Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today, at least so far.
CHANGES IN TERM DEPOSIT RATES
Kiwibank follows BNZ and Rabobank last week and raises term deposit rates. More here.
KIWIBANK PRESENTS A PARTNERSHIP WITH ACI WORLDWIDE
Kiwibank said A strategic partnership with real-time digital payment software provider ACI Worldwide will see ACI provide and manage Kiwibank’s Payments Hub, which is a software-as-a-service tool hosted in the Microsoft Azure cloud. Kiwibank says any service it needs is available on a secure cloud-based platform. The bank also says the ACI agreement prepares and equips Kiwibank for when New Zealand’s retail payment system will finally have to operate seven days a week, 365 days a year. Currently, settlements between banks take place at regular intervals between 9:00 a.m. and midnight on business days only.
Suncorp New Zealand owns the following insurance brands: Vero, AA Insurance, Asteron Life, AA Life, AA Money. It announced after-tax profit of $84 million for the six months to December 31, 2021. This is a -35% decline from the same period last year “due to negative impacts on the investment market” and “increased frequency and severity of weather events”. . More frequent weather events will make it difficult to be a general insurer – well, it will be hard to insure against weather losses or pay the premiums if you can. And insurers’ investments are generally likely to decline as bond yields rise. These New Zealand results were part of parent company Suncorp Group announcing income after tax over 6 months of 388 million Australian dollars, down -21%.
SHARP DROP IN LOAN DEMAND
Equifax said business credit demand fell -7.3% in the December 2021 quarter as lockdowns continued to affect business confidence. The drop in demand for business credit was mainly due to an almost -15% drop in demand for business loans, reflecting the sectors most affected by the pandemic, such as hospitality, retail and education.
GO WELL AGAIN AT BOND INVESTOR I
Westpac announces that it is about to launch a new issue of 5-year fixed rate NZD medium term notes. No details on size or price yet. Typically, bank fundraising campaigns like this allow for “unlimited oversubscriptions.” Westpac offers customers 3.20% five-year fixed term deposits (but term deposits aren’t bonds and don’t revalue with yield – and they’re limited to $5 million per customer).
GO TO BOND INVESTOR WELL AGAIN II
Property Investor (IPL, #37) said today that it is also considering an offering of 5-year senior secured fixed rate notes (bonds) to New Zealand institutional and retail investors. He currently has $342 million in debt, up 23% year-on-year. In September 2021, he had a Passive:Active ratio 32%, compared to 28% in March 2021.
TURN HIGHER FASTER
The RBNZ has been editing monthly bank yields on mortgages and corporate loans since January 2017. The rise from November to December 2021 was the highest on record for both, with fixed mortgage yields rising by +7 basis points over the months and +11 basis points for business loans. They also follow yields on sight and term depositsand they’re also rising, up +9 bps, and also the fastest since January 2017. Apparently the upside turn isn’t happening with rising bank spreads.
KEEP AN EYE ON THIS
The RBNZ will publish its updated inflation expectations survey data Friday, and the financial markets are a bit worried about what this will show. These risks are now creeping into wholesale rates.
Last week, the NZX50 had a very good session, with its overall capitalization up +3.7% over the week. But that just limited his long retreat to -5.8% and his retreat from a year ago to -6.4%. Last week’s gains were broad based, with Fisher & Payrel (FPH, #1) up +5.8% for the week and ending a streak of declining weeks. AirNZ (AIR, #33) increased by more than +11% over the week. In fact, only seven of the fifty listed stocks in this index fell, and that was Argosy (AR#25), Fletcher Building (FBU#9), Pushpay (PPH#28), ANZ (ANZ#41), Rim of the Pacific (PEB#35) NZX (NZX#40) and Serko (OSK, #44). The energy sub-sector rose by +6.0% last week, although it is far from registering a decline of -16% year-on-year.
DOWN BUT TO Bounce
In Australia, the much-watched NAB Business Confidence Survey for January came out today. It shows that business conditions deteriorated in January as Omicron drove infections to unprecedented levels, triggering consumer caution and staffing shortages. Profitability, business conditions and employment have all plummeted, with the impact being felt in nearly every state and every industry. But companies are looking beyond that and confidence rebounded in January as companies were optimistic that the outbreak would not last long, and consistent with that, futures orders held steady.
LOCAL PANDEMIC UPDATE
In New South Wales, there was a drop in 9,690 new community cases reported yesterday, now with 76,465 locally acquired active cases and 18 more daily deaths. There are now 2,494 people hospitalized there, far from their peak. In Victoria they reported an additional 9,785 new infections yesterday. There are now 58,449 active cases in that state – and there have been 20 more deaths there. Queensland is reports 5,178 new cases and 12 additional deaths. In South Australia, new cases rose to 1,147 yesterday and five deaths. The ACT has 323 new cases and no deaths, and Tasmania has 601 new cases and no deaths. Overall in Australia, around 26,700 new cases have been reported so far, although not all counts are in yet. In New Zealand, there were 63 cases arrested at the border, plus 202 new cases reported in the community. But testing rates are dropping sharply.
In early Asian trading, gold rose to US$1,822 per ounce and +US$15 from last week’s close, and +US$4 in today’s trade.
SOFT ACTIONS AT THE END
The S&P500 ended on Wall Street today down -0.4% after hovering around its opening levels. Tokyo opened +0.7% higher in morning trading. Hong Kong opened -0.5% lower. Shanghai opened -0.2% lower. The ASX200 is trading up +1.1% in its early afternoon session. The NZX50 is up +0.4% at the end of its Tuesday session.
We don’t have today closing swap rate again. They should be significantly higher, around +8 basis points for the 1, 2 and 3 year durations. If these new levels hold, it will alter the recent “flat” swap curves and put them on a new uptrend. The 90-day bank note rate rose +2 basis points to 1.18% and its highest since before the pandemic began. The benchmark ten-year Australian government bond rate is up +5 basis points from yesterday at 2.08%. The China Govt 10yr is still at 2.73%. The New Zealand 10-year government bond rate is now at 2.68% (up +8 basis points from this morning) and now above the RBNZ’s previous fixation for this rate at 10 years at 2.67% (up +10 basis points). The US 10-year government is now at 1.93% and unchanged from where it started this morning.
NZ DOLLAR LITTLE CHANGED
The Kiwi Dollar is little changed today at 66.4 USc. Against the Aussie, we are still at 93.1 AUc. Against the euro, we maintain a decline to 58 euro cents. This means the TWI-5 is holding at just under 70.8, slightly lower than the end of last week and slightly higher than where we opened today.
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BITCOIN ON THE RISE
Bitcoin rose to US$43,961, up +0.7% from its open this morning. Volatility over the past 24 hours has been elevated to just under +/- 3.1%.
This soil moisture chart is animated here.
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