What happened Thursday

Business / news

A review of things you need to know before you sign off on Thursday; Kiwi Bond rates rise sharply, Fonterra and Air NZ report better profits, councils report higher income, swaps stable, NZD firm, & more

[updated]

8th Dec 22, 4:45pm 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
Police Credit Union raised rates.

TERM DEPOSIT RATE CHANGES
Government guaranteed Kiwi Bond interest rates were raised today, all by +75 bps taking the 6 month rate to 3.75% and the one year rate to 4.25%. Liberty Finance also raised rates. Update: Westpac has raised almost all its term deposit rates by +5 or +10 bps.

BETTER PROFITS I
Air NZ is seeing better demand across both its domestic and international routes. The airline now expects earnings for the first half of the financial year to be in the range of $295 million to $325 million before taxes. This compares to the previous guidance range provided in September of $200 million to $275 million for the half year.

BETTER PROFITS II
Fonterra says good margins in their ingredients business is driving a better profit performance, and it has upgraded current year earnings. But it has trimmed its payout milk price slightly.

HIGHER TAX TAKE
Rates and regulatory fees charged by local authorities rose 6.7% in the september quarter compared with the same period a year ago. As high as this might seem, it is its lowest rise in two years.

MORE SECURITIED LOANS
UDC has securitised $250 mln of their assets loans to be basically priced at +185 bps above the one month BKBM rate (which yesterday was 4.32%.

BIG SURPLUSES ROLL ON
Australia reported another jumbo trade surplus in October of AU$12.2 bln for the month.

SWAP RATES HOLD
Wholesale swap rates were likely little-changed today,.. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 4.47%. The Australian 10 year bond yield is now at 3.34% and down -2 from this time yesterday. The China 10 year bond rate is at 2.91% and down -6 bps. The NZ Government 10 year bond rate is now at 4.06%, and down -5 bps and now above the earlier RBNZ fix for the NZGB 10 year which is up +2 bps to 4.03%. The UST 10 year is now at 3.45% and down -9 bps from this time yesterday.

EQUITIES MIXED
The S&P500 ended its Tuesday session down -1.4% on Wall Street. Tokyo has opened its Wednesday session down -0.4%. Hong Kong has opened up +0.2%, while Shanghai is down -0.3% in its opening session. The ASX200 is down -0.8% in afternoon trade. The NZX50 was down, but is recovering near the close to be back in positive territory, just.

GOLD UP
In early Asian trade, gold is at US$1784/oz and up +US$10 from this time yesterday.

NZD FIRM
The Kiwi dollar is firmer, now at 63.6 USc. Against the AUD we are firm at 94.6 AUc. Against the euro we are still at 60.5 euro cents. That all means our TWI-5 is now at 72.1 and up +20 bps from this time yesterday.

BITCOIN SLIPS
Bitcoin is now at US$16,830 and down -1.3% from where we were this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.0%.

AN APOLOGY ...
... for the lateness and brevity of this report.

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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58 Comments

by Noncents | 8th Dec 22, 4:53pm 1670471620

AN EXCUSE

Please note that there is unlikely to be a 4pm briefing tomorrow. The interest.co.nz crew will be decamping for its end-of-year function.

Get back to the party we can last a day without the 4pm update.

by Foxglove. | 8th Dec 22, 5:04pm 1670472245

Perhaps the bulletin was intended to be sobering? Still an apology not really required in contrast to a government that can wilfully transgress respected parliamentary procedures, get caught, admit begrudgingly to their mistake, but make no apology whilst at it. Classy lot aren’t they!

by JimboJones | 8th Dec 22, 5:02pm 1670472160

A bit early for that.

by Justa comment | 8th Dec 22, 5:06pm 1670472373

Interest.co, when you get back to your desk the Kiwibank Online Call is now 3.35%. I placed a chunk of my TDs today on the 5 yr 5.25%, that will do me in my old age...Will know in a couple of years if it was a good move.

by Justa comment | 8th Dec 22, 5:11pm 1670472665

Was reading about Nationals plans to remove the tax on used housing rentals. They should think carefully before re-igniting the used house swapping market, it will do serious damage to the developers who are currently building tens of thousands of new town houses that investors are buying for the tax exemption. I believe the current policy is a good thing, it is adding much needed supply to the housing market. Also, any tax cuts could re-ignite inflation again in April 2024, just as interest rates should be easing for mortgage holders.

by IT GUY | 8th Dec 22, 5:24pm 1670473448

The developers will have failed before we get to Nov 23, no one is buying anything here unless it’s 20-30% off cv

nothing can restart the ponzi unless Mr Orr can work out how to print Greater Fools

by HW2 | 8th Dec 22, 10:00pm 1670490050

Warning warning, find a bucket and start bailing

by HW2 | 8th Dec 22, 11:05pm 1670493914

Other than PPOR, are you fully cashed up. If not you could end up those who will fail

No that's completely wrong, I should reword it

by rastus1 | 8th Dec 22, 6:54pm 1670478899

Agreed. Imagine if jk had done this instead of pumping the not a crisis. It’s a smart bit of tax law and fhb’s need to take note.

by Nzdan | 8th Dec 22, 8:13pm 1670483589

The only reason why the tax law is so unpalatable is because it was done far too late. The punchbowl that is tax rebates for taking out stupid amounts of debt to bid up the price of housing has been taken away, but it should have never been put there to begin with.

by GV 27 | 9th Dec 22, 6:42am 1670521366

I can understand why it it existed to begin with, but once we understood that investors were outbidding FHBs in the same market segment for the same properties, it should have been axed.

by Nzdan | 9th Dec 22, 7:43am 1670525011

Yes, or we give Owner Occupiers the ability to deduct their mortgage interest costs out of their taxable income. I mean technically I am deriving an income from my home, by having a place to rest.

by Palmtree08 | 8th Dec 22, 7:12pm 1670479961

Nats, along with their ACT (100 immigrants annually) coalition partner, will have us pretty much experiencing "deja vu", as we recycle the failed policies of the Key epoch. All good though. A broad swath of commenters here can keep their brain on idle, by cutting and pasting the "worst government ever" masterpieces of wisdom, they have shared around with such abundant generosity.

by Fossil Lover | 8th Dec 22, 9:43pm 1670489009

Developers are just speculators that have preyed on low interest rates with no productivity. After all housing is consumption. You are not an investor if you buy a house for rental. You are a speculator and a business owner. Building more unproductive housing (Debt, money creation) is way more inflationary than any tax cut.

by Pa1nter | 8th Dec 22, 9:47pm 1670489266

Any investment is speculation at some level.

We'll allow it, if it means bigger salaries.

by bender | 8th Dec 22, 5:23pm 1670473408

The folks who believe the National promise that they won't privatise water believed John Key when he promised not to raise GST. There will always be some crisis to justify what they really want to do.

by IT GUY | 8th Dec 22, 5:26pm 1670473615

Until Labour stole my Auckland water assets today they could not be privatised WTF are you talking about ?

by GV 27 | 8th Dec 22, 5:31pm 1670473912

Amazing misdirection or just panic posting in the face of the inevitable next year? Take your pick.

by Foxglove. | 8th Dec 22, 5:34pm 1670474061

Yep 25% in the Roy Morgan sure pushes that panic button.

by IT GUY | 8th Dec 22, 5:43pm 1670474638

When they split into Māori labour and stupid labour they will only have 12.5% each

by Foxglove. | 8th Dec 22, 6:08pm 1670476084

Given the importance, power and plain obvious dominance of the former over the latter, would recalculate that something like, respectively 18.75% versus 6.25%.

by paashaas | 8th Dec 22, 6:31pm 1670477465

one man , one vote is just so passe .

by Foxglove. | 8th Dec 22, 5:35pm 1670474127

Exactly, IG.If the ownership had been left undisturbed in the hands of all the local councils, how the heck were you going to privatise that. Look at the outcry now from ratepayers, they just wouldn’t let their councils sell in the first instance. Who or what was going to move around the country buying up all the local waterworks, one by one.

by Rex Pat | 8th Dec 22, 6:06pm 1670476001

Ardern is the worst PM in living memory, leading the Worst government in living memory. A stain on NZ democracy. The deflection to National is pathetic.

by Baywatch | 8th Dec 22, 7:00pm 1670479238

Resident bot alert

by JimboJones | 8th Dec 22, 7:05pm 1670479550

With AI from the 1970s

by bw | 8th Dec 22, 5:43pm 1670474593

That GST change mentioned above that wasn't going to happen. Déjà vu all over again?

John Key said for it to “really, really, really get the property market to really crack, you’d have to have interest rates going through the roof from here, and you’d have to have labour markets going through the floor. We do all of that stress testing of our balance sheet at ANZ, and even then we see property prices down obviously from where they are ,and pretty significantly down, but that (would be) Armageddon,” Key added.

Armageddon, John? No ones mentioned that before now.

by J.C. | 8th Dec 22, 5:48pm 1670474920

Armageddon, John? No ones mentioned that before now.

TBH, I think Lord Key is a bit out of his depth here. You can only understand so much looking at a rear-view balance sheet. And in terms of modelling / testing stress, the balance sheet won't tell you much about the customer's situation. The 'it's all good' narrative might prove to be on the money, but anything can happen.

by JimboJones | 8th Dec 22, 7:24pm 1670480651

Personally I think the current interest rates will make the property market crack, although it might be an after inflation crack. It is so much cheaper to rent than to buy at the moment, there is a long way down before that gets back to par.

by DMC45 | 8th Dec 22, 6:15pm 1670476545

Funniest comment I've seen in a long time, but I'm afraid I have to delete it. - GN

by nigelh | 8th Dec 22, 6:21pm 1670476912

"Air NZ report better profits"

Not surprised at the horrendous domestic air fares.

by HouseMouse | 8th Dec 22, 7:33pm 1670481190

I am doing as much as I can to avoid domestic flights.

by Foxglove. | 8th Dec 22, 8:51pm 1670485882

Well then. Used to enjoy, when young the shorts at the matinee, Looney Tunes. Especially Mighty Mouse! A relation? If so all you need is a cape and the appropriate BVDs.

by Rhumline | 8th Dec 22, 9:24pm 1670487868

Drove to see a client in Wairoa last week. Decided to drive up as far as Havelock on Sunday, then lunch in Napier, first meeting in Wairoa on Monday pm, then more fee-earning work on Tuesday.We stayed two nights at Mahia (our B&B host gave us two crayfish as a parting gift) then had a long (and non-chargeable) drive back to Wellington.

All up it cost the same as a return Air NZ fare to Napier plus rental car ... for one

This way Mrs Rhumline came too, and we had a great time.

I gave up booking international flights with Air NZ years ago. Nowadays they're not much chop domestically either eh?

Lose a day or two and rediscover Aotearoa folk!

by Fossil Lover | 8th Dec 22, 9:51pm 1670489465

That's one hell ova a carbon footprint. Hope you got lots of credits!

by HouseMouse | 9th Dec 22, 7:25am 1670523929

Cool story. Agree.

Takes away all the cancellation risks as well.

by nigelh | 8th Dec 22, 6:30pm 1670477428

A lockout on apparently well paid workers. Paper plant in Auckland.

"OjiFS claims production workers at the Penrose Mill are currently paid on average over $100,000 per year. "

Union

"the mill's Panmure production workers "can't support their families at the moment, and they deserve a real hearing at the negotiating table", says Wallace."

full article https://www.newshub.co.nz/home/money/2022/12/paper-mill-company-oji-fibre-solutions-issues-pre-christmas-lockout-notice-to-employees-after-strike-threat.html

by JimboJones | 8th Dec 22, 7:04pm 1670479479

How much over? 100k isn’t that much these days, after tax and rent you’d have about $30k left.

by bw | 8th Dec 22, 7:09pm 1670479751

Fire-fighters got 24%.

What do we think is going to happen? What did the last paper mill lock-out get = 4.5% and $4,000 up front. A bit shy of 24%. I'll bet they're happy with their union, now!

Expect +24% across the board now. The standard has been struck. (NB: The management of this firm you mention got 30%, apparently)

5.5% terminal OCR? I don't think so.

by Nzdan | 8th Dec 22, 8:38pm 1670485116

I mean to be fair, the FENZ annual report 20/21 states a $36m net surplus (after capex)....why are they running as a profit centre? Also:

Number of Fire Fighters with Remuneration over $100k: 1118
Fire Fighters as a percentage of total employees over $100k: 64%
993 "Management and Support" staff and 1854 Career firefighters. What a ratio!

by IT GUY | 8th Dec 22, 7:42pm 1670481734

wow sale in Glenfield today 26.7% under cv. if the property keeps falling this fast firefighters will be able to buy DTI 3.5 in about 12 months

by Pa1nter | 8th Dec 22, 8:02pm 1670482941

Wake me when you can get a nice 3 beddie over the other side in St Mary's bay for under a mill.

by Nifty1 | 8th Dec 22, 8:52pm 1670485926

Wow saw a sale in Torbay today $155k over CV, another sale in Torbay today $55k over CV....There was also a sale in Northcote today $125k over CV and a sale today in Devonport $205k over CV.

https://www.interest.co.nz/property/residential-auction-results?region=…-

by IT GUY | 8th Dec 22, 8:58pm 1670486328

The Spruiker is strong in this one, can you report in % above CV not $ amounts or does that not suit your Narrative?

by Nifty1 | 8th Dec 22, 9:11pm 1670487110

It's easy finding above & below CV sales... point is, it doesn't really mean anything... especially singling out one property.

by IT GUY | 8th Dec 22, 9:28pm 1670488089

I know its really frustrating that greg keeps deleting all of my posts pointing out how bad things have got, it got comical yesterday as about 8 of us where all sharing the posts we had deleted, before that thread got deleted, its like living in china.......

But even if greg keeps removing our posts we will be right as we are posting facts not spruikiness.

meanwhile all of your and hw2 posts , even the personal attacks remain, are there guidelines that say only spruikers posts don't get deleted?

by Nifty1 | 8th Dec 22, 9:50pm 1670489455

Bizzare comment, could be worthy of being deleted.

by IT GUY | 8th Dec 22, 10:10pm 1670490654

Be Quick your comments will be gone soon

by HouseMouse | 9th Dec 22, 7:27am 1670524046

Totally agree. I find the editorial approach bizarre.

by Zachary Smith | 8th Dec 22, 10:16pm 1670491000

I agree that the relationship to CV isn't very significant. Houses that sell for less than their owners have paid for them is more significant. I think QV release a report with these statistics from time to time.

by IT GUY | 8th Dec 22, 10:28pm 1670491734

So why is greg deleting all my comments on factual sales, cv etc? is there a rule that individual sales cannot be discussed, sorry maybe I am late to the party and do not know the secret handshake around here? Guidance from the moderators would stop the posting.

if sales below cv don't matter then what is wrong with the posts?

by Pa1nter | 9th Dec 22, 1:18am 1670501888

Are the deleted posts spammy in nature?

In recent times there's been a tendency for some commentators to make repetitive posts that are more like a personality tick than a considered comment. Like a 2 year old walking around the house hitting a pot with a wooden spoon, rather than engaging in actual conversation.

by Nellbell | 9th Dec 22, 6:26am 1670520381

No they were just some detailed lists of auction results. Could be that select lists have potential for bias ( the disappeared list I saw showed sales above and below cv), or it could be that advertisers/related parties don’t like the lists.

by IT GUY | 9th Dec 22, 7:06am 1670522792

i was posting all sales that day not just picking out below what happened to the guy who posted on lower hutt its the epi center of nz falls

by Pa1nter | 9th Dec 22, 7:18am 1670523503

The same thing that happened to the guy who invented an internal combustion engine that runs on water.

by Llama_360 | 8th Dec 22, 9:29pm 1670488150

Are any retail investors looking at Kiwibonds over term deposits? What are the chances that we have "the big one" and the retail banks default on their obligations to depositors in the next year? Must be pretty slim. Even if that happened, surely depositors would be getting paid at least 75c+ on the dollar in the event of a solvency crises unless it really is "Armageddon".

by Justa comment | 8th Dec 22, 9:55pm 1670489741

Or deposit no more than 100k in each bank for the govt guarantee next year.

by KiwiinSpain | 9th Dec 22, 12:20am 1670498418

SBS Bank, 9 month TD: 5.5%

Compare to my Kiwisaver returns last two years...ouch!!