A review of the things you need to know before you get home on Friday; some mortgage rate changes, avoidance of credit card debt, New Zealand government pays 6% coupon bond, coupon swaps, NZD takes, US moves against cryptos, etc.
Here are the key things you need to know before you leave work today.
CHANGES IN MORTGAGE RATES
The Bank of China lowered its special 1-year and 18-month fixed rates to 2.15% and raised the 4-year and 5-year rates to 3.05% to 3.35% respectively. Update: SBS Bank raised its fixed rates to 4 and 5 years.
CHANGES IN THE TERM DEPOSIT RATE
Nothing here today.
The number of foreign students here continues to decline, while the number of foreign workers stabilizes. The number of people with work or student visas has declined by -63,417 since its peak in February 2020.
THE CEO OF THE BANK IS MOVING
Co-operative Bank CEO David Cunningham has resigned and left the bank at the end of July after four years in the role and eight years with the bank.
WE ALWAYS USE CREDIT CARDS …
National credit card spending increased in April compared to a year ago (of course given that April 2020 was at the start of the pandemic), but spending using these cards is also higher than in April 2019. On a seasonally adjusted basis, they are up + 4.1% compared to March.
… BUT NOT JUST FOR THE DEBT
April Credit Card Balances increased from March and increased from the same month a year ago. But the base effect distorts this increase. From April 2019, these last pay levels are down -14.4% over the two years. Prior to this April data, there had been 18 consecutive months of decline. Banks are struggling to keep credit card debt relevant and the effort just doesn’t work in the face of the BNPL challenge.
POPULAR BUT ONLY AT HIGHER YIELDS
The last Offer of government bonds offered $ 300 million today, which drew $ 1.3 billion in auctions. There were 71 bidders, but only 23 won a bid. The May 2024 bond earned a yield of 0.52% per annum, up from 0.49% in the previous equivalent tender two weeks ago. The May 2028 bond got a yield of 1.46% per annum compared to 1.35% two weeks ago. April 2037 rose to 2.39% and up from 2.27% two weeks ago. It should also be noted that last Friday, the May 2021 bond matured with a 6.0% coupon, which was the most expensive in their portfolio. This will save the Treasury on significant interest charges now it is being paid back given that it had $ 11.3 billion in circulation. The second most expensive bond in existence is the $ 16.2 billion of April 2023 with a coupon of 5.5%. (The RBNZ owns a $ 250 million miner of that one.)
Precinct Property’s (PCT) green bond offering was a success closing with complete oversubscription. Its final yield was 2.85% per annum on these six-year fixed rate covered bonds.
Update: Latest research shows that more New Zealanders from major demographic groups will receive a COVID-19 vaccine, as the number of doses administered reaches half a million.
Where everything goes
We’re currently updating some of our handy budget summary pages. Live now is the overall spending plan presented in yesterday’s budget. You can see where the money is going much easier this summary table. An interesting point to remember is that since the last National Party budget in 2016/17 so far, the total amount of expenditure incurred has increased from $ 83.7 billion to $ 146.9 billion, an increase of + 76% in five years. (We’ll have detailed access, as well as the Tax Levy Analysis released early next week.)
JASPER BREAKS THE $ 100 MLN AUM REFERENCE
Jasper, the technology-focused commercial property fund manager, has completed a third acquisition of a Class A industrial building in Wiri, south Auckland, to seed its latest industrial property fund. This brings its assets under management to $ 103 million.
The price of gold is now at US $ 1,871 in early Asian trading and down -US $ 4 from yesterday. And that’s down US $ 6 from the New York close earlier today at US $ 1,877; London closed at US $ 1,878 / oz.
The S & P500 ended its session on Wall Street up + 1.1% earlier today. Tokyo trades up + 0.4% in its morning session. But Hong Kong is down -0.3% at the start of trade and Shanghai -0.6%. The ASX200 is stable at the start of the afternoon and the NZX50 Capital index is up + 0.2% towards the end of its session. For the week, the New Zealand index is heading for an increase of + 0.6%.
SWAP & BONDS MAKES A SINK
We do not yet have today’s closing swap rates. If there are any significant movements today, we will note them here later when we have the data. The 90-day bank bill rate fell again by -1 bps to 0.32% and its lowest in six weeks. That’s a drop of -5bp in one week. The benchmark Australian government ten-year rate is down -3bp since yesterday to 1.68%. The 10-year Chinese government bond fell a further -2bp to 3.12%. And the ten-year New Zealand government is down -5bp to 1.84% and now below the 1.87% of the previous RBNZ fix (-1bp). The ten-year US government is down -3bp to 1.63% as markets return in a risk-free tone.
NZ DOLLAR HOLDS
The Kiwi dollar rose and fell since yesterday and ended slightly softer at 71.9 USc. Against the Australian, we have softened slightly again since yesterday at 92.6 AUc. Against the euro, we are little changed at 58.8 euro cents. This means that the TWI-5 is still at 73.3.
BITCOIN INCREASES IN HIGH VOLATILITY
The price of bitcoin is now at US $ 41,276 and a recovery of + 8.8% from yesterday. Volatility over the past 24 hours is extreme at +/- 6.1%. Janet Yellen’s US Treasury Department ad that it is taking action to crack down on cryptocurrency markets and transactions, and said it will require any transfers worth $ 10,000 or more to be reported to the U.S. IRS. This will likely cause international crypto holders to leak from US crypto exchanges.
This soil moisture graph is animated here.
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