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%.
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66 Comments
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 !!)
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.
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.
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
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
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.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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
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.
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.
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).
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.
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.
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.
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.
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.
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.
SOCIAL UNREST HITS THE YUAN
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.
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