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. Update: We had missed a Westpac advice earlier in the day, raising their floating rate by +50 bps, and raising most fixed rates by +10 bps. More here.
SAVINGS & TERM DEPOSIT RATE CHANGES
TSB has raised some key rates. Their new 6 month rate is now 3.60% and their new 1 year rates is now 4.30%. Both match or exceed main bank rates but are not special compared to challenger bank benchmarks. Update: Westpac has also raised all their TD rates for terms to 18 months. These increases are between +10 bps and +30 bps.
STRONGER THAN EXPECTED
Retail spending as recorded by electronic card transactions was stronger than expected in September, rising by +1.4%. Much of that appears to be related to increased spending by international tourists, although there was a surprising gain for spending on apparel. Spending in the hospitality sector is now back around the levels that we saw prior to the pandemic. But apart from that it is hard to know from this how much can be attributed to inflation. The number of transactions were up +5.3% from pre-pandemic levels, so there will likely be a 'real' gain. Inflation however will account for much of these September gains.
TRUCKING ALONG WELL
ANZ's truckometer metrics continue to be volatile. The Light Traffic Index (cars) lifted another +1.9% in September, while the Heavy Traffic Index (trucks) eased -3.3% after jumping strongly last month. The full quarter for the Heavy Traffic Index. rose +1.6% over the quarter which is well above the current ANZ Q3 GDP forecast of a +0.4% quarterly rise.
GOVT RESPONDS TO HWEN CLAIMING PROGRESS; FED FARMERS LIVID AT IMPOSED TWISTS
The Government has unveiled its proposal to levy farmers for greenhouse gas emissions by 2025. It claims their proposal 'would see New Zealand farmers lead the world in reducing emissions and help give NZ a competitive advantage in green conscious global marketplace'. And it claims it largely adopts the HWEN positions. One of the major differences between the Government proposal and that of He Waka Eke Noa is how on-farm sequestration is treated. The Government proposal includes some reward for riparian plantings and sequestration that occurs due to stock exclusion. However, the range of types of vegetation included is much narrower than was proposed by He Waka Eke Noa, and the Government is wanting this to be only a short-term solution, with all rewards for sequestration eventually occurring through the Emissions Trading Scheme (ETS). Farmer lobby group Fed Farmers strongly disagrees with the overall Government approach, saying it bastardises HWEN and will 'rip the guts' out of small town NZ' by rewarding foreign investors in pine plantations with tax subsidies sourced from local taxpayers.
CASE CLOSED
The Serious Fraud Office has closed its investigation into Fuji Xerox New Zealand after determining it is not in the public interest to progress it further. That decision hinged on the fact that no New Zealand investors suffered losses, and separate civil actions have generated remedies.
A NARROWER LOSS DESPITE HIGHER UNREALISED WRITEDOWNS
The RBNZ presented its Annual Report today, revealing a balance sheet that grew +11% in the year to June 2022 and now totalling $93 bln. It also said it won't be paying a dividend to the Treasury this year after reporting an $86 mln loss (lower than the $106 mln loss in 2021). Unlike last year when it was FX losses that drove the deficit, this year unrealised fair value losses, partially offset by higher interest revenue and FX gains, drove the 2022 deficit. The RBNZ and Treasury have previously agreed to forgo dividends as part of a strategy to build RBNZ reserves. (It paid a $140 mln dividend in 2021, nothing in 2020, $200 mln in 2019, and $425 mln in 2018.)
MORE GRUMPY EVEN IF CURRENT CONDITIONS OK
In Australia, business sentiment fell in September even as business conditions improved. The NAB business confidence index fall was the lowest reading since June, amid concerns over rising interest rates and a gloomy global outlook. Sentiment fell in retail, wholesale, transport, recreation & personal services, and finance, business & property. Meantime, business conditions rose, being above their pre-COVID peak, with sales surging while both profitability and employment were unchanged but stayed elevated.
MORE WIDESPREAD & WORSE THAN FEARED
Analysis in Australia following up on their Optus security disaster reveals the risks are much wider than just that one telco. New finco challengers to banks are a particular source of very high risk for clients, and are apparently treating key customer metrics cavalierly, even selling those details, it is claimed.
SWAP RATES KEEP ON RISING
Wholesale swap rates are firmer on global trends yet again with some more local push again. The key real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is down -1 bp at 3.91% and just off the highest since January 2009. The Australian 10 year bond yield is now at 3.99% and up another +13 bps from yesterday. The China 10 year bond rate is unchanged at 2.76%. The NZ Government 10 year bond rate is now at 4.44%, and up another +9 bps and still above the earlier RBNZ fix for this bond at 4.41% which was up another +8 bps from this time yesterday. The UST 10 year is now at 3.97% and up another +8 bps from this time yesterday, much of it after the Wall Street close. At this new level, that is its highest since November 2008.
EQUITIES LOWER EXCEPT LOCALLY
After being down as much as -1.3% earlier, Wall Street closed lower by less in the end, down -0.7% as repricing continues apace as benchmark bond yields rise. Tokyo is down -1.7% in morning trade. Hong Kong is down -1.1% in early trade. And Shanghai is down a lesser -0.2% in their early trade. The ASX200 is up +0.2% in their early afternoon trade. The NZX50 is up +0.5% in late afternoon trade. Rakon, Mercury, EBOS and Mainfreight are leading the gains today.
GOLD LOWER
In early Asian trade, gold is at US$1673/oz and down -US$22 from this time yesterday. But it is up slightly from where it closed in New York (US$1669/oz).
NZD DROPS FURTHER
The Kiwi dollar has fallen -¾c from this time yesterday to be just over 55.6 USc now. Against the AUD we are marginally firmer at 88.5 AUc. Against the euro we are now at 57.3 euro cents and and nearly -½c lower than this time yesterday. That all means our TWI-5 is at 66.2 and down -50 bps.
BITCOIN FALLS
Bitcoin is lower today, down -2.4% at US$19,058. Volatility over the past 24 hours was modest at just under +/- 1.5%.
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65 Comments
"Westpac has passed on the full increase to floating interest rates, taking them to 7.35% for floating and offset rates, and 7.45% for its everyday rates." Maybe that got announced yesterday and I missed it.
But more importantly, "ASB's Kiwisaver balances go to zero" (they're working on correcting that!)
Pretty sure that happened today, not sure why it hasn't been reported here yet.
They have also increased fixed rates by 10bps across the board. Good thing I locked in yesterday 60 days prior to refixing a term
7% Interest Rates This Year, Guaranteed !
Many doubted The Prophet. And now they hang their heads in shame.
It's a good thing The Prophet knows to forgive 77 times 7. ( Matthew 18:22 )
No need for shame.
Will HouseMouse/Kjeldorian do the right thing and congratulate The Prophet for his accuracy ?
It’s getting very boring.
I long ago admitted I was wrong on interest rates.
And Btw there’s no chances fixed rates will get to 7% before Xmas. They almost certainly won’t get there next year either.
You should apologise for making false accusations against The Prophet though. Even if your jealousy has got the better of you HouseMouse.
No Chance fixed rates will go to 7% before Xmas you say. Well Santa may just have a little something for you.
Yep NO CHANCE.
This schtick really is just becoming self-aggrandising trolling. Please, move on.
FWIW I've never made any claims for or against such predictions. They were always a possibility, but I never considered them a certainty while ever we had lunatics in charge of the RBNZ asylum.
You haven't missed anything: https://www.stuff.co.nz/business/money/300709925/westpac-lifts-home-loa….
Westpac also increased its TD rates.
Twitter going absolutely wild on the Bernanke prize. What is particularly interesting is the occasional tweet from the elite economist community coming out in support of Bernanke's work.
What I find particularly interesting is that the elite economist's position is that Bernanke "saved the economic world" from a depression. It kind of reminds me of the NZ govt sycophants and media claiming that the govt's actions on the Covid response "saved NZ from a worse death / economic toll". What I find particularly interesting is the idea that in both situtations, nobody can actually model what the worse case situation actually would have been. Furethermore, in the case of Bernanke, there seems to be no argument that his actions (which are no doubt based on his research) have made the current economic situation more dire than they should be if the Anglosphere had taken a course where the hyper debt-driven approach wasn't first and foremost.
Giving Ben Bernanke the Nobel Prize in Economics may be the drunkest decision of all time.
- Matt Taibbi
Be nice if banks could start upping their interest rates on savings accounts (and TD's) instead of continually shafting us..
Banks don't need your money unfortuantley...
Haha good one
Those retail stats just further confirm that the RBNZ can and should keep hiking towards 5%.
The continued weakness of the NZD means that the RBNZ should have hiked more aggressively rather than spewing rubbish. That's the fastest way of dealing with those retail stats.
"NZD Drops Again" - appears to be a recurring and consistent theme.
Should read USD skyrocketing against all other currencies..
Sighs. Wrong. Yes the USD is skyrocketing against all other currencies.
BUT here is the crux: the NZD is falling against (almost) all currencies, not just the USD. Even the Euro and GBP - and you have got commentators giving their advice and views on how bad the Eurozone and UK are. Maybe look at your own backyard, focus on the NZ economy and hold the politicians and RBNZ accountable for the mess?
I suspect it was a deflection. Not a good one, but some must protect JA at all costs.
Sigh..the current state of play started around 2008 ..Boomers kicking the can and now have run out of road. Looking at my own backyard everyone I talk too is flat out, cannot get good employees, booking in lots of travel o/seas.. As a export nation things could be worse..probably will be next year but at the moment its better here going into summer. would be truley worried if I lived in the UK right now.
Also Wayne will fix Auckland..so whats your point again?
I have given up hope that they will ever be held accountable.
Happens every bust cycle. Nzd will always fall farther.
Granny Herald did a podcast on a successful investor run-of-the-mill family in NZ. What I found particularly interesting about this was not the "live within your means" advice (which I fully prescribe to) but the actual investment vehicles that the family invested in. Besides the family-home-as-investment, it seems the only real investment was the Smartshares Top 50 and Smartshares U.S. Equities. A few issues here:
-- The NZX50 was one of the best performing indexes post-GFC globally up to Covid. There is no guarantee that this will continue.
-- As one of the initial investors in Smartshares, I know the depth of the mkt is not actually that deep.
-- The family seem to have hedged their bets on selling a $900K house in Alexandra, downsizing, and investing funds from the house sale.
https://www.nzherald.co.nz/business/cooking-the-books-podcast-how-a-nz-…
Nothing new here. It's how the Boomers did it. Pay off the mortgage as quick as possible and be freehold. Off course the size of the mortgage makes all the difference.
Investing in shares doesn't really encourage productivity either. Especially in big established businesses. It ultimately encourages monopolistic behaviours.
Financial independence is just another word for retirement. It's also an oxymoron? Still dependant one way or another.
Imagine if more parents could work part-time and invest their energy in their children.
Attended Raywhite Auction Manukau morning session : 100% Result, competitive bidding BUT possible as vendors were ready to meet the market - evident from data as houses sold as much as 28% below CV :
9 Zelda Avenue sold $770000(CV910).
57 Pembroke Street $911500(CV 1.225Million).
6 Stroll Place 771000(820).
39 Mcannelly Street $812000 (CV890).
82 Motatau Road $920000 (CV1.275Million).
Data will be 100% Success but possible as vendors trying to offload at best price available.
I have the feeling that the buyers overpaid. Doesn't matter. It's their "money." You make your own decisions.
They are pretty much ‘redevelopment sites’ that would have been snapped up by developers 12-18 months ago for prices above CV.
Very symptomatic of how sick the development market is starting to get.
Thanks for posting.
I firmly believe that the "valuation" on sites such as homes.co are way up in lala-land.
I don't think that the algorithm is coping at all with this fast value drop. Probably sees the recent low sale prices as anomalies.
I sold a property in Wellington privately 12 months ago. When I started, homes.co.nz listed the price as $965,000 - the day the property went up on trademe, the price on homes.co.nz dropped to 840,000 - only that one house - not any others in the area.
Based on that, the integrity of that particular website is definately in question.
I would suggest your agent may have done the dirty on you there - I believe agents have the ability to talk about the estimated value with homes.co.nz when they add the for sale listing onto their platform. Did your agent perhaps tell you to lower your price expectations by any chance so you (he) could get a quick sale?
Looks like “inflation has peaked” is the new “inflation is transitory”
I think it has peaked or is close to peaking.
you think annual inflation will be running at 6-7% plus in May/June 2023?
People think that 2% inflation is better than 7% inflation... The only difference is the compounding curve goes parabolic 3x faster.
If you includ the property bubble in the inflation stats, we have been running at more than 10% inflation for 10 years, and almost 25% in the 2021.
A comment from David McAlvany (McAlvany Wealth management) stated that people are delighted by the early parts of inflation as it inflates the value of assets and creates a wealth effect for those lucky enough to hold that asset class. Once it makes the jump to food/fuel/wages, then suddenly it is a problem, as it winds up causing politicians to lose their jobs.
Food for thought: John Maynard Keynes coined these immortal words in 1919.
“Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency,” Keynes wrote. “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.”
This “arbitrary rearrangement of riches,” he continued, strikes at both the security and confidence that people have in the economic system. He went on to explain that inflation turns consumers against capitalists—“profiteers,” in his words—when they see how those individuals accrue wealth while they suffer from inflation.
So by targeting a 2% inflation target, the objective is to make the masses poor at the expense of those who have the ability to get credit and buy the assets which are being inflated. Make the poor suffer so that they can then be radicalized against the wealthy - however the wealthy "targets" are not the top 3%, but rather the middle class - watch the retoric against home owners who havd been "proffiting" for owning a house which has mainained its value in the face of Government spomsored currency debasement.
I am all for a capital gains tax, but never in an environment where it is government policy to debase the currency and manipulate the cost of credit to inflate the prices. The govt inflates the prices of an asset by reducing the value of the currency and then gets to tax you more as a benifit. That is tantamount to theft by the government agents, driven of a wave of hatred of the impoverished mob which serves to remove the ability of anybody to better their financial position, which should be everyones right in a free society.
Well said - agree.
The only issue with this is it's not the government's operating this anymore, it is the 'capitalists', mainly the banks and financial institutions. Yes government's contributed through their own ineptitude and the citizens have willfully/ignorantly complied.
This is ultimately the consequence of capitalism and the monetary system combined.
Go deeper and this is the consequence of a pathological portion of society being in charge in both govt. and corporate institutions.
Please don't drag out the cliche branding of the left! Capitalists! They're the enemy!. Instead examine the meanings of the terms and you will see that this term has been misused.
Capitalism - an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state.
That is not the reality we have today. In true capitalism, unprofitable enterprises are allowed and are expected to fail It's a dawinian existance where only the worthy survive. Resources being used in an unprofitable manner are reclaimed in the breakup, and repurposed. It is a meritocracy where the worthy survive and prosper.
What we have today is crony capitalism. To the uninformed it sounds like the same beast, but I assure you it is a different animal entirely. It shares part of the same name, but is most certainly not capitalism.
Crony capitalism, sometimes called cronyism, is an economic system in which businesses thrive not as a result of free enterprise, but rather as a return on money amassed through collusion between a business class and the political class.
Money buys politicians, who pass laws to reward their benifactors, and the general populace pays the price.. In extremes, we end up with Fascism, which is a different animal. Google gives this as a definition.
Fascism is a far-right, authoritarian, ultranationalist political ideology and movement, characterized by a dictatorial leader, centralized autocracy, militarism, forcible suppression of opposition, belief in a natural social hierarchy, subordination of individual interests for the perceived good of the nation and race
Interesting that if you remove the first 4 words, the rest of the definition could easily apply to the USSR or comunanist China! Instead of a dictator, you have a party elite, but the rest is the same animal.
As an aside, I maintain that there is no such thing as left wing and right wing when taken to extremes. Instead you have a circle- with freedom on one side, and oppression on the other. The left/right distinction is only the flavour of the oppression.
global crash kiwi gets to 40c yeah its possible
Interesting reading a little article by a rental property management company today.
Some quotes:
’we must adapt. It’s not a recent occurrence, the market has been slow for more than six months.’
’there a smaller pool of tenants so we must make sure we are presenting properties at a high standard’
’It may also be a good idea to lower the rent’
’How long this is going to continue, who knows. We need more people coming into the country. With over 20 years in the business, we’ve never experienced anything like this.’
Only one property management agency but an interesting anecdote. Rental inflation might be pretty weak going forward.
"We need more people coming into the country."
🧛♂️🦑
Yes funny eh
Property people love high levels of immigration!
gotta keep that bubble pumped!
Its not about the bubble, but rather about a lack of population. Take a listen to Peter Zeihan's posts on population levels post baby boomers and you would see that worker shortfall will be a trend globally going forward.
This is by far the biggest issue on the horizon which is getting almost zero tattention in mainstream media
Given the state of many leadership positions around the world - it appears only the working class boomers want to retire...those at the heads of countries and companies don't appear to want to let go of the controls.
Retire later. Pension later. If everyone worked another 2 years then the working population increases by 4%. Do something similar for the young - leave school earlier and stop university education for those who don't need it.
Haha this is something Elin Musk is highly afraid of going by recent YouTube clips doing the rounds.
Sounds more like the 'elite' are worried their won't be enough humans to farm for their servitude.
It's more that the underpinning of most states is a pay-as-you-go model to run the various government services. That works fine in increasing or stable populations but falls apart when populations reverse.
Exceptions exist, but are rare and/or require inherent advantages.
But then it won't be "ours" anymore.
Article on page 126 of online version of Verve magazine:
https://www.vervemagazine.co.nz/econtent/2022/09/Verve%20October%2022%2…
"The Light Traffic Index (cars) lifted another +1.9% in September" Time to get that petrol price heading north again.
US Futures all pointing to another down day ahead, which can only come as long as there is fear that The Fed isn't done yet.
So where does that leave our OCR? Still too low, I guess.
The one year swap rate could be 5% in a few weeks if the trend continues. I thought it had peaked around 4% but it appears not.
Holiday homes just dropped in value.
Ruapehu Alpine Lifts Limited (RAL) were appointed voluntary administrators after three years of disastrous ski seasons due to the lack of snow and the Covid-19 pandemic.
https://www.nzherald.co.nz/nz/north-island-ski-fields-operator-placed-i…
A Turangi crash?
After taking almost $3.9m in wage subsidies. Fat lot of good that did.
Looking forward to Profile and Fossil spinning this one...
The company seems to have underestimated the threat posed by global warming. It doesn't mention climate change once in its most recent 54-page annual report, instead listing the major threats to its business as further Covid-19 disruptions and borrowing restrictions.
The National Institute of Water and Atmospheric Research (Niwa) found New Zealand's average winter temperature hit a new record this year of almost 10C. It was also the wettest winter on record. Niwa concluded that climate change was a major contributor to both the extra warmth and the rain.
Professor James Renwick, a climate scientist at the Victoria University of Wellington, said that as temperatures increase in New Zealand, skiing will become more untenable.
"I've told the North Island ski operators more than once that things are going to become marginal fairly quickly," Renwick said.
Warning of recession and 20% fall in US stocks in 2023:
https://www.nzherald.co.nz/business/jpmorgan-chief-jamie-dimon-warns-us…
The Serious Fraud Office has closed its investigation into Fuji Xerox New Zealand after determining it is not in the public interest to progress it further. That decision hinged on the fact that no New Zealand investors suffered losses, and separate civil actions have generated remedies.
My understanding is that the SFO just doesn't have the ability to pursue it because the case was just too big. -Supposedly one of the biggest corporate frauds in NZ at $300-$500M. One that made serious $ for a lot of people, but it's OK because only foreigners lost money.
The 'separate civil remedies' are no doubt just face saving tokens for the (largely) Japanese owners who wanted to bury the whole thing, such was the embarrassment.
https://www.reseller.co.nz/article/658219/why-serious-fraud-office-pass…
Just freeing up resource so they can take another long hard look at DuVal.
The Kiwi dollar has fallen -¾c from this time yesterday to be just over 55.6 USc now.
On its way to the center of the earth by the looks of it. Higher inflation for longer as a result?
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