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
Unity Money raised its fixed home loan rates.
TERM DEPOSIT RATE CHANGES
TSB raised its term deposit rates, but really only matching main bank levels. Heretaunga Building Society raised its TD rates too.
REACTIVE SHOCK
Business sentiment has dived after the RBNZ said it is trying to engineer a recession in it drive to kill inflation. Firms are looking ahead with trepidation for the general economy, and they are looking at their own prospects much more negatively now too. It's a widespread malaise.
ANOTHER DAIRY AUCTION DUE
There is another dairy auction tomorrow morning. It might be soft. At the last full auction on December 6, the WMP price held at US$3400/tonne. But at the intervening WMP Pulse event, that had fallen to US$3340, a -1.8% slip. Returns in NZD may not be that different to those in USD because there has been little change (so far) in the exchange rate between these auction events.
GREEN INVESTING
The NZ Super Fund has committed $157 mln (US$100 mln) to a fund that will invest in companies developing products and solutions for climate change mitigation and adaptation. The fund is part of the Wellington Management portfolio. Wellington is a US$1 tln investment manager with more than US$1 tln in funds under management.
A SHADOW OF ITS FORMER SELF
The demand of lifestyle blocks is softening as fast as those for urban residential properties. REINZ released its November data for lifestyle block sales transactions an it noted that the latest sales levels are now -75% lower than the equivalent in 2019 pre-pandemic. It now takes 53 days on average to sell an average lifestyle block property, up from 45 days a year ago. The quickest place to sell is in Southland (35 days), the longest time is in Northland (69 days). Banks are much tough now when qualifying a mortgage for a lifestyle property.
HALF A MARKET
Data released today by the REINZ shows there were 145 fewer (-37.3%) farm sales for the three months ended November 2022 than for the three months ended November 2021. Overall, there were 244 farm sales in the three months ended November 2022, compared to 183 farm sales for the three months ended October 2022 (+33.3%) and 389 farm sales for the three months ended November 2021. In the three months to November 2019, pre-pandemic, there were 282 sales, so this market has just about halved.
RECIVIDIST BANNED
Mobile trader Ace Marketing and its director Sandip Kumar have been issued with two banning orders by the Auckland District Court preventing them from operating in the consumer credit industry for five years. In 2016 Ace was fined $150,000 from CCFA breaches. In 2021 Ace was found guilty of a second CCFA offence.
ANTI-COMPETITIVE COVENANT
The Commerce Commission is going after a Mitre10 franchisee (licensee) for buying a Tauranga property, and putting a covenant on it to prevent a Bunnings store from opening there. Such covenants are illegal as they are anti-competitive.
RECORD HIGH
For all the monetary nerds out there, settlement cash balances at the RBNZ have hit a new record high of $57.6 bln, eclipsing the October 15 high of $57.5 bln.
TREAT YOURSELF
For 2023, give yourself a years use of the content on interest.co.nz ad-free. Supporting us at $10/month (or $100 per year) is all that is required to avoid the ads on our service. You can do it here.
SWAP RATES DRIFT UP
Wholesale swap rates were likely marginally firmer today. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +1 bp at 4.59%. The Australian 10 year bond yield is now at 3.64% and up +13 bp from this time yesterday. The China 10 year bond rate is at 2.91% and little-changed. The NZ Government 10 year bond rate is now at 4.31% and also little-changed, but back above the earlier RBNZ fix for the NZGB 10 year which was down -2 bps to 4.28%. The UST 10 year is on the move up, now at 3.60% and up +9 bps
EQUITIES DUMPED
The S&P500 ended its Monday session down -0.9% earlier today. Tokyo has started its Tuesday afternoon session down -2.1%. Hong Kong is down -1.3% and Shanghai is down -.06%. The ASX200 is down -1.3% and the NZX50 ended down -0.7%. There is definitely no Santa rally this year.
GOLD LOWER
In early Asian trade, gold is just under US$1786/oz and down -US$7 from this time yesterday.
NZD SALIPS
The Kiwi dollar down -½c from this time yesterday at 63.4 USc. Against the AUD we are also -½c lower at 94.8 AUc. Against the euro we -½c lower at 59.8 euro cents. That all means our TWI-5 is now at 71.9 and down -40 bps.
BITCOIN MARGINALLY LOWER
The bitcoin prices is -1.3% lower than this time yesterday at US$16,555. Volatility over the past 24 hours has been modest at +/- 1.6%.
FINAL FOR 2022
This is the final 4pm update for 2022. The interest.co.nz crew are all on their summer holiday break now. The daily mortgage, term deposit, currency and bonds emails have now also ended for 2022. However, we will be continuing with a morning briefing, so you can keep an eye on what is happening in the global economy that may influence New Zealand. Enjoy your break.
Daily exchange rates
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
47 Comments
A single shot rifle and a one eyed dog?
In 2021, Texas enacted dangerous ‘permitless carry’ legislation that, effective September 1, 2021, generally authorizes people to carry concealed or holstered handguns in most public spaces without any license, safety training, or background check required, as long as they are at least 21 years old and not prohibited from possessing firearms under Texas’s weak firearm prohibitions law.1 A narrow but notable exception is that people who have been convicted of any of four specified violent misdemeanors are not authorized to carry handguns in public for five years after the date that they committed that offense, except when on their own property or when they are inside of or directly en route to a motor vehicle or watercraft that they own or control.2
Well thats not quite right you can erect a pole barn structure in NZ under 100 sq m without a permit now, it happened about the same time they relaxed rules on building a shed in town up to about 30 sq m.
https://www.building.govt.nz/projects-and-consents/planning-a-successfu…
They are not relaxing their yield curve control, they are just choosing a different target. If inflation is running at 3%, they will be happy for market rates to adjust to the as it looks like being a new normal for a while. BoJ will still use yield curve control to hold the market at their target rate.
They are not relaxing their yield curve control, they are just choosing a different target.
Isn't that just semantics?
The BoJ said it will allow the 10 yr yield to rise from 0.25% to 0.50%.
Bond future trading on halt in Japan and equities selling off globally.
Gold price surges (but not in JPY).
Pedantic perhaps! But, yield curve control is the process by which central banks control the short and long-term market rates (using signalling and bond purchases / repos etc). Japan are not giving up or loosening that, they are just adjusting the market rates they set using yield curve control.
I think I am probably a monetary nerd because I am interested in the settlement balances hitting $57.6 billion. That means RBNZ will pay out $6.7 million in interest to the banks TODAY. That is about 2% of total Govt spending per day.
Those that are similarly nerdy will spot that this is a gross figure however. Part of the reason that the settlement balances are so high is that RBNZ have shoved $19 billion of Funding for Lending Programme money out to banks - meaning a third of the interest paid by RBNZ is coming straight back. The other $38.3 billion is mostly the result of QE - when the Crown swapped debt in the form of bonds for debt in the form of settlement balances. The average interest paid on those bonds was around 2.5%, so, again, there is an offset here.
The entanglement of bonds and settlement balances, falling bond prices, and ‘what ifs’ is such that it is very difficult to work out how much the Crown has made or lost as a result of QE. Not that it matters that much - as long as rich people get given money for being rich… that’s what matters.
Bachman Turner Overdrive - You Ain't Seen Nothing Yet 1974 Video Sound HQ
NZX is a dividend driven market, as EPS get revised lower its going to get .... pegged.
HW2 where is the Santa Rally?
I was talking with my bank over an issue . I mentioned that it would be nice to have a personal banker apparently my bank doesn't do this anymore. It can take up to an hour to talk to someone from the bank on the phone. 20 years ago the banks worked on a 1 percent mark up from what they borrowed to what they lent it for. Now we get 3.45% the floating rate is 7% . This is wrong and as interest rates have gone so have the margins. I wondered if any one knows a bank that has personal managers and is not taking all our money
I lost my personal manager at ANZ really annoying considering the amount of business I give them. Whenever I have to ring the online service I make sure I remind them how long I have been waiting and how I am unhappy with the changes to the service. I also make sure they promise to document my concerns. I am not going to make it easy for them.
This will not be an Xmas Gift to many interest rate trading desks....
“Tighter BoJ policy would remove one of the last global anchors that’s helped to keep borrowing costs at low levels more broadly,” Deutsche Bank analysts told clients, noting the BOJ move had come as markets were “already reeling” from the ECB and Fed’s hawkishness last week.
“It does suggest that change is afoot and speculation on a formal change of policy next year will intensify,” said Ray Attrill, head of FX strategy at NAB. “The very fact they’ve done it when the governor just a month or two ago was saying that they had no intention of doing it is clearly significant.”
Japan is the worlds creditor,the Japanese Insurance companies alone own around 3.5t of global treasuries and bonds.In Australia,Uk and France they own 20% of the debt.
With markets being constrained towards year end,there will be problems for speculators,and illiquid funds.Real money moves markets.
Maybe a Santa Crash then? EURJPY has puked 5 big figs, 3,5 big figs in the first minute, feels as big as the first QE news flash
JPY chart must target 110 over next year
I wonder if BoJ gave the Fed a courtesy call, I would not be surprised if this does not force a few big players into collapse. so many where borrowing cheap in JPY for all sorts of carry shite.
Once again Mrs Watanabe gets ........ like when the CHF gapped none of the margin houses would honour stops, once agains it warns that options are a safer trade protection then stops.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.