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
Kainga Ora has reduced all its fixed rates today by between -10 bps and -29 bps. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ has cut term deposit rates for terms longer than 18 months, all by -20 bps. All rates less than 1 year are here, for 1-5 years, they are here.
STILL HIGH, BUT LESS SO
The cost of living for an average NZ household climbed 5.4% in June quarter from a year ago, said Statistics NZ, pushed up by interest payments and insurance costs. That is down from 6.2% in the march quarter.
'A LITTLE BRIGHTER'
The ANZ-Roy Morgan monthly consumer confidence survey actually recorded a small rise in July, off its very low June level. Inflation expectations fell. More people think they will be better off in 2025.
INDONESIA NOTICES NZ
Indonesia’s Foreign Minister, Retno Marsudi, will visit New Zealand next week.
NEW BOARD MEMBER
ANZ NZ today announced that Nagaja Sanatkumar will join its Board with effect from August 19. This adds to her other board directorships at Meridian Energy, Southern Cross Healthcare, Southern Cross Medical Care Society, Foodstuffs, the Crawthorn Institute, and Tuatahi First Fibre.
HANDBOOK UPDATE
The RBNZ has updated its Monetary Policy Handbook. This follows The Remit Review of the Monetary Policy Committee and subsequent changes in 2023, and the Reserve Bank’s legislative framework updates. They have also made use of a broader range of monetary policy tools.
A COST-PRICE CHALLENGE
In the world's largest EV market, China, insurers are facing profitability challenges with NEVs due to high risk and regulatory pricing constraints despite increased premiums, according to Caixin. NEVs are more prone to claims, expensive to repair, and heavily used in the ride-hailing industry, leading to higher insurance loss ratios.
FAST UP, SLOW DOWN
In its weekly update, the US Fed said its balance sheet is still shrinking, (down to US$7.2 tln) but not as fast as earlier, and it is still not down to its pre-pandemic levels (of US$4.2 tln). The RBNZ balance sheet is also on a slow shrink, and also far, far larger still ($84.5 bln) than pre-pandemic ($31 bln).
COVERED BONDS STRONGER THAN MANY COUNTRIES
Most covered bond programmes are sufficiently strong to withstand the economic consequences from a sovereign default, Fitch Ratings said in its latest Covered Bonds Snapshot report. A majority of rated covered bonds programmes have higher ratings than their relevant sovereigns. Overall, covered bonds programmes are on average rated almost two notches above the sovereign Local Currency Issuer Default Rating.
SWAP RATES REMAIN WEAK
Wholesale swap rates are likely to be again influenced by low loan demand and downward receive-side pressure at the short end. (See this.) Our chart below will record the final positions. The 90 day bank bill rate is down -1 bp at 5.48% and another 110 day low. The Australian 10 year bond yield is down -3 bps from this time yesterday to 4.34%. The China 10 year bond rate is down -2 bps at 2.21% in what looks like a controlled easing. The NZ Government 10 year bond rate is down -3 bps at 4.44% and the earlier RBNZ fix was at 4.43% and up +1 bp from this time yesterday. The UST 10yr yield is down -2 bps at 4.25%. Their 2yr is now at 4.44%, so that curve is now inverted by -19 bps.
EQUITIES MOSTLY LOWER, BUT NOT THE ASX
The NZX50 is down a marginal -0.1% in late trade. The ASX200 is up +0.9% in afternoon trade mostly recovering yesterday's hard drop. Tokyo has opened its Friday trade up +0.5%. Hong Kong is down -0.3% at its open. Shanghai is also down -0.3%. Singapore is little-changed. Wall Street ended its Thursday trade with the S&P500 down another -0.5%.
OIL TURNS UP
The oil price is up +US$1.50 to just under US$78.50/bbl in the US, and now at US$81.50/bbl for the international Brent price. Demand expectations on the stronger US economy is driving this.
CARBON PRICE HOLDS SOFT
Today the carbon price fell marginally again, now $50.25/NZU and down from $50.50/NZU at this time yesterday.
GOLD HOLDS
In early Asian trade, gold is up a minor -US$2 from this time yesterday at US$2373/oz.
NZD SOFTER
The Kiwi dollar is down -¼c from this time yesterday, now at 58.9 USc. Against the Aussie we are dow3 -½c at 89.9 AUc. Against the euro we are down similarly at 54.2 euro cents. This all means the TWI-5 is now under 68 with a -40 bps fall.
BITCOIN BOUNCES BACK
The bitcoin price is up +4.1% from this this time yesterday, now at US$ 66,807. Volatility of the past 24 hours has been moderate at just on +/- 2.8%.
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71 Comments
The RBNZ balance sheet is also on a slow shrink, and also far, far larger still ($84.5 bln) than pre-pandemic ($31 bln).
who spent that much money in such short timespan and nothing to show for it?!
RBNZ bought and sold $20bn of currency in 7 days at the start of July. Where did they get the money from? Expanding and contracting their balance sheet. That is how NZ financed infrastructure for decades of course. Now we have got wise and we only build infrastructure if the financing arrangements provide an opportunity for an offshore investor to extract a decent rent.
Are you referring to D12 FX Swaps?
RBNZ lends NZD (borrows USD) when short-term interest rates move higher RBNZ borrows NZD (lends USD) when short-term interest rates move lower Page 7 of 15 PDF
In Cannery Row, Mack and the Boys travelled some distance for a woodstove. They spent 3 days haggling, and finally gave the owner an IOU which he probably still has.
That - considering the value-less-ness of debt - is the 'price' of oil. More accurately, the productivity of oil determines the percentage of debt that is underwritten. Or not. Price is nothing more than a murky look-ahead by a partially-informed cohort.
It is far too early to ascertain anything, and anyway, in the big picture it will make little-to-no difference. The overall popularity means diddly-squat - the marginal states are key, and it is unclear who will get traction in those.
Much money both ways: maverick money behind Trump, neocon elite money behind Harris. Both advocate GROWTH, both value their hegemon, and will retreat to protect (globalisation is over, and on the ebb).
There is though the question of momentum. When it swings in, which it has, and whether or not it is sustained. The Republicans up until now have been uncharacteristically muted, understandably because they wanted Biden to remain in place. Harris has now stepped into the void and has powered up the entire front for the Democrats and they have their convention in four weeks to ramp it up again. At that point it’s only 10 weeks or so to election day itself. Trump, if really pressured, may yet prove to be much more brittle than he appears to be. Very interesting times indeed.
“The painful reality for Ms. Harris is that in private conversations over the last few months, dozens of Democrats in the White House, on Capitol Hill and around the nation — including some who helped put her on the party’s 2020 ticket — said she had not risen to the challenge of proving herself as a future leader of the party, much less the country. Even some Democrats whom her own advisers referred reporters to for supportive quotes confided privately that they had lost hope in her,” they wrote.
“Through much of the fall, a quiet panic set in among key Democrats about what would happen if President Biden opted not to run for a second term. Most Democrats interviewed, who insisted on anonymity to avoid alienating the White House, said flatly that they did not think Ms. Harris could win the presidency in 2024. Some said the party’s biggest challenge would be finding a way to sideline her without inflaming key Democratic constituencies that would take offense.”
https://www.nytimes.com/2024/07/25/opinion/kamala-nomination-democrats…
Kamala up to 5 % ahead of Trump in today's polls. Worst poll for her has Trump 2% ahead.
Polymarket has Trump at 61% and Kamala at 36%.
So who do you trust? Polls or the betting markets?
https://polymarket.com/event/presidential-election-winner-2024?tid=1721…
Betting markets will take account of the convoluted electoral system over there. If the polls are simple nationwide polls, there's been plenty of popular vote victories that don't translate into actual victories.
I hope she can build some momentum though - a convincing, indisputable loss for Trump would be absolutely delightful.
Betting markets will take account of the convoluted electoral system over there. If the polls are simple nationwide polls, there's been plenty of popular vote victories that don't translate into actual victories.
Betting markets represent 'skin in the game'. Also, a colleague suggested to me that Polymarket is biased towards crypto bros and younger people. Fair comment.
It's very similar on Betfair which is my normal go-to. Any differences between platforms I'd expect to be arbitraged away (although there was a nice time years ago where that wasn't the case - suspicion was big money flooding a particular platform to generate momentum)
Today ex-NSW Premier Gladys Berejiklian failed in her bid to have findings of "serious corrupt conduct" overturned.
She still remains as a senior exec at Optus, even though Optus owner Singtel says it has "zero tolerance for corruption."
https://www.theguardian.com/australia-news/article/2024/jul/26/gladys-b…
A Korean investor has acquired a skyscraper in Downtown Los Angeles for $120m - $170m less than the debt owed.
Previous owner Brookfield recently defaulted on a $319 m loan tied to the property. At the time of default, $290 m was outstanding on the loan provided by Wells Fargo and a syndicate of lenders.
Since last Feb, Brookfield has defaulted on $1.1 billion in debt tied to its office buildings in downtown LA
https://therealdeal.com/la/2024/03/26/brookfield-to-sell-777-tower-in-d…
I am going to pop up again and say there's no sign of similar calamities in NZ commercial property just yet, recent transactions by our listed REITs show values are holding up quite well. I note that REIT share prices are starting to climb, too.
Our residential property, however...
I am going to pop up again and say there's no sign of similar calamities in NZ commercial property just yet, recent transactions by our listed REITs show values are holding up quite well.
S&P/NZX All Real Estate Capital down approx 33% since 2021.
China's surprise cut in rates today is a waste of time. This chart shows how eventually rate cuts stop working because households are drowning in debt backed by a deflating asset. I think it used to be called "pushing on a string". Next stop QE? Link
What Will Happen When the Fed Finally Cuts Rates
All year all anyone has heard is the Fed and its rate cuts. Soft landings imply a little weakness but no worry, Jay Powell will cut rates once maybe twice and everything will be just fine. The only question is, why on earth does anyone believe this? The evidence and history of interest rate targeting - as you'll see - is indeed 100%, as in total failure. Rate cuts (like hikes) are pure superstition.
Anyone else wondering why taxpayers money is spent on sporting events ?
If the athletes are really that enthusiastic about their irrelevant ego competition then they can fund themselves. TV1 appears to have sent a full team...
https://www.theguardian.com/sport/article/2024/jul/25/two-weeks-to-save…
(I would agree with a physical & mental health case for supporting the Paralympics)
May do yes. But their efficacy is pretty bad. Worse than tossing a coin.
As you allude, there's a decent interplay between your physical and mental wellbeing. But like much personal health, our medical institutions are heavily weighted towards pharmaceutical measures than a holistic approach.
It does, or did, lift the nation’s profile. Great athletes such as Snell, Halberg the rowing eight, were brilliant portrayals of NZ’s finest. In modern times such as Lisa Carrington ring the same bell. Modest, grateful and successful. Actually our Olympians largely present a hell of a lot more decorum, dedication and easy personality, than the very many prima donnas in some other national sports.
Japanese company MetaPlanet listed on the TSE and famous for holding Bitcoin on their balance sheet now up 1,200% for 2024.
Done my research on this company and cannot understand this price action. However, all my congrats to the investors who have profited from this.
https://www.tradingview.com/symbols/TSE-3350/
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