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
Cooperative Bank have raised their fixed rates today.
TERM DEPOSIT RATE CHANGES
SBS Bank raised term deposit rates. Christian Savings also rates rates, including for its savings accounts.
END OF YEAR DOWNER
The Westpac McDermott Miller consumer sentiment survey for the December quarter is the first of four end of year sentiment surveys, reports record low confidence as rising financial pressures bite. The pressures are widespread through the community, they say.
GOOD BANKING RELATIONSHIPS SLIP
The December Fed Farmers survey of how farmers relate to their bankers shows farmers are being squeezed by rising interest rates, with debt or other financial concerns "eroding mental wellbeing" they say. Although just on 60% of farmers said they were very satisfied or satisfied with their bank relationship, this was down 5 points from the survey six months earlier, and is the lowest since the biannual surveys began in 2015.
SUPPLY SIDE DEPRESSANTS RETURN
The local service sector is still expanding, but not as vigorously as it has been. That is according to the BNZ-BusinessNZ PSI survey for November. From an elevated reading of 57.1 in October it eased to 53.7. BNZ noted that while this reflected a sharp deceleration in the PSI’s employment index – to 51.8, from 57.1 – this component was still expanding. "The drag factor is really in supplier deliveries which, at 47.3, fell back into contraction territory, after poking above the 50 breakeven level in October, with 52.0. This infers supply-side issues are not fully resolved. In contrast, the demand side still appears robust, with new orders/business, at 57.3 in November, coming in very close to normal."
INFLATION EATS THE GAINS
Worldline (ex-Paymark) is reporting that consumer spending maintained its high levels in the second to last full week of pre-Christmas shopping, nudging above spending over the same time last year and surging ahead of pre-Covid levels. But that 'nudge' higher is only +1.9% and well below inflation - so they are really reporting a decline in 'real' terms. If December inflation is up +7% year-on-year, that means 'real' spending may be -5% lower this year.
ANZ RESTRUCTURES
ANZ Group is restructuring itself, splitting out their non-banking investments into a separate group. This will be owned by the new holding company, ANZ Group Holding Limited, which becomes the listed parent of both the banking division, and the new non-bank division.
THE DOWN SIDE OF TRANSITORY
There are increasing signs that globally at least, inflation has peaked and is trending down. Certainly economies that are suffering sharp demand falls are seeing that. Like China. And now possibly South Korea. The Koreans are now thought to be the most likely central bank to cut their policy rate (from its current 3.25%). Their inflation rate is currently 5.0%, having already fallen from 6.3% in July. They have an economy very dependent on exporting to China (24%) and Japan (10%), and even those exports are dependent on central US demand which takes 12% on South Korean exports directly.
MISERY UPDATE
We have updated our Misery Index charts - to find something unexpected. There is more 'misery' in Australia than New Zealand again. Between September 2021 and June 2022 we were holding that dubious prize. But from September, things have changed to the more 'normal' situation where NZ outshines AU. This economic definition of 'misery' is merely the sum of inflation + unemployment. We are leveling out at 2011 levels, whereas Australia is now at its highest since 2001. They how have higher inflation than us, and a higher jobless rate. (H/T Rumpole) We have also updated our charts tracking public service staffing, and the wider public sector staffing. The original data is here.
SWAP RATES DRIFT OFF
Wholesale swap rates were likely marginally lower today. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +3 bps at 4.58%. The Australian 10 year bond yield is now at 3.51% and up +3 bp from this morning. The China 10 year bond rate is at 2.90% and down -2 bps. The NZ Government 10 year bond rate is now at 4.30%, and down -3 bps and matching the earlier RBNZ fix for the NZGB 10 year which was up +2 bps to 4.30%. The UST 10 year is now at 3.51% and up +3 bps
EQUITIES START MIXED
It might be a week in the shadow of Christmas, but the NZX50 is down -0.7% in late trade today. No Santa rally here. The ASX200 is flat in afternoon trade. Tokyo has opened down a full -0.9%. Hong Kong has opened up +1.5%. Shanghai is down -0.2%. The S&P500 futures suggest Wall Street will open up +0.7%, bucking the trend. We'll see.
GOLD HOLDS
In early Asian trade, gold is just under US$1793/oz and unchanged from where we opened this morning.
NZD HOLDS
The Kiwi dollar little-changed from this morning at 63.9 USc. Against the AUD we are holding high at 95.3 AUc. Against the euro we still at 60.3 euro cents. That all means our TWI-5 is now at 72.3.
BITCOIN LOWER
The bitcoin prices is lower at US$16,773 and virtually unchanged from this morning. Volatility over the past 24 hours has been low at +/- 0.5%.
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48 Comments
Increasing signs that globally at least inflation has peaked. Bit of a rider in that proposition vis a vis NZ’s position I would suggest. CPI for a start, our household budget for a finish where I reckon household essentials and services, power and fuel, insurance, rates, and the rest will outturn 14.15 % higher than year end 2021. Nothing in there of significant comparison. What to expect in 2023, more of the same and more on top I imagine?
Wait and see. It turns out that the usual suspects have not got total control of inflation reporting. They want interest rates to go down so that their borrowed money costs less to service, and the shares they have bought with it will increase in value again as they become more attractive than term investments again. Their MSM mates are fiddling the info to report lower inflation only for this reason. My own costs of my businesses and my personal life have leapt up way over 10% this year. Funny that officially I haven't had that much increase. Other websites and other people agree with me. Is Adrian Orr stupid enough to go along with the fake MSM reporting?
But that 'nudge' higher is only +1.9% and well below inflation - so they are really reporting a decline in 'real' terms. If December inflation is up +7% year-on-year, that means 'real' spending may be -5% lower this year.
Thank you good sirs of interest dot co. This is what people need to understand with retail volume and value data.
David seems to love the one-upmanship with Australia, but I can tell you what his ‘Misery Index’ does not address - the cost of living here (obviously it does measure the *change* in the cost of living).
My brother and family arrived from Sweden in the weekend. I am sure most of you know that Sweden is far from an affordable country.
Well, my brother was shocked by the cost of groceries here, they just did their first supermarket shop. He reckons general grocery goods are close to double what he pays in Sweden.
Christchurch city council gets downgraded in LGFA release from AA-( positive) to AA,The council needs to bring back control from the unelected bureaucracy,and show leadership by cancelling virtual signalling projects with little or no real ROI.
https://www.lgfa.co.nz/sites/default/files/2022-12/List%20of%20LGFA%20G…
And so say all of us! Ratepayers that is! $100k set aside to be wasted on a festival, wasted on cycle lanes instead. That’s why a seperate levy on ratepayers for the stadium won’t work. The Brown Cardigan Brigade will just take it and spend it on whatever takes their fancy instead.
Everyone can see there are substantive economic problems ahead,with sustained inflation from overextended infrastructure spending,such as so called traffic calming in the CBD,blowouts in projects underway (such as Hornby pool) slowing spending will not add cost,its saving funding for when the economy does need stimulation and contractors have sharper pencils.
Spending can only be sourced by income from rates or dividends from council shares in such as the airport, or borrowing. So if all of that revenue or finance is tight why the hell do the good people in Christchurch need to own a very large tract of land over a 4 hours drive from their own catchment, in Central Otago, in the vainglorious hope that one day it might become an international airport. Nor has it been explained to the good people of Christchurch just where the money from the above three sources is to be found, to complete said airport, how much debt they will be liable for consequently and when will there be the remotest future possibility that said pie in the sky venture will return one single dollar to them in revenue.
Either the deep state (aka Council officials) pulled the wool over councillor eyes or there are a lot of dumb councillors or there are a few councillors benefitting from it, in the know and managed to persuade other councillors it was a great idea. I think this was on the go at least a year ago so before any financial stress. It is a white elephant.
REINZ regional director Neville Falconer said owner-occupiers were dominant in the market, with first-home buyers also active.
“Open homes have been quiet, largely due to current market conditions and economic uncertainty. Buyers are finding it difficult to obtain finance in time, and some have indicated placing a hold on their buying plans until the New Year.”
Funny some on here must be attending open homes not monitored by REINZ, some spruikers seem to have been falsely claiming open homes where busy?
https://www.nzherald.co.nz/nz/rotorua-family-buys-first-home-as-others-…
Lovegrove said he believed property prices would continue to drop and vendors needed to reduce their prices if they wanted to sell.
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