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
Kiwibank has reduced its two year fixed rate to 6.49%, the lowest of the main banks for this term. It also raised its one year fixed rate to 6.49%, matching BNZ and wth TSB at 6.29%.
TERM DEPOSIT RATE CHANGES
Kiwibank raised some term deposit rates out to a 12 month term, mostly by +10 or +15 bps. First Credit Union also raised rates today. And SBS Bank raised rates, but left its hot 6% one year rate unchanged (it cut its 9 month rate, however).
RURAL GOODS KEEP US AFLOAT
Our merchandise trade deficit fell in December to -$470 mln as exports rose and imports fell. This was the lowest deficit in seven months. Exports rose +10.5%, led by rural sector products from the dairy and wine sectors. These sectors account for 69% of our exports, up from 67.5% a year ago. The rising dominance is revealing. Meanwhile, goods imports slowed sharply, increasing at a slower +1.8% rate, and would have fallen if it wasn't for the one-off 'large items' worth $269 mln. Cars, machinery and oil account for 43.3% of all imports, down from 44.3% in December 2021.
WE TRADE THEM FOR CARS
Our trade surplus with China has been whittled away to virtually nothing in 2022. Buying Teslas from Shanghai saw to that. We ran larger deficits with Australia, the US and Japan too. Interestingly, Korea has now displaced Japan as our fourth largest import source, and we ran a -$2.9 bln deficit with South Korea in 2022, the largest with any country. Cars and machinery tell that story.
UP +$1 BLN
On average, across all mortgages, banks charged their home loan borrowers 4.24% in the December 2022 quarter. That was up sharply from 3.87% in the September quarter. The $3.5 bln in interest charged in the quarter was the most since the RBNZ started keeping this data in September 2014, and is +$1 bln more in Q4-2022 than in Q4-2021. But in relation to the amounts borrowed it is still lower relative level than pre-pandemic.
NO MORTGAGE STRESS EVIDENT
This data isn't showing any sign of excess repayment stress. Borrowers have been paying down their loans much faster that what the minimum, scheduled payments require. In fact the average has been quite impressive, more than +70% more than the required minimum/scheduled. For all of 2022 borrowers were obligated to repay $21.4 bln in principal. In fact they repaid $37.6 bln (other than repaying the loan outright), plus interest of $12.0 bln. You can see why both the banks and their regulator claim that they are confident borrowers will easily manage their scheduled repayment obligations even if things get tougher from here. It will be the voluntary repayments that dip first, and so far there is no sign that has even started yet. Risks to required repayments are miles away.
LABOUR MARKET PEAKED?
The number of filled jobs edged down slightly in December, with a -0.1% dip the first monthly decline since March 2022.
SWAP RATES MARGINALLY FIRMER
Wholesale swap rates likely firmed a little today. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +2 bp at 4.88%. The Australian 10 year bond yield is now at 3.57% and little-changed from the open earlier today. The China 10 year bond rate is at 2.96% and unchanged even after their week off. The NZ Government 10 year bond rate is now at 4.17% and up +1 bp, but still above the earlier RBNZ fix for the NZGB 10 year which is up +3 bps at 4.10%. The UST 10 year is up +1 bp to 3.52%.
EQUITIES START THE WEEK NERVOUSLY
The NZX50 has started the week little-changed in late trade. The ASX200 has started down -0.2% in early afternoon trade. Tokyo has opened flat. Hong Kong has opened down -0.6%, while Shanghai is now back from a week-long holiday and is up +0.8% at its open and making up some of what it missed last week.
GOLD SOFT
In early Asian trade, gold is lower, now at US$1926/oz and down -US$3 from this morning.
NZD HOLDS
The Kiwi dollar is still at 64.9 USc where we started today. Against the Aussie we are still at 91.3 AUc. Against the euro we are still at 59.7 euro cents. That all means our TWI-5 is now at 71.5.
BITCOIN HOLDS
The bitcoin price is very little different from where we opened this morning, now at US$23,661 and up a mere US$30. Volatility over the past 24 hours has been modest at +/- 1.9%.
JUST A REMINDER
It is a public holiday today in the Auckland region (where we are based) and the top half of the North Island. But many of us are cleaning up and preparing for the next downpour.
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