What happened Wednesday

Business / news

A review of things you need to know before you sign off on Wednesday; ANZ hikes home loan rates, migrant flows pick up quickly, dairy prices rise, farm sales 'vulnerable', swaps firm, NZD soft, & more

[updated]

21st Sep 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
ANZ raised fixed mortgage rates sharply today to levels well above their rivals. More here.

TERM DEPOSIT RATE CHANGES
ANZ also raised a number of term deposit rates, but these rises essentially match some rivals, except perhaps for their 9 month rate at 3.65%. Rabobank also raised their TD rates, also to 3.65% for 9 months, but applied that level to 6 months as well. Rabobank's one year rate is now 4.40%, the highest of any bank.

PAYING FOR BAD CONDUCT
The FMA is reporting of hundreds of conduct & culture issues from life insurers resulting in tens of millions of dollars of customer remediation.

IMMIGRANT FLOW PICKS UP SHARPLY ...
The number of overseas workers coming to NZ is picking up strongly. Many still here have transferred over to residence visas. But more than 8000 new arrivals on work visas in August shows that the flow is picking up again. However it could be several months before overseas students return in significant numbers.

... AND WILL RISE FURTHER
Meanwhile, the Government today said from October 3, registrations for the Samoan Quota will reopen for border entry, and from October 5 registrations for the Pacific Access Category will reopen.

HIGHER PRICES MAY LAST
Rising dairy prices and a falling NZD have put an effective floor under the 2022/23 farm gate payout estimates. Although not as high as the 2021/22 season, these will still be very high by historic standards. Today's dairy auction cemented that view. Also keeping prices up are supply issues around the world, including in New Zealand. The season here will start on the back foot volume-wise due to unusual wet weather. Risks are rising that local supply won't expand, as many analysts had originally. suggested.

"THE PANDEMIC IS OVER"
More than $3.9 bln was transacted on credit cards in August (C13), the largest August activity since ... well, forever. Sure August in 2021 was pandemically damaged, as was August in 2020. But the previous high was $3.4 bln in August 2019 and this 2022 level is +16% higher than that. Billings on NZ-issued cards used overseas are rising again too. Inflation will be a reason for some of these increases of course.

NO EVIDENCE OF CREDIT CARD STRESS
But balances outstanding on credit cards are not rising much at all (C32), down -5.5% year-on-year and down -18% from August 2019. But 'inflation' is not adding to these balances. Nor is there any evidence that the long-term retreat of balances incurring interest are reversing because they are not. They are down -29% from the equivalent pre-pandemic level.

PETROL NO LONGER A SERIOUS INFLATION PRESSURE
Local petrol prices have reverted to late 2021 levels, helped of course by the [temporary?] reductions in excise taxes. Discounting remains as high as ever. Discounted pump prices are only +7% higher now than prices in effect in late 2018.

BNZ REVEALS NEW DIGITAL INVOICE FINANCING PRODUCT
BNZ is launching a digital invoice financing product for businesses named CashFlow Plus in partnership with Waddle from Xero. The bank says CashFlow Plus allows businesses to access up to 80% of the value of their unpaid invoices quickly and easily, including on the day they're issued. The lending is secured against the unpaid invoices, meaning there’s no need to put up additional security, such as property. BNZ describes itself as the only "tier one" NZ bank offering invoice financing as part of business lending options, describing the partnership with Waddle as "a total, digital-first revamp of BNZ’s existing invoice finance offering."

FARM SALES "VOLATILE & VULNERABLE"
Data released today by the REINZ shows there were -126 fewer farm sales (-38.2%) for the three months ended August 2022 than for the same period in 2021. Overall, there were 204 farm sales in the three months ended August 2022, which was -20% lower than in July. Pre-pandemic, there were 386 farm sales in the three months to August 2019, so the latest sales data is down by a massive -48%. Sales prices are falling too. The subdued sales activity is almost nationwide.

SHARP FALLS IN LIFESTYLE BLOCK SALES
Other data released today by the REINZ shows there were -120 fewer lifestyle property sales (-7.7%) for the three months ended August 2022 than for the three months ended July. Overall, there were 1,439 lifestyle property sales in the three months ended August 2022, compared to 1,893 lifestyle property sales for the three months ended August 2021, a huge -24.0% fall. Pre-pandemic, lifestyle block sales in August 2019 were 1745 so the latest month is down -17.5% on that basis too.

QUICK FLICK
Macquarie Asset Management is 'retiring' as the manager of its retail and wholesale funds, passing that role over to Mercer. It was only in March 2022 that Macquarie took over these funds when it acquired AMP Capital NZ. Macquarie will remain an investment manager for these funds in the background, but they now reside on Mercer's platform. Mercer has been growing its platform significantly.

INSTRUMENT FLYING UNCERTAIN
Even though its current revenues have rebounded strongly recently, Air NZ is refusing to give full year guidance because the outlook remains very uncertain. However they do report that they are currently operating at 70% of their pre-pandemic level. AIR is #36 in the NZX50 capitalisation.

VERY HIGH CONSTRUCTION CRANE USAGE
The semi-annual RLB survey of construction cranes in operation with the residential construction sector using 77 cranes on major projects nationwide, a record for this sector. 59 are in Auckland of which 7 are for aged-car facilities. As at the end of September there were 148 long-term cranes on construction sites across the seven main centers. 104 cranes in Auckland, 12 in Wellington, 10 in Christchurch, 8 in Queenstown, 5 in Tauranga, 5 in Dunedin and 4 in Hamilton. The peak was 150 in March 2022.

SWAP RATES RISE
Wholesale swap rates are probably firmer today on global forces ahead of tomorrow's Fed decision. Our chart will record the final positions. The 90 day bank bill rate is up another +2 bps at 3.71% after yesterday's big jump which is a new high since January 2015. The Australian 10 year bond yield is now at 3.73% and up +3 bps from this time yesterday. The China 10 year bond rate is also down -1 bp at 2.68%. The NZ Government 10 year bond rate is now at 4.06%, up +4 bps from this time yesterday and now above the earlier RBNZ fix for this bond at 4.04% which was unchanged. The UST 10 year is now at 3.55% and up +7 bps from this time yesterday. At one point in between it rose to 3.59%.

EQUITIES SELL OFF AHEAD OF THE FED
Wall Street struggled to get traction today in their Tuesday trade and never did and the S&P500 ended down -1.1%. Tokyo is down -1.4% in mid-day Wednesday trade. Hong Kong is also down -1.4% in morning trade, while Shanghai is down -0.6%. The ASX200 is also down -1.4% in afternoon trade. The NZX50 is down -0.5% in late Wednesday afternoon trade.

GOLD FALLS SLIGHTLY
In early Asian trade, gold is down -US$10 from this time yesterday to US$1,665/oz.

NZD STILL ON DOWNWARD SLIDE
The Kiwi dollar has fallen another -½c from this time yesterday and is now at 59 USc. It has been lower in between however. Apart from the pandemic dive, that is a 13 year low. Against the AUD we are another -¼c lower at 88.2 AUc. Against the euro we down marginally to 59.2 euro cents. That all means our TWI-5 is at 68.7 and down another -30 bps from this time yesterday. That is its lowest since October 2020.

BITCOIN SLIPS
Bitcoin has risen today and is now at US$19,032 and down -2.2% from where we were this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.

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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63 Comments

by Peter M | 21st Sep 22, 4:17pm 1663733823

Petrol might not be a serious inflation driver but Diesel still is! The current price is still about $1 higher than the average price in 2019

by sit23 | 21st Sep 22, 4:23pm 1663734227

If that $1 rise remains stable into the next year, it is adding zero to inflation in the new year. That will be the government spin.All other rises in prices caused by the high diesel price trickling through will be treated as if the govt doesn't know they were caused by the high diesel prices

by bw | 21st Sep 22, 4:32pm 1663734726

Yes, The Base Effect is going to start to swing into the stats in the very near future.

by rolande | 21st Sep 22, 9:16pm 1663751781

Is it the same price now as 91? Then you have to pay RUCs on top.

Is there any difference to diesel refining supply chain that is causing this?

by Averageman | 21st Sep 22, 4:28pm 1663734493

Lifestyle blocks down. They are another poster child of the pandemic with people wanting to get away from people. They are and always will be a whole lot of hard work, as recent buyers are finding out.

by Yvil | 21st Sep 22, 4:39pm 1663735188

Local petrol prices have reverted to late 2021 levels, helped of course by the [temporary?] reductions in excise taxes.

Time to end the discount on fuel taxes, we desperately need the money for our infrastructure, also it will help to reduce inflation. Now is the perfect time.

by Foxglove. | 21st Sep 22, 5:26pm 1663738008

Agreed but with the proviso that such tax collocation is invested seriously, sensibly into legitimate, necessary & purposeful infrastructure rather than pointless cycle bridges, unviable airport rail links and pie in the sky international jet airports in the middle of nowhere.

by Wilco | 21st Sep 22, 5:08pm 1663736936

The futures market would disagree. 2022/2023 price around $10kg ms or 7% above last season.

We are currently 20% behind season to date due to wet weather and with no chance of catching last season's production.

We fixed about 25% of our production through Fonterra contracts at around $9.70 but now stopped because we reckon there is more upside to come plus add on the forecast extra 10c -.20c dividend.

This coming spring there will be more listings as aging farmers take advantage of increased values and banks revise their underlying dairy payouts upwards to help with financing.

by redcows1 | 21st Sep 22, 6:02pm 1663740133

We're ok here. About -2% std with last year being excellent first half. But we are probably one of the few and just had 170mm the last 48hrs to soak things again. Payout certainly looking good and reiterating the less is more mantra.

by HW2 | 21st Sep 22, 9:25pm 1663752334

Company announcement tomr morning. Should be very positve and a strong profit forecast for 22/23. I know that the company's success and profitability is usually inverse to the farmers. Maybe now it is changing.

by Independent_Observer | 21st Sep 22, 5:28pm 1663738101

I thought the 1 year swap had peaked around 4.2 and may not go higher. It now looks as though it could continue its trend for the last year and head up to 5%. Pure speculation....but who knows if the Fed lifts another 0.75 (or even 1%) tomorrow.

by Independent_Observer | 21st Sep 22, 5:34pm 1663738493

That would be a rise in a space of 2 years of more or less 500 basis points. The equal opposite of what happened post GFC in New Zealand to save the housing market.

by Flying high | 21st Sep 22, 5:33pm 1663738429

PETROL... INFLATION PRESSURE

Local petrol prices have reverted to late 2021 levels, helped of course by the [temporary?] reductions in excise taxes

IO take note ...

by Independent_Observer | 21st Sep 22, 5:36pm 1663738564

Great - can we put the petrol taxes back on again then and start reducing the governments deficit spending? (to tackle the root cause of the inflation problem?)

by Flying high | 21st Sep 22, 5:43pm 1663739017

Robbie knows it will add 0.5 percent... so no

When is this lot going to start charging RUC for EVs. That's a rort by mainly rich people not paying for their road use.

by Independent_Observer | 21st Sep 22, 5:53pm 1663739624

Yes with his Bachelor of Arts its a steady hand managing the country's finances.

by RickStrauss | 21st Sep 22, 8:45pm 1663749953

Presumably they're being advised by others. Could've been worse though: zoology.

by nigelh | 21st Sep 22, 9:21pm 1663752061

Not so sure about that. Would have enabled him to study the monkeys surrounding him.

by Rex Pat | 21st Sep 22, 6:33pm 1663741989

April 2024, at the earliest. Even then, the $8,625 subsidy we received will pay whatever is levied, for quite some time.

Thanks JA. This one was on you.

by Officebound | 21st Sep 22, 8:34pm 1663749288

0 RUCs and $$ Rebates are a deliberate, short term incentive to increase NEV vehicle uptake, and its working.

The poor weren't ever going to lead the uptake of NEV's, but they have a better chance of owning one in 10 years thanks to these incentives. They'll also have better supporting infrastructure because there are more NEVs on the road

In less than a year, NEV uptake has gone from under 10% to over 40%

These are great results!

by Flying high | 21st Sep 22, 8:58pm 1663750739

Yep buy an EV on HP that is close to knackered but how would you know the battery is about to give up soon after. Car manufacturers already struggle for lithium batteries for their new vehicles. So what cost and availability of spare parts. There is more chance of a slug crossing a busy road

by Officebound | 21st Sep 22, 9:32pm 1663752741

So do second hand petrol cars not get sold 'knackered'?

What opportunities do you see for future battery refurbishment/replacement? Or is the status quo clearly better?

by JimboJones | 21st Sep 22, 9:24pm 1663752274

Sorry Officebound, no positive comments here please. You need to whinge about ute’s having no alternative and inflationary impacts and how the government are telling you what to do.

by Larry76 | 21st Sep 22, 11:37pm 1663760264

Oh boo hoo Rex Pat. Efficient vehicle incentives & emissions standards brought us back into the civilised world. Yes, thanks JA.

For RUC you can thank Simon Bridges, but even then it’s a token amount of revenue. $76 per 1000km is $24 million pa for the 32,000 EVs in NZ. I wonder how much a carbon tax on all the daft utes and SUVs would bring in? That should pay for a few negative externalities I reckon.

by Rex Pat | 22nd Sep 22, 12:20am 1663762823

No boo hoo here. I just love to point out that it’s financially comfortable people like me taking up the rebates so the poor can maybe get that vehicle in 10 years. Talk about trickle down. More like a golden shower.

by Richardfromauckland | 21st Sep 22, 5:37pm 1663738656

to quote ccr: there's a bad moon on the rise.

by Flying high | 21st Sep 22, 5:41pm 1663738865

SHARP FALLS IN LIFESTYLE BLOCK SALES

Overall, there were 1,439 lifestyle property sales in the three months ended August 2022, compared to 1,893 lifestyle property sales for the three months ended August 2021, a huge -24.0% fall. Pre-pandemic, lifestyle block sales in August 2019 were 1745 so the latest month is down -17.5% on that basis too.

Everything is slower esp compared to the red-hot 2021 year. Still on the bright side there was approx 500 sold per month, not too bad

by Flying high | 21st Sep 22, 6:02pm 1663740132

200 Auckland rental properties were listed yesterday on Trademe

All taken

Wednesday is usually a big day for listings so I let you know that tomorrow

by Pa1nter | 21st Sep 22, 6:20pm 1663741203

Wasn't someone keeping a running total of Auckland rentals or something?

by Flying high | 21st Sep 22, 7:58pm 1663747094

I have been 'away' cant tell you where so have been looking for a flat

by Baywatch | 21st Sep 22, 8:42pm 1663749769

Ukraine?

by HouseMouse | 21st Sep 22, 7:06pm 1663744016

Worrying rhetoric from the nasty little Russian leader.

by Baywatch | 21st Sep 22, 7:10pm 1663744218

Carlos, Roger, and Audux will be cheering tonight over their vodka bottles

by dumbthoughts | 21st Sep 22, 7:21pm 1663744893

Until Putin announces the special mobilisation of overseas pro-Kremlin Internet commenters!

by mfd | 21st Sep 22, 7:57pm 1663747048

Doesn't this rather go against the narrative of Russian supremacy? Last week we were told the huge Ukrainian offensive was a trap, no sign of the counter-attack materialising and now Putin is having to pull in more conscripts to his already demoralised force. The referenda seem to be a desperate attempt to fend off the Ukrainian re-conquest of these regions.

I'm sure that RT will feed them a new line.

by HouseMouse | 21st Sep 22, 8:03pm 1663747389

Yeah.

I think Putin's invasion is doomed.

And that's a little scary.

by nigelh | 21st Sep 22, 9:29pm 1663752555

Yes. Serious economic consequences will be around for at least five years. EU and specifically Germany will be economically very badly off.

USA likely to come out economically smelling of roses to the EU's/Germany's detriment. Ukraine will be a basket case for decades.

It's likely Putin will not survive politically for five years.

by Independent_Observer | 21st Sep 22, 7:37pm 1663745844

What scares me is he seems to have a far better understanding of the macro economic situation than the leader of the free world. If you watch Bidens 60minutes interview, and compare it with the recent statement Putin made on the global economy. Putin knows exactly what is going on and Biden is in absolute lala land.

Not that I think Putin is a respectable human being, but it is worrying when the leader of the 'bad side' appears to know what he's doing with 10x the coherency of the good guys.

Then again, if you read the 4th turning, its the Biden/Trump/Putin generation of men who were/are predicted to start the next global conflict. So perhaps we shouldn't be surprised.

Just as the west was asleep at the wheel in the 1920's and 1930's, it appears we are once more.

by whakahokia mai | 21st Sep 22, 7:24pm 1663745093

Putin has come up with some novel views as to the predicament his country finds itself in. The wicked west is behind all of their problems. Would be hilarious if it wasn’t spoken by an individual with the power to plunge Europe into a nuclear winter. What can one do with a person who speaks delusional nonsense and makes guarded threats about using the nuclear option. Very difficult to ignore him.

by HouseMouse | 21st Sep 22, 8:06pm 1663747588

yeah he's spouting a load of nonsense propaganda.

by Squishy | 21st Sep 22, 8:59pm 1663750769

If President Putin used a nuclear weapon it would immediately trigger a new arms race with every country on its border developing or buying systems. The loser would be Russia.

Also using one nuclear weapon wouldn't actually halt the Ukrainians, he would have to use a dozen or more.

by HouseMouse | 21st Sep 22, 9:30pm 1663752643

2 or 3 would be enough wouldn’t it?

create a few strategically located, irradiated wastelands to act as a no man’s land or ‘demilitarised’ zone

by Carlos67 | 21st Sep 22, 10:20pm 1663755659

1 is enough unless you are stupid and don't think there will be a second. The USA only used 2 to end a war and they got lucky because the Japanese didn't know they had no more but the Ukrainians know Russia has plenty if they start using them.

by Firstclass | 21st Sep 22, 7:44pm 1663746246

Economy news, local fruit and vege shop selling one Cauliflower for $9 and Broccoli for $7 each.

by Room319 | 21st Sep 22, 8:00pm 1663747220

Don't shop there.

by HouseMouse | 21st Sep 22, 8:07pm 1663747666

Look for alternatives?

Take more vitamins and minerals instead?

by Zachary Smith | 21st Sep 22, 8:26pm 1663748763

Bought a 2.7kg lump of rump steak from New World this morning for $52 (18.99kg). That's eight meals for me.

by Baywatch | 21st Sep 22, 8:43pm 1663749829

Mee artery's..

by Sluggy | 22nd Sep 22, 7:28am 1663788538

Inside word is costco will have firstlight on the shelves.

by waymad | 21st Sep 22, 10:06pm 1663754771

We are managing to exist on Green Dragon broccoli florets which just..keep..coming from an autumn sown few plants....

by Squishy | 21st Sep 22, 8:55pm 1663750505

The number of overseas workers coming to NZ is picking up strongly.

Welcome to the return of the low wage economy.

by MLSmith1 | 21st Sep 22, 9:06pm 1663751197

It’s too late… restructures, sales and liquidations are required.

If NZ isn’t careful, well be seen as running a modern day slavery!

by Albert2020 | 21st Sep 22, 8:58pm 1663750688

What’s with all the bloody ads on a paid subscription site?

by Zachary Smith | 21st Sep 22, 10:02pm 1663754573

Log off and on again.

by HouseMouse | 21st Sep 22, 9:02pm 1663750923

Just locked in 18 months mortgage with BNZ for 5.29%.

Reasonably happy with that.

by Glitzy | 21st Sep 22, 9:07pm 1663751265

Nice work. Do you mind sharing the rate before this refinance ?

by HouseMouse | 21st Sep 22, 9:25pm 1663752330

I was on 2.60

so certainly a big jump.

however Our annual household income has risen quite a bit this year and we are finishing a car loan in November so our net position in terms of outgoings will if anything be better in 2023 than 2022

by HouseMouse | 21st Sep 22, 9:24pm 1663752282

BNZ knocked 0.2% off the advertised rate

by Glitzy | 21st Sep 22, 9:06pm 1663751175

Various news outlets reporting the China Stats dept reporting 20% youth unemployment. Significant because reshoring and Covid lockdowns clearly knocking the stuffing out of their domestic economy.

Given these are the official stats one wonders what the real numbers are like.

by HouseMouse | 21st Sep 22, 9:28pm 1663752503

I think it’s been late teens, close to 20% for a while?

Big trouble in Little China.

by Glitzy | 21st Sep 22, 9:37pm 1663753068

I'm in HK at the moment doing a biz trip. Mates seem to think real rate is North of 30%. Shanghai property prices down circa 30/40% and developers trying to sell unfinished places at roughly half of what contracted buyers have walked away from. Certainly not looking pretty.

by HouseMouse | 21st Sep 22, 9:47pm 1663753679

Must be at least a moderate chance of a full blown financial crisis?

Maybe the CCP has enough power and control to avert it, and instead the economy will be mediocre for years…

by Glitzy | 21st Sep 22, 9:53pm 1663754012

Thats prob the likely outcome. I'm 97 they let all the ITIC investment trusts go bust but this time the issue is prop developers and banks. Prob too big to fail.