What happened Friday

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A review of things you need to know before you go home on Friday; confidence holds locally, KiwiSaver valuation jumps, SBS profits strong, new virus concerns, equities dive, swaps sink, NZD falls, & more

26th Nov 21, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
Both TSB and Bank of China raised fixed rates today. Some other institutions are planning to raise fixed rates on Monday.

TERM DEPOSIT RATE CHANGES
None today. But we know that there will be some good rises coming early next week

CONSUMER CONFIDENCE HOLDS, INFLATION EXPECTATIONS EASE
Consumer confidence eased 1 point to 97 in November. Within that, perceptions of current conditions rose but expectations fell sharply. The proportion of people who believe it is a good time to buy a major household item lifted 1 point and remains subdued at -6. Inflation expectations eased half a percent to 5.7%. House price inflation expectations fell back under 6%.

GOOD INVESTMENT
Total KiwiSaver assets topped $90 bln at the end of September, according to new RBNZ data out today. (T43) These balances have grown +24% in just one year, or +$17.6 bln. Some of that is contributions of course (+$7.2 bln), but investment gains are making up a larger portion now. It could only be two quarters for this valuation to exceed $100 bln (unless the share market tanks of course).

SBS HALF-YEAR PROFIT UP +35%
The SBS Group, including SBS Bank and subsidiaries Finance Now, FANZ and SBS Insurance, posted September half-year operating profit of $32.5 million, up 35% or $8.5 million. Lending rose $93 million to $4.13 billion. SBS also disclosed a $100 million drawdown on the Reserve Bank's Funding for Lending Programme.

BANK METRICS DEEP DIVE
The RBNZ released its Bank Financial Strength Dashboard today for the September quarter. That data powers our Key Bank Metrics tool which is now updated too.

RESURGENT
In Australia, retail sales jumped +4.9% in October as opening up generated a strong surge. But as ANZ economists have noted, their recovery is now "a supply side issue".

IT'S ALL ON AGAIN
The news of the new COVID virus in South Africa that may defeat the vaccines and spread more virulently is weighing heavily on markets today with broad selloffs. Countries are starting to close borders again to protect themselves from rapid spread.

LOCAL PANDEMIC UPDATE
In Australia, Delta cases in Victoria have risen again to 1362 cases reported there today, its highest in November. There are now 10,887 active cases in the state - and there were another 7 deaths yesterday. In NSW there were another 261 new community cases reported today, and a rise, with 2359 active locally acquired cases, and they had one death yesterday. Queensland is reporting zero new cases yet again. The ACT has 8 new cases again. Overall in Australia, just under 86% of eligible Aussies are fully vaccinated, plus a bit over 6% have now had one shot so far. In contrast, there were four cases in New Zealand at the border, and 173 new community cases today. Now 91.9% of Kiwis nationally aged 12+ have had at least one vaccination, and the Australian rate is now at 92.0% of all aged 16+.

GOLD HOLDS
In early Asian trading, gold is at US$1793 and little-changed from this time yesterday. It closed in New York and London earlier at US$1788.

EQUITIES SINK
Wall Street was closed today for their Thanksgiving holiday. However, Tokyo is down a very sharp -1.9% in early trade today, heading for a weekly loss of -2.4%. Hong Kong is down -1.6% in early trade today, heading for a weekly loss of -2.8%. Shanghai is down -0.5% in its early trade and if it finished like that would have a +0.2% weekly gain. The ASX200 is down -1.3% and heading for a -1.2% weekly retreat. The NZX50 is down nearly -1.1% in late trade and heading for a weekly loss of -0.6%.

SWAP & BONDS RATES DROOP
We don't have today's closing swap rates yet. They are probably sharply lower in a bear steepening. The 90 day bank bill rate is unchanged at 0.80%. The Australian Govt ten year benchmark rate is now at 1.80% and down -8 bps from this time yesterday. The China Govt 10yr is at 2.89% and down -2 bps. The New Zealand Govt 10 year rate is now at 2.47% and down -6 bps, but well below the earlier RBNZ fix for that 10yr rate at 2.58% (+1 bp set before the virus news). The US Govt ten year is falling on the new-variant virus news, down -5 bps to 1.59% compared to this time yesterday.

NZ DOLLAR SOFTER
The Kiwi dollar is now down at 68.4 USc and a -½c retreat from where we were this time yesterday. This time last week it was 70.4 USc. Against the Aussie we are down slightly at 95.4 AUc. Against the euro we are down more than -½c at 60.9 euro cents. The TWI-5 is now up at just on 73.3 and down -50 bps. For the week it has fallen from 74.8, a -150 bps devaluation.

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BITCOIN FIRMER
The bitcoin price is now at US$58,829 and up a modest +1.5% from this time yesterday. Volatility in the past 24 hours has been moderate at just under +/-2.1%.

This soil moisture chart is animated here.

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73 Comments

by bw | 26th Nov 21, 4:07pm 1637896049

"perceptions of current conditions rose but expectations fell sharply"

Perhaps a good time to keep an eye on businesses shuttering as we head into the holiday season? No point paying staff holiday leave etc if the doors aren't going to open again after Christmas. 4 weeks notice now should tick all the regulatory boxes.

by Justa comment | 26th Nov 21, 4:07pm 1637896058

I see Simon Bridges put his hat into the ring. National should go for somebody new, Bridges didnt come across well last time, unfortunate persona/voice whatever, but could not gain traction in the polls. Someone new I think for a new start.

by GV 27 | 26th Nov 21, 4:16pm 1637896594

Dunno, he could be an effective placeholder if that's all he goes into it pitching for. Reti/Willis or Reti/Stanford seems to be the most appealing combo for the centre but I'm not convinced Reti actually wants it and values his time away from politics and being able to keep practicing medicine too much.

Irony being is that's probably exactly why it should be him. He might need time to come around.

by Sam B | 26th Nov 21, 5:37pm 1637901473

I agree, Reti seems like the sanest, most likeable option, partly because he doesn't take part in the party feuds.

But that same sanity means he doesn't want to be leader. An unusual character in politics.

by sharetrader | 26th Nov 21, 10:33pm 1637919230

mike h said no to Reti, as as self appointed leader of the national party publicity wing they better listen

by frazz | 26th Nov 21, 4:19pm 1637896793

They will obviously pick Luxton..shiny white knight. Its reads like a pre written script so far that anyone could write.

by JimboJones | 26th Nov 21, 4:20pm 1637896806

The religious element should put them off. NZers aren't exactly a fan of religious politicians let alone prime ministers.

by False economies | 26th Nov 21, 5:21pm 1637900499

Chris Trotter did a piece about this

https://thedailyblog.co.nz/2019/11/08/chosen-to-rule-what-sort-of-christian-is-chris-luxon/

If the media sniff some "odd beliefs" he'll be a target....

by False economies | 26th Nov 21, 5:48pm 1637902131

There'll be plenty who won't like this sort of thing. ..

https://www.upperroomfireprayer.org/prayers/homosexuality/

by graintrader | 26th Nov 21, 5:52pm 1637902352

I don't know he gets my vote

by Uninterested | 26th Nov 21, 7:06pm 1637906812

More accurately the media isn't a fan of religious politicians.

by fat pat | 26th Nov 21, 8:07pm 1637910476

The religious element should put them off.

You know that Jacinda Ardern is a mormon!

by JoolzT | 26th Nov 21, 8:56pm 1637913363

Luxon is a practicing evangelical Christian. Ardern is not a practicing Mormon. Big difference.

by Zen20 | 26th Nov 21, 10:30pm 1637919040

He's also an active house hoarder

by JoolzT | 27th Nov 21, 8:48am 1637956103

How many houses? Luxon didn't build a company. He took one that was built by taxpayer funds over decades and maximised profits. He also took the joy out of working at Air NZ according to many employees I've spoken to. An approach to running the country one part Calvinist certainty, one part hard-core neoliberal and one part evangelical 'magical' thinking = disaster for NZ.

The last thing we need is another round of Rogernomics/Ruthanasia, or parliament being used as a pulpit. Either prospect makes me shudder.

by Fluffybunny | 27th Nov 21, 10:28am 1637962108

Yes, I'm sure as soon as he's elected, he would ban homosexuality and introduce the death penalty by Village stoning.

Meanwhile, in socialist utopia. The govt has made the housing crises a complete disaster, the rbnz has buggered up the pandemic QE response, and we are still locked in country due to crumbling health infrastructure.

Leave his personal religious views out of it. We have bigger problems right now than worrying about optimal diversity optics.

by Theoracle | 26th Nov 21, 8:30pm 1637911835

If they do that it'll be certain death.

They can't have another white male sorry. Won't fly with voters.

Jacinda needs someone more like her to oppose her.

Reti/ Willis best choice.

by Theoracle | 26th Nov 21, 8:40pm 1637912429

No he's too boring, too divisive, stale pale white male. Not serious contender against Jacinda. They need to pick someone more left field ideally a woman too ie Willis.

by Uninterested | 27th Nov 21, 6:55am 1637949345

From this comment, I know someone who is divisive...

by Fluffybunny | 27th Nov 21, 7:46am 1637952401

What's wrong with being a white male? Why the hate? Doesn't seem fair to discriminate against political inclusion based on skin colour?

Shame on u.

by frazz | 27th Nov 21, 8:13am 1637954026

There was no hate fluffy..just boring..and your response confirms it.

by Fluffybunny | 27th Nov 21, 10:34am 1637962471

Making a point of someone's race, gender, skin, colour, age is discrimination.

If I said we need a strong white male leader, you'd have a spasim of indignation.

Someone is either compotent, or not. And the current govt swings from failure to failure.

Nice diversity visuals will not get us out of the global mess we are in. Global warming doesn't care if your a pasty white male, or a fat Liberal with a face tattoo.

by JimboJones | 26th Nov 21, 4:18pm 1637896707

I think they need to go as centre / left as possible. Bridges could do that maybe, he used to be fairly reasonable as transport minister. Or maybe Bishop. I am not sure where Reti sits.

by Officebound | 26th Nov 21, 4:20pm 1637896843

Yep, inviting Nats to come grab my vote, I'll be here ever ever so slightly to the left of centre.

by JimboJones | 26th Nov 21, 4:54pm 1637898888

I think they need to be progressive left but not socialist left. The party that believes in personal responsibility but also lives in this century.

by JimboJones | 26th Nov 21, 7:13pm 1637907187

I guess they could also go socialist left and progressive right: the party that likes to hand out money to everyone (probably old people in particular), but hates the gays / woke / climate / cyclists / Greta / 21st century. Or is that already taken by NZF?

by Foxglove. | 26th Nov 21, 5:03pm 1637899404

I think Dr Reti has a rare touch of dignity about him and is respected a lot more than most mps, all sides of the house. that speaks for itself but not sure if he is equipped to handle the gutter sniping and other antics that a leaders have to deal with. But it would be a new image as a leader carrying both credibility & sincerity, his qualifications & work experience for a start, and with Luxon as deputy on the financials, could be a effective team.

by JimboJones | 26th Nov 21, 7:03pm 1637906606

Another Todd Muller?

by Foxglove. | 26th Nov 21, 8:17pm 1637911023

Some aspects true but Muller seemed to be stuck in a mindset of firstly being in Bolger’s period & secondly a wistful yearning for the halcyon time of Key’s first two terms. Dr Reti offers much more than that in terms of substance, empathy and education and life experience. It is something of a sad commentary that those abilities are considered insufficient to succeed in government. Reminds me, as a irrelevant comparison, that Conrad Smith was dismissed early on as an All Black prospect, because he was considered to be too small.

by Nifty1 | 26th Nov 21, 7:16pm 1637907386

Reti has zero personality & zero relatability, he would get no where with NZ public.

by Lapun | 26th Nov 21, 7:32pm 1637908375

Like Angela Merkel. You would prefer Boris? Helen Clark was highly professional but there were few Kiwis who would have invited her to a social event for her relatable personality; she was rather like an old fashioned school principal.

It must be me - I preferred Andrew Little to his successor.

by apizap | 26th Nov 21, 4:45pm 1637898327

All irrelevant. It comes down to whom Key anoints. He is still the puppet master of the National party

by JimboJones | 26th Nov 21, 4:49pm 1637898597

I doubt that is true. They went quite far right after Bill English lost, I think that is what got them in this mess. Key would never have done that. I am not a fan of Key, but he isn't an idiot, he knows everything is won in the centre.

by Zen20 | 26th Nov 21, 10:33pm 1637919215

Key was a puppet - always was, always will be ...

by Lapun | 26th Nov 21, 7:26pm 1637907972

Yesterday I wrote a rather pious comment saying we should not abuse our politicians only their policies. But Simon Bridges would have my support except for one reason - he's was reportedly friendly with Jami-Lee Ross and that is proof of bad judgement.

by Snow | 27th Nov 21, 5:49am 1637945374

As well as Beijing.

by Audaxes | 26th Nov 21, 4:19pm 1637896772

S&P 500 mini down ~41.75 points.

by DTRH | 26th Nov 21, 4:28pm 1637897307

NZD still getting hammered rates might need to go up to protect NZD we are loosing purchase power. Inflation will continue raise if nothing is done especially with imports going up

by bw | 26th Nov 21, 4:42pm 1637898160

But, but.....think of our Exporters! Besides. If "Inflation!" really kicks into gear, we'll need....tada... Lower mortgage rates to stimulate the domestic economy. (shakes head in despair)

by DTRH | 26th Nov 21, 4:58pm 1637899096

Lowing OCR would just more pain but you know that right

by bw | 26th Nov 21, 6:55pm 1637906154

Pain, probably doesn't describe what's ahead of us.

by J.C. | 26th Nov 21, 7:09pm 1637906954

NZD still getting hammered rates might need to go up to protect NZD we are loosing purchase power. Inflation will continue raise if nothing is done especially with imports going up

NZDUSD at 12-month lows but still well up from March 2020. Good chance that a global shock will see it sink like a stone if the interest rate differential is not attractive enough.

by Galloleous | 26th Nov 21, 4:31pm 1637897463

https://twitter.com/wmiddelkoop/status/1463970626004213766?s=20

Chart of the new Covid version spread rate compared to other variants. Its bad.

by Nifty1 | 26th Nov 21, 4:32pm 1637897549

Ahh let's not worry about it until 2022...

by DTRH | 26th Nov 21, 4:41pm 1637898069

Look like another year of no travel in or out

by bw | 26th Nov 21, 4:47pm 1637898454

The Queen City of The South won't like that.

by Ahuhyeah | 26th Nov 21, 4:47pm 1637898423

Hmm. I like graphs. I don't like that graph.

by JimboJones | 26th Nov 21, 4:56pm 1637898977

Yikes

by DTRH | 26th Nov 21, 5:17pm 1637900242

All market going down on new variant news

by DTRH | 26th Nov 21, 5:12pm 1637899963

Once Jacinda see this do you think international travel will open as vaccine will not have as much protection over this new variant

by younger than most | 26th Nov 21, 6:34pm 1637904880

International travel reopening... that's a good one

by Sam B | 26th Nov 21, 5:39pm 1637901572

Great news for the property market... and the share market... or will it be different this time?

by younger than most | 26th Nov 21, 6:40pm 1637905236

by younger than most | 26th Nov 21, 6:39pm 1637905175

More variants !!!! Lol

I've been saying for months... there is no freedom coming... rather expect stories of variants, more boosters, and more lockdowns...

Why?

Cos the world economy would reveal itself as bust if we let spending power hit the street... inflation would skyrocket ...

The sheep are being herded....

Just one more booster, and we'll be back to normal right...

Cos the vaccine doesn't work on this one!! Honestly, sheep will believe anything if someone puts a lab coat on...

by frazz | 26th Nov 21, 6:45pm 1637905511

Go peddle your conspiracy theory's on facebook..you and your "purebloods" lol

by younger than most | 26th Nov 21, 7:51pm 1637909470

Yip

They shut down the world economy for a 99.99% survivable virus....

Your logic is bulletproof

by fat pat | 26th Nov 21, 8:33pm 1637912032

He's right Frazz. Not only do they not work properly, scientists were screaming from the rooftops that they'd lead to vaccine enhanced disease. Look here, here, here, and here and that's just a few papers. Then we saw the evidence in genebank that the directed evolution of spike was happening just as predicted here. Then we saw the predictable result here, highly mutated spike variants that escape the vaccine, just recently. Fortunately that one A.30 seems to have fizzled out but it'll be back, and that's the trajectory we're on. That's what happens when you put all your eggs in one crappy basket.

by Albert2020 | 27th Nov 21, 7:56am 1637953016

No it’s what happens when you have inequities in a vaccine rollout where only 6% of Africa have been fully vaccinated. It’s not a coincidence that these new variants are generated in Africa where transmission has been allowed to flourish via lack of vaccination and high HIV rates. Stop “referencing” non-peer reviewed publications, it’s pathetic.

by fat pat | 27th Nov 21, 11:20am 1637965217

I'm sorry that you can't understand the evidence I've laid out in front of you.

by Carlos67 | 26th Nov 21, 6:43pm 1637905393

I said months ago there was the possibility of this happening. Labour just wasted 2 years and we will be back to square one if this turns bad. 2 years for better hospitals and a dedicated MIQ facility. This country is toast if we have to go into level 4 lockdowns for months.

by HouseMouse | 26th Nov 21, 6:51pm 1637905905

Exactly. Pathetic inaction from Labour.

by Fluffybunny | 27th Nov 21, 7:52am 1637952752

The current govt is nothing but nice thoughts and diversity optics.

So many Jacinda mania fangirls/boys. I think many can now see the fluff for what it is. Repeat failure after failure to do anything useful that's not a media release.

by Rob Reid | 26th Nov 21, 7:45pm 1637909122

At least Delta won't get a look in now before the new one gets us. One less thing to worry about.

by J.C. | 26th Nov 21, 5:00pm 1637899248

How the RBNZ have passed $6 bio to the sheeple through the Long-term Asset Purchase Scheme (LAPS). That amount will only grow.

I like these select comments:

It is easy to squander taxpayers’ money if you are a central bank. The losses amount to a few thousand dollars per household, but hardly anyone is aware of it.

The losses for taxpayers look set to rise by many more billions. Rising inflation expectations depress bond prices, lifting interest yields. Taxpayers are enduringly exposed because the RBNZ has badly mismatched its assets and liabilities.

Under the indemnity, the RBNZ can shrug its shoulders and keep its massive gamble open. But someone should be accountable. Surely it is Treasury and the Minister of Finance.

https://www.nzinitiative.org.nz/reports-and-media/opinion/new-opinion-1…

by Audaxes | 26th Nov 21, 6:11pm 1637903499

Michael Reddell (ex- RBNZ economist) had this to say in recent weeks:

Massive losses, for nothing and $5.7 billion

by J.C. | 26th Nov 21, 6:38pm 1637905128

Thanks. I made a disparaging remark about Robbo y'day and got away with it. I just noticed what Reddell wrote.

(Where does the Minister himself fit into all this? I’m not particularly sympathetic to Robertson, who seems the epitome of a minister uninterested in holding anyone to account, but realistically on the dawn of a crisis, no Minister of Finance was likely to have turned down the Bank’s request for an indemnity, at least if The Treasury was onside with the Bank. No, the substantive blame here rests first and foremost with the Governor, the MPC, secondarily with the Bank’s Board and the Secretary to the Treasury, and only then with the Minister of Finance. But it is the Minister who is accountable to Parliament and the public, and who had failed to ensure that the Reserve Bank was fit for purpose (people, preparedness) going into a crisis like Covid.)

by bw | 26th Nov 21, 7:07pm 1637906827

"unfortunately that is the hole Orr and his colleagues dug for us."

A good read, late on a Friday arvo, and one worthy of all taking the time to evaluate.

Thx.

by Fluffybunny | 27th Nov 21, 9:37am 1637959074

Interesting read. Took me a coffee and a couple of Google searches to get through it..

Serious question. Do orr Robinson actually talk to each other? Like every week? Daily? Or do they just trade steering committee reports?

I'd assumed that the whole response was carefully orchestrated.

by Uninterested | 26th Nov 21, 7:14pm 1637907271

"....unless the share market tanks of course"

I know this is cherry picking but the 1 year NZX 50 capital index doesn't look very flash.

by bw | 26th Nov 21, 9:31pm 1637915466

The best question I’ve heard about yesterday’s MPS was from a first year economics student, who wanted to know how the Bank could claim to be fulfilling its mandate.....

https://croakingcassandra.com/

by muzled | 27th Nov 21, 7:04am 1637949875

Is Orr the best we've got??

All in all, it was a fairly typically poor Reserve Bank performance, perhaps undershooting even my low expectations. It was good that some questions were asked – at the press conference and at FEC – about the high turnover at the top of the Bank, even if Orr was allowed to get away much too easily with ludicrous claims about what a desirable place the Bank was to work, what an abundance of talent they had available etc etc. It certainly wasn’t on display in this document.

(On the turnover question, one almost had to feel sorry for the Chief Economist who has been restructured out: asked by MPs about what was going on Orr rashly talked about how Yuong Ha “has chosen to go into a far more challenging role. What are you going to be doing?” There was a noticeable, whereupon Ha lamely responded “Coaching my son’s cricket team. Taking a break”. Orr seemed to display all the sensitivity and personnel management skill of, say, a Judith Collins.)

by younger than most | 27th Nov 21, 6:46am 1637948810

Since when did a person's vax status become public ,"news"???

This constant public "shaming" would normally be alarming to people... yet the public wants blood...

https://i.stuff.co.nz/national/health/coronavirus/300461453/covid19-han…

by redcows1 | 27th Nov 21, 7:04am 1637949890

Getting well over the top.

2% seems about right, and I'm pleased at least some believe in privacy.