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
Westpac has raised both its fixed and floating rates today, increases similar to yesterday's by ANZ. More here. Rates also rose at China Construction Bank.
TERM DEPOSIT RATE CHANGES
Similar increases came from Westpac today for both term deposit and bonus savings accounts too. More here.
FEWER NEW DWELLINGS BEING CONSENTED
There was a big drop in the number of new homes consented in October. They fell -22% compared to September, but consenting levels in Auckland, Waikato and Canterbury remain high.
TAXPAYERS KEEP ON FUNDING PUBLIC BUILDING
Non-residential consents are holding up, but only because of public sector activity. The biggest positive contributions to activity in the year to October came from office and factory buildings, which totaled $1.7 bln and $1.5 bln respectively. Office consents (which include public transport buildings) were boosted in October by a $42 mln consent for Auckland’s City Rail Link and a $39 mln consent as part of ACC’s new building in Dunedin. Factory consents included a $30 mln consent for KiwiRail’s workshops in Christchurch and $23 mln of consents in neighbouring Selwyn. (H/T Infometrics)
CONFIDENCE SAGS SHARPLY
The latest ANZ Business Outlook Survey shows a sharp drop in confidence and own activity readings, while sentiment in the residential construction sector has 'tanked' and 'could hardly be lower'.
COLD COFFEE
Bank mortgage books grew less than +$1 bln in October from September, continuing a weak expansion that has been evident (and below +$1 bln) since July. At its height, these home loan books grew +$3.7 bln in March 2021, so this is quite a retreat from there. It is not as though non-bank lenders are winning business away from banks. Their expansion was only a mere +$21 mln. More here.
SMALL GROWTH BUT LARGE SHIFT
Household deposits grew very little in October from September, up a mere +$275 mln. But households are shifting their money around rather aggressively. They let their transaction balances fall -$1.4 bln, kept their savings accounts unchanged, and added almost +$1.7 bln to their term deposit balances, taking these up to just shy of $100 bln. They are up +$18.8 bln over the past year. Households are very motivated by rising term deposit interest rates, even if they aren't high enough to cover inflation (and still well short on an after-tax basis).
TOP JOB FOR COMMISSIONER
The Government has appointed Dr John Small as the new Chairman of the Commerce Commission. He replaces Anna Rawlings.
A FULL DOWNGRADE
Following on from yesterday's outlook downgrade for Wellington City Council, S&P has now given a full rating downgrade to Marlborough District Council, from AA+ to AA on their rising deficit and debt burden. Their outlook was already 'negative', and it remains so at the new rating level.
EMBEDDING THE ZERO CARBON ACT
From today, it has become a legal requirement for local governments to consider the Government’s National Adaptation Plan and Emissions Reduction Plan when preparing or changing regional policy statements, regional plans, and district plans under the Resource Management Act. The new requirement builds on changes made in 2020 that mean consents for large projects can be declined if they will have significant climate change implications that are inconsistent with the Zero Carbon Act.
VERY HIGH, JUST NOT A RECORD JUMP
In Australia, inflation eased to 6.9% in October from 7.3% in September, a retreat largely driven by lower food costs. But even at the new "lower" level, the increase remains unusually high.
VERY LOW, JUST NOT A RECORD DROP
Staying in Australia, the total number of residential building consents fell -6.0% in October, following a -8.1 fall in September. Year-on-year consents to build houses were down more than -11%.
SWAP RATES FIRMER
Wholesale swap rates were likely higher today on global trends. The real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged again at 4.42% to end the month. The Australian 10 year bond yield is now at 3.60% and up +5 bps. The China 10 year bond rate is at 2.92% and up another +3 bps and its highest in a year. The NZ Government 10 year bond rate is now at 4.15%, and up +6 bps and above the earlier RBNZ fix for the NZGB 10 year which is up +6 bps at 4.11%. The UST 10 year is now at 3.74% and up +5 bps from this time yesterday.
EQUITIES MIXED
Wall Street ended its Tuesday session down -0.2% and recovering as the session wore on. Tokyo has opened -0.7% lower today. Hong Kong has opened flat after yesterday's very sharp rise. Shanghai is also flat at its open. The ASX200 is up +0.3% in afternoon trade. And the NZX50 is up +0.8% near its close.
GOLD FIRM
In early Asian trade, gold is at US$1752/oz and up +US$10 from this time yesterday.
NZD MARGINALLY FIRMER
The Kiwi dollar is +40 bps firmer from this time yesterday at 62.1 USc. Against the AUD we are unchanged at 92.8 AUc. Against the euro we have risen back to 60 euro cents. That all means our TWI-5 is now at 71.1 and little-changed.
BITCOIN RISES
Bitcoin is now at US$16,838 and up a sharpish +4.1% from where we were this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.3%.
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43 Comments
“Confidence Sags Sharply.” Now that’s a headline isn’t it and it describes the business outlook in New Zealand at present. I would wager though, the societal outlook is sagging, at the least, equally pessimistically. Personally don’t have a large social circle these days but there are certainly more worried and uncertain people out there than the opposite for sure. At least summer approaches but that there is foreboding seems undeniable. It reminds me unfortunately of the downcast folk shuffling around in the supermarkets during the lockdown(s,) they don’t know what’s going to happen next. Likely this government is to be the Grinch that stole Christmas.
Just bumped into an old client in the dump that is Auckland Airport - he was glum about how quickly he is seeing deals evaporate and an increase in time to go from lead to sale.
That is four out of five clients I've visited in the past fortnight reporting the same (the one I was actually up here seeing is seeing a rapid change as well)
Fewer inquiries, and the ones that they are getting are much "twitchier" in terms of signing on the dotted line.
All anecdotal, but 90% of the anecdata I'm getting at the moment points in one direction.
A sitting Government with the courage to do the right thing, regardless of the political consequences? Impossible!
We choose to rebalance the New Zealand economy and do the other things, not because they are easy, but because they are hard; because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one we intend to win.
(With suitable apologies to JFK).
The government can do nothing but sit and watch the economy collapse from the sideline.
The only thing this lot have done is spend taxpayer money on boosting consumption, and that will be counterproductive in this scenario.
In fact, Robbo & Orr playing fast and loose with taxpayer funds is what brought us here in the first place.
Must be as whatever unfortunate consequences that have occurred in the last five years or so are nothing to do with this government because otherwise, this government would have admitted fault or apologised or both. Most governments are rather like that of course. But this one has carried that obduracy and denial to levels previously not witnessed.
This would be a great time to launch a government house building program to avoid the boom-and-bust scenario that has held affordable housing back in New Zealand.
There's more than a few issues there. Most of the nation's wealth is tied up in the existing housing stock (approx 4x GDP). There's a trade off. Wealth destruction would be necessary to acheive that goal.
I can almost hear the shrieks of protest through the digital transmission.
David Hargreaves' article mentions that mortgage growth for the last 12 months has slowed to +5.2%, so it has still increased. So to be clear, the value of all mortgages was higher in the last 12 months than it was when the real estate market was going beserk in 2021.
How can the value of all mortgages be higher in the last 12 months, when so fewer houses have been sold and also at lower prices, that the year before ???
Anyone with an explanation?
Here is the link to his full article: https://www.interest.co.nz/business/118684/latest-rbnz-lending-figures-…
No, HGWR means a smaller mortgage being repaid to the bank by the vendor and a bigger one taken up from the bank, by the buyer. It makes sense but I would ask "what happens to the vendor, does he not buy another house to live in with a bigger mortgage?" You could argue that the vendor rents and therefore doesn't need a mortgage, but if this was happening at any scale, we would have a flood of new renters...
Or.. some people paid off their mortgages.
Or.. some people sold at a profit and downsized.
Or.. some specuvestors sold excess property holdings (maybe not at a profit, but > than their mortgage; not also the higher LVR requirements for investors vs OO).
And a very very small amount might have been written off because someone died or their bankruptcy was discharged.
I wonder if it might have something to do with the existing mortgages on the houses being sold. If you sold me a house you had owned for some years, you might retire a mortgage of 100k and I might take out a mortgage of 500k, so total mortgage stock up 400k. If instead you had a mortgage of 500k on that house, there would be no change to total mortgage stock as a result of the sale.
I find it exhausting listening to politicians on all sides of the isle spout out the same climate goals. Someone has to be in the room to say this is bad and why. Simply put the recent research by Japan on methane, completely blows out the premise that farming is a major contributor. Simply put the tundra is the largest emitter of methane.as the Japanese exposed in their recent research. So when and if scientists comprehensively prove that methane is causing the greenhouse effect when it is only 2 points per million vy volume, then they can explain to simple types like me, that when cattle who eat the grass and poop are by in fact net zero contributors, why we should buy into the fact of us allowing the narative to continue. Farming bad, plant trees.
https//global.jaxa.jp
It's more nuanced. Methane is a potent GHG.
But in practice methane is very short-lived in the atmosphere. With a half life of nine years only a quarter remains after two decades and the remainder is almost entirely broken down within a human lifetime.
It does seem a bit strange to be treating it like CO2 because if countries are emitting a steady amount per annum over decades there is no further warming being caused.
I know many here don't rate bank economist's analysis, still I thought ANZ's latest "NZ Insights" was an interesting read for those of you who might want to peruse.
https://anz-singletrack.s3.ap-southeast-2.amazonaws.com/NZ_Insight_risk…
Trying to call which quarter of which year will be the bottom of the market or the highest of interest rates is all pretty trivial.
A lot of this is fairly procedural, so the real trick is how you've prepared yourself overall for the market fluctuations.
Some people went crazy over the last 2 years and they'll be first on the block.
I read a great book on share trading about 20 years ago. In market declines they mentioned "no one left to buy" as a cause. The concept was that assets can remain attractive/desireable with strong demand. However people have just topped out with no capacity left to continue to invest. Even though they want to. I think about that alot, escially these days.
Aussie not messing around.
The Nov. 29 Digital assets in Australia report was commissioned by the Tech Council of Australia (TCA), one of the country's technology industry advocacy groups, and written by technology consulting firm Accenture, which outlined a number of potential benefits the growth of the digital assets sector in Australia could deliver, stating:“Digital assets (DA) have the potential to transform our lives offering significant time and cost savings to individuals and businesses”
The report estimates digital assets — such as cryptocurrencies, stablecoins, tokens, and Central Bank Digital Currencies (CBDCs) — could deliver an “80% reduction in retail payments costs by 2030,” save Australian businesses 200 million hours per year by automating tax compliance and administration, and a further 400,000 hours in preparing documents for business loans.
https://techcouncil.com.au/wp-content/uploads/2022/11/Digital-Assets-in…
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