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
SBS Bank has raised its fixed rates today.
TERM DEPOSIT RATE CHANGES
SBS Bank has also raised some term deposit rates too. Their 6 month rate is up to 3.75%, their nine month rate is up to 4.00% and their one year rate is unchanged at a market leading 5.00%
MORE AUCTIONS BUT TO BETTER OUTCOMES
Spring finally arrives at the residential auction market with a lift in activity in early November. But the sales rate is still wallowing around a third of the properties offered. Just how low that is can be judged when compared to the recent clearance rate in Australia of over 60% - and they think that is low. (In Australia, sellers are "accepting reality" to get houses sold with "sharply lower house prices".)
ORR REAPPOINTED
The Finance Minister has reappointed Adrian Orr as Governor of the Reserve Bank for another five year term, effective from March next year. The usual suspects give the usual reactions.
FOR THE FEW WHO WANT TO STAY FOCUSED ON FACTS ...
There has been a lot of public bank-bashing recently, political 'skills' learned from Australian pollies and now imported here. But to allow you to base your assessment of the criticisms, we have updated our Bank Leverage page. And we have our Key Bank Metrics data also all updated. (The criticisms have now become so widespread from both sides of politics, and they appear in all MSM outlets, as well as the more rabid blogs, that the uninitiated are likely to just assume these are 'facts').
EMBEDDING HIGHER
The Q4 RBNZ Survey of Expectations from professional analysts all point to higher inflation. The data for this survey was obtained from 33 business leaders and professional forecasters by the Nielsen group on behalf of RBNZ. It reports that in one year this group expect inflation to still be over 5% (a rise +22 bps from the prior survey), and the all-important two year indication is now 3.62%, up from 3.07% three months ago, so a +55 bps jump. This survey is influential in RBNZ judgements. More here.
A SURPRISINGLY WIDE RANGE
In the second of a series of articles on bank fees, Matt Skinner looks at credit card fees the major banks charge. Again, there is a surprisingly wide range, from zero, to $310 per year.
PRODUCTIVITY COMMISSION TO PROBE SUPPLY CHAIN ISSUES AT SAME TIME AS MINISTRY OF TRANSPORT
Finance Minister Grant Robertson says the Government has asked the Productivity Commission to undertake an inquiry into NZ's economic resilience to persistent supply chain disruptions. This comes at the same time the Ministry of Transport is developing what it describes as NZ's first ever comprehensive freight and supply chain strategy. (There's more on the MoT's work here). The Productivity Commission says its inquiry will examine future risks to NZ's economy and communities, and explore how NZ can build its economic resilience, with a particular focus on competition, diversification, substitution, innovation and economic geography. An issues paper is due in February 2023, with the inquiry expected to last 12 months.
RESPONDING TO INCENTIVES
There has been more data released today on new car registrations for October, this set focused on the New Energy Vehicles being added to our national fleet. There were 4281 new passenger NEVs sold in October, accounting for a record high 32% of all passenger cars. This is a surprisingly strong result, because only 168 sales were Teslas, which tend to arrive in large lumps. So far in 2022 14% of all NEVs have been Teslas; in October less than 4%. (NEVs are hybrids, plug-in hybrids, and 100% electric cars. Separately, so far in 2022 there have only been 421 commercial NEVs sold or just 1% of this class.)
IAN HANKINS LEAVING WESTPAC
Westpac NZ says its long serving executive Ian Hankins is leaving the bank "to take up another finance industry role." It has appointed Jo McGregor as Acting Manager of Consumer Banking and Wealth while the search for Hankins' permanent replacement is completed. Hankins has been with Westpac since 2002 and was its Chief Financial Officer between 2017 and 2021. Prior to that Hankins' roles included Head of Commercial Banking and Head of Retail Distribution. McGregor steps up from a role as Chief Operating Officer of Consumer Banking and Wealth.
SHRINKING VALUATIONS
Morningstar has released its KiwiSaver Survey for the September 2022 quarter. KiwiSaver funds "generally reflected the challenging underlying market conditions experienced over the September quarter" - which means they did as bad as a the general investment market in the period. The average multisector category returns ranged from -1.3% for the Conservative category to -1.8% for the Growth category.
UNSECURED CREDIT DEMAND UP +7%
The latest Quarterly Consumer Credit Demand Index from Equifax reveals an improving trend in overall consumer enquiry volumes for the quarter ending September 2022 vs the previous quarter. The result for the quarter was driven by a sharp rise in the appetite for credit cards.
BUSINESS SENTIMENT SHIFTING DOWN
In Australia, the widely-watched NAB business confidence survey fell in October, taking it to its lowest reading since December 2021 and leaving it below the long-run average. It comes amid growing concerns over rising interest rates and a gloomy global outlook.
CONSUMER SENTIMENT SHIFTING DOWN
The Westpac-Melbourne Institute Index of Consumer Sentiment for Australia fell in November to its lowest level since April 2020 as rising interest rates and surging inflation weighed on family finances and the economy. November’s reading also remained at contractionary levels for the ninth straight month.
SWAP RATES RISE STRONGLY
Wholesale swap rates may be up strongly again today so far but most of the real action happens near the close. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps at 4.19%. The Australian 10 year bond yield is now at 4.04% and up +14 bps as part of a global lift. The China 10 year bond rate is up +1 bp at 2.72%. The NZ Government 10 year bond rate is now at 4.70%, and up +11 bps from this time yesterday but still well above the RBNZ fix for the NZGB 10 year which was up +11 bps at 4.62%. The UST 10 year is now at 4.22% and up +7 bps from this time yesterday. It's recent peak was 4.28% on October 22, 2022. Prior to that it was last at this level 15 years ago in 2007.
EQUITIES MIXED
In a strong finish, Wall Street ended higher with the S&P500 up +1.0% in its Monday session. Tokyo has started its Tuesday session up +1.5%. Hong Kong is down -0.2% and Shanghai is down -0.5% in their respective opening trades. The ASX200 is up +0.3% in afternoon trade. But the NZX50 is down -0.6% near the end in a growing sell-off today.
GOLD SOFT
In early Asian trade, gold is at US$1674/oz and unchanged from this time yesterday.
NZD RISING
The Kiwi dollar is up +½c at 59.4 USc. Against the AUD we are little-changed at 91.7 AUc. Against the euro we unchanged at 59.3 euro cents. That all means our TWI-5 is now at 69.6 and and up +120 bps from this time yesterday.
BITCOIN SLIPS AGAIN
Bitcoin is lower today, now at US$20,615 and down another -1.5% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.6%.
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67 Comments
The Governor made comfy in his chair for another 5 years + unexpectedly high inflation expectations = Nothing to lose. 1% on the 23rd? There's a long, scheduled break after that, after all.
(NB: None of this should have happened, but it has. So we will have to deal with it by sacrificing profitability; slash margins to 0%, in the name of long-term survival.)
RBNZ has hogged all the headlines today by a country mile. That much publicity being generated by a bureaucratic back office is rather unusual to say the least. Seems to me the government itself as part of the party, is becoming hard pressed to keep the lid on the pressure cooker and looking rather like a bunch of sea sick landlubbers on a yacht on a sloppy sea.
Mortgages will be between 7% and 8% next year, and this is a safe, conservative estimates. They might even go higher if Orr keeps burying his thick head under the sand, and avoids taking the necessary action to prevent inflation from completely going out of control.
Interest payments on mortgages are currently running at a record $1.1 billion per month. If OCR stays where it is, interest payments will hit around $1.6 billion per month by July 2023 (errrm, hello election). Any further increases to OCR will obviously accelerate this increase and move the peak higher.
I simply do not see how increases of this scale are feasible when other non-negotiable costs are also going up (insurance, local govt rates, food staples etc). It's a recipe for disaster - and yet on we march? Madness.
Perhaps our PM could decree a mortgage repayment holiday for certain mortgagees. After all it is just a tick of the pen to create overnight a national holiday. That would be a double movement. A whole heap of happy & grateful voters for her at the next election and a curb on bank profits as per her protest flounce yesterday. Just kidding!
I don’t accept that reducing the disposable income of households and loading businesses with increased costs will lead to reduced prices. But, if I did, I would not use an increase in the cost of credit as my lever; it is poorly targeted and inequitable (targets young families rather than asset owning rich folk for eg). A top rate of tax, land tax, or an incentive to increase KiwiSaver contributions would all be much fairer.
We are shooting ourselves in the head. As a country we are implementing dumb 1970s monetary policy despite having private debts of 150% of GDP, and we have no economic strategy other than to send milk powder and timber to China and sell each other houses. Meanwhile our govt would rather run the infrastructure built in the mid 20th century into the ground whilst it restructures public agencies and crows about having low debts (much of which is owned by its central bank, ACC Fund, and kiwisaver funds!)
Hi Joe,
I think it is just a case of how the arguments are being presented in the media and which side of the fence you are standing on.
On the one hand someone who bought their house in the 80's or 90's for 4 figures and then sold it for 6 or 7 figures is a financial genius but on the other side the poor sap who purchased the same house in the 2010's (or later) for the 6 or 7 figures is now the one who needs to cut back on their spending to reduce inflation?? (And also pay back the mortgage)
Wouldn't the people who have made 6 figures from selling their house be the ones with excess cash to spend rather than the people already up to their eyes in debt? And increasing interest rates just gives them more cash back on their tds?
There seems to be an unwritten rule that the on trend, environmentally friendly statement-on-wheels needs to look aesthetically displeasing. As if saving the planet needs to come at the cost of any style whatsoever.
"Yeah it looks like a duck, but after about 13 years this baby will have paid for itself".
It's only one month, but you have to wonder if what companies are staying about consumer demand falling apart is reflected in lower increase in Sept consumer credit. Might just be a one-month fluctuation, or it might be the start of consumer behavior changing (recession). Link
https://www.nzherald.co.nz/business/australian-developer-bailing-out-of…
I call bullshit on this. They have done what many developers do - secure large uplift in property value via a consent, and then on-sell.
In this case very disingenuously used a fast track process designed for projects to actually get built and for jobs to be created.
To be fair the bought the site while the property market was booming. The residential market has pulled back approx 15% whilst construction costs have increased almost 20%. Funding costs have almost doubled.
Virtually no site purchased in the last 2 years stacks at present.
Finance Minister Grant Robertson says the Government has asked the Productivity Commission to undertake an inquiry into NZ's economic resilience to persistent supply chain disruptions.
China looms large in Europe:
EU compares dependency on Russia and China
The bloc is more reliant on Beijing for its green transition than it is on Russian energy, Josep Borrell has said
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