What happened Wednesday

Business / news

A review of things you need to know before you go home on Wednesday; some TD rate increases, consumer sentiment holds at lowish levels, dairy prices slip, insurer profits revealed, swaps on hold, NZD firm, & more

22nd Dec 21, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
Kiwibank added +10 bps to their one year TD rate taking it to 2.20%. SBS Bank had increases to rates from 6-18 months, taking their one year rate to 2.25%.

'LOWLY STABLE'
The final consumer confidence survey for the year is out, this one from ANZ Roy Morgan. It reports little change at a low level, up +1.7 points. The proportion of people who believe it is a good time to buy a major household item rose +6 points to 0, after three months in the red. Inflation expectations were little changed at 5.6%. House price inflation expectations fell another -0.6% pts to 5.3%.

STABLE & STAYING HIGH
Dairy prices at the latest auction slipped -1.5% overall in USD. This drop was solely because WMP dropped -3.3%. All others rose, like SMP which was up +0.6%, cheddar prices are up +0.5%, and the cream group prices were higher again.

CLOSING THE GAPS II
The Government is asking the Productivity Commission to look at why there is persistent disadvantage in some communities. They have been asked to draw on Te Ao Māori approaches, including applying a collective as well as an individual lens to research and analysis, and the principles of mana motuhake (collective/self-reliance), rangatiratanga (independence) and mātauranga Māori (Māori-specific knowledge). The terms of reference are here. The Commission’s final report to Government is due in March 2023.

FINANCIAL INSTITUTIONS EARN $10 BLN IN TAX PAID PROFITS
Updated data via the RBNZ shows the insurance industry earned $3.7 bln over the past year, after paying just over $1 bln in tax here. That puts them in the league with banks who earned $6.35 bln after tax after paying $2.5 bln in income tax in the same period. Between the two, that is $10 bln in tax-paid income after paying $3.56 bln in tax. Almost all this income was earned by Australian-owned institutions.

LOCAL PANDEMIC UPDATE
In Australia, pandemic cases in Victoria were 1503 reported today. There are now 13,888 active cases in the state - but there were another 6 deaths today. In NSW there were 3763 new community cases reported today, and another big jump, with 21,991 active locally acquired cases, and 2 more deaths. Queensland is reporting 79 new cases. The ACT has 58 new cases. Overall in Australia, 89.6% of eligible Aussies are fully vaccinated, plus 3.5% have now had one shot so far. There are increasing reports of testing and hospital facilities being overwhelmed by demand. In contrast, there were no Omicron cases in New Zealand at the border, and 56 new community cases today. Now 90.8% are double vaxxed, 94.6% of Kiwis nationally aged 12+ have had at least one vaccination, and the equivalent Australian rate is now at 93.1% of all aged 12+.

GOLD ON HOLD
In early Asian trading, gold is at US$1789/oz and just -US$1 lower than this time yesterday.

EQUITIES MOSTLY POSITIVE
Wall street closed higher

SWAPS LITTLE-CHANGED
We don't have today's closing swap rates yet. They are likely to be little-changed. The 90 day bank bill rate is up +1 bp at 0.95%. The Australian Govt ten year benchmark bond rate is down -1 bp at 1.62%. The China Govt 10yr is little-changed at 2.87%. The New Zealand Govt 10 year bond rate is now at 2.26% and up +2 bps but still below the earlier RBNZ fix for that 10yr rate at 2.31% (up +2 bps). The US Govt ten year is now at 1.46% and another +3 bps firmer.

NZ DOLLAR FIRMS
The Kiwi dollar is now at 67.6 USc and back up +½c in a day. Against the Aussie we are also marginally firmer at 94.6 AUc. Against the euro we are up +40 bps at 59.9 euro cents. That means the TWI-5 is now just under 72.3 and off its recent lows.

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BITCOIN RISES
The bitcoin price has risen to US$48,670 and +4.3% than this time yesterday. Volatility over the past 24 hours has been moderate however at just over +/- 2.8%.

This soil moisture chart is animated here.

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Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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36 Comments

by Officebound | 22nd Dec 21, 4:12pm 1640142728

Good to see our large financial institutions paying fair tax.

by kpnuts | 22nd Dec 21, 5:11pm 1640146293

i am the only one who wonders why when it was injecting all the tax free money to banks to lend did not simply decide to invest $2-5 bill into Kiwibank instead ? if it was able to seriously compete sure more Kiwis would move - at least the profits would stay in NZ

by sit23 | 22nd Dec 21, 5:22pm 1640146952

The article specifically says they aren't our institutions. Practically all are foreign owned. They do nothing that cannot be done by a local firm. Their only job is to shovel as much money overseas as possible. An ODT article summed the problem up last week. " Fifty years ago, 80% of Southland bought groceries were made in Southland. Now it is 20%." That is the problem. We refuse to look after our locals, and are desperate to give our hard eaned money to foreigners.

by JohnTrz | 22nd Dec 21, 4:34pm 1640144085

"CLOSING THE GAPS: The Government is asking the Productivity Commission to look at why there is persistent disadvantage in some communities. They have been asked to draw on Te Ao Māori approaches, including applying a collective as well as an individual lens to research and analysis, and the principles of mana motuhake (collective/self-reliance), rangatiratanga (independence) and mātauranga Māori (Māori-specific knowledge)."

(This is the Government that has failed to tax wealth and property, failed to commit itself to building 100,000 state houses for secure lifetime income-related rent by all who want them, failed to make health care free, comprehensive, accessible, and timely, failed to implement the recommendations of the Welfare Expert Advisory Group, and failed to introduce a universal Unconditional Basic Income.)

by MortgageBelt | 22nd Dec 21, 4:54pm 1640145266

According to this Labour Govt it’s not their fault that they have failed to provide govt housing, Kiwibuild or good hospital care for Maori, or other practical real-world helps. No, they say - the problem is due to all NZ businesses and organisations not integrating matauranga Maori into all their policies and conducting more business in cultural terms etc. So it’s somebody else’s fault for the gap.

by Brock Landers | 22nd Dec 21, 5:01pm 1640145694

Perhaps it's just that the New Zealand aboriginal way of doing things is not very productive.

by JohnTrz | 22nd Dec 21, 5:22pm 1640146931

It is the New Zealand Labour Government that is not very productive: rather than just bloody do it, they say 'Oh, let's have a hui and talk about it till everyone goes back to sleep.'

by KH | 22nd Dec 21, 5:40pm 1640148014

All hui, no dui you mean. It's cultural.

by paashaas | 22nd Dec 21, 7:31pm 1640154687

I think neither of them is very productive ; it is not mutually exclusive.

by HouseMouse | 22nd Dec 21, 5:14pm 1640146458

Yep huge failure.

They are great at empty rhetoric though, and commissioning investigations.

by Jonny.Foe | 22nd Dec 21, 7:39pm 1640155148

Hey, productivity commission, could you piss away a year or two exploring why our tax and policy settings lead to money accumulating in the pockets of wealthy people? Just make sure you come back with some recommendations for more plans and strategies. Miri Kirihimete, Labour.

by MortgageBelt | 22nd Dec 21, 4:43pm 1640144621

Mortgage lending drying up according to ANZ.

“new consumer lending protections legislation seeing mortgage lending rapidly drying up…”

https://www.anz.co.nz/about-us/economic-markets-research/property-focus/

I assume ANZ and other banks would be monitoring their own decreases in home loan lending starting this month? Are they happy with this loss of business?

by JimboJones | 22nd Dec 21, 4:58pm 1640145495

Mortgage lending protections, high interest rates, over valued housing market, big supply increases, empty auction rooms, brightline extended, more tax on rent. Yet almost all are predicting flat house prices. Sounds much worse than that to me.

Even if prices were flat, why would investors hang in there with a tiny taxed yield that is hard work, especially if interest rates at the bank start to earn more.

by Fluffybunny | 22nd Dec 21, 5:15pm 1640146502

I think its all starting to catch up. The reality that more credit is needed to further extend to prices, is now bumping against the nations dogged determination for never ending yearly gains. We are such a bunch of morons.

Its gone from what 70% clearance rates, down to sweet bugger all in say 4 months? Most properties on trade me now with prices or via negotiation. Some on my watchlist from auctions 1-2 months back.

And we've only just started on rate rises. Wait and see if the Fed puts up rates and see what happens to basically everything at that point. We could be in for a rocky ride next year. Good luck to anyone who is overly leveraged. Cause the vultures are circling... KAaaaaaARRRRRRKK!!

by MortgageBelt | 22nd Dec 21, 5:33pm 1640147618

The immediate issue is not house prices, its more an emergency situation of lending being completely frozen. This is going to cause a major financial problem far bigger than 35% annual house price increases (as much as that is also a problem). This is going to have severe repercussions all down the line.

by Brock Landers | 22nd Dec 21, 5:47pm 1640148441

Houses are going to zero!

by HouseMouse | 22nd Dec 21, 5:17pm 1640146639

Aren't most of the banks predicting a small fall in house prices? Eg. ANZ with the bizarrely precise forecast of -4% (the machine must have spat that number out)

by frazz | 22nd Dec 21, 5:58pm 1640149136

"especially if interest rates at the bank start to earn more" you would need to earn at least 6-7% just to keep up with inflation?

by JimboJones | 22nd Dec 21, 4:47pm 1640144850

So bugger all cases in Auckland again today. The "experts" were predicting a big increase in cases with the traffic light system, are they ever right? I think I knew more about Covid when it first started than some of the experts do now:

1) It is basically like a flu but worse

2) Like flu it is seasonal

3) Like flu it is spread in the air (remember all that hand washing nonsense)

4) We would have a vaccine in a reasonable timeframe (I remember them saying 3 years minimum)

So now we are in summer with high vax rates and no community omicron, wouldn't this be a good time to relax restrictions? If not then when?

by Carlos67 | 22nd Dec 21, 4:52pm 1640145167

Its just the calm before the storm. Once Omicron gets in it will be a CAT 5 hurricane.

by MortgageBelt | 22nd Dec 21, 5:02pm 1640145770

Once O Micron spreads then NZers will be locked up again, with all regions in red and no prospect of Q-free travel back to NZ. Then another variant hitting in May 2022, and so it goes on and on.

May as well plan for another year of working from home, Grant Robertson spreading more money everywhere, and zero overseas travel. And more blaming on the non-vaxed.

by Hardly | 22nd Dec 21, 5:07pm 1640146039

Omicron seems to burn itself out pretty quickly. We just need a little bit of time to get some boosters in place and then we can take it on before winter.

by MortgageBelt | 22nd Dec 21, 5:12pm 1640146355

That may be true.

But the Govt/media narrative is to keep the fear level high with omicron, and to threaten more lockdowns and restrictions.

by Hardly | 22nd Dec 21, 5:35pm 1640147749

Why are you suspicious of the governments motives? Governments all around the world are scared of omicron including the UK where they are talking about new lockdowns.

by MortgageBelt | 22nd Dec 21, 5:40pm 1640148024

I rest my case - watch for the new NZ lockdowns.

Stay home. Don’t travel. Get your booster. WFH.

by Hardly | 22nd Dec 21, 7:03pm 1640153007

You didn’t make a case. You implied the government was unreasonably fear mongering and when I called you on it you walked away.

by MortgageBelt | 22nd Dec 21, 8:49pm 1640159369

Ha ha. I rested my case on your observation which effectively agreed with my point.

“Governments all around the world are scared of omicron including the UK where they are talking about new lockdowns.” Including our Govt and our Bakers & Jackson’s etc.

by RickStrauss | 23rd Dec 21, 4:25pm 1640229901

Too much research on Facebook and talkback makes for paranoia.

by Fluffybunny | 22nd Dec 21, 4:58pm 1640145515

The only way we will get rid of traffic light, levels, passports whatever is through voting out Labour at the next election. This Pandemic is going to have a long tail.

In the meantime get set for more variants, more mind-changing, delays etc.

by RickStrauss | 23rd Dec 21, 4:26pm 1640229995

Most likely dreaming to think National would do much different. It's easy to propose all and sundry and make cacophonous noise from opposition but in reality they'd likely be 95% the same.

by Hardly | 22nd Dec 21, 5:04pm 1640145862

They have relaxed restrictions.

by MortgageBelt | 22nd Dec 21, 5:06pm 1640146010

Not really. All regions that were in Level 2 have effectively more restrictions now under traffic lights, especially Red. And the freedom of movement is more restricted.

by Hardly | 22nd Dec 21, 5:08pm 1640146108

The regions in red come out on New Year’s Eve - that is like a week away.

For everyone else I can’t think of anything I’d want to do that I can’t do.

by JimboJones | 22nd Dec 21, 7:19pm 1640153982

It’s about 4 weeks too late. And we will go right back into red once omicron leaks, possibly before New Years. I think the govt get it mostly right, but they are just a bit too cautious, they forget that they are imposing harsh restrictions on peoples lives and businesses, and it’s not fair when there is no pressure at all on the health system. The red traffic light should be for a serious threat to the health system, not a just in case.

by Macawsley | 23rd Dec 21, 4:42am 1640187775

"I think I knew more about Covid when it first started than some of the experts do now:"

Really ? that sounds utterly delusional to me.

by murray86 | 23rd Dec 21, 7:48am 1640198918

Very delusional. He his perpetrating myths. COVID is NOT like flu. Flu does not leave blood clots in young healthy people. Lots of bugs are airborne - this is not a valid comparison. Seasonal - is more about the combination of factors that make it easier for any bug to survive, again a spurious comparison.

Reduce restrictions - why? People are still breaking the rules selfishly. COVID has appeared in Wellington (actually the Hut Valley). For it to have done that some selfish idiot has thought the rules don't or shouldn't apply the them, and lied or committed fraud to break them. Along the way they have brought COVID to their family and friends (and that is they type of friend they don't need!). These peoples identities when known, should be made public so they really do understand just what people think of them.