What happened Thursday

Business / news

A review of things you need to know before you sign off on Thursday; few rate changes, new browser tool, loan arrears rise, house values fall, NZDMO bond fizzer, swaps unchanged, NZD rises, & more

[updated]

1st Dec 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
Resimac and Kookmin Bank have raised rates today. Still no announcements from ASB, BNZ or Kiwibank.

TERM DEPOSIT RATE CHANGES
Unity Money and the Cooperative Bank raised their term deposit rates, and the Cooperative Bank also raised savings account rates. Update: BNZ has also raised its rates today. Details here.

A READER-DESIGNED FEATURE
For readers who would like to be able to sort our rate tables, a reader has developed a browser extension that allows you to do that. You can find it for Chrome here and for Firefox here. The Chrome one also includes a short video tutorial. Thanks to LL. (Please note that for reasons other than tech ones, we do not plan to offer that sorting feature directly on our tables. We are of the view that this reinforces a 'bad habit' on how to choose a financial product. But we do know that many would like the feature.)

HIGH COST FUNDING DEMAND RISES
Consumer loan arrears are on the rise. Credit bureau Centrix says the number of borrowers behind on consumer loans is rising and so is demand for consumer loans.

THE FALLS ARE BUILDING
Average value of homes nationally is down -$84,000 from the March peak. That is an -8.1% fall. Lower Hutt experienced the country's biggest decline in average dwelling values, dropping almost -20% over the last 12 months according to this CoreLogic data.

AND THE PROSPECTS GET TOUGHER
Property listings point to a cool summer for the real estate market. The housing market is heading into summer with a big and rising stockpile of unsold listings, according to realestate.co.nz data. The average days to sell is now up to 29 weeks in Auckland, the longest in a November since 2010 (when it was 41 weeks!)

A LABOUR LAWYERS DREAM
Labour's scrum-screwing Fair Pay Agreements regime (FPA) is now in place as the law. This means that eligible unions are now able to apply to a government department (MBIE) for approval to "negotiate" an FPA for an industry or occupation. The first set of FPA regulations have been published under the Fair Pay Agreements Act. Get ready for lots of bureaucracy and unintended consequences.

INSUFFICIENT DEMAND, WEIRD YIELDS
Treasury tendered three bonds today. The $150 mln April 2027 one attracted $395 mln in bids, and the yield was 4.27% and up from 4.16% two months ago. But the April 2033 $200 mln didn't attract sufficient interest to be filled. Only $189 mln was bid, although the yield was only 4.03% and down from 4.44% one month ago. This is the first Treasury tender to come up short since September 2012. The final $50 mln for the May 2051 tranche got $93 mln in bids and went for 4.21%, well down from the 4.80% one month ago.

WILL THEY STAY OR WILL THEY GO?
Global banking giant HSBC is reviewing its NZ retail banking operations with a sale one option being considered. The review doesn't affect their wholesale operations here, they say.

ANOTHER $300 MLN IN BOOT TOPUP
We are getting very near the end of the Funding for Lending program. But yesterday and other bank drew down $300 mln, probably a mid-sized one. The program ends on Tuesday. So far, banks have drawn down $19 bln since it started three years ago.

DAIRY TO GO SOLAR (FROM HYDRO?)
New Zealand Green Investment Finance (NZGIF) is investing $10 mln in Solagri Energy to help rollout solar energy to dairy farms. Based in Canterbury, Solagri provides a ‘solar as a service’ offering tailored specifically for dairy farms, so no upfront investment required. Solagri arrays are normally ground mounted on a quarter hectare close to the dairy shed and provide the farm with low-cost electricity and long term energy price security. The $10 mln debt finance facility provided by NZGIF is expected to finance around 120 solar arrays over the next three years, and these arrays are expected to help avoid 36,100 tonnes of CO 2-e emissions over the life of the assets.

NOT AS NEGATIVE
In China, the private Caixin PMI factory data reports a contraction in November, but not one as sharp as the official data reported yesterday.

SWAP RATES HOLD
Wholesale swap rates were likely little-changed today on competing local and global trends. The real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is down -1 bp at 4.41%. The Australian 10 year bond yield is now at 3.50% and down -10 bps. The China 10 year bond rate is at 2.93% and up another +1 bp and its highest in a year. The NZ Government 10 year bond rate is now at 4.15%, and unchanged and well above the earlier RBNZ fix for the NZGB 10 year which is down -11 bps at 4.00%. The UST 10 year is now at 3.62% and down -12 bps from this time yesterday.

EQUITIES RISE
Wall Street ended its Wednesday session up +3.1% juiced by the Powell comments. Note that since October 12, the S&P500 is now up +14% which is kind of impressive. Tokyo has opened +1.1% higher today. Hong Kong has opened up another +2.4% and continuing this week's rise. That puts it up almost +12% so far this week. Shanghai is also up strongly at its open, up +1.3% today to be up +4.4% so far this week. The ASX200 is up +1.0% in afternoon trade. And the NZX50 is up +0.7% near its close and for the week so far that is a +2.3% gain.

GOLD FIRMER
In early Asian trade, gold is at US$1776/oz and up +US$24 from this time yesterday.

NZD RISES
Fed boss Jay Powell's speech this morning has driven the USD lower. The Kiwi dollar is +1c higher from this time yesterday at 63.2 USc. Against the AUD we are unchanged at 92.8 AUc. Against the euro we have risen back to 60.6 euro cents and up +60 bps. That all means our TWI-5 is now at 71.6 and up +60 bps.

BITCOIN RISES AGAIN
Bitcoin is now at US$17,241 and up +2.4% from where we were this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.5%.

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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63 Comments

by AdamJay1990 | 1st Dec 22, 4:02pm 1669863762

ASB, BNZ or Kiwibank just sitting on their hands not passing anything onto savers.. Might be time to open up a Rabobank account

by Justa comment | 1st Dec 22, 4:20pm 1669864841

They wont wait much longer, at least one of these will move tomorrow.

by Retail shop | 1st Dec 22, 4:28pm 1669865338

Transferred some short term funds from kiwibank to rabo today. I am sure I wasn't the only one.

by Eschaton | 1st Dec 22, 4:42pm 1669866172

Kiwibank staff on here. Yall need to do better, move faster please.

by Justa comment | 1st Dec 22, 5:24pm 1669868661

Well there you go, BNZ just moved. TDs a little underwhelming. The other day ANZ went over the top of Rabos new rates at the long end, using their muscle.

by fortunr | 1st Dec 22, 4:43pm 1669866204

I have an account with Rabo (and some deposits with them), as well as with other banks. Just note that Rabo has a slightly lower credit rating than the major banks - hence the usually slightly higher returns on deposits.

by Retail shop | 1st Dec 22, 8:27pm 1669879675

I think when it gets bad enough for some of the banks to go tits up none of them will be safe.

by Justa comment | 1st Dec 22, 8:44pm 1669880694

100k per bank deposits guarantee next year, maybe split your deposits?. This would mainly benefit Heartland, SBS and the likes. ANZ and ASB look pretty bullet proof on their AAs, would need a double or triple black swan to tip them up I believe. Kiwibank is 100% government owned, for now.

by Justa comment | 1st Dec 22, 8:51pm 1669881096

Yes Rabo will have to go 5.3 or 5.4 at the long end now, or else you would just go ANZ/WBC with their AA ratings. But that Rabo 1 year 5.5% is a good one at the moment if you only want 1 year.

by DollarsandSense | 2nd Dec 22, 5:35am 1669912513

Yep did that six months ago when I realised Rabo moves pretty much straight after the RBNZ decisions (well within a week) and is closer to the OCR than the others. The others wait for the start of the following month and lag so far behind you would think they are in a different race.

by liamlabuschagne | 1st Dec 22, 4:03pm 1669863815

Thanks David for sharing my extension!

by False economies | 1st Dec 22, 7:24pm 1669875898

Any relation?

by Foxglove. | 1st Dec 22, 4:08pm 1669864139

Consumer loan arrears increasing and so to are applications. This is now a consistent trend. Cannot imagine a more stark and sinister indicator that too much of society in New Zealand is struggling to make ends meet. There is a gathering storm alright.

by Jonny.Foe | 1st Dec 22, 4:13pm 1669864419

Same with business loans - are those businesses borrowing more to expand their production, or because they are having to extend their credit to stay afloat?

by IT GUY | 1st Dec 22, 4:16pm 1669864586

During the GFC some NZ business’s drew down there facilities to the max and deposited it at another bank so their main bank did not reduce their available credit just as they needed it.

by Independent_Observer | 1st Dec 22, 4:23pm 1669865024

We can just print more money and give it to those in need, and as a result increase the various deficits that are increasing inflation and decreasing our standard/s of living, and everything will be fine

(100% sarc)

by J.C. | 1st Dec 22, 4:38pm 1669865887

What's sarky about that?

Look at USD M2 money supply. First time in 60 years that it has gone negative yoy. The chart tells a great story.

https://twitter.com/MacroAlf/status/1596533273370542082

by KH | 1st Dec 22, 5:36pm 1669869411

It:s confirmed. JC and Grant R both would miss the sarc.

by Independent_Observer | 1st Dec 22, 6:04pm 1669871051

Good chart! Was looking at this post/chart the other day.

The average increase (% change) in money supply has been around 8% following the GFC.

Where has all the money flowed into if CPI has been running at 2%? i.e. it hasn't been reflected in the cost of goods and services.

It would appear we've been importing cheap goods and providing cheap services/labour that has been increasing at 2% inflation, while we've been inflating debt/assets at 8%.

Will be a nightmare if people want to convert their assets into cash (to buy goods and services, while our capacity to produce those goods and services is limited by demographic changes) and reverse the process that has been playing out.

by J.C. | 1st Dec 22, 6:20pm 1669872042

It would appear we've been importing cheap goods and providing cheap services/labour that has been increasing at 2% inflation, while we've been inflating debt/assets at 8%

Bingo

by fortunr | 1st Dec 22, 4:45pm 1669866322

Dangerous posting - Orr, Robbo and Co. might take some ideas from it ! :-)

by Jonny.Foe | 1st Dec 22, 4:55pm 1669866937

Govt accounts for October 2022 came out today. Govt net worth is now $172 billion - up 30% from $144 billion in October 2019. We are not short of space for fiscal investment - we just need a strategy for turning Govt investment into a better country for our kids.

by RickStrauss | 1st Dec 22, 5:07pm 1669867623

by Advisor | 1st Dec 22, 5:31pm 1669869084

Call me glass half empty but nothing much the Government can achieve directly in our lifetimes without endless consultation and expanding the bureaucracy.

The plan should be to support a high-value export ecosystem and improve skill outcomes for our local workforce.

by Pa1nter | 1st Dec 22, 5:44pm 1669869869

Pretty much. Let's get the basics done and keep the lights on first, then worry about saving the world and everyone in it later.

It'd be a rocky road getting there though.

by Jonny.Foe | 1st Dec 22, 7:53pm 1669877600

You realise that a high value export ecosystem and improved skills will only happen if Govt does some stuff right? Hence, govt needs to forge and deliver a strategy.

by Pa1nter | 1st Dec 22, 8:03pm 1669878225

Governments don't normally deliver well on that sort of thing. I'd argue they actually hinder it, because they just increasing the list of things you can't do, or what you have to do in order to get things done.

by Jonny.Foe | 1st Dec 22, 8:17pm 1669879070

I am not saying they deliver well on it - only that we need govt to have a strategy (knowing what they *will do* and *why*). If Govt have to get out of the way to make something happen, then they need to know that and do it! No country has transformed without state intervention / action.

by Foxglove. | 1st Dec 22, 8:54pm 1669881276

Rural Banking Corporation of NZ. Established in 1974 by the Kirk Labour government (can’t quite recall but it may have been Colin Moyle’s initiative?) The purpose was to support, finance & grow the primary production sector together with all the associated services. Fletchers got hold of it during Muldoon’s tenure & finally the NBNZ absorbed it. Ironically enough, an article today by Peter Dunne suggested this Labour government likes to flatter itself as being cast in the same mold as that of Kirk’s. No, no not in anything to do with agriculture, we don’t, no,no,no! What an inconvenient truth though lies in that comparison.

by Audaxes | 1st Dec 22, 5:55pm 1669870541

Property revaluations by any chance?

by Jonny.Foe | 1st Dec 22, 8:02pm 1669878152

Yes, property plant and machinery are a chunk - but also kiwibank mortgages, funding for lending loans, equity etc. Key thing is that net interest payments on net 60 billion of financial liabilities is around 3% (well below inflation). No fiscal constraint.

by Independent_Observer | 1st Dec 22, 6:05pm 1669871149

We should spend (government) up a storm then Jfoe while the boomers head into retirement.

by Jonny.Foe | 1st Dec 22, 8:21pm 1669879286

Preparing the country for a higher % of retirees will actually require state investment. If we leave it to the BUPAs of this world all our money will be disappearing into shareholders' lavish holidays.

by Independent_Observer | 1st Dec 22, 8:34pm 1669880056

Increased government spending, reduced/stagnant goods services production (as we lose the boomer workforce) - sounds like more of what we've had the last few years that has produced inflation.

by Jonny.Foe | 1st Dec 22, 9:22pm 1669882926

Your smarter than that. What should Govt invest in to make our economy function effectively in 2050? Splashing cash around on random stuff is of course stupid. But building infrastructure that makes the care of older people more efficient in the long run? Yes.

by KH | 1st Dec 22, 5:33pm 1669869209

Don't say those things IO. Grant R might be listening and he would think it a great idea. (oh wait. He already did)

by IT GUY | 1st Dec 22, 4:09pm 1669864196

Wow that blow out in days to sell

The average days to sell is now up to 29 weeks in Auckland, the longest in a November since 2010 (when it was 41 weeks!)

a lot can change in 203 days …. Including the price you can expect

by Jonny.Foe | 1st Dec 22, 4:12pm 1669864368

On the bond sales, remember that the banks have a choice of bidding for bonds or leaving their money in their RBNZ settlement accounts earning 4.25%. The banks are presumably deciding that the path for future bond prices / yields is too uncertain, so they may as well leave their money where it is?

We are going to see more weirdness like this because RBNZ have taken us out on a limb with their aggressive rate hikes. The rest of the world can see that they have crested the post-COVID price surge (bullwhip effect), but Adrian is committed to Shock and Orr.

by Whatwillhappen | 1st Dec 22, 4:26pm 1669865191

A $300 billion drawdown on FLP? Surely you mean $300 million?

by RickStrauss | 1st Dec 22, 4:44pm 1669866283

Welp, that escalated quickly...

by HouseMouse | 1st Dec 22, 4:37pm 1669865854

What’s up with the NZSX50 this week? Rising interest rates, more signs of a nasty recession approaching etc. Any thoughts ? Is there a seasonal factor at play?

by Thinker | 1st Dec 22, 4:53pm 1669866782

AU Inflation dropping was a big positive for it and also government increasing funding for retirement sector, hence those stocks rose. Don't worry they'll all come back down again soon.

by HouseMouse | 1st Dec 22, 5:00pm 1669867213

Thanks, and exactly

by Justa comment | 1st Dec 22, 5:21pm 1669868464

Powell signalled less aggressive rises this morning, their next looking like 0.5 and not 0.75. Stocks rallied. Also FPH provided a big push to the index. World class company FPH, great they are still heavily in NZ, another expansion at Karaka to come.

by Tin Pot Tony | 2nd Dec 22, 4:37am 1669909037

FPH was oversold and beat expectations - check out their chart the last few days.

by J.C. | 1st Dec 22, 4:52pm 1669866753

Silver price in Kiwi pesos. Holding its own as a store of value.

Past 3 months - +17%

Past 1 year - +7.4%

Past 3 years - +42%

Past 5 years = +48%

by House-Hunter | 1st Dec 22, 5:44pm 1669869851

Physical Silver and a bit of Ripple XRP.

by J.C. | 1st Dec 22, 6:23pm 1669872232

Physical Silver and a bit of Ripple XRP.

I own some XRP. But it's somewhat of an entry-level crypto. Very useful though. I've used it to transfer value to Japan. Quite powerful solution if used properly.

by Firstclass | 1st Dec 22, 4:59pm 1669867178

There is a typo here

"But yesterday and other bank drew down $300 bln, probably a mid-sized one."

You meant NZ$300 Million ?

by NoRegrets | 1st Dec 22, 5:12pm 1669867929

The substantial rise in the NZ$ will add additional pressure to our already appalling trade deficit. Might help bring imported inflation down but not good for farming returns.

by Retail shop | 1st Dec 22, 8:32pm 1669879959

We import heaps more than we export so we will make more on that side than we lose on the export side with a rising kiwi $1.

by Hans Brink | 1st Dec 22, 10:29pm 1669886950

Good point Retail shop, one I've often pondered. Needs a good analysis to see which is right. As a farmer a lower $ is good for income but bad for expenses.

by Pa1nter | 1st Dec 22, 5:35pm 1669869302

This means that eligible unions are now able to apply to a government department (MBIE) for approval to "negotiate" an FPA for an industry or occupation. The first set of FPA regulations have been published under the Fair Pay Agreements Act. Get ready for lots of bureaucracy and unintended consequences.

What an absolutely amazing day not to be dependent on employing staff.

by Pragmatist | 1st Dec 22, 6:04pm 1669871086

Labour's scrum-screwing Fair Pay Agreements regime (FPA) is now in place as the law. This means that eligible unions are now able to apply to a government department (MBIE) for approval to "negotiate" an FPA for an industry or occupation. The first set of FPA regulations have been published under the Fair Pay Agreements Act. Get ready for lots of bureaucracy and unintended consequences.

And just when the RBNZ is trying to engineer a recession.

Going to need to stock up on popcorn for this one. Shall we lay bets on which industry gets to be the first "beneficiary" of this process?

by Pa1nter | 1st Dec 22, 6:46pm 1669873610

No need to bet, the first claim is in and it's hospitality.

If you can get a minimum of 10% of workers to agree you can basically lobby for an entire industry.

by singautim | 1st Dec 22, 7:26pm 1669876019

Yet another incentive to employ naive immigrants desperate for permanent residency.

by Pa1nter | 1st Dec 22, 7:41pm 1669876867

I don't know about that, but when you can get paid more to push a supermarket trolley around a carpark in NZ than you can being an engineer in many countries makes you contemplate why our productivity is so low.

by Advisor | 1st Dec 22, 7:42pm 1669876966

Yes, when hiring holidaymakers, international students and grads.

For visa accreditation, a wage threshold of $27.76 applies to most sectors. Hospitality has a carve out of $25 until March 2023 and $28 thereafter.

by Advisor | 1st Dec 22, 7:38pm 1669876687

While I don’t like the bureaucratic approach taken towards collective bargaining, I do believe some low-paid sectors are in desperate need of a shakeup.

by OldSkoolEconomics | 1st Dec 22, 7:36pm 1669876606

So the industries that will be worse hit by a staff shortage and recession .. now get minimum wage agreements. Great time to own a cafe.

by Rob Reid | 1st Dec 22, 7:59pm 1669877998

About a year ago (22/12/21) there was this item from Gareth Vaughan with 5 predictions for 2021: I calendared to dig it out for a laugh:

Five predictions for 2022 | interest.co.nz

1) Covid-19 is not going away.

2) We learn how serious New Zealand is about combatting climate change.

3) There'll be a lending slowdown.

4) The Reserve Bank will be increasingly politicised.

5) The Official Cash Rate (OCR) won't rise as much as predicted.

In general, Gareth was pretty accurate I think, except the last one. The comments include quite a few of us chipping in our own 5 predictions:

Eskyrider
Ngakonui Gold
Northern Lights
Carlos67
EpsomArtsAndCrafts
And others with one liner predictions or responses to others

Mine are pretty inaccurate - too optimistic on housing and inflation, which is bizarre given I'm a doom goblin.

by Jonny.Foe | 1st Dec 22, 8:07pm 1669878466

That's pretty good to be fair!! He was just a few months out on the OCR dropping.

by GV 27 | 2nd Dec 22, 7:16am 1669918591

JFC I could have said this yesterday, but apparently I said it before Xmas in 2021:

"Controlling stability" - it's a bit late for that. The 'over-leveraged' is now 'every aspiring FHB who bought in the last two years - how's that going to work out for financial stability if things unwind? A total collapse in discretionary spend or a generation of Kiwis resigned to leaving the country.

If 'stability' mattered, we wouldn't be in this mess in the first place. It only suddenly matters when Gen Xer civil servants on stonking pay-packets need to inflict a big of finger-wagging at young Kiwis to distract from the fact that they have failed at almost every part of their mandate to get us into this position to begin with.

Remember kids, all of the criticism of our current situation is apparently rooted in hindsight. Thank you for reminding me that thread existed, I can now point to it when someone tries to tell me that 'it's easy to look back and say what we should have done' - we were all bloody screaming it at the time!