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
Unity Money raised its 18 and 24 month fixed home loan rates.
TERM DEPOSIT/SAVINGS RATE CHANGES
Unity Money raised its 6 month and 1 year TD rates today, both 6% or higher. The Cooperative Bank also raised TD rates.
THE UNEMPLOYMENT RATE IS RISING
Stats NZ said today that those without jobs rose to 116,300 (+10,000 from June and +22,300 from a year ago) and that is an actual jobless rate of 3.84% (seasonally adjusted was 3.89%). While the number of jobless rose, the number of people employed fell almost -2000 from June although this is up a strong +68,500 in a year. There are now 2,912,000 employed people in the workforce, fractionally lower than the record high in June, and 369,500 are self-employed (and without employees). The number of part time workers was little-changed (all of the increase in unemployment was from full-time positions). Of the 586,000 part-time workers, only 59,200 were actually seeking more work.
PAY INCREASES FOR SOME EASE BACK
Private sector wages rose +4.1% in the year to September from a year ago, down from a +4.5% rate in June. In contrast public sector wages rose at a +5.4% pa rate following generous increases (+7.2%) for the health sector. The education sector wages rose +5.0% in the year, those for the rest of the public sector up +5.4%. Taxes on private sector wages essentially pay public sector payrolls.
ON THE LOOKOUT FOR LENDING STRESS
In its semi-annual Financial Stability Report released today, the RBNZ says if economic conditions deteriorate by more than projected the lending stress could be more severe. They report that the big banks say non-performing loans could double over the next year.
MORE THAN 10,000 NEW CARS SOLD IN SEPTEMBER
Car sales were surprisingly strong in October. 10,055 new passenger cars were sold in the month, plus 9,657 used imports. Both were sharp increases from August, but the new car sales were -6.6% less than the hot September a year ago. The average for the prior ten years for a September is 9,400 in the month. Used imports were up +33% from the same month a year ago. Lagging a lot are sales of new commercial vehicles, down -31% from a year ago now.
SELLDOWN FROM BRAZIL COMPLETE
Fonterra said today that the sale of Fonterra and Nestlé’s DPA Brazil joint venture to French dairy giant Lactalis is complete.
$1 MLN MORTGAGE BROKER SCAM
The FMA charged Natalie Ann Carter, a former Hawke’s Bay-based mortgage broker, with multiple dishonesty offences following an investigation into her conduct. She pleaded guilty to eight of the 15 charges filed against her in the Napier District Court today. The FMA alleged that between 2018 and 2020, Ms Carter created various false documents for the purpose of obtaining home loans for herself and two clients. The documents were fake pay slips, contracts and employment verification forms from fictitious employers. In total, seven home loans were applied for, totalling $2.91 mln in value. At least three of the seven home loan applications were successful to the total value of $1,087,700.
MITIGATIONS START
Auckland Council is starting to address the buyout / remediation issues for the 2023 Extreme Weather Events. It's complicated, so reading this will be helpful. They are starting slow, so frustration levels won't ease quickly. But some progress is starting.
SURPRISE DISAPPOINTMENT
In Australia, building consents dropped -21% in September from a year ago. They fell -4.6% from August. These were sharper retreats than expected because a rise was expected from August.
CHINA LOWER
Mirroring the official version, the private Caixin PMI for China's factory sector slipped lower into contraction in October. It just reinforces earlier data that they are in a funk, one that will be hard to escape from - at least in the way they were running pre-pandemic. This Caixin report drop wasn't expected.
SWAPS TURN DOWN MARGINALLY
Wholesale swap rates have probably settled back today but not by a lot. The real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 5.64% and now +14 bps above the OCR. The Australian 10 year bond yield is unchanged from yesterday at 4.97%. The China 10 year bond rate is down another -1 bp at 2.71%. The NZ Government 10 year bond rate is down -4 bps at 5.58% from yesterday, but still above the earlier RBNZ fixing of 5.53% which was up +7 bps from yesterday. The UST 10 year yield is up +4 bps from this time yesterday to 4.93%. The UST 2yr is up +4 bps to 5.09%, so the curve inversion has narrowed further but only slightly, now only -16 bps.
EQUITIES MOSTLY HIGHER
The NZX50 is up +0.3% in late trade today. The ASX200 is up +0.4% in early afternoon trade. Tokyo has opened up a very strong +2.2%. Hong Kong is starting its Wednesday down -0.6%, and Shanghai is unchanged at its open. Singapore is up +0.3% at their open. The S&P500 ended its Tuesday Wall Street session up +0.7% but down -2.2% for the full month.
GOLD LOWER
In early Asian trade, gold is now at US$1980/oz and down -US$16 from where were this time yesterday. Earlier it closed in New York at US$1986/oz. And earlier still at US$1996/oz in London.
NZD LOWER AGAIN
The Kiwi dollar has fallen -¼c to 58 USc from this time yesterday. But against the Aussie we are little-changed at 91.6 AUc. Against the euro we very marginally softer at 54.8 euro cents. That means the TWI-5 is down -20 bps at 68.2.
BITCOIN LITTLE-CHANGED
The bitcoin price is little-changed today, now at US$34,566 and up just +0.3% from this time yesterday. Volatility over the past 24 hours has been low at just under +/- 1.0%.
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52 Comments
In the 1960s A girlfriend’s father had a Mini Cooper. A great target for thieves. He was a doctor with even less mechanical knowledge than me. But he had a cut out switch fitted under the dash which you would never find if you didn’t know it was there. Switched off, car couldn’t start, no electrics. Lived on a hill with no garage. Car was never stolen but side window was broken twice in attempts. Surely in today’s technical world something similar could be installed
Holdens started on the barrel - no need for a key. We lived on a tree-lined road, no off street parking. Got hit often. Took to removing the rotor - both of us got so good we could do it in the dark in a second.
Led to a unique way of life; getting the kids ready to go somewhere, always a bit pushed - "Where's the rotor?"
Had a spare but it was a tad intermittent...
Did my fair share of citizen's arrests, too. Them were the days...
The FMA alleged that between 2018 and 2020, Ms Carter created various false documents for the purpose of obtaining home loans for herself and two clients. The documents were fake pay slips, contracts and employment verification forms from fictitious employers.
Blake (Glengarry Glen Ross): Go and do likewise, gents. The money's out there, you pick it up, it's yours. You don't--I have no sympathy for you. You wanna go out on those sits tonight and close, close, it's yours. If not you're going to be shining my shoes. Bunch of losers sitting around in a bar. (in a mocking weak voice) "Oh yeah, I used to be a salesman, it's a tough racket."
Taxes on private sector wages essentially pay public sector payrolls
Wow, I didn't know that employee taxes were hypothecated to pay public servants! You learn something new everyday.
For the record...
- Public sector share of total wages earned is at a record low.
- Private sector wages were growing at well over 8% last year while public sector wage increases were falling in real terms
- Public sector pay increases have been lower than private sector increases for three years straight.
Yes, in the last 12 months public sector wages totaled $36.1 billion, private sector wages $114.9 billion. So public sector share is a touch under 24%. It has only been as low as this briefly in 2019 and for a year or so in 2000/2001.
The data is in the quarterly employment survey data on Stats NZ (infoshare). See Table QEM008AA for the average earnings per FTE and QEM030AA for the number of employees (FTE).
Yes, this is the first time in a while public sector has outstripped private. No doubt boosted by the recent pay equity deals, and skewed towards low earning staff groups.
As I posted the other day, real pay for my specialized healthcare profession is down about 10% since the start of 2020. Others around us affected by pay equity deals are somewhere between flat and +10% or so over the same period.
David is using labour cost index rather than actual wages in this article. The data for the wages is here (quote from Stats NZ):
For the public sector, average ordinary time hourly earnings rose 5.4 percent annually to $47.17, while for the private sector it rose 7.1 percent to $38.64.
There is a disconnect somewhere - the following was here this morning in the article on Reserve Bank
"Salary and wage rates for the public sector increased 5.4% annually, the highest rate since the series began in late 1992. The increase was 4.2% in the June quarter year ended September, down from 4.3% in the prior quarter."
Just testing a theory here...
- The bank economists have been forecasting jumps in unemployment - getting more certain in recent weeks that it was going to be grim.
- They knew that a jump in unemployment would reduce the likelihood of any more RBNZ rate hikes.
- They knew that this would lead to a reduction in swap rates.
- So, they all raised their mortgage rates.
Nice simple assessment on the Japan YCC change and why it's important for us.
By sending capital abroad, Japanese investors have essentially been subsidizing the rest of the world for years. We can partially thank Japan for the low interest rates and high equity values that we took for granted.
But as inflation becomes impossible to ignore, the Bank of Japan is being forced to reverse that process. This is a slow-moving mega trend that every investor needs to understand. So how does it all play out in the end?
What happens if Japanese investors, the Fed, and the US Treasury are all selling bonds at the same time? Yields go way up. Some people will say: "Oh wow! This is incredible! I can get 6% risk free now!" But others will take it a step further and say - wait, this bond is a promise for my government to pay me in the future right?
But at 6% interest rates, my government is completely bankrupt at current debt levels. Now add on the debt they'll incur when 6% interest rates eventually destroy indebted companies en masse, asset markets crash, and tax revenues plunge as a result.
Bottom line: There's no way I'm actually getting that 6%. It's a mirage. If I do get it, it will be in monopoly money that they print out of thin air to avoid defaulting. Reminder: Argentina is offering 97% interest rates. Are you buying Argentine debt? So how will people protect themselves? By getting out of sovereign debt and buying hard assets that can't be debased.
https://pro.stackmacro.com/c/pro-feed/the-katana-of-damocles-4e6b31df-e50a-43a5-b5ff-93fb65dc42cf
Adrian Orr’s priorities demonstrate he is no longer fit for the job
The Taxpayers’ Union is calling on Reserve Bank of New Zealand (RBNZ) Governor, Adrian Orr, to resign or be sacked following revelations of yet another engagement focused on issues completely outside of his responsibility of price stability.
Orr’s speech on Friday at the Chapter Zero NZ breakfast will focus on ‘the Reserve Bank’s climate change strategy and outline how they are working to help to identify, understand and manage climate-related risks to New Zealand's financial system.
"...focused on issues completely outside of his responsibility of price stability."
Robertson already knew that when he reappointed Orrful for another full term, breaking the previous convention of RBNZ chair appointment requiring consultation with the Opposition (incoming Govt).
Hooligans.
Given that the $$$$$$$$$ he adjudicates are 100% underwritten by the physical planet, he's on the right track.
Far better than the horespoo where we survey the 'business confidence' of an uninformed echelon; then extrapolate that to mean there will be more planet available.
Hi David - a bit of consistency around the description of swap rates movements would be appreciated. They have been down for the last 2 weeks with barely a mention and plummeted today.
I have noticed a bias to overstate the upside swing and understate the downside. Maybe that’s my personal bias coming through but a viewpoint for feedback.
IMF getting all DGM on Aussie, particularly the mortgage holders.
IMF recommends the RBA hike rates further and argues for tighter fiscal policy (contrary to Gov Bullock who surprisingly crowed about how amazing fiscal policy was): "Although inflation is gradually declining, it remains significantly above the RBA’s target and output remains above potential. Staff therefore recommend further monetary policy tightening to ensure that inflation comes back to the target range by 2025 and minimize the risk of de-anchoring inflation expectations. In that context, continued coordination between monetary and fiscal policy is key to securing more equitable burden sharing.
The Commonwealth Government and state and territory governments should implement public investment projects at a more measured and coordinated pace, given supply constraints, to alleviate inflationary pressures and support the RBA’s disinflation efforts. Otherwise, interest rates would have to be even higher, putting the burden of adjustment disproportionately on mortgage holders.
https://www.imf.org/en/News/Articles/2023/10/31/cs103123-australia-staf…
The IMFs words are like the UNs during a bing bong, calling for "restraint on both sides in order to restore peace and stability to the region". But it is the RBA with the unenviable task of maintaining a property ponzi in hyperdrive while trying to make their inflation fighting efforts plausible. In comparison the IMF has little skin in the game.
Mohamed El-Erian, Allianz chief economic advisor, now calling ol' ratty the 'safe asset.'
“You have people talking about bitcoins, about equity being the 'safe asset' because they've lost confidence in government bonds being the safe asset," El-Erian explained. “But the reality is that the 10-year yield today is a good 70 basis points higher than it was before this latest conflict erupted."
Instead, El-Erian said relatively riskier assets like bitcoin have been marked as “safe haven” bets in this climate, particularly as more investors disinvest from Treasury bonds, which are partly suffering due to high interest rates – shattering investor confidence in the bond market.
https://www.thestreet.com/crypto/markets/advisor-for-2-trillion-allianz…
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