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 some fixed rates today, taking them just under their main rivals. More here. We are now expecting a flurry of new fixed rate increases, maybe not until the shadow of the long weekend however.
TERM DEPOSIT RATE CHANGES
None to report here today so far.
ROUTE RECALCULATION
Inflation ran at a much higher level in Q3-2022 than nearly every analyst assumed - and that includes the RBNZ. It came in at 7.2% pa, +2.2% from Q2 alone. (And that is a recent annualised rate of nearly 9%). Lower petrol prices were expected to suppress the overall rate. But raging non-tradeable inflation is keeping the pressure on in unexpected ways. Financial markets, analysts, and politicians will all have their pencils out for route recalculations.
DOING A STARVE
The misfiring housing markets are tough on real estate commission earnings. They are down more than -30% year-on-year in Q3-2022. And the new level is the second lowest Q3 level ever (or since our records began in 2016).
TOUGH LESSON FROM ACROSS THE DITCH
Fast-rising house building in Auckland is keeping a lid on rents. That is a similar effect to what we saw in Christchurch after the earthquakes there and housebuilding ramped up; house prices stayed restrained for years while it raged elsewhere. Building houses at a faster rate than demand keeps shelter costs suppressed. We can watch what is happening is Australia right now when that impetus falters. They have an extreme rents crisis.
NEXT DAIRY AUCTION
There is another dairy auction tomorrow morning. Derivatives pricing suggests WMP prices could come in at US$3,625/tonne. That would be +1.5% higher than the last full event. However, remember there are WMP Pulse events in between and the last one of those a week ago came in at US$3,425/tonne - but that may have just been because it wildly missed 'over' in its previous event. Since, Fonterra has warned markets that NZ milk volumes are running softer than predicted, so supply is somewhat constrained. Derivatives pricing for SMP suggests US$3,355/tonne so a -4% fall for this product. Overall, we will be lucky with a no-change result in USD. In NZD, our currency has fallen -1.4% so the NZD prices should insulate us somewhat.
MORE FLP DRAWDOWNS
Another $700 mln was drawn down from the Funding for Lending program, taking the total owing on it to $15.9 bln. That costs the borrowing banks 3.5% pa or $46 mln per month ($557 mln in interest per year). The rate for all the borrowing rises with each OCR rise.
NEW DIRECTOR FOR ANZ NZ
ANZ NZ says Mark Tume has been appointed to its board, effective January 1 next year subject to the standard non-objection from the Reserve Bank. Tume is a director of Infratil, RetireAustralia Pty, Precinct Properties and chairs Te Atiawa Iwi Holdings. His professional experience is in banking and funds management, with corporate governance positions predominantly in the infrastructure sector.
GONE QUIET
We should note that China seems to have stopped releasing economic data; presumably they expect their people to be glued to the Party Congress proceedings. That means the expected September trade, GDP, FDI, and PBoC data are now unexpectedly not being released. No agency is saying why. Analysts are wondering if is an attempt to keep bad news away from the Party's week in the limelight.
SWAP RATES FIRMER AGAIN
Wholesale swap rates are firmer yet again especially after the release of the September CPI data. The key real action comes near the close. Our chart will record the final positions but they will be very much higher, perhaps by +15 bps. The 90 day bank bill rate is up another +3 bps at 4.04% and back at its highest since January 2009 when it was on its way down from 8.89%. Prior to that is was never as low as 4%. The Australian 10 year bond yield is now at 3.98% and down -8 bps. The China 10 year bond rate is little-changed at 2.72%. The NZ Government 10 year bond rate is now at 4.61%, and up +3 bps and now matching the earlier RBNZ fix for this bond at 4.61% which was up +8 bps from this time yesterday. The UST 10 year is now at 4.00% and up +1 bp from this time yesterday.
EQUITIES RISE
Wall Street rallied strongly today with the S&P500 up +2.7% in Monday trade. Tokyo is up +0.7% in early Tuesday trade. Hong Kong is up +1.2% in very early trade. But Shanghai is flat at their Tuesday open. The ASX200 is up +1.4% in early afternoon trade today. The NZX50 is up +0.8% in late trade.
GOLD HOLDS
In early Asian trade, gold is at US$1651/oz and up +US$3 from this time yesterday.
NZD FIRMISH
The Kiwi dollar has firmed +¾c from this time yesterday to be just on 56.6 USc. Against the AUD we are up +¼c at 89.9 AUc. Against the euro we are also firmish at 57.5 euro cents. That all means our TWI-5 is at 67.2 and up +50 bps from this time yesterday. But you have to say the currency market reaction to the high CPI and the implications that flow are modest.
BITCOIN FIRMS
Bitcoin is firmer today, now at US$19,546 and up +1.5% this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.1%.
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