Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
SBS has raised all fixed rates today.
TERM DEPOSIT RATE CHANGES
TSB raised term deposit rates today. Their six month rate is now 1.20% and their one year offer is 2.40%. SNS has raised rates too, with their 6 month rate at 1.75% and 12 month rate at 2.40%.
IT'S POURING IN AUCKLAND
The volume of ready-mixed concrete poured in Q4-2021 was up strongly, almost all because of a sharp rise in activity in Auckland. The national level hit a new record high, driven by the Auckland activity which was also an all-time record. Activity in both Wellington and Christchurch was middling.
FACTORY EXPANSION FACES QUESTIONS
Although they are still expanding, new orders in the January factory PMI out today are softer than they have been. The overall PMI metric has continued its recent sequence of oscillating around its long term average. January’s 52.1 reading was a bit under the long-term norm of 53.1, after December’s somewhat perkier 53.8. At face value, the headline result looks reasonable enough. January’s result is the 5th consecutive month above the breakeven 50 mark and points to some further progress into the New Year.
CARD SPENDING UP +4.3%
Stats NZ reported that total electronic card spending was $8.2 bln in January, up +$339 mln or +4.3% from the same month a year go. But it is not really keeping pace with inflation (+5.9%) so it is hard to be too enthusiastic about the January result. Further they note there is some evidence that spending to prepare for Omicron may have helped keep it elevated.
MINIMUM WAGE UP +6%
As socially desirable as it may be, today's +6% rise in the minimum wage, and the consequent follow-throughs will add to inflationary pressures. The minimum wage is to rise by 6% as at April 1, 2022 - in line with inflation, but not a large enough jump to reach the living wage. Both the MBIE and business lobby groups fear Covid-affected businesses will struggle to absorb it. But with labour shortages reported to be widespread, this increase will protect those that aren't part of the inflating labour market.
INFLATION EXPECATIONS RISE
The RBNZ's Survey of Inflation Expectations reports a sharp jump in the near term. But it is a survey of only 33 people! - "a mixture of professional forecasters, economists and industry leaders operating in New Zealand". The one year was up from 3.70% to 4.40%, the two year out expectation was up from 2.96% to 3.27% and the five year a bit more restrained, up from 2.17% to 2.30%. In terms of the Reserve Bank's 1% to 3% mandate "over the medium term" this show pressure is on, but it is the near term pressures that are strongest. The two year expectation is back up to 30 year highs.
LOOKING FOR $100 MLN, GETTING $800 MLN
As we have been reporting over the past few days, Westpac has been in the bond market looking for $100 mln "plus unlimited oversubscriptions". In the end they raised $800 mln of five year money, at 3.70% - pumped at the end by the blip up in swap rates recently.
IAG NZ GROSS WRITTEN PREMIUMS RISE
Insurance Australia Group NZ, which includes State, NZI, AMI and Lumley, has posted an 8.3% rise in half-year gross written premium to A$1.481 billion. However, IAG NZ's insurance profit fell to A$99 million from A$162 million, with its loss ratio rising to 64.9% from 56.5%. Its underlying insurance margin was 16.8% versus 18.6%. The insurer says it wants to add 250,000 new customers over the five years to 2026.
STAFF ABSENT IN 22% OF BUSINESSES DUE TO COVID
In Australia, the Statistic agency reported that more than one in five (22%) of employing businesses had staff who were unavailable to work, due to issues related to COVID-19.
LOCAL PANDEMIC UPDATE
In NSW, there has been a rise to 8,950 new community cases reported yesterday, now with 64,813 active locally-acquired cases, and another 19 daily deaths. There are now 1,716 in hospital there, off their high but staying stubbornly at this level. In Victoria they reported 8,521 more new infections yesterday. There are now 55,617 active cases in that state - and there were 13 more deaths there. Queensland is reporting 5,977 new cases and 14 more deaths. In South Australia, new cases have slipped to 1445 yesterday and 2 more deaths. The ACT has 500 new cases and no deaths, and Tasmania 552 new cases and no deaths. Overall in Australia, about 26,000 new cases have been reported so far although not all counts are in yet. In New Zealand, there were 32 cases stopped at the border, plus 446 new cases reported in the community, a new daily record driven by Omicron. And with the superspreader event going on outside Parliament, that number is certain to jump soon, magnified when the protestors return to their regions. The delusional selfishness is stunning to witness.
GOLD SLIPS
In early Asian trading, gold is now at US$1827/oz, and down -US$7 from this time yesterday.
EQUITIES WEAK
After a soft start, the S&P500 ended its Thursday session down -1.8% after the high US CPI data. Tokyo is on holiday today (Foundation Day). Hong Kong has opened down -0.4% while Shanghai is has opened down -0.3%. The ASX200 is down -0.7% in mid afternoon trade but heading for a +1.7% weekly rise, and the NZX50 is down -1.7% in late trade today and heading fro a -1.1% weekly fall.
SWAPS SHIFT HIGHER EVERYWHERE
We don't have today's closing swap rates yet. They are likely to be sharply higher on the US moves. The 90 day bank bill rate is up +4 bps at 1.21% and a relatively big one-day move. The Australian Govt ten year benchmark bond rate is up +7 bps from yesterday to 2.16%. The China Govt 10yr is also up +6 bps to 2.80% and a huge move for them. The New Zealand Govt 10 year bond rate is now at 2.81% (up +8 bps from this time yesterday) and still below the earlier RBNZ fix for that 10yr rate at 2.82% (up +8 bps). The US Govt ten year is now at 2.03%, up +10 bps from yesterday at this time.
NZ DOLLAR HOLDS
The Kiwi dollar is little-changed today at 66.6 USc. Against the Aussie we are little-changed too at 93.1 AUc. Against the euro we are softish at 58.4 euro cents. That means the TWI-5 is up to just over 71.
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BITCOIN SLIPS
Bitcoin is a little softer today at US$43,448 and down -1.7% from where we were at this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.7%.
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73 Comments
It depends on what is being surveyed.
If there are only 34 people who know a topic in depth then 33 is a really good sample space.
However, in terms of predictions on inflation, its crystal ball stuff, so I can't imagine that anybody really has a claim to know any more than a layman.
And, what's more, you'll get a front sea view of the next tsunami that'll sooner or later roll in from the Pacific plate fault-line that is loitering not too far off-shore. If you're moving to Tauranga it might pay to buy a seat in the circle......if there is one.
I can't stand bland Tauranga. The 'CBD' is a joke, there's no culture or diversity, very limited dining etc. Traffic is bad, and the planning is all over the place.
The only thing I rate there is the beach at Mt Maunganui, and the climate is quite good.
Anyhow - each to their own, if you are happy living there, good for you!
My Dad retired to Tauranga from Hamilton (the normal route) 20 years ago and says even in that time it has changed out of sight - clogged roads are his main gripe. My earliest memories (mid 70s) of the area are that awesome beach at Mt Maunganui and the camping ground. Now the batches have been replaced by fancy places.
The "CBD" has a Turkish place, so I'm happy.
The US Govt ten year is now at 2.03%, up +10 bps from yesterday at this time.
UST 7 year yield is currently higher.
Yep, this is fine. Nothing to see here. Completely normal. Jay's got it all under control. [actually, it suggests very high probability 'inflation' itself has already choked off growth potential as well as, well, 'inflation', therefore it's not inflation] Link
Maybe. But National needs to keep their pants up and avoid soiling themselves. Hopefully Luxon has got them under control by now? On the other side though pressure is plainly building. The PM looks both wan & rattled, not the cock a hoop of before either. The standard pouts, frowns, shrugs, gesticulations are all looking a bit embattled, lip biting though could be downright perilous.
Having said that, I reckon next year's election could be quite a close one - although if the economy slumps like I think it will, then every chance Nats will win relatively comfortably.
If the bubble pops and / or the economy heads into recession / depression, National will romp home.
People are fatigued and it's easier to create a scapegoat.
I'm two weeks back at work and am pretty over it, construction sector is an absolute basketcase, 8 weeks for gib, 6 months for large commercial windows. Everything's taking 3x longer than it should easily.
We collectively just went for just-in-time delivery expectations and the supply chain is just so multi-faceted one thing goes and it's all out the window.
Now anyone with the sniffles has to be tested, so you lose labour for at least a few days, this is all going to get worse before it gets better.
The government can't fix this.
Very hard to tell, I'm more in industrial and commercial which seems fairly healthy and that pipeline is 18+ months long. Some projects are being halted indefinitely due to lack of security over resources.
Residential also seems pretty healthy, realistically the industry is in more danger of the delays bankrupting various players.
Most of my clients who are a range of various types of manufacturing and agriculture are all being effected by the same supply chain and labour issues also.
It's all extra cost that has to either be absorbed or passed along.
I agree but did you notice how fast the MSM was to discredit the whole protest by focusing on a "Few Nutters" so therefore the hundreds of people there must all be nutters. Quite disturbing the way things are trending here and how the MSM is being controlled. Kiwis are way to soft and usually just roll over and take it so things have to be pretty bad before we start getting protests in NZ, maybe the government should wake up.
I’m surprised the polling isn’t a lot different. 1 year ago I would say most people thought labour had done a fairly good job of covid. Now it seems there are so many people who are not at all scared of it who just want their lives back, how come that isn’t being reflected in the polls? Especially as a lot would be younger people who are traditional labour voters.
i think Covid will go from an election winner to an election loser for Labour. There is no way they can keep the votes of those who are shit scared of it as well as those who just want their lives back and know they will probably get it regardless. I’m in the latter camp: what is the point in vaccine mandates and closed borders in an omicron world where the vaccine does not stop infection and the border cases will be a tiny fraction of total cases. They are living in the past.
Some polls are never published in the MSM https://www.roymorgan.com/findings/8892-nz-national-voting-intention-ja…
Societies can work a lot better when everyone is on the same page.
So like, a brutal dictatorship is bad, mkay.
But if it's somewhere uber authoritarian like Singapore, the answer is less clear, because arguably that society can produce better outcomes than a western "every man to themselves" individualistic approach.
I mean, it's not my cup of tea, but if you compare it to the rest of South East Asia it's been light years ahead, and leads much of the world in all sorts of metrics and stats.
The alternative is you have an extremely strong shared culture - Japan works pretty well because most everyone is on the same page, everything's all uniform and you don't place as much emphasis on the individual.
Far harder to cater to everyone's needs if you have as diverse a population mix as NZ. The list of wants is effectively unlimited.
There isn't really such a thing as freedom, instead degrees of trade-offs.
As socially desirable as it may be, today's +6% rise in the minimum wage, and the consequent follow-throughs will add to inflationary pressures.
Through what channel? The recent CPI (and HLPI) data shows very clearly what is causing cost of living increases - cars, petrol, housing, rental, rates, insurance, real estate fees etc. The typical minimum wage sectors (restaurants, supermarket, personal care etc) are very minor drivers of price increases; and, minimum wage earners are unlikely to be buying noticeably more stuff with their extra dollar or so an hour given that rents and petrol costs will have already reduced consumption of other goods.
But 'data' is only from what gets measured. What's not measured, then?
- Business not getting started at all because the budget just doesn't pencil out.
- Business deciding not to expand existing market because the added expenses cannot be covered by added revenues.
- Business deferring Capex
- Business declining a potentially lucrative new market opportunity because too much uncertainty about regulatory settings including min wage, social insurance levies and hence a much higher risk profile.
- Business doing very well as is but instead of owners pursuing growth, take it easy, draw down equity, and go on holiday.
Nothing, but nothing in the above, gets Measured.....
We have a $5 billion a year hole in our boat thanks to the banks, potentially $20 billion a year if you factor in other multi-national corporate profits.
$20b is $4000 per person per year. $12,000 per household per year. Address this issue and....I dunno....maybe we will see the cost of living drop?
"And with the superspreader event going on outside Parliament, that number is certain to jump soon, magnified when the protestors return to their regions."
Maybe it will but it's entirely on the Government, the protest was inevitable, you can't force medicate people and expect them not to object. The quickest way to end the protest is to remove vax mandates and the passport system.
"The delusional selfishness is stunning to witness."
Really? If you're OK with forcing/coercing a substance on people that can cause serious harm, go tell your story to Casey Hodgkinson or Rory Nairn's fiancee, here's the salient points of mine.
My wife has Myalgic Encephalomyelitis, ALL vaccines trigger her symptoms yet the Government saw fit to:
- Make her take the first dose knowing it was likely to ruin her health, which it did.
- Go through a bureaucratic paperwork nightmare WHILE SHE WAS SUFFERING to apply for exemption.
- Give her a very rare approval, which lasts all of 3 months then she must re-apply.
- The MOH have now removed Myalgic Encephalomyelitis from the claim form, so the future beyond May 6 looks bleak.
I am very thankful to those currently on Parliament grounds fighting for our basic human rights, I'd be there myself but 2.5 months after her jab I'm still looking after her.
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