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
No changes to report.
TERM DEPOSIT RATE CHANGES
None here either. Update: A late change from Westpac who have raised their 6 mth rate to 4.65% and the 12 month TD rate to 5.30%. Those levels are higher than their main Aussie rivals but just match Kiwibank.
FOOD PRICE RISE EVEN HIGHER
Food prices rose +11.3% in the year to December, ensuring a high base in next week's CPI result. The last time they were this high was in 1990. Compared with December 2021, grocery food prices increased by +11%, fruit and vegetable prices increased by +23% (not a typo), restaurant meals and ready-to-eat food increased by +7.8%, and meat, poultry, and fish prices increased by +11%. (These are price increases to consumers, not what producers received.) From November, food prices rose at an annualised rate of +13% pa, so the pace seem sto be rising.
HOUSEHOLD NET WORTH FALLS EVEN LOWER ...
Statistics New Zealand said falling property values lopped -$91.1 billion off the worth of Kiwis in the first nine months of 2022, while falling share and investment values took -$78.6 billion away. Overall household net worth of Kiwis fell -$179.4 billion in first nine months of 2022, the largest retreat ever.
... BUT HOUSEHOLD SAVINGS RISE
But the tougher outlook has households saving more. In fact before June 2019, households basically spent what they saved. But since June 2019, households have been saving a significant portion of their income. For the year to March-2022 that exceeded 4% which belies the barbeque narrative that we are hopeless savers. This is partly helped by the fact that "compensation of employees" rose +10% in the same period, and has held that increase through to Q30-2022. For stats-geeks, the Wages:GDP ratio is staying up at 45.8%, almost its highest ever in the modern era (it was higher when NZ had a closed command economy before 1984, the one that ended in virtual bankruptcy).
LESS UPBEAT
Employment confidence fell in the December quarter, particularly on the outlook for the year ahead as households have taken notice of the warnings of recession. It is not a surprising result given the recent BNZ-Seek job ad data we noted earlier in the week.
A MINOR LUXON SHUFFLE
If you are interested in such detail, the National Party did a minor reshuffle of its front bench and Party spokespeople.
ARDERN QUITS
Jacinda Ardern has resigned as Prime Minister. A new leader of the Labour Party will be chosen this weekend. Grant Robertson is not a leadership candidate apparently, but said he is staying on as the Wellington Central MP. Ardern's avowed reason is that she can't commit the required energy to another election campaign and another potential stint as PM. She became PM on October 26, 2017. She led the Labour Party to the only MMP result where one party gained more than 50% of parliamentary seats (2020). (This news is even bigger in Australia than here. The Murdoch press has put the boot in with an acerbic NZ Initiative gloat piece.)
COTTERILL ASCENDS
Bruce Cotterill has been appointed as chairman of realestate.co.nz. He is a keynote speaker, a professional board member, and notes Barfoot & Thompson as a current client. Realestate.co.nz is half-owned by "REINZ Member Services" and half by equal shares of Barfoots, Bayleys, Ray White, Harcourts and LJ Hooker. Cotterill is also an outspoken critic of the Labour government.
"UNDERLYING KEY RISKS" WELL MANAGED
An FMA review has found that the funds management industry has "robust risk management across the sector".
AMP SELLS A BIT
In related news, AMP NZ has offloaded a $200+ mln legacy AMP Superannuation Master Trust to the retirement-focused Lifetime Income Group. The SMT fund has about 3400 members, most of whom are close to retirement.
BENEFIT UPDATE
MSD released its December 2022 data on the uptake of the main working aged benefit rolls. There are now 353,900 people on these rolls, up from September and little-changed from a year ago. 170,000 are on "job seeker support", 100,000 receive "supported living payments" (the only category rising), and 73,600 receive "solo parent support". Given the shortage of workers, it is perhaps unusual that the "job seeker" levels are not declining.
MODERATING? MAYBE, MAYBE NOT
In Australia, consumer inflation expectations in rose to 5.6% this month from 5.2% in December, though a general moderation in expectations has been evident in recent months as consumers appear to be responding to higher interest rates, according to the Melbourne Institute who do this survey.
A LESS-THAN-EXPECTED IMPROVEMENT
The December labour market data in Australia was a minor disappointment - mainly because November data was revised lower. Full time employment rose +17,000 when +34,000 was expected. Part-time positions retreated -32,000 when they were expected to expand +25,000. Most analysts seem to think the December hesitation is a 'one-off'.
SWAP RATES DROP
Wholesale swap rates were likely sharply lower and more inverted 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 4.81%. The Australian 10 year bond yield is now at 3.40% and down -26 bps from this time yesterday. The China 10 year bond rate is at 2.95% and up +1 bp. The NZ Government 10 year bond rate is now at 4.01% and down -16 bps, and still above the earlier RBNZ fix for the NZGB 10 year which was down -13 bps to 3.99%. The UST 10 year is down an even sharper -19 bps to 3.37%.
EQUITIES MOSTLY LOWER
The S&P500 ended its Wednesday session on Wall Street down -1.6%, and falling away late in the session. Tokyo has opened down -1.1% today. Hong Kong has opened its Thursday session down -0.6%. Shanghai is down a minor -0.1%. The ASX200 is up +0.4% in afternoon trade. The NZX50 is down a minor -0.1% in late trade. It was down more but has pegged that back after the Ardern announcement.
GOLD SLIPS AGAIN
In early Asian trade, gold is just on US$1901/oz and down -US$7 from this time yesterday.
NZD HOLDS
The Kiwi dollar is a little softer than this time yesterday, now at 64.2 USc. But against the AUD we are +ac firmer at 93.1 AUc. Against the euro we are unchanged at 59.6 euro cents. That all means our TWI-5 is now at 71.4 and also unchanged yesterday.
BITCOIN DROPS
The bitcoin price is down -2.6% from this time yesterday at US$20,688. Volatility over the past 24 hours has been moderate at +/- 2.9%.
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 ».
38 Comments
Speaking of "unexpected" demand for USTs, the 3m2s spread has utterly crashed. Recession probably nasty one, too, would indeed drive such huge demand for safe and liquid instruments whereas the inflation Poszar (and so many others) was so sure would wreck USTs would not. Link
The US 10 yr swap continues to fall. The one that interests me is the 5 year, also fallen a lot in the last 2 weeks. Even the 2 year. Looks like the markets are now picking a turn around timeframe now of 12 to 18 months for the OCR. The 1 year is holding up however as expected. Will be interesting to see what the inflation number does later in the year or early next.
Listened to Jeffery Gundlach last night and he said watch the 2-yr note over the Fed to understand what's going on. He also thinks USD is going down and looking at emerging mkt equities (ex-China) witha focus on India and SEA.
https://finance.yahoo.com/news/gundlach-says-listen-bond-market-2203439…
They have a 7 business days 'cooling off' period..
You have a seven business days cooling off period starting on the date you take out your Term Deposit or reinvest your existing Term Deposit. During this period, you may cancel your investment and you will not be paid interest.
Food prices rose +11.3% in the year to December, ensuring a high base in next week's CPI result.
The cost of agricultural inputs has moved substantially because Russia was a large supplier of fertilizer and diesel. We really need non-tradable inflation to buckle, when that happens it will ease CPI.
Yep, people accuse Labour of not doing anything about our various extractive industries (building/supermarket/banks etc), but forget that National would likely do even less. Cos there donors/mates are exactly these people...
That's why we shouldn't vote for either of the major parties. They are all ideological numpties looking after special interest groups.
Time to post this again
"I paid taxes all my life, I am entitled to a pension. Pensions were guaranteed and a portion of our taxes were set aside for National Super".
....Not the portion of taxes that disappeared when the top marginal rate was dropped from 66% to 33% was it?
$20k per year per pensioner (minimum), average life expectancy post 65 = 17 years. Today's average h'hold income of $110k pays about $20k p.a. PAYE. Time to cut back on wasteful spending going to those with the means to support themselves.
Also, much like every generation before, there are a wide range of people coming out of the education system.
Some incredible talent coming through, disrupting thinking in large enterprises, and creating social & capitalistic change.
Have you seen any stats to suggest the quality of school-leavers has changed, or is it anecdata?
Anybody in the know is aware of the dumbing down of the stem subjects under NCEA. Many of the 'Achieved' grade NCEA would be the equivalent of 40% under the old system. Many senior teachers are also aware of this fudging in recent years, and the universities frustrated that students actually are not competent at level 2. This is the reality. Customer service workers who cannot add or subtract basic numbers without a calculator, or who cant work out 10% of something in their head.........Meanwhile NZ falls further down the international rankings.
National Australia Bank has become the second of the major banks to create a stablecoin, called the AUDN, to allow its business customers to settle transactions on blockchain technology in real-time using Australian dollars and highlighting the role of banks driving innovation in the digital economy.
https://www.afr.com/companies/financial-services/nab-creates-a-stableco…
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.