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). It's a skinny edition today.
MORTGAGE/LOAN RATE CHANGES
Resimac was the only institution to raise fixed rates today, and they raised them all.
TERM DEPOSIT/SAVINGS RATE CHANGES
TSB raised their TD rates for terms 5 to 12 months, and trimmed their 2 and 3 year offers.
"LESS WEAK"
Activity in New Zealand’s manufacturing sector improved in January, but still remained in contraction, according to the latest BNZ-BusinessNZ Performance of Manufacturing Index. January’s result is the 11th consecutive month of contraction even if it was "less worse". Today’s release did have a couple of positives, noted BNZ. Food processing remains expansionary, with signs primary production has so far largely skirted the potential ills of El Nino. Across components, employment stood out like the proverbial with a poke back above 50. This is at odds with deeply negative production and demand indicators like new orders.
BIG JUMP
IAG New Zealand’s gross written premium leaped 18.8% and insurance margin rises to 20.8% in its half year results to December 2023.
TARGET: CORE INFLATION
Governor Adrian Orr says the Reserve Bank is focused on core inflation and is not willing to tolerate even temporary inflation pressure.
YOU SHOULD READ THIS
David Tuffley of Australia's Griffith University details eight key corporate pricing tricks. This is the sort of gritty and explicit analysis we love.
THERE IS MORE OF US, & WE ARE OLDER
StatsNZ said our estimated resident population was (provisionally) 5,305,600. That is up +145,100 or +2.8% in a year. That is the most since the end of WWII, almost 80 years ago. But they caution, these estimates are currently 2018-based until results are available from the 2023 Census which get rolled out starting in May 2024 and finish in 2025. There may be adjustments coming. That change is not reducing our median age - surprisingly. It is back to its record high 38.1 years. (For reference, there are now just over 27 mln Australians, and their median age is 37.6 years).
SWAP RATES HOLD
Wholesale swap rates will probably be little-changed again today. However, the key reaction will come at the close. Our chart below records the final positions. The 90 day bank bill rate is down -3 bps to 5.71%. The Australian 10 year bond yield is up +4 bps at 4.20%. The China 10 year bond rate is unchanged at 2.45% while they are on holiday. And the NZ Government 10 year bond rate is down -12 bps to 4.89%, while the earlier RBNZ fixing was at 4.92% and down -2 bps from yesterday. The UST 10 year yield is now at 4.25% and up +2 bps from yesterday. The UST 2yr is now down to 4.59% and so that key inversion is unchanged at -34 bps.
EQUITY WINNERS & LOSERS
The NZX50 is up +0.5% in late trade today. And the ASX200 is also up +0.5% in afternoon trade. The NZX50 is heading for a weekly fall of -1.4% but the ASX200 is heading for an unchanged week. Tokyo has opened up a very strong +1.3% and if that holds it will be up +4.7% for the week and within less than 1% off its all-time high set in December 1989. Hong Kong has opened unchanged at their open. That will be +1.6% up for the week if this levels holds. Shanghai is still on holiday. Singapore has opened up another +0.5%. Wall Street ended its Wednesday session up +0.6%, and back challenging its Monday all-time high.
OIL RISES
Oil prices are up +US$1.50 at just on US$77.50/bbl in the US while the international Brent price is now just under US$82.50/bbl.
GOLD BOUNCES BACK
In early Asian trade, gold is now at US$2004/oz and up +US$11 from this time yesterday.
NZD HOLDS
The Kiwi dollar has risen slightly from where we were this time yesterday, now at 60.9 USc and up +10 bps. Against the Aussie we have slipped to 93.6 AUc, a -30 bps slip. Against the euro we are essentially holding at 56.6 euro cents. That means the TWI-5 is now at just over 70.3 today and little-changed.
BITCOIN ESSENTIALLY ON HOLD TOO
The bitcoin price has moved back a little today, now at US$52,001 and down -0.4% from this time yesterday. There's been high modest over the past 24 hours of just on +/- 1.4%.
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42 Comments
I still see a rate cut in August. The economy will have tanked by then and all it needs is some external factors beyond our control thrown in and it will drop. Potentially I think the RBNZ want to keep it where it is now for as long as possible but anything can happen.
I don’t get the obsession with transport (whether roads or trains) over hospitals and frontline healthcare.
Correction - I do get it. Transport is an ideological political statement, whether Right (Roads) or Left (Rail). It is also seen as a great GDP booster. Roads also please a lot of big business…
in terms of hierarchy of needs, healthcare, education and housing should come above transport.
Ok well I'm sorry to tell you, but the state of construction in this country is abysmal, and when local or national government is involved, it's even worse than abysmal.
That's only my view from watching it slowly shit the bed for 30 years though, I'm sure people with almost no relationship with it can talk themselves blue in the face trying to argue otherwise.
Nothing to see here everyone, it's merely a media hit job.
No the hit job was specifically on raised pedestrian crossings. Bernard Orsman published an article implying 26 crossings would cost 500K each. He has the information that the crossing would cost between 16k and 40k each. He chose not to publish it. The Herald correction was tiny and buried away the next day.
I didn't say the state of construction was great, I was just pointing out that road safety improvements that allow kids and vulnerable people to walk around their neighbourhoods are not comparatively speaking very expensive (e.g. a car park costs 80K per space to build in Auckland). Bernard's hit job was to promote culture wars and attack "wokeness". He had the facts and chose not to report them because it didn't suit his war on wokeness narrative.
Well, we've spent 20 odd years going down the path of draconian and expensive health and safety practices, with no end in sight, and it's not improved our work related deaths and injuries at all (it's arguably worse now than it was in the early 2010s). It's just made construction slower and costlier, and created jobs that reduce productivity rather than add to it.
Mentioned that the ol' rat poison hit an all-time high in JPY. The water cooler bros said this is a result of JPY falling into the toilet. Can't disagree with that.
Anyway, it appears to be having some positive impacts on tourism.
Japan welcomed 25 million tourists in 2023, the largest number since 2019, as a weak yen helped attract post-pandemic visitors in a boost to the nation’s fragile economy.
The number of inbound tourists last year compared with 3.8 million in 2022, Japan’s National Tourism Organization reported Wednesday. December also marked the seventh consecutive month in which the number of foreign visitors exceeded 2 million, for the highest figure in that month on record.
https://archive.ph/COAnS#selection-4973.0-4977.292
Quirky economic data point, but also concerning that the global engine of growth has been surpassed by the economic has-been. If we had 5.7% nominal growth, I'd imagine we'd be patting ourselves on the back.
While Japan's nominal gross domestic product slipped below Germany's last year, making it the world's fourth-largest economy, the country's growth rate has surpassed that of China for the first time in almost half a century.
Japan's nominal growth rate overtook China's for the first time since 1977, according to preliminary 2023 GDP figures released by Japan's Cabinet Office on Thursday. Its economy showed nominal growth of 5.7%, while China's grew by 4.6%.
The surprising reversal took place as Japan is starting to turn inflationary, while China is experiencing deflationary pressure.
https://asia.nikkei.com/Economy/Japan-s-nominal-GDP-outgrows-China-s-fo…
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