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
The Bank of Baroda raised their mortgage rates today. And Credit Union Auckland has raised its floating rate.
TERM DEPOSIT RATE CHANGES
The Bank of Baroda raised TD rates too. And the Cooperative Bank did as well with a 3.80% six month rate and 4.55% for one year. And NZCU Auckland raised their rates too.
DEEPLY EMBEDDED
Statistics New Zealand says our jobless rate has remained at 3.3%. But an unexpected number of extra people entered the labour market in Q3-2022 taking out participation rate to its highest level ever at 71.7%, and the employed rate up to 69.3%, also its highest ever (the data has been collated this way since 1986). Perhaps more importantly from an inflation-fighting perspective, private sector wage rise blew all forecasts out of the water - up +8.6% pa which could have big ramifications for interest rate rises. Inflation is very well embedded in the labour market and risks undermining low (ie target) inflation expectations.
A QUIET MONTH, AGAIN
Barfoot & Thompson suffers lowest October sales volumes since 2010, which suggests the Auckland housing market could be heading for a quiet summer. Sales volumes were down -23% from the same month a year ago, average prices were down -11% from the peak, and median prices were down -12% on the same basis.
SLIDING VALUES
The average value of all dwellings fell by almost -$13,000 in October from September CoreLogic says and nationally, home values are now -$79,000 lower than they were in March of 2022.
LOWER STILL IS NEEDED
In its latest Financial Stability Report the RBNZ made many very interesting points, and one key one is it said a continued decline in house prices 'remains desirable' for long term financial stability. It says house prices are still well above sustainable levels.
CLEANER CAR IMPORTS UP, DIRTY ONES DOWN
Car sales held up for new vehicles in October, aided by stronger demand by rental car companies (even if they aren't back to pre-pandemic levels). But sales of used imports are struggling now. Prior to the past six months, used imports exceeded new car imports for every month for the past 28 years. Now the tables have turned following regulatory restrictions on importing older, less fuel-efficient systems.
TRIPLE DIP
The dairy auction earlier today was a very weak one, taking prices back to levels not seen since March 2022. In USD terms the decline was -3.9%. In NZD terms it fell -6.6%. WMP demand was weak, but SMP demand was dire, with prices falling -8.5%. Collapsed Chinese foodservice demand as their lockdowns extend are behind these retreat, which also come as milk production levels slip worldwide. The combination of falling prices, sliding volumes, and a strong currency will all hurt a key component of our current account significantly. Also see this. Westpac is the first to trim its farmgate milk payout forecast.
WARNED, CASE DROPPED
The Commerce Commission has issued warnings to eight international freight forwarding companies that in the Commission’s view likely entered into cartel agreements with Mondiale Freight Services (Mondiale) or Oceanbridge Shipping (Oceanbridge) – in some cases with both – to not compete for customers. The warnings conclude the Commission’s investigation, which began in 2018, into allegations of anti-competitive conduct in New Zealand’s international freight forwarding industry. The companies who received warnings are 360 Logistics Group, Aqua Air Freight Services, C. H. Robinson Worldwide (NZ), Go Logistics, Kerry Logistics (Oceania), Mainstream Global, Ryders Customs and Forwarding, and Stellar International.
PAY LEVELS TO BE DECIDED BY UNIONS
The Fair Pay Agreements (FPA) Bill has been rushed into law, with the new bargaining system to take effect on 1 December 2022. Only unions can do the bargaining, and they will be committing employees that are not members of a union. Interestingly, there is now little incentive to join a union, and if that extends the long atrophy of union membership, it is likely that membership will be made compulsory. On the flip side, union membership may end up as being the domain of the hard-core adherents. New unintended consequences may be with us for some time on the labour front.
A BIT SAD IN AUSSIE
In Australia, residential building consent levels fell almost -6% in September from August, and are down -13% from a year ago. Meanwhile, lending for housing fell more than -8% in September from August and is down more than-18% year-on-year. Lending for commercial construction is down -33%. But non-residential building consents rose +3.7% in September and are down less than -2% year-on-year.
SWAP RATES FIRMER
Wholesale swap rates may possibly be a lot firmer again. NZGB yields certainly are again. Our chart will record the final positions. The 90 day bank bill rate is up another +2 bps at 4.16%. The Australian 10 year bond yield is now at 3.75% and down -8 bps. The China 10 year bond rate is up +3 bps at 2.69%. The NZ Government 10 year bond rate is now at 4.39%, and up another +8 bps from this time yesterday and now well above RBNZ fix for the NZGB 10 year which was up +5 at 4.31%. The UST 10 year is now at 4.02% and down -3 bps from this time yesterday.
EQUITIES MIXED
In New York, the S&P500 slipped another -0.4% today. Tokyo has again opened flat today. Hong Kong is down -0.4% after yesterday's rumour-fueled gain. Shanghai has opened up a mere +0.1%. The ASX200 is up +0.3% in early afternoon trade. The NZX50 is flat again in late trade.
GOLD FIRM
In early Asian trade, gold is at US$1650/oz and up +US$16 from this time yesterday.
NZD FIRMS FURTHER
The Kiwi dollar is a little firmer at 58.5 USc. Against the AUD we are nearly +½c higher than this time yesterday at 91.4 AUc. Against the euro we also up at 59.2 euro cents. That all means our TWI-5 is at 69.1 and a +30 bps rise.
BITCOIN LITTLE-CHANGED
Bitcoin is little-changed today, again, now at US$20,521 and up a tiny +0.2% from this time yesterday. Volatility over the past 24 hours has been low at just under +/- 0.8%.
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46 Comments
Sure, an OCR of 20% would probably do it, but it would also destroy the economy. For a more balanced response, together with a higher OCR, companies need to be able find workers in order to operate a business, since workers in NZ are rare as hens teeth, getting workers from other countries to fill in these positions is beneficial.
How about, no.
The country has already been wrecked by mass immigration, housing shortages, insufficient infrastructure and absurdly low interest rates.
They have inflicted outright demographic replacement on much of Auckland.
They have not invested in the schools, roads, hospitals, housing and other infrastructure necessary for the people they poured in.
They have done their very best to drive the native born kiwis abroad.
They are covering the country in permanent pine plantations to try and keep "emissions" at 1990 levels.
What the country now needs is a stable or declining population and businesses need to figure out how to do more with less people... or make way for those than can.
So we search the world for its cheapest workers. I can understand how that helps the elite owning multiple properties (myself plus most MPs) but not how it helps NZ.
Tackle it from the other end - encourage immigrants to take the top paid jobs in NZ and that will squeeze the over promoted back down the ladder.
So we search the world for its cheapest workers.
Did you know that companies such as Toyota would not have existed without migrant labour from Brazil? These were supposed to be Japanese Brazilians who emigrated to Brazil but many without Japanese ancestry were accepted as well.
I doubt Brazil was the cheapest labour; much cheaper in many SE Asian countries.
Percentage of Japanese population who are immigrants: 2.0%
Percentage of South Korea population who are immigrants: 2.3%
Percentage of Denmark's population who are immigrants: 12.5%
Percentage of New Zealand population who are immigrants: 27.4%
So, the government spent about 120 billion last year and theres 5,123,000 people in NZ - a total spend of 23,423.77 per person.
If an immigrant is willing to work at a salary below New Zealand market rates how will their tax revenue pay for the govenment services and infrastructure they will require? 23k of PAYE is nearly a 6 figure salary.
If an immigrant is hired at a rate above what a New Zealander will work for how will more immigration lower inflation?
https://www.trademe.co.nz/a/property/residential/sections-for-sale/well…
Steepest subdivision in the world?
In its latest Financial Stability Report the RBNZ made many very interesting points, and one key one is it said a continued decline in house prices 'remains desirable' for long term financial stability. It says house prices are still well above sustainable levels. It also noted.
Households’ accumulation of savings stopped as spending recovered after COVID-19 restrictions eased
Household deposits grew through the pandemic period, and consumer debts such as credit card balances declined (figure 2.7), supported by the tight labour market, strong wage growth, and subdued consumption from pandemic restrictions. The broad-based accumulation of savings suggests that in aggregate households have a buffer to cushion against shocks. Offsetting this, strong mortgage borrowing in late 2020 and in 2021 as house prices rose has increased indebtedness among a concentrated group of households. page 15 (17 of 55)
The Government also got further into debt by issuing new securities via syndicate and tender events. Banks monetised the new debt which ended up as deposits in the Crown Settlement Account until dispensed into authorised beneficiary bank accounts, over the same period.
Buying in USTs is split by the time of the day: foreigners buy heavily then Americans sell. Why?
Treasury trading today (11/1) was another perfect example of the insanity gripping the marketplace. Americans are more afraid of the Fed and its rate hikes which are based on psychology not economy, so they sell Treasuries. Meanwhile, foreigners can't get enough of them, increasingly afraid of the actual economy and what more the dollar will do to it.
Pre- and post-Elon + Twitter sees Dogecoin up 66%. Remember that's less than 7 days.
Probaby nothing. But most still not seeing potentially what this all could mean.
https://indianexpress.com/article/technology/tech-news-technology/elon-…
Perhaps more importantly from an inflation-fighting perspective, private sector wage rise blew all forecasts out of the water - up +8.6% pa which could have big ramifications for interest rate rises. Inflation is very well embedded in the labour market and risks undermining low (ie target) inflation expectations.
So why should the wage earners bear all the brunt of fighting inflation, rather than, say, corporate profit margins ?
And I say this as someone whose income doesn't come from wages, but from investments.
Using average income and 20% down as the anchor, Aussie house buyers have lost $289K in terms of purchasing power since April. Unfortunately, this will also impact the maginal buyer target properties while also impact those properties priced above those target properties (assuming trading up behavior).
https://www.realestate.com.au/news/aussie-home-buyers-budgets-slashed-b…
Minor scuffle or potentially more?
https://www.theguardian.com/world/2022/nov/02/north-korea-has-fired-thr…
https://www.newshub.co.nz/home/politics/2022/11/national-labour-back-sp…
Real estate lobbying in action, trying to pressurize RBNZ and government to step in to support.......
His mortgage rate's recently doubled, which means paying $800 a fortnight. On top of that, his property's now worth $200,000 less than what he paid.
"People have advised me to get another job but I cannot because I'm also studying. I'm working full-time and studying full-time as well."
Seems quite over committed in whatever way you look at it - sounds like a recipe for a nervous break-down trying to do what this individual is doing. Hold down a massive mortgage, work full-time and study full-time (and watch you deposit/equity disappear).
Good for him to giving things a go but equally over-committing yourself isn't a good strategy either in the long run. Have witnissed in the past, people in similar circumstances, end up in therapy.
This is dreadful and the subject seems to be an admirable, responsible citizen.
I have no doubt the negative wealth effect is going to kick in seeing stories like this.
Also noticed that Squirrel Bolton sent his CEO to the media, not front himself. He used to love fronting for media.
It's all good Bernard Hickey says to just Namaste the pain away. Maybe he could give this chap a call to soothe his anxiety? and the 30,000 others in a similar position...
Coming to a place near us....
I had three negatively geared properties, then I lost my job...Like a death by a thousand cuts, each property had to be sold
https://www.smh.com.au/money/planning-and-budgeting/i-had-three-negativ…
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