What happened Wednesday

Business / news

A review of things you need to know before you sign off on Wednesday; minor retail rate rises only, dairy prices slip, GHG emissions fall, FMD risks rise, equities surge, swaps up, NZD rises, & more

[updated]

20th Jul 22, 3:59pm by David Chaston

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 RATE CHANGES
WBS raised its floating rate but decreased its two year fixed rate (more in line with other building societies). Update: Bank of China raised their floating rate and lowered their 2-5 year fixed rates.

TERM DEPOSIT RATE CHANGES
The Cooperative Bank has raise most of its TD rates for term less than one year. Update: Bank of China raised their TD rates.

LOWER PRICES LINGER
Dairy auction prices slipped again in today's dairy auction, down by -5%. Global demand is now showing signs of weakness and as that is now extending, it is having analysts worry that their new season farm gate payout forecasts may need to be trimmed.

EFFICIENT - GHG EMISSIONS FALL EVEN AS GDP RISES
Statistic NZ is now releasing greenhouse gas emission data on an 'official' basis now. Previous releases were 'experimental' but that lead-in set has now ended. Today they released year ended December 2021 data, and that reports levels that are -6.1% lower than pre-pandemic levels. In 2021 we released 79,300 kilotonnes of GHG emissions whereas in 2019 is was 84,430 kilotonnes. During the same period economic activity rose +3.0%. (Just for perspective, China's 2021 GHG emissions were 14,100,000 kilotonnes, a rise of +465,000 kilotonnes - the change alone is six times NZ's total emissions- and the USA's emissions were 4,460,000 kilotonnes and now -236,000 below their 2019 level of 4,725,000 kilotonnes. China's eyewatering levels are all to do with coal-burning for electricity production.)

FMD RISK MITIGATION
Even though there are currently no direct flights from Bali to New Zealand, the Government is stepping up protections against the Foot & Mouth Disease outbreak there with enhanced border monitoring and controls. Australia faces a grave risk from this outbreak, and via there this is where the FMD risk will come.

EMBEDDING INCUMBENTS
Banks, insurers and non-bank deposit takers are to get a new regulator in the FMA who will issue a "financial institution license", which will bring new regulation, probably starting in 2025. It is already "too hard" for most new entrants that don't have deep pockets and this new oversight and regulation will probably make it even less likely we see new entrants. Large incumbents won't be unhappy with these changes. The talk of encouraging innovative fintechs is waning as start-up capital investors reassess the value of these following a string of quite high-profile fizzes over the past year or so.

HOLDING
China reviewed is Loan Prime Rates today, but left them both unchanged.

LEADING LOWER
The Westpac-Melbourne Institute Leading Economic Index in Australia declined by -0.2% from a year earlier in June, after a -0.1% fall a month earlier and pointing to the third straight monthly retreat.

"AGGRESSIVE" DECARBONISATION?
The cost of fertiliser has risen sharply as the cost of crude oil and natural gas have risen. A reader has pointed out that Norweigian-heavweight Yara (ex Norsk Hydro) has had a banner year, raising output, profits and dividends sharply. They effectively trebled in Q2-2022. Their Norwegian plant is not dependent on Russian gas, but their Danish plant has some exposure. Yara are now on a mission to decarbonise fertiliser production.

SWAP RATES RISE
Wholesale swap rates may have firmed in a steepening trend today, with the one and two year durations up about +5 bps. The 90 day bank bill rate was down -1 bp to 3.12%. The Australian 10 year bond yield is now at 3.58% and up +7 bps from this time yesterday. The China 10 year bond rate is now at 2.80% and down -1 bp. The NZ Government 10 year bond rate is up +9 bps at 3.80%, and now well above the earlier RBNZ fix for this bond which was up +3 bps to 3.75%. The UST 10 year is now at 3.03% and up +6 bps from this time yesterday.

EQUITIES SURGE
The S&P rose a heady +2.8% on Wall Street earlier today. Tokyo has opened +2.4% higher, continuing the trend. Hong Kong has opened +1.9% higher. Shanghai is up +0.7 in their early Wednesday trade. The ASX200 is up +1.8% in afternoon trade. The NZX50 is up +1.0% in late trade.

GOLD FIRMISH BUT STILL LOW
In early Asian trade, gold is up +US$4 from this time yesterday, now at US$1712/oz.

NZD FIRM
The Kiwi dollar has recovered some overnight slippage and is back at 61.6 USc. Against the AUD we have recovered partially to 90.5 AUc. Against the euro we are up at 61.1 euro cents. That means our TWI-5 is now just under 71.3 and up +70 bps today.

BITCOIN RISES FAST
Bitcoin is now at US$23,440 and up another +6.0% from this time yesterday and extending a building set of rises. Volatility over the past 24 hours has been extreme at +/-5.1%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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46 Comments

by jimmyH | 20th Jul 22, 4:07pm 1658290020

Why is NZD/USD cross linked at the hip to daily movements in S&P500?

Anyone got a chart for comparison,or a set of fairly reasoned propositions as to why it so closely correlates in last 18 months?

by Nzdano | 20th Jul 22, 4:11pm 1658290260

I believe it's often attributed to risk appetite affecting both the same way.

NZD is considered risky and USD is considered safe haven.

by Nzdano | 20th Jul 22, 4:07pm 1658290079

NZDUSD is 62.6, risen quite a bit today.

by RickStrauss | 20th Jul 22, 4:13pm 1658290427

that reports levels that are -6.1% lower than pre-pandemic levels. In 2021 we released 79,300 kilotonnes of GHG emissions whereas in 2019 is was 84,430 kilotonnes.

Allowing more working from home is a very useful measure to reduce both emissions and congestion. Hopefully more organisations - and more lobbyists - can acknowledge this and allow greater flexibility. I suppose allowing employees to work more flexibly is becoming a competitive advantage in the recruitment market.

by HouseMouse | 20th Jul 22, 4:16pm 1658290615

Absolutely right.

by gnx | 20th Jul 22, 4:33pm 1658291606

Rick

Allow for the caring of young kids at home. The number of car trips to drop and pick up kids at childcare must be mind boggling numbers.

200,000 kids times two trips times two kms times times 200 days….whos got a big calculator? Ok mine still can do it ….160 million kms of car travel if the average kid is only 2kms away…yikes

I think we will end up putting a carbon cost on all product and services in the future.

by solardb | 20th Jul 22, 5:10pm 1658293840

Need to make it safe to walk / cycle to schools and child care. Has health benefits as well as environmental .

by Brock Landers | 20th Jul 22, 6:38pm 1658299130

It's a real shame that so few people here have travelled to the Netherlands or Denmark or even the UK to some degree to see how good cycling is when done right.

by Carlos67 | 20th Jul 22, 7:20pm 1658301659

The cycling here is not the problem it's the assholes on four wheels deliberately trying to take you out. We would need completely seperate cycle lanes it's a waste of time trying to change driver attitudes.

by agnostium | 20th Jul 22, 8:10pm 1658304612

Netherlands and Denmark have completely separated cycle lanes Carlos, that's how they make it safe and attractive.

Cars are only allowed to share the road with people on bikes on roads that are designed to be super slow. They literally design the smooth asphalt sections of the road for people on bikes and if you're in a car you're forced to drive over cobbled section down the middle that makes you go slower.

If you're in a car you are not allowed to go through the city centres, you can go around and those that need to get in can but they go back out the way they came.

They had an active policy of reducing public car parking and the amount of asphalt each year in their city centres.

All these measures are completely achievable in New Zealand and what most of our city planners want to do but the f***wits who listen to people like Mike Hosking get up in arms anytime a City Councillor or planner suggests we do the same here.

by Market Interest | 20th Jul 22, 9:14pm 1658308460

It goes two ways. Plenty of assholes on two wheels hogging the road and making a menace of themselves.

by powerdownkiwi | 20th Jul 22, 9:42pm 1658310138

MI - bullshit. A bicycle hogging the road? And I'm guessing you - for compensatory reasons, probably - drive a Ford Ranger or similar? But you aren't 'hogging the road', right? You'll just be asserting your rights.

by Noncents | 20th Jul 22, 10:31pm 1658313103

Come on PDK, cyclists are not all little Angels.

I am guessing you have never been stuck behind a peleton doing Le Tour de suburbia as they hunt down the trendiest cafe on a saturday morning, or used a shared pathway with a lycra demon blasting past you at 40kph while you walk with your young kids.

Or my favourite, getting bowled over, because cyclist's don't believe in signalling their turns...stopping at red lights, pedestrian crossings, or intersections...

and don't get me started about their ability to follow oneway traffic signs.

Its even better now that they have e-bikes, which are larger, heavier, and faster. But "sooooo much better for the environment" as they like to tell me while I ride my old fashioned push bike around the nieghbourhood.

by Nzdan | 21st Jul 22, 9:24am 1658352255

Every time I commute into Wellington, there's the same lyric clad morons as you say blasting past at 40kph on narrow footpaths. One time I was nearly collected by one of these fools as I got off the bus by Petone station. They like to race down the pedestrian tunnel and then come out and floor it. Below Streetview for context.

https://www.google.com/maps/@-41.2227222,174.86854,3a,75y,17.26h,95.32t…

by Norm | 20th Jul 22, 8:21pm 1658305266

Agree Brock, and not just those countries. Three years ago I took a bike over to France and biked 1,000km in a month, 100km max on roads, 2km on a busy road. They have thousands of km of trails, and that's just France. Amazing experience. A good way to meet people and really see the country. Great food and drink, with the added benefit of loosing 8kg!

by Brock Landers | 20th Jul 22, 8:38pm 1658306318

Yep. I was back in the Netherlands last month and it was bliss. I won't even ride my bike here it's too dangerous.

by Carlos67 | 20th Jul 22, 11:07pm 1658315264

Well I guess that's something we can agree on for once. I'f your cycling safety in NZ it's because your in your garage using Zwift because the roads are suicide.

by Pa1nter | 21st Jul 22, 3:07am 1658329656

Its great to ride a bike in a flat city that developed before the motor vehicle so you don't really need to travel further than about 2ks to do anything.

In short, different geography is different. Enjoy cycling from your new house and back to the CBD.

Grizzlas gotta grizzle.

by Noncents | 20th Jul 22, 10:12pm 1658311936

I have been to all those places, and it is simply not comparing apples with apples to simply move their cycling policies here and expect them to work.

Geography: Auckland is 5x the size of Amsterdam in terms of land area. Wellington is twice the size. Christchurch is 6x the size. Both the Netherlands and Denmark are flat, amazingly flat.

Climate: While both the Netherlands and Denmark tend to be colder in winter and hotter in Summer. It is also significantly drier on average (Copenhagen has 1/2 the annual rainfall of Auckland) and has much less wind. Both things that make cycling a lot less practical. In Europe when the weather is less than ideal, they use the above mentioned public transport to move around, in most parts of NZ your choice would be get wet or drive.

Population Density and planning: NZ cities were never designed to be densly populated. You simply don't have the same access to Jobs, shops, education, and medical facilities here as you do there. Everything there is nearby. The con is that everything is nearby... your neighbours, light and heavy industry, airports, and traintracks.

Other transportation options: Most cities in Europe have extensive well integrated public transportation networks, often a mix of subways, buses, trams, and trains. As a result a car is very much optional.

Housing affordability: It is a lot cheaper to rent/own in the central city/inner suburbs - i.e. live closer to where you work.

I am not saying we can't do it better here. But there are significant factors as to why Cycling took off in the larger urban areas of the Netherlands, Denmark, and Belgium, rather than every single European City. I mean even in Amsterdam, Brussels, and Copenhagen, once you escape the confines of the large ring road/freeway/highway networks that often surround the cities, it is a different scene, private vehicle usage increases drastically.

by IanME | 21st Jul 22, 6:49am 1658342992

This pointless debate been thrashed out dozens of times on Stuff, in a similar tone. 🥱

by The Person | 20th Jul 22, 9:05pm 1658307953

Are you suggesting employers should pay their staff to look after their kids instead of doing (company) work?

by Hardly | 20th Jul 22, 6:02pm 1658296930

Absolutely. It’s a shame that the government started encouraging people into the office just to prop up the coffee and food sales.

by hum | 20th Jul 22, 8:24pm 1658305476

coffee shop were just an excuse. Buinsesses just doesn't want to pay people wages for staying at home doing a meeting or two per day in underwear and paying them 80/120k per year to be absolutely unproductive.

by Noncents | 20th Jul 22, 10:40pm 1658313645

Yeah, much better to pay peple wages while they flounce about the office "networking" and ducking out every hour for a 20 minute coffe catch up...I mean meeting. So much more productive.

by Casual Observer | 20th Jul 22, 8:01pm 1658304083

On the Business.govt.nz carbon emissions budget they use 0.446kg CO₂e emissions per day worked from home. It would be interesting to know if this was taken in to consideration in the 2021 figures.

https://www.tools.business.govt.nz/climate/

by IT GUY | 20th Jul 22, 4:23pm 1658291005

Contracts are collapsing as banks ‘play real estate agent’

https://www.oneroof.co.nz/news/41859

by redcows1 | 20th Jul 22, 5:14pm 1658294048

Buyers and sellers always have this quaint idea that they decide the price of real estate . But truth is a house is only worth what a lender will front.

by Audaxes | 20th Jul 22, 4:36pm 1658291778

China reviewed is Loan Prime Rates today, but left them both unchanged.

China has completely changed the orientation of its econ & financial priorities. While real estate is in turmoil, contagion at banks, PBOC sits on its hands letting banks deal with it however they can. But, common prosperity, PBOC is pumping out RMB currency aid to smaller busn. Link

by gnx | 20th Jul 22, 4:40pm 1658292035

Incoming black swan?

Just got an email from the commerce commission…draft report on building supplies Aug 4th

Yikes I hope they have big black marker pens for redacting names.

by HouseMouse | 20th Jul 22, 4:49pm 1658292575

Fascinating.

by J.C. | 20th Jul 22, 4:51pm 1658292674

Bitcoin is now at US$23,440 and up another +6.0% from this time yesterday and extending a building set of rises

Some of the crypto stocks are massively oversold: Marathon Digital Holdings up 80% in past 5 days and Riot up 46%.

Furthermore, JPM reported that the average price to mine Bitcoin dropped to $13,000 in the month of July, from $24,000 in June.

by HouseMouse | 20th Jul 22, 4:53pm 1658292816

Townhouses for rent in Auckland have been sitting around the low 500's for a week or two, but have shot up to 525. This is about where they peaked a couple of weeks back, will be interesting to see if they push on towards 550. Quite a few new builds have been listed in the last few days.

https://www.trademe.co.nz/a/property/residential/rent/auckland/search?p…

by HouseMouse | 20th Jul 22, 5:46pm 1658295979

NZD at 86.36 yen. If it gets to 87 I am exchanging some more.

by J.C. | 20th Jul 22, 6:03pm 1658297003

Are you a forex trader or just playing? Why do you need JPY?

by HouseMouse | 20th Jul 22, 6:07pm 1658297235

Because we are going back to Japan for a family trip next April :)

The last time we were there pre covid we got about 70 yen for our one NZD. Getting 85 yen for our one NZD makes a big difference in terms of spending power there.

Who knows maybe it will go above 90 before April next year. But I'm happy to take anything north of 85.

by J.C. | 20th Jul 22, 6:16pm 1658297775

I understand. JPY could change very dramatically in the case of a financial crisis. If JPY is repatriated, it strengthens dramatically. Remember, Japan has a net creditor investment position.

by HouseMouse | 20th Jul 22, 6:20pm 1658298045

Yeah.

I wouldn't be shocked if, by April '23, it was circa 60-65 yen to one NZD. After the SHTF some time later this year / early next.

But who really knows.

by Norm | 20th Jul 22, 6:25pm 1658298338

ANZ Serious Saver is showing as 1.8% under Bonus Savings Accounts on here but mine is showing 1.5% as is the ANZ site. Is the increase to 1.8% for a future date?

by jo147 | 20th Jul 22, 9:22pm 1658308942

Pretty sure I saw 27th June change date on here when increase was first mentioned.

by Norm | 20th Jul 22, 10:02pm 1658311344

Thanks Jo

by Alter Ego | 20th Jul 22, 6:36pm 1658298994

The most over indulged Housing policy for Multi-millionaires ever made with Over Taxed Taxpayers munny.

Beats paying a mortgage for any other reason, business or otherwise. Rental Mental support for the idle rich.

https://www.stuff.co.nz/national/politics/129327338/get-rich-quick-sche…

by Belle | 20th Jul 22, 6:47pm 1658299636

How much longer will we dodge Foot and Mouth. So the Aussies find viral bits in meat in Melbourne. Just one old ham sammy fed to a pig in the scrap bucket away from disaster?

by HouseMouse | 20th Jul 22, 8:13pm 1658304814

Construction company collapses continue across the ditch. Those who think Aus might offer a sanctuary for out of work NZ builders and tradies may need to think again. In fact we might see some out of work kiwi builders and tradies in Aus return back here, possibly to the dole.

https://www.macrobusiness.com.au/2022/07/construction-collapses-to-wrea…

by Squishy | 20th Jul 22, 7:51pm 1658303509

UK inflation pushes up to 9.4% from 9.1% last month.

by wozmad | 21st Jul 22, 2:41am 1658328114

still 50-200% cheaper in the supermarkets than NZ. steak and salmon are the only items on par. Iam here now on a holiday after 9 years. Kiwis are getting raped on all fronts!

by Carlos67 | 21st Jul 22, 6:00am 1658340047

Supermarkets alone are a false comparison try going to buy some fish and chips from a takeaways. Also you cannot compare like for like products. Sure the bread is cheap if you want to eat cheap bread. I'm sure the UK is great if your a vegetarian otherwise it sucks.