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
Nothing today.
TERM DEPOSIT/SAVINGS RATE CHANGES
None to report so far here either.
STAYING COLD
The July REINZ report shows that the housing market remained cool in July. There was not a lot of movement with sales volumes low, the median price down slightly and the HPI up slightly.
FEWER JOB ADS
Job ads fell for a fourth consecutive month in July, down -25% from the same month last year. The anticipated sharp cooling in the labour market is beginning. It is toughest in the south, and toughest in the FIRE sector.
PRESCIENT?
The RBNZ household inflation expectations survey, one they are paying much more attention to these days, shows households expect CPI inflation to be 6.0% over the next year, and then fall to 3.3% in the following year. Interestingly StatsNZ said CPI inflation was 6.0% in the year to June, so there isn't the divergence there used to be. But 6% is still far above where the RBNZ needs it to be. These same households said house prices will be unchanged in a year, but up +7% in five years time. More here.
CASH EARNINGS SLIP
NAB's Q3 trading update revealed that cash earnings before tax and credit impairment charges declined -5% on margin pressure and more credit provisioning. NAB is BNZ's parent. BNZ represents 9% of the NAB Group assets. Full year results for the year to September won't be released on November 9, 2023 and that is when we will get BNZ details. In the 2021/22 year BNZ earnings rose +13.7% when the NAB Group earnings rose +8.2% in the same period.
INCOMES UP MORE THAN INFLATION FOR MOST
Stats NZ released data today that showed for the year to June 2023, median weekly incomes rose +7.1% to $1273. CPI inflation over the same period was 6.0%. For men the rise was +6.1% and for women by +8.1%. But that still left the overall pay gap at -8.6% for women, they said. Income from Government transfers increased by $30/week of +7.5% to average $432. Income for the self-employed had no change, remaining at $767/week.
'HALF ARE STRUGGLING'
The Retirement Commission says their research reveals over half of the people surveyed this quarter are feeling the pinch financially (54%) with 51% ‘starting to sink, or treading water’ and a further 3.5% ‘sinking badly’. This marks the widest gap between those who are ‘starting to swim/swimming happily’ and those who are ‘treading water/sinking a bit’ since we started surveying back in February 2021. And the gap is widening for women compared to men in terms of optimism, financial sentiment, personal savings and savings for retirement they say.
NERVOUS AHEAD OF THE DAIRY AUCTION
Maybe half our dairy farmers are 'struggling' too? There is a GDT auction event tomorrow. The NZX dairy analysts suggest it will be a weak one, with WMP prices trending toward US$2600/tonne which would be a -9% fall if it got there tomorrow. Rather they think tomorrow will 'only' bring a -6% fall. SMP might bring a -3.3% fall, and butter a -2.2% fall. And they remind us that China has produced +25% more WMP over the last 12 months while the domestic consumption of the commodity down -8.7%. H/T AWB.
HSBC RETAIL WIND-DOWN 'PROGRESSING AS ANNOUNCED'
The wind-down of HSBC's New Zealand wealth and personal banking business "is progressing as announced in June," according to a Sydney-based HSBC spokeswoman. She says HSBC continues "to support and communicate with our customers on items related to their banking needs and ask that our customers contact us if they have any questions." On June 13 HSBC announced it would wind-down its NZ retail banking operations over several years, stopping accepting new customers with immediate effect.
JAPAN SHINES
In Japan, strong export growth propelled their economy in Q2-2023, up at a 6.0% annualised rate, far higher than expected (+3.1%) or the Q1 expansion (+3.7%). It was the third consecutive quarter of strong growth. Japan not only has unusual growth, it also has unusual inflation which is running at a +3.3% rate.
CHINA DATA LACKLUSTER
Meanwhile, China is in economic defence mode. Their central bank cut its one-year medium-term lending facility rate by -15 bps to 2.50% today. It's their biggest cut since 2020. This came after Chinese new bank loans plunged almost -90% from June to the lowest since late 2009. And it came as they released industrial production data that was weaker than expected. This was so even after steel production surged more than +14%, so a sharp cutback there seems almost inevitable. And retail sales were weaker than expected too. However, electricity production was up +3.6% from a year ago, a slightly enhanced rate from June, maybe because they kept production higher than end-market demand. A lot of steel would go into property development, but their national real estate development investment was -8.5% lower than a year ago, and that base wasn't flash in the first place.
SWAPS HIGHER
Wholesale swap rates are probably higher again across all tenors. However, the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is little-changed yet again at 5.65% and now +15 bps above the 5.50% OCR. The Australian 10 year bond yield is up +5 bps from this time yesterday at 4.26%. The China 10 year bond rate is down -5 bps at 2.59% and a three year low. And the NZ Government 10 year bond rate is up +5 bps to 5.01% and its highest since 2011, and still higher than the earlier RBNZ fix which was up +6 bps bps at 4.94%. The UST 10 year yield is at 4.20% and up another +2 bps from yesterday and its highest since October 2022. Rising long rates are a global trend (except in China).
EQUITIES SHARPLY LOWER IN SHANGHAI AGAIN
The NZX50 is down a marginal -0.1% again today in late trade. The ASX200 is up +0.5%, mainly on the hope that the Chinese will now come up with significant stimulus. Tokyo has opened its Tuesday session up +0.7% in morning trade. Hong Kong has opened down another sharp -0.9% and Shanghai is down another -2.2%. Fear is spreading over the Chinese economy situation and the locals don't have the Aussie optimism on imminent stimulus. The S&P500 ended its Monday session up +0.6%.
GOLD SOFT
In early Asian trade, gold is at US$1906/oz and down a further -US$5 from yesterday. Earlier in New York it closed at US$1907, and wearlier still in London it closed at US$1904/oz.
NZD ON HOLD
The Kiwi dollar is holding, up +20 bps from this time yesterday at just under 59.8 USc. Against the Aussie we are soft at 92.1 AUc. Against the euro we firm at 54.8 euro cents. That means the TWI-5 is at 68.8 and up about +20 bps.
BITCOIN STILL NOT GOING ANYWHERE
The bitcoin price is virtually unchanged - again -since tis time yesterday, now at US$29,351 and up a minor +US$76 or +0.3%. Volatility has stayed low at just on +/- 0.7%.
Daily exchange rates
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
65 Comments
can someone explain why there is such a big difference between Median hourly earnings which has gone up 6.6% and the wage growth index which is 4.5 (https://tradingeconomics.com/new-zealand/wage-growth), is it because lower wages are going up faster than higher wages and that impacts the median more?
The former is part of QES and the latter is LCI. This is from a Parliamentary paper on why LCI is better
The LCI is the recommended measure of wage growth but the QES is also commonly used. The HLFS (Income) is the least commonly used of the three. Wage growth measured by the QES and HLFS (Income) is less reliable than the LCI as both surveys are sensitive to compositional changes in the workforce that the LCI is not. Compositional changes includes changes such as industries with higher or lower average wages making up a larger share of the hours worked or changes in the make-up of the workforce between higher and lower paid workers
The loss of NZ citizens to Australia at 35k in the year to June 2023 was the largest in a decade
Massey University Sociologist and Immigration expert, Paul Spoonley says we're losing the youngest and brightest of New Zealanders
Spoonley said in an interview that we don't the full scale of the brain drain as he suspects many skilled migrants in NZ that are not NZ citizens (not part of the 35k figure) are also moving to Aussie.
Many with critical skills have direct pathways to residency in Aussie and no longer have to stick around until getting their NZ citizenship.
Skilled migrants have no sticking power. They should be here paying rent, working in hospitals and retirement villages on barely adequate wages and paying tax to support our welfare state. Instead they pursue a better standard of living elsewhere. With an attitude like that its good riddance.
NZH headline crypto merchants Dasset down the drain. One investor $40k represents life savings!
As I've said before, Dasset is little more than a conduit for normies taking the plunge (and who haven't done their homework) to get wrecked.
“This has been a slow-moving train wreck for many months. I have Bitcoin on the exchange and have been completely ghosted by the company.”
First, as everyone has been told, you don't keep digital assets on exchanges (except in Japan where exchanges are required to keep 1:1 reserves). If people are not prepared to take individual responsibility, they deserve all they get. May sound harsh but that's the reality.
Do believe the reluctance and/or ignorance of NZRs to take individual responsibility is a core issue for the nation negatively speaking. Extraordinary really the level, the attitude of denial and evasion of responsibility that has permeated right through our society
Extraordinary really the level, the attitude of denial and evasion of responsibility that has permeated right through our society
Unfortunately I have to agree with you. And that doesn't just mean people burnt on shonky crypto exchanges, it goes to the top. You might even apply to Princess Xindy. She hardly set an example.
That's not hard, more like a forum of clowns with close ties and roles handed to them through nepotism & wealth. In that group a shonky crypto exchange founder who has been shown to have stolen customer funds is really amongst their peers. Ethics and financial prudence be damned. You too can be on that forum with a close friend or family member in the groups formation and a substantial lack of all ethics and morals to collect the checks.
Some people consider crypto is a good hedge because they are worried about fiat currencies failing lol.
Plenty of examples of failed fiat currencies. In reality, all fiat currencies fail over time in terms of purchasing power and store of value properties.
Doesn't mean "crypto" is a hedge. Bitcoin possibly.
Trump Junior muddled his lines saying
"Trump has the charisma of a mortician and the energy that makes Jeb Bush look like an Olympian"
Unbelievable, he meant to say Ron De Santis!! Now Trump, who's the person with dementia???
I'll add, I absolutely hate Trump Jnrs body language and expressions.
In Japan, strong export growth propelled their economy in Q2-2023, up at a 6.0% annualised rate, far higher than expected
Now for the bad news. in 2021, PM Kishida confirmed Japan has overstated construction data used in GDP. The relevant Ministry had exaggerated data for nearly a decade, according to the media.
https://www.bloomberg.com/news/articles/2021-12-15/kishida-confirms-jap…
Most large European economies (Finland, Germany, Belgium, Netherland, Sweden, Denmark) are posting a significant pick-up in inflation pace in July. It might be a while before the inflation genie is back in the bottle despite the economies having ground to a halt.
Inflation Rate Mom - Countries - List | Europe (tradingeconomics.com)
Anyone else reading The polling that The Guardian is doing in NZ
https://www.theguardian.com/world/2023/aug/12/youthquake-rumbles-to-a-s…
Polling released this week in the inaugural Guardian Essential poll found that among New Zealand’s 18- to 34-year-olds, just 20% were voting for Labour, the major centre-left party, compared with almost 40% supporting the centre-right National party. Support was not being distributed further left – the Labour-Greens coalition accounted for 34% of millennial votes, compared with a National-Act coalition sitting at close to 50%.
Agree to agree here and would think this poll is a solid pointer to Labour being even further behind on election day. Hard to defy gravity when on a slippery slope. But take your point. National are quite capable of shooting themselves in the foot, if some of the goofy and thoughtless utterances of late, are any measure.
I think this is an election you want to lose. Sit on the sidelines and watch the mess. If National look good/impressive over the next 3 years given the economy they are likely to be taking over, I will be really surprised (and that is regardless of any political bias - I think whoever takes over risks looking very poor).
Agree - the scale of the policy mess is immense and the funds are non-existent. Whoever is in charge has nothing but the public (assets, taxes, or less service) left to wring money from and that means they won’t be popular in three years. Given we aren’t at war, we don’t have a common threat and we all feel the current mess isn’t our fault - it’s hard to see the nation rallying to provide such self sacrifice. Political quagmire awaits.
They aren't and based on what some come out and say, some seem to live in their own entitled world as a career politician. I don't know who to vote for because I don't like the policies of any of the parties. I wish we could pick and choose policies. At the moment it looks like the retirement age will effectively be rising to 67 for most people under 50, despite voting in Labour to successfully reverse this policy 6 years ago. People didn't want it, but it is going to come in by default on the back of National based on current polling.
FWIW (which isn't much) I'm under 50 and have no problem at all with moving the super age up to 67. I don't know if anyone is still forced to retire at 65, and with the number of healthy over-65s still working it's little more than a bonus payment for not dying young. Those with health issues before the age of 65 have a number of other benefits to support them for the 2 gap years.
If there's any govt super at all by the time I'm 65 I'll be quite amazed.
The issue I have is that many won't really have a choice to retire at 65 if they want to access your Kiwisaver, as that too gets increased to 67. If they kept kiwisaver withdrawal at 65, then that would at least allow people who have saved for their retirement and want to retire at 65 to retire earlier. Or those that have o choice but to retire due to the sort of work they do. Otherwise people will need to save an extra $70k in the 15 + years (if they are near 50), at least, to retire at 65.
IMO it is a no brainer to decouple KiwiSaver eligibility from Super eligibility. But no one seems to notice that this is going to occur and what it means. Despite it having the potential to significantly affect peoples lives at that age. It potentially means people can still retire at 65 and get access to their Kiwisaver to cover them until Super Kicks in. I guess the winners will be the banks and Kiwisaver managers who get an extra 2 years of KiwiSaver fees off people, and these fee at 65,66, and 67 could be very large.
Zwifter, hope your prediction becomes a reality, they are a disaster, the GST announcement that will save a family $5 a week is pointless, the costs to administer it may exceed the gain.
They would have been better to target those who require it by lifting benefits etc by another $5 a week.
The Labour caucus has lost the plot bid time.
Not surprising at all. Young people don't care about bread and butter issues, they want environment policies and affordable housing, all things Labour promised at previous elections then failed to achieve.
The article says Labour have gone more centre with Hipkins, I would suggest it is the opposite, they have gone more socialist with handouts in every direction, but less progressive.
This article confirms a lot of things I have been saying: https://www.stuff.co.nz/business/money/300950485/we-live-on-bare-basics…
- Rent is way too high. Almost takes up an entire income. Need to build more houses
- There is already a lot of government help for poor people, $500 a week in WFF!
- Having 6 kids on one minimum wage income is going to be tough, always has been and always will be. Taxing the buggery out of everyone else to try and fix this inequality will just make everyone poorer. I guess that does address inequality!
Need to build more houses
That's an oversimplification. We bring most of the skills, materials and capital from overseas and yet have high build costs, keeping our residential construction sector in a permanent boom-bust loop.
We just lost a once-in-a-generation opportunity to try and fix this when National decided to withdraw its support from the half-decent planning reforms proposed by Labour.
I've heard build more houses for decades! We just spin our wheels. I'd be looking internationally at good pre-built solutions for the near term. Kit sets. Make tax on land high, so land banking is discouraged. Consult internationally and get apartment blocks built. We make such a meal of building good quality/affordable homes for our young. It makes me angry all the bickering and beauracracy. Just get it done.
Houses are a bit like a mobile handset. They are useless unless there is the supporting infrastructure to support them. That is NZs problem. It is only a matter of time IMO before we have a power crisis for example, as NZs electricity network demands are likely to skyrocket over the next few decades. .
CNY DOWN = BAD
Another rough day for yuan, the PBOC, and dollar dooming. No is actually a dollar bull, just aware of how the dollar works meaning Euro$. It is getting alarmingly tight...right in time for September. https://buff.ly/45kwLxa Link
Interesting that the 1 year swap is flat, but rising for the longer durations (i.e. have a look at 3, 5, 10 year).
Could it be that we are starting to see the yields return to a normal spread? (i.e. so they are no longer inverted?)
If so, in the past, this is when financial markets tend to break - in the months after the yields return to a normal spread.
Apparently China isn’t going to report youth unemployment anymore.
https://twitter.com/financialjuice/status/1691272122306289664?s=20
Hardly surprising - it's a politically inconvenient 20%+.
Here is another roundup of how people are just giving up:
(244) ‘Let it rot’: surviving China's high unemployment and cost of living - YouTube
I wonder if they will start rounding them up, loading them on invasion barges and taking them for a 160km cruise with some covering fire?
Good graph showing the rise and fall in economic statistics that China publishes.
https://x.com/jburnmurdoch/status/1691341030925193216?s=46&t=1FTm2FPeEr…
The USA middle class zeitgeist is going viral this week...helpfully colourblind
(Caution: Country music)
"Rich men north of richmond"
Yes lots of shares on twitter - people saying its the type of song that starts a revolution. A lot of what he says is very similar to RFK Junior's campaign views. Even though you would associate this with more republican types. Political lines are quite blurred right now, especially in the US.
I like it and his others!! Strikes a cord.
Go the Virginga ginger ??
This homeboy from the hooood even like him....
(122) Oliver Anthony - Rich Men North Of Richmond | Reaction - YouTube
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.