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
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
63 Comments
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
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.
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.
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.
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 ...
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!
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
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.
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
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.
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.
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.
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.
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.
The number of overseas workers coming to NZ is picking up strongly.
Welcome to the return of the low wage economy.
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.
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.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.