and Westpac have also released a lot of detail. What you'll see very clearly is that spending is holding steady-ish on consumables (basically food) - but this is falling in real, per capita terms. Spending on discretionary items like meals out, durables etc is falling through the floor. I have no doubt that some people are still sat pretty, but an increasing proportion of households are really struggling. The wave of unemployment that we are seeing has only just got started and we are well into the negative doom loop of falling demand > job losses > falling demand etc.
Interest rates were able to be cut fast and hard in the wake of the GFC. China was booming and offered support. Then we had the economic stimulation of the ChCh rebuild.
None of these things apply this time.
Our economy is much more vulnerable this time.
I think that’s going to be very bothersome for this government.
Interest rates were able to be cut fast and hard in the wake of the GFC.
Why do you think they hiked them so high, so quickly?
How much more money do kiwis with mortgages have to spend if the interest rate came down 2% in a short period?
The can is rusty, bent, and the labels worn off, but we can kick her down the lane another time or two.
I don’t see what point you are trying to make. The drop in the OCR during and after the GFC was massive. That provided a lot of support for the economy.
Save for some sort of catastrophe, the OCR cannot be cut aggressively this time.
So what do you see supporting the economy and not significantly impacting on the government’s popularity?
You are drifting away from my points and original question, which was basically:
The economy is in big trouble, it’s getting worse, that won’t be good for the government, what are they going to do about it?
Noting they don’t set the OCR.
I can’t see anything that they are planning that will really help lift the economy out of the doldrums in the next 1-2 years.
Anything sustainable would take quite some time.
The government doesn't set the OCR, but in case you missed, central banks have a responsibility to ensure financial system stability and liquidity. If the economy is seriously going down the drain, their only response mechanism is to foster lending.
Treasury, 2008:
Governments and central banks around the world have moved quite quickly to adopt measures aimed to restore confidence in the financial sector and mitigate the extent of the economic slowdown.
Interest rates have been cut very dramatically in many countries. Our own Reserve Bank has cut interest rates by 325 basis points since July – including a 150 point cut just 10 days ago.
They will focus on selling assets to foreign capital.
I expect to see water, farms and strategic infrastructure related to food production to be sold from under us.
Expect privatisation of government owned or partially owned assets, relaxation of foreign buyer rules and some juicy post-political career board positions on the companies/entities that stuff gets sold to.
I also didn't predict the war in Ukraine (never anticipated a hot war in the continent between two major countries in my lifetime) but I have to say that plenty of limits to growth and social consequences of climate change people have been yelling from the rooftops for years that both of these things will lead to increased conflict as countries fight for the remaining resources and have to deal with mass emigration due to climate events.
I remember sitting in a post-graduate seminar on International relations in my mid 20s and confidently stated that Russia posed no threat to the West and that the biggest challenge would be China and Wahhabi ideology.
I just thought the limits to growth and climate change alarmists were exaggerating the risks.
I'm big enough to admit they were right and I was wrong. The sooner others swallow their pride and see the real state of affairs the more likely we are to be able to mitigate the consequences.
Italy's economy has had a big uptick recently and that's been a driving factor.
The problem is we are wanting someone to make life easier right now, doing the status quo, while at the same time investing in some sort of economic activity that's more lucrative, and more sustainable.
Y'day BTC was up <1% and the miners +7% (Iris ripping another 9%). The gap is widening. Don't be surprised if it widens dramatically over the next few months.
Bitcoin miners aren’t just defending the Bitcoin network. Think of them as a last line of defense against tyrants like Elizabeth Warren who seems focused on implementing a CBDC. The Anglosphere will have to follow their lead.
There is actually a lot more at stake here than making 10-20x on these stocks.
Unelected head of the EU, Ursula von der Leyen, announces the need for an EU-wide digital ID, "that any citizen can use anywhere in Europe, to do anything from paying your taxes to renting a bicycle". But once that digital ID has been connected to the EU's programmable CBDC, EU citizens won't be able to rent a bicycle, or participate in society at all, if the unelected technocrats at the EU decide they haven't been obedient enough, for whatever reason. Link
According to the US Govt, the cost of health insurance has declined 5% over the past 5 years. Of course that's nonsense to most Americans. It's important to understand how the CPI is derived. Or you're just being fooled.
How is that possible when we know that the cost of health insurance is certainly much higher today than five years ago?
The government is not using actual premium data to determine the cost of health insurance, but instead using changes in the retained earnings of health insurers. So when their retained earnings decline as they have over the past few years, the government says that the cost of health insurance has declined as well.
The CPI measures (cost of insurance + cost of medical services). If the insurers are making less margin the first part won't be so high, but then you'd expect the second part to be high (>2% yoy earlier in the same article), so overall it sounds like it's doing the right thing.
It's literally in the link in your original post
Rather than pricing the full premium of health insurance plans, the CPI prices the services provided by the health insurer measured by the portion of the total premium that isn’t used to indirectly purchase medical goods and services. The premiums minus benefits spending is known as the retained earnings.
Then, the measured prices of medical goods and non-insurance services (e.g., physicians, hospitals, etc.) are defined to be the total reimbursed amount and include any payments from insurers. The associated out of pocket expenditure weights are reassigned from premiums to the medical goods and non-insurance services categories. So, the only weight remaining to the health insurance index reflects the retained earnings.
Please read this.
Charting the Budget
"...from now until 2027, Willis will be outspending what Robertson had promised in the first Wellbeing Budget, in real per-capita terms, net of debt servicing costs."
https://newsroom.co.nz/2024/06/07/charting-the-budget/
Tony’s logic is all over the place really. Says the market won’t recover till interest rates come down. Correct. Yet we all knew interest rates wouldn’t come down much if at all in 2024, right? Yet, he predicted house price rises of 10%.
https://www.oneroof.co.nz/news/tony-alexander-the-return-of-the-housing…
The RBNZ is between a rock and a very hard place.... sure they have only one target ... inflation... in the mandate, but they also have to maintain financial stability, and they know damn well right now that the economy is stalling. But the data is not yet showing it (Stats NZ is probably still working on last years data on an Abacuss and a pdp-11... perhaps a few vax stations being generous...)
So they have old data on the only target they have... they must be able to see the pain around them (or maybe too busy dining at WGTN Bistros), but they cannot act unless they SEE DATA.
I think they cut this year, and the economy is going to be dire by the time they do, my call that house prices will be down 10% Dec 23 to Dec 24 will be the least of our problems....
RBNZ - NZ may be downgraded. NSS
The Rockstar NZ Economy is lying in the corner looking very sad, that white powder is probably icing sugar.
"... and they [RBNZ] know damn well right now that the economy is stalling."
LOL. I think the word you wanted was "falling".
We've been going backwards for over a year. And for over two years, were we to be honest.
Tony finishes by saying ..
When do I think things will improve? Not until interest rates fall away. When might that happen? Late this year, when the Reserve Bank acknowledges that its monetary policy settings are now too tight (a reversal of 2021-2022 when they were much too loose).
Who was it that said November 2023 was the time the RBNZ should have started easing? Oh, right, that was me. At that time Tony was still bullish on the house market. Geez! He's as bad - and was as wrong - as the ghouls at the RBNZ.
Over in Aussie, the National Anti-Corruption Commission will be probed...for corruption. Less than 12 months in.
An investigation has been launched into the National Anti-Corruption Commission over its refusal to investigate six public officials referred to it by the Robodebt Royal Commission almost a year ago.
The Inspector of the National Anti-Corruption Commission (NACC) Gail Furness SC – whose role includes “detecting corrupt conduct in the NACC” – has announced she will investigate after receiving “nearly 900 individual complaints” complaints from the public.
“Many of those complaints allege corrupt conduct or maladministration by the NACC in making that decision,” Furness said.
https://theklaxon.com.au/nacc-to-be-probed-for-corruption-over-first-ma…
https://www.youtube.com/watch?v=E-nIG5rzPZQ
19 min thought provoking - worth listening to this guy
if you want a full 3 hrs
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