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. Update: Westpac has trimmed some short fixed rates. More here.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either.
RISING CONCERNS
Households and small businesses are feeling the chill from rising electricity bills according to the third annual Sentiment Survey undertaken by the Consumer Advocacy Council. The Council is an MBIE-appointed and funded group set up to monitor the regulated electricity sector. They say planned price rises risk worsening hardship. Two out of three residential consumers are worried about their electricity bill. Almost half of households and more than a third of small businesses are finding it harder to pay electricity bills than a year ago. And affordability and resilience of the network to storms remains the top issue of concern for households.
BIG 4 BANKS TO 'DUAL REPORT' CAPITAL
ANZ, ASB, BNZ & Westpac are required to "dual report" their regulatory capital positions from June 30, the Reserve Bank says. The four are accredited to use their own "internal ratings-based" models to calculate capital requirements for credit risk. They'll now also have to disclose their regulatory capital positions using the "standardised approach" set by the Reserve Bank, which other banks use.
LOWER & LATER
Westpac says the housing market momentum has slowed decidedly since the middle of last year, and has trimmed its 2024 house price growth forecast. And ANZ has now done the same.
POPULIST REGULATION
Parliament could start its own probe into business and rural lending as early as August, while the Coalition parties are currently jostling for the spotlight.
THE DISTANCE PENALTY
ASB economists expect 'a considerably more modest inflation impact' than during the pandemic spike in shipping costs, but say the latest rise 'will further crimp NZ and global household demand'.
AMORAL CROOK
'Lion's Share' crypto pyramid scammer Shelly Cullen, the self-described 'biggest scammer out there' who promoted the scheme to Māori and Pasifika communities during 2020 and 2021 has been ordered to pay record $5.9 mln fine. The scheme took in at least $17 mln from 150,000 people. She promoted the crypto currency pyramid on social media and YouTube, and has continued to promote schemes on Facebook after the court case against her this year. Her whereabouts are not known, and Cullen did not attend the April court hearing.
MONITORING FOR STRESS SIGNS
For the past few months we have been tracking commercial lease offers, watching for signs of both SME stress, and commercial property risks. While it is a shortish period so far, nationally these advertised levels are up a bit less than +4% an average for the past rolling 4 week period. They now total 21,800. The fastest rises are in Hamilton, New Plymouth, and Auckland's Manukau. The least are in Palmerston North. (We started this monitoring because we thought we saw an unusual spread of 'For Lease' signage in Auckland's North Shore. But the data shows essentially no rises since then.)
COORDINATE TO DO A BETTER JOB
The Parliamentary Commissioner for the Environment is pointing out that the modeling councils use for freshwater management is inconsistent, and inadequate to get the desired result of better fresh water. He wants to see Councils more coordinated and using better tools.
NO MORE PROGRESS, GOING BACKWARDS
In Australia, their monthly inflation indicator for May edged up to 4% from 3.6% in April, boosting the chance of another RBA rate rise as underlying price pressures clearly remain entrenched. Australian government bond yields leapt almost +20 bps on the news, and to their highest in 2024. The AUD rose +50 bps. The ASX200 tumbled sharply. Markets may have reacted sharply but economists had a much more measured view preferring to see the relatively small month-on-month change as 'not much'. Meanwhile, an RBA boss said their policy positions are on the right track and will get inflation under control.
SWAP RATES RISE
Wholesale swap rates are likely to be higher in the shadow of the Aussie moves. Our chart below will record the final positions. The 90 day bank bill rate is up +1 bp at 5.62%, a level it has hovered around for 110 days now. The Australian 10 year bond yield is up +11 bps from this time yesterday at 4.35%. The China 10 year bond rate is down -1 bp at 2.24%. The NZ Government 10 year bond rate is up +3 bps at 4.66% and the earlier RBNZ fix was at 4.55% and down -4 bps from yesterday. The UST 10yr yield is up +4 bps from yesterday at 4.27%. Their 2yr is now at 4.72%, so the curve is less inverted at -45 bps.
EQUITIES VERY MIXED
The NZX50 is up +0.4% today in late trade. But the ASX200 is down -0.9% in afternoon trade after the CPI data. Tokyo has opened up a strong +1.4%. Hong Kong is down a minor -0.1% at its open, but Shanghai is down -0.6% and continuing their slide. Singapore is down -0.1%. However Wall Street ended its Tuesday session up +0.4% on the S&P500.
OIL SLIPS SLIGHTLY
The oil price is down -50 USc at US$81/bbl in the US, and just over US$84.50/bbl for the international Brent price.
GOLD SOFTISH
In early Asian trade, gold is slightly softer, down -US$8 from this time yesterday at just on US$2318/oz.
NZD LITTLE-CHANGED AGAIN
The Kiwi dollar is only marginally softer from this time yesterday, now at 61.1 USc. Against the Aussie we are -30 softer at 91.6 AUc after their CPI data. Against the euro we are +10 bps firmer at 57.1 euro cents. This all means the TWI-5 is actually little-changed at 70.7.
BITCOIN RECOVERS
The bitcoin price has recovered +2.5% from this time yesterday after yesterday's outsized drop, now at US$62,090. Volatility of the past 24 hours has been modest at just over +/- 1.5%.
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59 Comments
Hey there IT GUY, be careful what you wish for when it comes to Data Centres-start asking these questions.Is it being built in a residential area(noise pollution),is the storm water system up to handling the runoff from each of the buildings(which are the size of a rugby field)& how much diesel fuel is being stored on site for power outages to fuel diesel generators as the centres need power to cool 24hrs.Resource consent will be required & these questions need to be answered instead of offers of warm water
Worth every penny
In isolation maybe. Can the externalities be costed?
A lot of hype about the sustainability but is any of it true or is it just a lovely narrative? How sustainable are all these data centers really, sucking up renewable energy projects, adding consumer costs elsewhere, both in data and electricity costs, plus environmental costs?
The wave generator may make sense in places where access to surf is otherwise inhibited, but NZ already has all this available. Demanding certainty of waves on a daily basis actually lessens the lessons to be learned from a mental and emotional well being perspective. Surfing is a great teacher of physical, emotional, mental and spiritual wellbeing and best done in Nature.
https://www.spark.co.nz/online/about/our-company/news/spark-secures-res…
https://newsroom.co.nz/2024/03/19/surf-data-centre-tests-new-demand-for…
https://www.newshub.co.nz/home/travel/2024/06/john-kirwan-s-auckland-su…
Primary Dealer Banks Showing Signs Of Global Collateral Tightening
There have been a whole bunch of ripples through the monetary system coming in from all angles pointing toward a sizable collateral disruption. The primary culprit(s) appears to be from Europe, starting in bond spreads surging off election uncertainty though we can't discount the ECB's rate cut as a factor. The eurodollar aftershocks are pronounced regardless of origin.
And over in Chyna:
"Average vacancy rates at logistics properties in east and north China are approaching 20%, the highest in years. More warehouses are being built, which is making the problem worse."
While few analysts would consider that tenant losses and slashed rents in warehouses and industrial parks have anything to do with trade, this is part of the process in which weak demand and excess savings are channeled into over-investment in logistics, which improves manufacturing competitiveness at the cost of weaker domestic demand.
https://www.bloomberg.com/news/articles/2024-06-25/a-100-billion-bet-on…
I can only commend you on tracking commercial leases. I think it needs to be a bit more detailed though. It would be great to have them broken down by type, such as: warehouses, office and retail. Furthermore, I think the cost per m2 pa is more important than the number of leases, because the level of rent determines the value of the building. Finally, tracking and publishing a vacancy rate per commercial property type over time, would be great. I think the likes of CBRE and Colliers do already have these figures.
Couldn't give you the exact formulae, but resi doesn't attract anywhere near the sophistication that commercial does.
The value on a resi property is typically derived by people with sufficient equity in another property, walking into the bank going *grunt me property want grunt*, leveraging as much as they can to outbid everybody else, and expecting the FHB they just outbid to stump enough rent to cover the basic outgoings.
Commercial valuations are a laugh. Owners valuer comes round and then it values X for the new rent. Up of course. I talk with the owners and they say "won't budge". I am talking to him in the doorway and point out the six similar properties withing 200 meters which are vacant. Some for 5- 10 years. No reduction - so I move out. Property sits vacant for 5-6 years and is now rented to a Karate Club, clearly at about 30 % (or less) of what I had been paying.
But you know, "the valuer said this".
Labour through MBIE accepted the recommendation of the electricity companies to increase the fixed charge proportion of their income on the basis that large consumers got a slight reduction in the future increased variable consumption tariff.
If anyone outside the government bureaucrats believes this is actually a consumer benefit more than an electricity company benefit I have a bridge to sell you.
Check out this property sale. That's an incredibly cheap price for the land on offer. Only 12 BTC!
What am I missing here? Some issue with geotech reports / cliff erosion etc? Or is this is the norm now. I get that Beachhaven is a ganster's paradise but still....
https://www.stuff.co.nz/home-property/350323641/real-estate-king-garth-…
I'm assuming the owner has very little experience with understanding what's involved in buying/selling/valuing property and has been scammed by a master bargain hunter like Wingman or the Man 3.
Either that, or that's the new baseline for property values in Auckland 50% under RV.
"That's an incredibly cheap price for the land on offer."
No. Seems about right.
Check the topology. No much to build on. Further, zoning means not much can be done with it beyond a either a bowl and rebuild, or major reno. No connections and not close to amenities. Garth's a lovely guy. He's probably not bothered by a few $$$ here or there, and is quite happy to leave some for the next guy - in fact, that's likely his intent.
Oh my. Heat turned up in Aussie. Do they have the kahunas to hike?
Underlying inflation continues to track above the RBA’s forecast profile, suggesting that the board should raise rates in August.
Headline inflation came in above market expectations for the third month in a row in May, up 4.1% over the past year.
More importantly, measures of underlying inflation - for which there are no consensus forecasts - point to persistent above-target inflation.
https://www.livewiremarkets.com/wires/the-rba-should-hike-in-august
And on the topic of Big Banks....
"A BNZ employee has won her lengthy court battle to prove the bank proposed making her redundant because she blew the whistle on a colleague....Bowen’s 30-year career in banking was destroyed and she has now spent years fighting for justice against the might of one of Aotearoa’s biggest banks....Her ordeal began in 2016, when she complained about alleged serious wrongdoing by a senior BNZ manager....Soon after she made that complaint, a “change proposal” was presented, to potentially make her redundant. Bowen says she thought she was doing the right thing, as required to in her employment contract, by raising her serious concerns about the behaviour of a senior manager. She relied on the bank’s code of conduct because there was no clear process....(Now) She wants the bank’s executive to be held to account,"
https://www.1news.co.nz/2024/06/26/bnz-proposal-to-force-whistleblower-…
Are you saying Melissa Bowen got constant rape and death threats from the bank?
Not taking anything away from Melissa Bowen's courage - but your comment is silly.
(Seems lots of commentators liked it given the thumbs up it got. Perhaps they think such comments were funny? Did they miss the darker undertones?)
"Goes with the territory I guess."
No it doesn't. Being a politician doesn't mean you can automatically get death and rape threats and expect to just take it as 'going with the territory. Normalise this type of behaviour and you then wonder why good people don't want to get into politics.
What Labour tried to normalise and instil in our country has consequences, and although death and rape threats are not to be condoned under any circumstances, it is a clear indication of the public backlash from divisive policies and mandates having large and often long-lasting impacts on peoples lives.
No it doesn't. Being a politician doesn't mean you can automatically get death and rape threats and expect to just take it as 'going with the territory.
Gerald Ford, Ronald Reagan, John F Kennedy all threatened. 3 leaders. Can you imagine how many others have been threatened and how many other instances you're unaware of?
As I said. Goes with the territory.
Bank of Canada warned the public of a possible sharp correction in asset prices & systemic risk to the banking system.
https://www.cbc.ca/news/business/armstrong-bank-of-canada-economy-reces…
Electricity bills.. What have not seen commented anywhere as yet, is anything about the drop of household solar power production over the last 2 yrs. Due to the higher atmospheric moisture / clouds, household production has dropped around 30% on 12 month ave. Reducing capital cost recovery and significant increase in power bills.
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