A review of things you need to know before you sign off on Friday; ANZ raises its floating rates, trade balance deteriorates, credit cards in funk, yield curve goes flat, swaps stable, NZD holds, & more

It used to be 0.05% (yes zero point zero five) interest with a bonus of 0.2% bringing it to a grand total of 0.25%pa ! 

Yes, my mistake, actually x2. The actual change happens on September 1, which I should have noted. It's in there now. And I originally had the new rate incorrect (typo). It will become 2.30% and not 2.80%. Apologies to everyone, inc. ANZ.

We really need to see some trade balance figures adjusted for the lack of tourism export dollars since 2019. On the surface, we are down 15 billion or so a year in tourism earnings, which will greatly imbalance our trade figures.

Sadly, English and Key didn't bring us much of anything better. Short term sugar rushes built on land speculation and debt rather than growing productivity by incentivising business rather than speculation.

They may have had slightly less stardust but unfortunately the substance to bring productivity was absent, seeing our productivity continue to lag and reliance on debt increase.

Yes, "nous", as in the experience of having led a large company with thousands of employees. This means having some skill in negotiating, implementing ideas, finance, operations etc...

Raw log exports went to China mainly used for concrete pour Formwork? There construction industry is in a sharp contraction ,so less demand,at lower volume lower prices?

They have been inverted for a while, whereas NZ yields flattening is new "news".

Cheers. That's a striking correlation. It looks like the 2006 inversion predated Lehmans' sub-primes by quite a lot.

You’ve been out of the market long enough for the market to correct those losses and then some. Timing the market is a fools game.

Haha!  Went for a workout, and got woke in your face.

Yeah, society is nuts - a mix of stupid over-sensitive crap like that and violent food riots.  Surely can't last.

I don't know, you tell me.

But immigration is a privilege, and it pisses me off no end when immigrants, especially 'business migrants', commit fraud on such a regular basis.

Doesn't concern you? 

We'll be one of the first to cut, and our dollar will sink. 

Independent Observer,

In the long run, I would like to see the current account running positive - as Australia's is currently. That would mean we would not have to be importing capital - currently about $23 billion per annum . But we won't be in that desirable position of a positive external current account for many years if ever. In the meantime I would be relaxed if the current account deficit could be brought back to say $5 billion but that is a huge ask.

The three big contributors to the current account are merchandise goods, services, and repatriated interest payments to overseas destinations on historical loans.

The current merchandise deficit is $11-6 billion right now and this is a record. it is primarily due to very big increases in imports which have overwhelmed a more moderate increase in exports.  The export increase has been due to higher prices as there is no increase in volumes.  And those export prices have in the last couple of months been turning against us from record highs.

Services sometimes run at a surplus but currently these are in big deficit because of limited tourism and the decline in overseas students studying here.  But this has been balanced somewhat by less NZers going overseas.  Right now the uptick  in Kiwis heading overseas seems to be exceeding the uptick in foreign tourists coming here.  Queenstown is awash with Aussies but there are aren't many tourists elsewhere.  I don't see services turning positive for quite some time.

Interest payments to foreigners are increasing.

The combined effect of all of these factors is that I see difficult times ahead. At some stage I see a further decline in the exchange rate as the mechanism to bring the current account into a better balance. Our current account deficit  (merchandise, services and interest payments) is sitting at $23 billion per annum. Resetting  will occur when the financial reef fish stop darting around and decide they need to move their money away from NZ. At that point the exchange rate will drop creating further inflationary pressures. I cannot predict exactly when those irrational financial reef fish creatures will see the light but at some stage it will occur.

The situation as outlined here, plus the widespread failure to even recognise this situation, is why I am less than optimistic about where we are heading to in Aotearoa NZ.  

KeithW