Here are the key things you need to know before you leave work today.
CHANGES IN MORTGAGE RATES
SBS Bank has increased all of its fixed rates for terms of one year and longer. WBS has also increased its prices. Heartland Bank raised its variable reverse mortgage rate from 5.95% to 6.20%, an increase of + 25bp. (Heartland’s regular floating rate rose +25 basis points to 3.75% last week.)
CHANGES IN TERM DEPT RATES
SBS Bank has raised most of its term deposit rates, with the exception of its 1 and 2 year rates.
Construction activity took a big hit of – $ 226 million in Auckland in the September quarter compared to the June quarter due to Level 4 restrictions (- $ 306 million on a seasonally adjusted basis). But activity appears to have increased in the rest of the country where Waikato decreased slightly by – $ 18 million, Wellington increased by + $ 13 million, the rest of the North Island by + $ 62 million, Canterbury of + $ 25 million and the rest of the South Island of + $ 31 million. This means that outside of Auckland, all construction completed increased by $ 113 million in the September quarter. Two-thirds of Auckland’s decline was in the residential construction sector, which was hit harder than the commercial sector.
NEW HIGH RECORD
The ANZ Global Commodity Price Index rose + 2.8% in November compared to October, pushing it into new territory. Dairy product prices led the charge, supported by strong gains in meat, which offset lower prices in forestry and aluminum. Overall, commodity prices are now + 26% higher than a year ago in world prices, and slightly lower in NZD terms. Our tables of the different components are here. It’s a good time to sell [food] merchandise.
THE NEXT DAIRY AUCTION
We have another dairy auction on Wednesday morning and it looks like it could be another good one. Dairy futures prices suggest the SMP could rise + 2.8% to US $ 3,780 / tonne. And WMP could rise more than + 6% to US $ 4,230 / tonne. There is about a day left and things could change from here, but such a result would be a + 12% increase since early October. It’s a good time to sell [food] merchandise.
THE PRICE OF CARBON ON THE RISE
It should also be noted that after stabilizing at $ 65 / tonne CO2e, the carbon price per NZ unit rose last week to over NZ $ 68 / tonne NZU – and with a more pronounced bias in the futures prices, now up to over NZ $ 81 per tonne for April 2025 contracts (4+ years). (Remember, a year ago this price was around $ 35 / tonne; two years ago $ 25 / tonne.) As a benchmark, the EU carbon price has also risen sharply. over the past three weeks, now hitting NZ $ 130 / tonne. (78 € / tonne.)
NO MORE SLICE AND DICE
Non-bank mortgage lender Basecorp securitized $ 250 million of its variable rate mortgage-backed loans. The best bits ($ 100 million rated AAA) were priced at the 30-day BKBM rate plus 90 bps, which today would be around 0.81 + 0.90 = 1.71%, and floating down from the. This is the second issue of Basecorp this year after one earlier in March. (All the details of the last issue are here).
MARK DARROW FOR SUCCESS JOHN KELLY TO THE PRESIDENT OF THE TSB
Mark Darrow, the former CEO of PGG Wrightson Finance, will join the TSB board in February and succeed outgoing chairman John Kelly in June. Darrow has held various positions on the Board of Directors in a number of industries including Financial Services, FMCG, Manufacturing, Automotive & Transportation, Primary, Healthcare, Education. and investment.
DEPT ‘INSURANCE’ MATURITY END 2023
New Depository Bodies Act will create a single regulatory regime for all bank and non-bank depository corporations (NBDTs), such as building societies, credit unions and retail finance companies). It will also introduce a new depositors compensation system that will protect up to $ 100,000 per depositor, per approved depository, if a payment event is triggered. We expect the returns received by depositors to fall to be more in line with those of other countries with deposit insurance. This is because the premium costs to institutions will eventually be passed on, and holdings of $ 100,000 or less will become risk-free and priced similar to other risk-free offerings (like Kiwi Bonds, currently. at 0.5% pa for one year, up tp + 0.9% per year for four years). When the law comes into force, it will be the end of “market rates” for depositors.
RRR CUP COMING SOON
In a meeting with IMF chief, Chinese Premier Li Keqiang made an effort to point out that he would likely cut his reserve requirement ratio (RRR) rates if the housing slowdown requires political action and that their global economy is faltering for much longer. They are currently focused on maintaining high liquidity levels.
UPDATE ON LOCAL PANDEMIC
In Australia, pandemic case in victoria were 1073 reported yesterday. There are now 16,503 active cases in the state – and there were 6 more deaths yesterday. In NSW there was another 208 new community cases reported a jump yesterday, with 3,036 active cases acquired locally. Queensland is report zero new cases. ACT has 6 new cases. Overall, in Australia, just over 88% of eligible Australians are fully vaccinated, and just under 5% have only had a single injection so far. In contrast, there have not yet been any cases in New Zealand at the border, and 135 new community cases today. Today 87.6% are doubly vaccinated, 93.3% of Kiwis aged 12 and over nationwide have been vaccinated at least once, and the Australian equivalent rate is now 92.8% of every 16 years and over (91.9% aged 12 and over).
At the start of Asian trading, gold is at US $ 1,784 / oz and has not changed much since this morning.
MIXED SHARES IN EARLY COMMERCE
The NZX50 opened today down -0.5%. The ASX200 opened at -0.3%. S & P500 futures suggest Wall Street will open + 0.4% tomorrow, which is an “encouraging reversal from the -1.0% signal earlier today.” Tokyo opened down -0.8% and Hong Kong opened down -0.9%. But Shanghai opened + 0.3%.
SWAPS AND BONDS RATES FALL AND FILL
We don’t have today’s one closing swap rate Again. They may have flattened out again today with 2yr and 3yr yields down more than -2bp and the 10yr down almost -4bp. The 90-day bank note rate was up +1 bp to 0.88%. The benchmark ten-year Australian government rate is now at 1.58% and up +3bp since this morning. The 10-year Chinese government is at 2.84% and down sharply by -7 basis points. The New Zealand 10-year government rate is now at 2.30% and down -5 basis points from this morning’s opening, but still well below the RBNZ’s previous correction for this. 10-year rate at 2.35% (-8 basis points). The ten-year US government is up +2bp since this morning to 1.38%.
THE NZ DOLLAR REMAINS SOFT
The Kiwi dollar is now at 67.5 USc and just slightly above the opening level this morning. Against the Aussie we’re slightly firmer at 96.2 AUc. Against the euro, we are moderate at 59.8 euro cents. The TWI-5 is now back at 72.4.
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The price of bitcoin has fallen to US $ 48,813. It’s a similar level to this morning, but -14% lower than this time on Friday. Volatility since yesterday has been moderate to just +/- 2.0%.
This soil moisture table is animated here.
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