What happened Monday

Business / news

A review of things you need to know before you sign off on Monday; still no mortgage rate hikes, but some higher TD rates, sprawl updated, apologies & sacking in Australia, swaps slip, NZD holds, & more

28th Nov 22, 3:59pm by David Chaston

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
As we write this, still no main bank has yet changed its floating mortgage rates in response to the RBNZ +75 bps hike in the OCR. These changes must be quite close now however.

TERM DEPOSIT RATE CHANGES
Rabobank has raised almost all their TD and savings account offers. They raised their savings rate by +65 bps, their Noticesaver by +75 bps. Their TD were also raised taking their 6 month offer to 4.60% and the 12 month offer to 5.50%. WBS also raised rates, as did Heartland Bank whose 6 month TD is now 4.30% and their 12 month TD now 5.00%.

KEEPING PACE
Stats NZ released an update to their jobs tracking "Employment Indicators" today for October. There was no change in employment between September and October (seasonally adjusted), with the total number of filled jobs remaining at 2.3 mln. But the composition of the working population is changing. Jobs filled by 15-19-year-olds continue to rise, up +18% compared to October 2021. There has also been an increase in jobs filled by workers over 60, with a +4.5% increase since October 2021. Workers aged 25-29 are the fastest-shrinking cohort, with filled jobs down -3.4%. Earnings per filled job were up +7.2% pa in the year to October, suggesting wage increases are broadly keeping pace with inflation, which was also 7.2% in the September quarter. (H/T Infometrics.)

'SPRAWL' VISUALISATION UPDATES
We have updated our "urban sprawl" charts to include 2022 data. Thanks to Paul Hughes for these updates.

THE FIRST 2022 DIP
In Australia, retail sales in unexpectedly dipped by -0.2% in October from September when a +0.5% rise was expected on top of a +0.6% gain in September. This was the first drop in retail trade since December 2021, and comes amid cost of living pressures and rising interest rates. Department stores had the largest fall, down -2.4% in a month. Overall, year-on-year the rise eased to +12.5%. In November, some major retailers are reporting strong trading conditions.

SOCIAL UNREST HITS THE YUAN
The offshore yuan (CHN) depreciated almost -1% past 7.2/USD today as protests in China over the Coivd curbs, dented risk appetites. A video on social media showing a woman screaming in the burning high-rise apartment block in Urumqi, the capital of Xinjiang region, caused a wave of protests in major cities including Shanghai and Beijing.

AMBITION INTERUPTED
George Frazis, the one-time CEO at Westpac NZ, as been shown the door at Bank of Queensland in an unceremonial dumping after three years on a reform and updating crusade at the underperforming regional bank.

APOLOGY FROM A CENTRAL BANKER
At and Australian Senate hearing, RBA governor Philip Lowe has offered an unprecedented apology to Australians who took out home loans based on the central bank’s failed guidance that interest rates were unlikely to rise until 2024.

SWAP RATES SLIP
Wholesale swap rates were likely a little lower today on risk aversion related to China. The real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps at 4.42%. The Australian 10 year bond yield is now at 3.55% and down -5 bps from this morning. The China 10 year bond rate is at 2.86% and up +1 bp. The NZ Government 10 year bond rate is now at 4.10%, down -6 bps and now well below the earlier RBNZ fix for the NZGB 10 year which is up +6 bps at 4.14%. The UST 10 year is now at 3.66% and down another -1 bps from this time Friday.

EQUITIES SOFT ON CHINA RISKS
The China unrest is suppressing equity market enthusiasm today. The NZX50 has started the week -0.4% lower in late trade. The ASX200 is down -0.5% in afternoon trade. Tokyo has opened its Monday trading also -0.5% lower. Hong Kong is sharply lower however, opening down -3.7%. Shanghai is down -1.4% at their open. The S&P500 futures suggest Wall Street may open down -0.4% as well.

GOLD SOFT
In early Asian trade, gold is at US$1749/oz and down -US$6 from this morning.

NZD MARGINALLY SOFTER
The Kiwi dollar is softer at 62.2 USc and down -30 bps from where we opened this morning. Against the AUD we are up +20 bps at 92.8 AUc. Against the euro we are at 59.9 euro cents and down -30 bps. That all means our TWI-5 is now at 71.1 and down -20 bps.

BITCOIN HOLDS
Bitcoin is now at US$16,384 and down -0.9% from where we opened this morning. Volatility over the past 24 hours has been low at just over +/- 0.7%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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66 Comments

by AdamJay1990 | 28th Nov 22, 4:02pm 1669604552

Pretty poor form how sluggish the banks are to pass the OCR lift onto savers.. And after a year of record profits.

by Justa comment | 28th Nov 22, 4:07pm 1669604821

Yes well done ASB, increased their TDs last week. And Rabo today, 5.5% TD hit, and 3.75 Premium Saver, well done them. Surprised ANZ and Westpac so slow. Not surprised in BNZ, they are always the laggards for their savers (but happy to pay 5.6% to anyone in bonds !!)

by WellingtonInvestor | 28th Nov 22, 4:29pm 1669606182

ASBs rises only moved their rates to about the same or slightly higher than other banks, but most of the other banks haven't yet increased their rates yet apart from Rabo.

by Justa comment | 28th Nov 22, 5:55pm 1669611331

Wellingtoninvestor, ASBs TD rate is now up to 5.1%, a chunky 0.4% above the other big 3. (Of course if you ask the other they always match). Anyway I would be very surprised if we dont get higher rates from ANZ tomorrow.

by WellingtonInvestor | 28th Nov 22, 7:07pm 1669615677

For 3 years, yes you are right. But I am not looking at anything over 12 months while the rates are still rising. ASBs other rates for 12 months and less were increased to a level about what other banks were already listing at. ANZ will hopefully bring in some better rates. Rabos look good.

by Justa comment | 28th Nov 22, 7:17pm 1669616260

yes you would think they would be trying to get 4 and 5 year since the FLP has to be repaid in full in 3 years.

by EdwardD | 28th Nov 22, 5:51pm 1669611090

Why give good interest rates to savers when banks have loaded up on cheap FLP money? Thanks Mr Orr (sarc).

by Miguel | 28th Nov 22, 4:08pm 1669604898

Credit to Rabobank again. They have moved deposit rates before the other banks have even gotten around to raising mortgage rates

by fortunr | 28th Nov 22, 4:14pm 1669605241

Rabo's offer of 5.50% for a 1-year term is not bad for now. This means that it is quite likely that 5.25% from all major banks for a 1-year term is going to appear before Christmas.

Still not up to the inflation level, but getting closer. I would not invest in longer terms, however, as I can see 6% TDs happening well before end of first quarter next year, most likely soon after the next OCR review, which is going to be another 75bps increase for sure.

by Tim Depositor | 28th Nov 22, 4:24pm 1669605886

You lose alot relative to what's gained, eh by the waiting ?

by Justa comment | 28th Nov 22, 7:20pm 1669616457

yes you lose a lot waiting for 3 or 4 months, sometimes works out the same as 30 points or so later.

by WellingtonInvestor | 28th Nov 22, 4:31pm 1669606310

Rabos 4% for 60 days on notice saver isn't bad for a short term deposit.

by morepork | 28th Nov 22, 4:12pm 1669605130

The link to the urban sprawl charts isn't correct, it takes me to a nice picture of the Avon

by Palmtree08 | 28th Nov 22, 5:22pm 1669609377

The picture contained in the link was probably meant to look more like this?

https://calconstructionlaw.files.wordpress.com/2015/07/clip_image0179-e1435880727504.jpg

by David Chaston | 28th Nov 22, 7:35pm 1669617308

Well, that embarrassing. It should be https://www.interest.co.nz/property/90395/we-release-new-set-visualisations-showing-how-seven-our-cities-have-grown-over-time

by Yvil | 28th Nov 22, 4:12pm 1669605146

Very surprising that none of the OCR lift has been passed on by the banks yet, surely, at least the floating rates have to go up very soon.

by Nifty1 | 28th Nov 22, 4:21pm 1669605708

They're all waiting on ANZ to make the first move...

by Small Kev | 28th Nov 22, 7:40pm 1669617653

Do banks still sell their mortgage books as investments I wonder? Raising interest rate and declining property market is hurting the banks on the opposite side of their record profit. Maybe they are trying to hold off the raise or absorb as much as they can to protect both end of their business.

by IT GUY | 28th Nov 22, 9:35pm 1669624538

Not in NZ, banks in the US before the GFC used to package loans and sell them off completely, in NZ banks keep them mainly on their books. They do package them but its so they can use the package as part of a repo security. I guess this is a two edged sword. In principal it should mean that they write better quality loans as they have to keep them on book, but it also means they at times of competition they may have to write high DTI loans to keep market share of mortgages. It will all be fine until its not, about 69% of loans are retail mortgages at ANZ I believe, add in loans to dairy farms ... and you start to have a lot of exposure to land prices.

by Justa comment | 28th Nov 22, 4:15pm 1669605349

I see the RBA has apologised to mortage holders about saying there would be no rises until 2024. This was probably the worst forecast from any central bank ever lol

by JimboJones | 28th Nov 22, 4:28pm 1669606113

And that is a very low bar |_________|

by bw | 28th Nov 22, 4:35pm 1669606542

It's actually worse than just having to pay more come next roll-over time.

Many of these buyers were panicked into their actions, not only by the promise of lower-for-longer, but by the spectre of watching house prices run away from them as a result.

So they arguably paid a massive double jeopardy price for listening. On both fronts. Principal and Interest.

by Eschaton | 28th Nov 22, 4:29pm 1669606148

6% TDs from January on the cards.

by HouseMouse | 28th Nov 22, 4:33pm 1669606401

Does anyone else think the government’s response on ram raids is way too late? Like at least one year too late…

by Albert2020 | 28th Nov 22, 4:50pm 1669607407

Of course it is, as it always has been... reactive... Small business retailers have crying out for support for over a year but it takes someone to be murdered for them to take this issue seriously.

by dumbthoughts | 28th Nov 22, 5:21pm 1669609300

Did anyone else catch Ardern's claim from today's media release that the just-announced increase to anti-theft funding (for fog machines) was decided on before the recent murder of the dairy worker?

Considering how reactive the government has been (when not in full refute/reject mode) that seems like a whopper so big that Burger King wouldn't put their logo on it.

If it isn't a lie, then what this means is that the government is happy to settle on policy and then release it only when it benefits them most politically (in this case acting as a form of much-needed damage control once the refuding failed). If expanding the anti theft program was already decide on, surely you would announce that ASAP so that the wheels can get in motion for dairy and shop owners to sign up?

Fog off with the BS.

by Foxglove. | 28th Nov 22, 4:52pm 1669607562

Not just ram raids, it’s walk ins and suggest they are more common anyway. Our local dairy got hit, they just double parked two cars outside, ran in one with a knife, grabbed confectionary & sped off running over the dairy owner while at it. Goes to show what a sweet tooth will drive you to, but it’s not funny.Eventually they were caught, cars stolen of course, too young to prosecute.,Similar and real nasty ones took a car to the top of the hill, pointed it down the street, put a rock on the accelerator, put it in gear and let it go. These are perilous times for everyone, everywhere, anytime for all of us.

by Nzdan | 28th Nov 22, 5:58pm 1669611498

Eventually you'll find someone is completely fed up, not in a good state of mind, and we end up with another Pihema ("The Tagger") Cameron.

Then everyone will be mourning the loss of a young, promising kid who "briefly" went down a troubled path.

by vman | 28th Nov 22, 4:56pm 1669607805

Remember,a lot of this youth crime is driven by social media copy cat 5 mins of fame stuff.

Media coverage & facebook feeds them,aside from having an armed security guard outside each retail outlet,there is only so much that can be done.

https://www.nzherald.co.nz/nz/politics/explained-why-the-sandringham-da…

“Police are having a noticeable impact on offending rates, with ram raids during November down by 83 per cent compared with August – 13 so far this month against a high of 75 in August. But we need to lock that progress in and sustain it,” Ardern said.

by vman | 28th Nov 22, 5:01pm 1669608078

What is happening in the LA,Manchester,Western Sydney soon turns up in Auckland & Hamilton etc with the reach of social media.

Some things are reasonably harmless like an ice bucket challenge,they just show how easy things good or bad spread globally.

The discussions we are having are the same as many other western countries unfortunately.

by Rex Pat | 28th Nov 22, 5:45pm 1669610708

Is there a Labour Party spreadsheet where you take an unfortunate metric and find another country that is worse? The bottom line is that in a civilised country we are limited by laws in our ability to protect ourselves. In accepting those laws, we supposedly have a right to full protection by the Governments police force. However given how soft on crime this lot are, it’s not a fair trade off. I’d prefer the right to self arm.

by vman | 28th Nov 22, 5:49pm 1669610962

Just being a realist RP...this isn't 1965.

by JimboJones | 28th Nov 22, 6:46pm 1669614399

I thought it is judges that sentence criminals, not the Labour Party.

by sharetrader | 28th Nov 22, 7:18pm 1669616294

not according to the media, and it would be a very scary country if politicians could decide whom does what time at an individual level

by IT GUY | 28th Nov 22, 5:34pm 1669610098

Every Day the major supermarkets get hit by people walking out with trolleys full without paying.

Every Day small Dairy and Liquor shops have people run out the door with stock.

The cost of all theft in retail is passed onto everyone through increased margins.

Labour have been Soft on Crime ever since they decided to reduce the prison population.

We need National/ACT to get in and show some Kindness to honest hard working people by Getting Tough on Crime.

by AdamJay1990 | 28th Nov 22, 5:39pm 1669610398

Well I hope that if Nat/Act do implement "Tough on Crime" policies they equally invest in initiatives that actually reduce crime... The old "Tough on Crime" approach has worked oh so well in the States... Oh wait...

by Foxglove. | 28th Nov 22, 6:03pm 1669611790

Lived not far from NY City when Mayor Giuliani was pursuing the zero tolerance crime policy. Recall overall crime was reduced near to 60%. He became quite famous for that and then of course even more famous for his handling of 911. Now he is simply infamous to say the least. Nothing quite like NY. The Germans have a saying that in NY an hour is worth only 40 minutes. Believe crime stats are no better there now than other major USA cities?

by AdamJay1990 | 28th Nov 22, 6:25pm 1669613117

Ah yes, the often-touted stop and frisk policy... that on the surface looked like a "success" (albeit extremely racist). But when you take a look back you see that it may have actually been the fact that abortion was made much more accessable 20 years prior..

The problem is, reduction of crime should not be addressed with reactionary policy and politics. Unfortunately, the proven initiatives that actually reduce crime, such as support for solo, low-income mothers, take much longer than an election cycle to bear their positive results. It is a pity that we don't get bipartisan support for such initiative, and Nats/Act forever go down the reactionary path.

by Rex Pat | 28th Nov 22, 6:35pm 1669613727

A pity Bill English’s social investment program never made it into practice. Labour did that. No surprises there. Worst PM and Government in living memory.

by sharetrader | 28th Nov 22, 6:20pm 1669612829

and how much tax are we going to have to pay to build all these prisons and staff them, we already have one of the highest percentage of people behind bars in the oecd and still crime is rising year on year. Newstalk ZB can reveal each person behind bars costs roughly $150,000 a year – that's up $30,000 on the 2018/19 financial year.

i blame judges the most as they give soft sentences and do away with concurrent sentences, a start would be to make all sentences cumulative, you do a crime you do all the time, all of it then by the time these guys get out they are too old to do much harm

by Room319 | 28th Nov 22, 7:27pm 1669616823

I would happily have some of my tax take redirected from the gobbledygook it's currently being spent on, to lock up more antisocial arseholes for as long as possible.

by agnostium | 28th Nov 22, 8:36pm 1669621017

You then have to pay a bit more to house those people's kids when they grow up in broken family and also turn to crime.

Locking people up is a simplistic answer and doesn't work. If it did USA and El Salvador would be the safest places on earth. But sure you go ahead and continue to get angry spouting non-solutions.

by Room319 | 29th Nov 22, 5:03am 1669651437

Not angry,realistic.The current approach is not working.

By all means invite them round your place for BBQ and a chinwag and let them explain how unfairly the world has treated them,all the while checking out your place.

You'll feel better about things and how you're making a difference, till they rob you blind.

Oh and by the way,the kids don't TURN to crime, they are apprenticed in it from as early as possible.

Got a cat door at your place?Easiest point of ingress for a small child.

Removing kids from their horrendous,preordained existence would be an unpalatable answer for many,however they have no chance if they stay.

No not Angry.

by JamesM | 28th Nov 22, 10:34pm 1669628075

Yep- the bit that bothers me the most is that they announced a $5m support package in May and as of last week only 7 sites had received assistance. Couldn’t organise a piss up in a brewery.

by Jonny.Foe | 28th Nov 22, 5:04pm 1669608280

The OCR might have gone up but the markets had already priced in around 60 of the 75 point increase, and the softening Fed stance, the situation in China, and falling input costs seems to have wiped the rest of the rise out. Our two-year swap rate is back at mid-October levels.

This feels like the peak to me - all the rate increases are doing is putting upwards pressure on wages and increasing the costs of doing business (both of which are inflationary).

by Small Kev | 28th Nov 22, 8:08pm 1669619293

You just never know, this may be the last big raise, reports after summer holiday might be weaker than forecasted? Things often go the opposite direction from where everyone was looking. A bit like the weather, we can form a educated guess but it can change just like that.

by Tim Depositor | 28th Nov 22, 5:06pm 1669608402

I'm picking next CPI announcement 23 Jan, will effect long term mort/TDs settings by banks Viz where they see OCR needs to be for RB to fight inflation. RB forcasts 7.5 in Jan ..

If it's lower than 7.5 TDs for 4-5 years might come down? Higher , TDs should have to rise.

by Jonny.Foe | 28th Nov 22, 5:06pm 1669608412

The number of young people entering work is astonishing - I would like to know more about the underlying issues here - I suspect it is families needing extra money + employers more willing to offer casual shifts to inexperienced kids to plug gaps in their rotas.

by Room319 | 28th Nov 22, 5:23pm 1669609404

This is spot on.Everywhere you go in retail/hospitality you see kids running the show with maybe one Senior behind the scenes.

These kids are in the firing line for the gangstas in our midst.

by tis i | 28th Nov 22, 6:41pm 1669614065

Rising youth employment is great news. Can’t we just acknowledge that?

by Small Kev | 28th Nov 22, 8:14pm 1669619685

Older generations taking a step back and enjoying life perhaps? Covid has taught people a big lesson.

by Nzdan | 28th Nov 22, 6:03pm 1669611823

2 years of minimal inwards migration? The supermarkets, fast food outlets etc are forced tap into the local population and hire teenagers again?

I recall in the 90's as a teenager working for McDonalds, New World etc and the places were teeming with people my age. Fast forward 15 years, not so much. Suppose the forced adult minimum wage is another contributing factor.

by Chaosinflesh | 28th Nov 22, 10:54pm 1669629271

Well, with the youth wages in the late 90s early 2000s, those businesses largely didn't hire anyone 20+ as they cost 25% more for the same work output. And McDonald's was very proud (at the time) of the fact it could take anyone off the street and they'd be trained in 30mins, since it kept staff costs down - and shifts dictated - by threat of unemployment. Had several flatmates who had absolutely zero flexibility with their hours, as if they ever said no, the next week's hours would be reduced.

by Nzdan | 29th Nov 22, 7:33am 1669660423

I do remember the good old "split shifts". 6 am - 10 am and then back from 4 pm to 8 pm on the same day. Was fine as a 16 year old.

by Wrong John | 28th Nov 22, 5:11pm 1669608672

Drove home a couple of weeks ago (not in rush hour) & came to a full stop on a main artery. No lights. No warning. No accident. When we drove past there were two cars playing silly buggars with one another. No guesses for who they were. One car then did a U turn on the grass verge then crossed back over the traffic to go back the other way chasing his mate. Really. Beware out there.

by Jonny.Foe | 28th Nov 22, 5:24pm 1669609477

"No guesses for who they were"?!? Was it Nigel Mansell and the ghost of Ayrton Senna?

by vman | 28th Nov 22, 5:46pm 1669610805

So,who were they John?If I have to beware,I need to know who to look out for.

by JimboJones | 28th Nov 22, 6:53pm 1669614805

Jacinda and Clark?

by agnostium | 28th Nov 22, 8:39pm 1669621149

Worst drivers in living memory

by IT GUY | 28th Nov 22, 9:42pm 1669624923

Please don't make fun of a serious situation /sarc

by Wrong John | 28th Nov 22, 5:13pm 1669608789

Mortgage silence from the commercial banks speaks volumes. Especially after such huge profits.

by Audaxes | 28th Nov 22, 5:58pm 1669611533

SOCIAL UNREST HITS THE YUAN

Germany not far behind.

by Audaxes | 28th Nov 22, 6:03pm 1669611815

Imagine the outrage in the west if this was China or Russia? Only it is the US, so no one is interested. Link

by TommyYank-old | 28th Nov 22, 6:46pm 1669614403

What other country lets millions with only a 6th form education on average just "walk in", and then given a bus ride, a phone, and eventually subsidized Health Car and credits when they file tax returns as they are low income earners. Without those millions who can't work in a "legal job" those growers would be paying higher wages. Simple as that. Worst of all for the native poor people rent soars due to the overflow of new occupants in their neighbourhoods, and then their schools are flooded with non English speakers. More attention and costs taken away for the native poor. All of this is outrageous to a MAGA voter.

by HouseMouse | 28th Nov 22, 9:46pm 1669625209

Price of oil really slumping. With the stronger NZD we should be seeing some lower prices at the pump.

I maintain that by May annual inflation will be significantly lower than most are picking.

by Pa1nter | 28th Nov 22, 10:08pm 1669626500

With the stronger NZD we should be seeing some lower prices at the pump

Unless the government remove their temporary fuel tax reduction.