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
Still no more to report. Only ANZ has moved so far, post the OCR hike. CFML raised their rate however.
SAVINGS & TERM DEPOSIT RATE CHANGES
BNZ raised its TD rate offers today for terms to 1 year. For the six and 12 month offers, they are matching ASB's recent rises.
TOUGH IN THE RETAIL TRENCHES
Retailers see further 5% price increases in the next three months. The latest survey of retailers shows a still significant number are unsure if their businesses will survive the next year.
MORE COST INCREASES MEANS MORE PRICE INCREASES
Cost increases from grocery suppliers to supermarkets have risen further in September as suppliers face sustained increases in input costs. The Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index (GSCI) shows a +9.2% pa rise in September 2022, which will maintain pressure on retail supermarket prices.
FEWER HOUSES BEING AUCTIONED
Nationwide residential auction activity slowed slightly in the first week of October. Even allowing for the effect of school holidays, last week's auction numbers were low by any measure, and certainly for the Spring real estate selling season.
CONSUMERS REVERT TO CASH
Cash is back. There has been a big jump reported in usage of 'real' money. The latest Kiwibank household spending data shows that the volume of cash withdrawals is 70% higher than a year ago.
THE STRONG GOT STRONGER
Last week's +0.4% rise in the NZX50 capitalisation revealed a size split. The top five listeds all rose while many of the smaller listeds fell. Fisher & Paykel Healthcare was up +4.2% and Fletcher Building was the biggest gainer, up +6.8%. But the retirement sector fell -1.7% on average with a number falling more than -4% in the week. Other property listeds fell -0.3% on average and only GMT and Investore rose, and their good rises (up about +4% each), kept the sector falling away more. The Energy sector fell -1.5%, held up by a +5.7% rise by Vector. But see below for todays interim update.
MORE FLP ACCESSED
The RBNZ has revealed that [unknown] banks drew down another $470 mln on Friday last week. Now $15.2 bln is drawn on this program. Banks can have these funds for three years at the OCR rate. The fist of them ($1 bln) was drawn in December 2020, so these will need to be repaid by December 2023. The current OCR cost is 3.5% but by mid 2022 that will probably have risen to close to 5%.
MEASURING THE DECLINE
The RBNZ updated its M10 series for data for the June quarter. That reveals that house sales in the June 2022 quarter were the lowest since the September 2010 quarter. It also revealed that the total value of all residential real estate fell to $1.68 tln, the second consecutive quarterly fall, retreating -$82 bln since December 2021, a -4.7% fall so far in 2022. And don't forget, that is after adding in the new houses that are being built and occupied in 2022. The average retreat per dwelling will be more than the -4.7% six monthly figure they report overall.
SWAP RATES RISE AGAIN
Wholesale swap rates are firmer on global trends yet again with some local push now too. The key real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +4 bps at 3.92% the highest since January 2009. The Australian 10 year bond yield is now at 3.86% and up another +6 bps from Saturday. The China 10 year bond rate is unchanged at 2.76%. The NZ Government 10 year bond rate is now at 4.35%, and up another +6 bps and still above the earlier RBNZ fix for this bond at 4.33% which was up +12 bps from this time Friday. The UST 10 year is now at 3.89% and up another +6 bps from this time Friday.
EQUITIES LOWER EVERYWHERE
The NZX50 is down a sharpish -1.3% in late Monday trade. The ASX200 is down -1.6% in early afternoon trade. Tokyo has opened its Monday trade down -0.7% so far. Hong Kong has started down a very sharp -2.2%. Shanghai is back after a week's holiday with a flat opening - meaning it missed all of last weeks rises elsewhere. The S&P500 futures suggest that New York will open marginally lower.
GOLD STABLE
In early Asian trade, gold is at US$1695/oz and very little-changed from this morning and about where it closed at the end of last week in New York.
NZD STAYS SOFT
The Kiwi dollar has held at its lower level to be just over 56.2 USc now. Against the AUD we are marginally firmer at 88.3 AUc. Against the euro we are now at 57.7 euro cents and also a tad firmer than this morning's open. That all means our TWI-5 is at 66.7 and little-changed.
BITCOIN BECALMED
Bitcoin is seems becalmed today, very little-changed at US$19,520. Volatility over the past 24 hours was low at just under +/- 0.6%.
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41 Comments
"Tokyo has opened its Monday trade down -0.7%". Sports Day in Japan?
You are right. I missed that. Thanks
Retailers see further 5% price increases in the next three months. The latest survey of retailers shows a still significant number are unsure if their businesses will survive the next year.
Not everyone can be a winner, the economy just doesn't work that way.
I am sure every year for the last 100 years that some retailers are unsure if their business will survive,just like the historical survival rate for cafes,restaurants and bars,so many don't exist after 2 years.Retail has to also accept that the world is a different place,online purchasing isn't going away,adapt or die....I should know,my Video Ezy store is really struggling these days.
Stuff is chocka today with articles on businesses increasing prices and the bidding war for workers getting more intense.
CPI in NZ may have very well peaked with global commodity prices retreating but the numbers may remain elevated for a bit before falling back to under 3%.
The Housing Market Sucking Everything Into IT:
"nom, nom.. feed ME more economy"
nobody is commenting on the worker shortage caused by demographics. the baby boomers are 3/4 retired and we now have a situation of a shortage of replacement workers for the jobs they have vacated.
businesses have to bid up wages to attract replacements which adds another spoke to the inflation wheel. I don't see this unwinding in a nice fashion...
I chucked some staff recently, that's a good way of keeping wages down too.
Makes it crazy that I can't seem to get an interview in govt organizations in my field of expertise due to being 61. Well "field of expertise" may be pushing it. Haha.
But the upside is that I am getting even more fit and healthy! And I can look at the power industry with a detached sense of doom.
"...getting even more fit and healthy!".
I think I see the issue. For your next interview, turn up in a wheelchair.
And looking androgenous, wearing lots of fake tan.
And refer to yourself as at least 'they', or perhaps 'it'.
..and don't come across as too clever. Govt managers do not like a threat in the form of an employee who might outsmart them.
Well young people should leave the country because the boomers are likely to vote in the reintroduction of interest deductibility, bright line test reduction, and reintroduce foreign buyers to the property market. Why should they stay when it's already extremely difficult to make a life here?
You forgot to add in opening the immigration taps, which permanently diminishes our personal share of resources.
On the other side politically is the road to separatism which will surely be closed off amid a backlash that will have lasting negative social effects.
I am still to decide which will inflict the most long-term damage to our great little country.
When real wage increases always lag inflation, how can we blame wage increases? Shouldn't we be blaming margin inflation?
Did that really accelerate so much in the last 3 years, or was it just low interest rates?
Rightly or wrongly our company has service based pay increases along with yearly increases. Because of this, every time someone retires (who has been there a while), we can replace them with a lower cost employee who is still well paid, typically much more enthusiastic and quicker. So we actually get a productivity gain and a cost saving, offset by a bit of knowledge loss.
Some banks may wait for the CPI on the 18th before moving. From todays food inputs and retail increases we could still be over 6.5% inflation and not slowing much if any in the dec quarter. RBNZ will seriously consider 0.75 to 4.25 in nov since its their last chance until feb. All eyes on the 18th.
In the US, 5y real yields [1.78%] are trading 150+ bps above my estimate of neutral real rates (r*). And every time the Fed forced a tight policy (50-100 bps above neutral) for longer than a few months, 1 year later the SPX was much lower and credit spreads much wider. Link
In July 2022 (latest available data), the G5 Credit Impulse printed at 20y lows as the result of the combination of a gigantic post C-19 fiscal drag + Chinese de-leveraging + insufficient pickup in global bank lending.
While analysts expect earnings to grow by 8% in 2023 (green dot), such a drop in the Global Credit Impulse is instead consistent with an EPS contraction well in the double-digit area.
The message seems consistent: going forward earnings are likely to disappoint.
And disappoint very hard. Link
Saw a tweet and haven't run it through the fact check but anyway:
Wellington house prices have falled 39% in USD terms and 35% in Gold price terms from ATH.
I know. NZ house prices are not priced in USD or in Gold prices.
Interesting all the same.
Is the FLP making mortgage rates lower than they would have been otherwise?
If so does that mean after December it will take 3 years before rates are where they should be?
Retailers see further 5% price increases in the next three months.
And the RBNZ is farting around with 50pb tweaks to the OCR.
Orr is like the Roman Emporer that fiddled while Rome burned.
Inflation is the silent thief. Those prices are not coming down again. Y'all about to lose 5% of your purchasing power in the next 3 months. Inflation makes losers of us all!
Inflation is the silent thief. Those prices are not coming down again. Y'all about to lose 5% of your purchasing power in the next 3 months. We are all the losers here!
Kaumatua Orr sees it as "guardianship".
Inflation is theft..The worlds 500 richest have grown their wealth by 40% to $8.4 Trillion in the last 18 months. This is a DIRECT result of manipulating $$ to drive inflation... stealing from the middle class and poor to give to the rich. Inflation is the greatest theft of our time!
"Jeff Booth"
"Jeff Booth"
Infinitely more interesting than Kaumatua Orr to me (I'm not famous so this is not my Salman Rushdie moment)
Inflation is a tax.
That's not true at all. Inflation is being targeted right now and all assets are plummeting including houses, stocks, gold, silver, bitcoin... everything's falling relative to cash. The wealthy have much of their wealth in these things, and not cash. If the wealthy engineered this they did a great job of shooting themselves in the foot.
Look at Bezos' net worth. Dropped. Bill gates, dropped. Elon musk. Warren Buffet. In fact only one of the top 10 billionaires had their net worth increase this year. Got this from Bloomberg website.
Inflation is certainly theft...government sponsored house price inflation has been robbing NZ'rs for years !!
Y'all lost a whole lot of house purchasing power over the last 30 years.
NZTA are having so much fun closing roads,perhaps we should change their mission statement to keeping them open, bonuses attached to performance,penalties attached to potholes.
Dont worry about new roads, someone else will be doing it.
Such a shame couldn't post the image here of the one doing the rounds on WhatsApp its so funny.
Based on the Titanic I think with Jack up to his armpits in a pothole and the text " Hold on Jack...... the NZTA are on their way"
'everyone will be terrified in 14 days', same old 'be very afraid 'click bait you're putting us onto there careless...sorry.. carlos...wasted 5 minutes I could have spent watching kardashians
Yeah, sums it up.
I tell some of my friends that its fascinating to be around when the cycle comes to an end and we get the chaos, but it don't think they appreciate the "opportunity".
Toby Nangle estimates the Bank of England’s losses alone are currently around £200bn, and the Federal Reserve says it had notched up $330bn of unrealised losses by the end of the first quarter. We think it’s safe to say the pain has grown since then.
On the other hand, central banks are constructs of sovereign states and can literally create money out of thin air, which makes the whole bankruptcy question take on a different dimension.
https://www.ft.com/content/ddc5d867-59fe-4c9b-a588-4066304318b6?segment…
Not everyone can be a winner, the sooner we accept that the sooner we can make progress on resolving issues like inflation.
Yeah but the top 0.1% now seem to think they can win and own everything.. at the expense of everyone else - who soon all be the losers. And the process of their wealth accumulation is accelerating and the divide and excessive greed is becoming very obvious to all. People like Orr and robertson stand out as the people that are þo blame. The new auckland mayor and his ilk are definitely going to continue to take an axe to the jobs and reputations of those that have slept at the wheel or worse have deliberately fleeced the majority for their mates
To come are many more major swings and wins by right wing local and central governments like trump and italy.. and with them will be increasingly serious riots and revolutions. I def wouldnt want to be a well known and wealthy banker, landowner or current politician in a couple years.
But everyone can be a millionaire and a landlord if they all just worked very hard.
On shares I don’t know how anyone who follows the market objectively could ever think that this year would be anything other than a very poor year.
Perhaps a good year to buy some quality stocks at discount prices though
Maybe…but I think that’s more of a story for 2023.
Future returns got better this year due to the price improving. Stocks on sale yo!
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