What happened Tuesday

Business / news

A review of things you need to know before you sign off on Tuesday; house prices drop fast, food prices rise fast, rents rises mixed, swaps lower and more inverted, NZD holds, & more

13th Sep 22, 4:56pm 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
BNZ raised its one year fixed rate to 5.15%, matching ANZ, ASB and Westpac for this fixed term. Bank of China raised all its fixed rates.

TERM DEPOSIT RATE CHANGES
No changes to report here today.

BIGGEST DROP EVER
The REINZ says August house prices were 'weaker than expected'. In fact they reported the biggest drop in house prices over the last six months since REINZ records began.

UP BRISKLY
Stats NZ reported that food prices rose fast in August, surprising analysts. Food prices were up at their fastest pace since 2009 and maybe dashing any hopes that the Q3 CPI would moderate like it seems to be doing in other countries. Major retailer Foodstuffs said the increase was not due to its system-wide pricing changes in the month

ALSO UP BRISKLY
Rents rose briskly too in April according to separate Statistics NZ data. There were up +4.0% from a year ago for all properties, although this rise is less than half the food price increase. And these rises aren't even. In Auckland new rentals rose only +2.5% in August, they rose only +0.9% in Wellington after a long period of outsized raises, and they rose +6.3% in Christchurch compounding an equally long period of outsized rises.

FALLING AT ALMOST $2 BLN PER DAY
In Australia, there are 10.8 mln dwellings. In total they were worth AU$10.146 tln as at March 2022. But by June they had fallen in value to AU$9.983 tln. That is a loss of value of -AU$162 bln - or -AU$1.8 bln per day.

ALL OK ACROSS THE DITCH
Staying in Australia, that value retreat hasn't hurt business confidence - yet. The widely-watched NAB business sentiment survey for August improved, with conditions holding high and confidence improving. Westpac had a consumer sentiment survey out too, and that improved as well.

SWAP RATES QUIET
Wholesale swap rates are lower and more inverted. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 3.58%. The Australian 10 year bond yield is now at 3.60% and up +3 bps from this time yesterday. The China 10 year bond rate is little-changed at 2.67%. The NZ Government 10 year bond rate is now at 3.92% and now well below the earlier RBNZ fix for this bond at 3.97% which was up +4 bps. The UST 10 year is now at 3.34% and little-changed from this time yesterday.

EQUITIES MIXED BUT MOSTLY UP
Wall Street ended higher with the S&P500 up +1.1% in Monday trade. Tokyo is up only +0.1% in late trade today. Hong Kong came back from holiday and is up +0.4% so far. Shanghai is up +0.3% in mid-day trade. The ASX200 is heading for a Tuesday rise of +0.7. But the NZX40 is down -0.4% today.

GOLD UP
In early Asian trade, gold is up +US$7 from this time yesterday to US$1,722/oz.

NZD ON HOLD
The Kiwi dollar is firmish at 61.3 USc. Against the AUD we are softish at 89.2 AUc. Against the euro we are now at 60.5 euro cents. That all means our TWI-5 is un-changed at 70.5.

BITCOIN RECOVERS FURTHER
Bitcoin has recovered some more, now at US$22,327 and up +2.3% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.8%.

LATE TODAY BECAUSE...
... the interest.co.nz journalists were out plotting and planning our future coverage. And we did it on Waiheke Island.

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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19 Comments

by fortunr | 13th Sep 22, 5:01pm 1663045267

Foodstuffs said the increase was not due to its system-wide pricing changes in the month

LOL, yeah right...

by Independent_Observer | 13th Sep 22, 5:26pm 1663046816

Its going to be interesting to see if 2021 was the end of a 40 year cycle of interest rates.

Typically the long debt cycle (if you believe Dalio's theory) is around 80 years. So we've had 40 years of rising interest rates from the 1930s to 1970s....then falling interest rates from 1980's through to 2021.

Do we now have 40 years of normalising/rising rates ahead of us as the world becomes more inflaitonary?

(I don't know, but we are going to find out if we live long enough...)

by Yvil | 13th Sep 22, 5:46pm 1663048006

In Australia, there are 10.8 mln dwellings. In total they were worth AU$10.146 tln as at March 2022. But by June they had fallen in value to AU$9.983 tln. That is a loss of value of -AU$162 bln - or -AU$1.8 bln per day.

Or in other terms that's a drop of 1.6% in three months

by J.C. | 13th Sep 22, 6:45pm 1663051527

Losing AUD1.8 billion of wealth every day has way more impact.

by mfd | 13th Sep 22, 9:09pm 1663060172

Heartland bank are offering special term deposit rates to shareholders, 4% for 6 months and 4.3% for 12 months.

For that increasingly rare investor who is interested in TDs but not terrified of owning shares, and not already all-in on investment property.

by Justa comment | 13th Sep 22, 7:21pm 1663053671

Heartland will be keen for govt deposit guarantee next year with their BBB rating, will make it alot easier for them to attract large depositors. I believe the guarantee should not be given to B grade banks. It will also make Rabo more attractive, although they do have a single A rating.

by DTRH | 13th Sep 22, 5:59pm 1663048770

House price’s crash the biggest six month drop on record but will be way over shadowed by next six month drop.

by JimboJones | 13th Sep 22, 6:44pm 1663051444

After probably the biggest rise in history. It’s nowhere near a crash or affordable until prices are way below 2020.

by J.C. | 13th Sep 22, 6:46pm 1663051578

House price’s crash the biggest six month drop on record but will be way over shadowed by next six month drop.

OK Nostradamus.

by Justa comment | 13th Sep 22, 7:14pm 1663053283

yes Auckland median now down 200k

by Uninterested | 13th Sep 22, 6:06pm 1663049160

Plotting and planning: at a winery?

by Rob Reid | 13th Sep 22, 7:58pm 1663055924

I hope they had a grape time

by HouseMouse | 13th Sep 22, 8:12pm 1663056767

And maybe they had a wine about their DGM readers

by Glitzy | 14th Sep 22, 1:29am 1663075784

I would imagine Interest has a good deal of revenue from Barfoots / property related advertising. Need a cunning plan for the next few years if the housing market has a long winter.

A suggestion. Increase coverage on NZ stocks and target revenue from stock infomercials. Providing they are clearly categorized as ads they will be partly informative and broaden the news coverage base of the articles.

Suggestion two... quite a few firms now doing seed capital raising for start ups and expanding firms. Worth considering approaching them for articles on the sector and ads for their websites.

by DTRH | 13th Sep 22, 6:13pm 1663049597

Have a look and see what Aussie housing stock was worth 10 years ago as it will keep tanking until it drop to around this figure, NZ could go right back in time as is more overpriced than Australia compared to income’s

by J.C. | 13th Sep 22, 7:00pm 1663052445

As noted earlier today, total h'hold land / property onwership value as a proportion of GDP:

Aussie - 330%

NZ - 520%

by Glitzy | 14th Sep 22, 1:20am 1663075224

Nice stat.

by bw | 13th Sep 22, 7:18pm 1663053518

"(UK) Unemployment drops to the lowest level since 1974. The unemployment rate fell to 3.6pc.."

Which means what?

Interest rates; mortgage rates, are going to go a lot higher. Here, there and everywhere.

by USKiwi | 13th Sep 22, 8:04pm 1663056266

Jeez I miss the strategy days on Waiheke Island!! The large corporates are too afraid to organise "extravagant" strategy days in case the media get hold of it.....it's been a major drain on team culture (not to mention we no longer get great work stories off the back these strategy days....many relationships formed and broken on Waiheke Island strategy days). Hope you guys enjoyed a well deserved day away from the office for all the awesome work you do!