A review of the things you need to know before you go home on Monday; business confidence peaks, BNZ will borrow big, milk flows strong, RBNZ exposed, mortgages rise, swaps relax, NZD falls, etc.
Here are the key things you need to know before you leave work today.
CHANGES IN MORTGAGE RATES
No changes to report today.
CHANGES IN THE TERM DEPOSIT RATE
None here either. Update: Westpac has reduced the interest rate on its bonus saver by -5bp, so the best you can earn on this account is 0.15%.
IN TROUBLE. BUT IN THE RIGHT WAY?
Latest ANZ Business Outlook survey shows New Zealand’s economy is struggling to keep up with demand, and pressures on costs and inflation continue to mount.
BNZ IS LOOKING FOR AT LEAST $ 100M THANKS TO THE MANDATORY ISSUE
BNZ plans to borrow at least $ 100 million through a five-year unsecured and unsubordinated retail bond issue. The offer has an indicative margin of 0.57% to 0.62%, which means it will likely offer a return of around 2%. That’s well above BNZ’s five-year term deposit rate of 1.40%. BNZ is looking for $ 100 million, but has the capacity to accept unlimited oversubscriptions at its discretion. The interest rate will be set on June 2.
AVRIL MILK FLOW UPDATE
Fonterra said he had a very strong production month in April. Milk collection for the month was 118.2 million kg DM, an increase of + 11% from April last season. At the end of April, the collection since the start of the season is up + 1.2% compared to last season. Their report on their milk production in Australia was much more modest; April collections were 8.1 million kg DM, an increase of + 2% from April last season, but down -1.1% for the season to date compared to period previous.
The government today received the latest opinion from the Climate Change Commission. It will be made public at noon on Wednesday June 9, 2021. It has the potential to shake up the way the economy works, with major losers present and future winners unknown.
MORE MILK PRICE FORECASTS
Synlait struggling milk processor ad its update of the price of milk for the current dairy season and its first forecasts for the following season. They settled on $ 7.55 / kgMS for 2020/21 (Fonterra reported $ 7.45 – $ 7.65 / kgMS). For 2021/22, they’re forecasting $ 8.00 / kgMS, smack in the middle of Fonterra’s wide range of $ 7.25 to $ 8.75 / kgMS.
Banks provide financial assistance to individuals and businesses affected by flash flooding in Canterbury. Westpac, for example, says this relief can include a temporary overdraft facility, suspension of principal repayments for up to three months, and deferral of payment on business credit cards for up to three months. None waived accrued interest charges.
COMPARISON OF BANKS ‘FINANCIAL POSITIONS
Update: RBNZ dashboard data is available today for the March 2021 quarter, and our Key bank metrics tool is now updated using this data.
The RBNZ has published an edited (sanitized?) version of KPMG’s review of its December 2020 data breach event. Although the central bank says “it takes full responsibility” for the failure, it then blames the Accellion entrepreneur. Many other Accellion customers were also affected by the event, but it appears only RBNZ lost sensitive data. “The use of the system by the Bank was not limited to secure file transfers as intended. Working practices evolved over time to the point where the system was also used as an information repository and collaboration tool, which was not in line with the 2014 Bank guidelines on acceptable use of the system. . Membership would have significantly reduced the volume of at-risk information. “(page 3) The RBNZ has a lot to answer as no other central bank has become vulnerable. Just imagine if a commercial bank had committed such folly. More here.
The Whakatāne stationery will not be closed at this time. A rescue package of international and local investors is committed to the future of the plant, with its unique position as the only folding boxboard plant in Oceania.
EXUBERANCE, BUT IS IT RATIONAL?
Mortgage loan (C5) rose in April to nearly $ 312 billion, up 11.0% from a year ago and the fastest pace since before the GFC. At + $ 31 billion as of April 2020, this is the first time the year-over-year expansion has exceeded $ 30 billion. More here.
BANK DEBT REDUCTION
But loans for other consumer, business and agricultural purposes are still dwindling. (C5) This narrowing is becoming integrated. The contraction in personal loans has occurred in the last 19 consecutive months, for businesses the decline has been more than 9 consecutive months, and for the agricultural sector it is 15 consecutive months. For business loans, borrowers owe – $ 6.8 billion less than at the peak. For agribusiness, it’s – $ 1.8 billion less. Bank debt is no longer a preferred source of financing.
THE GROWTH OF BANK ACCOUNTS SLOWS DOWN
Household deposits have now almost reached $ 205 million, up + $ 12.3 billion in one year. (S40) But this implies a marked slowdown in the growth rate. In the past nine months, households have withdrawn $ 1.5 billion or more from their term deposit accounts per month, essentially transferring it to on-call accounts.
NZX50 SHEDDING GAIN ANTERIOR
Last week, the capitalization of the NZX50 fell -2.3%, a loss of -2.9 billion dollars from the previous week. Over the past month, that’s a loss of -4.5% or -5.8 billion dollars. This has reduced the gains since September 2020 to just + 2.5% or just under 3.0%, so this is a market on the verge of entering negative territory. Heartland Group (HGH) has weathered the trends, increasing +3 spots on the NZX50 roster over the past week to rank No. 30. Since September. the big winners were Fletcher Building (FBU), up +7 places at n ° 6, and Freightways (FRE) up by +6 places at n ° 19.
GROWTH IN COVIDAL REINFECTIONS IN MELBOURNE
Victoria reported 11 new cases overnight as their elderly care epidemic continues to grow (6 as forally reported, and 5 more that were later revealed). Their government is not ruling out an extension of their 7-day lockdown.
The price of gold is now US $ 1,907 and above + US $ 3 from where it ended on Saturday in New York (NZT).
Wall Street is on vacation until Wednesday NZT (their Memorial Day weekend). This means that trading in financial markets will be quite shallow. The NZX50 Capital index is up sharply by + 0.8% at the end of the session today, after recovering from last week’s beat. The ASX200 is down -0.1% at the start of the afternoon. Shanghain opened down -0.2%, Hong Kong is also down -0.2% when it opens, and the very large Tokyo market is down -0.7% in morning trading. The S & P500 futures index is little changed at + 0.1%.
SWAP & BONDS EASY RETURN
We do not yet have today’s closing swap rates. If there are any significant changes again today, we will update this item. The 90-day bank bill rate was down -1bp to 0.32%. The Australian government’s ten-year benchmark rate is unchanged at 1.64%. The 10-year Chinese government bond holds at 3.11%. But the ten-year New Zealand government plunged today, down -4bp to 1.82% and still below 1.85% in the previous RBNZ fix (-3bp). The ten-year US government is keeping the Wall Street Friday trading slip at 1.58%.
NZ DOLLAR SOFT
The Kiwi dollar remained high at 72.6 USc although it was both higher and lower during the session. Against the Australian we came down to 93.9 AUc. Against the euro, we are flexible at 59.4 euro cents. This means the TWI-5 is down to 74.1.
BITCOIN SLIPS TODAY
The price of bitcoin is now at US $ 34,774 and a net decrease of -3.1% from where we opened this morning. Volatility over the past 24 hours is a maximum of +/- 3.5%.
This soil moisture graph is animated here.
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