What happened Wednesday

Business / news

A review of things you need to know before you sign off on Wednesday; many retail rate changes, minimum wage to rise +7.1%, dairy prices rise, swaps rates up again, NZD soft, & more

8th Feb 23, 3:59pm 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
Westpac is the latest bank to tweak its home loan rates. More here. The Co-operative Bank trimmed some rates.

TERM DEPOSIT RATE CHANGES
BNZ raised its term deposit rates today. At 4.80% for six months, it now matched Kiwibank for that term. At 5.20% for nine months, it has the highest big-bank rate for that term. It didn't change any rate offers for 12 months or longer. Cooperative Bank, Xceda Finance and Heretaunga Building Society all also raised TD rates.

NO CHANGE HERE
This item is non-news. But we note that Australian credit card interest rates are rising as their cash rate target rises, some by as much as +2% to 23.95%. However in New Zealand, OCR hikes have yet to bring any rate adjustments to credit card rates here.

UP +$1.70 or +7.1%
The Government is to increase the minimum wage "by inflation" to $22.70/hour on April 1, 2022.

DAIRY PRICES RISE, PAYOUT DIPS
Dairy prices rose at the latest auction, and while it was a good +3.2% rise and the most since September 2022, it was less than some expected. Still, the same forces that generated the higher expectation are still there, namely the re-opening of the Chinese foodservice market. Ongoing price rises over coming months are still expected as the Chinese economic recovery gains further momentum. Still, ANZ has revised its 2022/23 season payout price down to $8.50/kgMS and the subsequent season down to $8.75/kgMS.

CHANGE AT DAIRYNZ
Tim Mackle is leaving DairyNZ, ending a 15 year run as chief executive.

2022 A WEAK FUNDS MANAGEMENT BENCHMARK
A savvy review of the investing landscape in 2022 yields some surprising findings. Assets under5 management fell almost -US$15 tln. Despite the natural 'savings' inflows, equity funds saw significant outflows globally, shrinking a rare -US$13.3 bln in the full year (net), equivalent to one quarter of 2021 inflows. Most of the pessimism was centered in Europe, especially the UK. Asia/Pacific markets were much more optimistic. SMEs, tech and China were the weakest sectors. ESG and defensive income funds more than held their own. It was a draw between active and passive fund performance. Unfortunately with rising interest rates, bond investments provided no relief.

CHANGES AT NIKKO AM NZ
Chief George Carter is returning to the UK, and will be replaced by Stuart Williams. Head of distribution, James Wesley, is moving to Nikko AM US as deputy CEO, based in NYC.

CREDIT RATING CHANGES
Fitch Ratings as affirmed Unity Credit Union's BB rating (UnityMoney), but shifted its outlook to 'negative'. Fitch also affirmed Nelson Building Society as BB+ (NBS) and upgraded their outlook to 'positive'. That puts NBS just one notch below investment grade.

INTERCEPTING 3.2 TONNES
This haul is reputedly worth NZ$500 mln.

FORESAKING HIGH-COST CONSUMER DEBT
In late-released data earlier today, American appetite for consumer credit slowed unexpectedly in December, rising a ting +US$11.6 mln in the month, when a small +US$25 bln was expected. American appetite for consumer credit is unusually restrained, perhaps because interest rates rises are making it unattractive. This comes despite a key optimism index improving sharply (well, getting a lot less pessimistic).

SWAP RATES RISE AGAIN
Wholesale swap rates likely rose today as international influences kept the pressure on. 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 4.96%. (The last time they were this high was in January 2009.) The Australian 10 year bond yield is now at 3.65% and up +11 bps from this time yesterday. The China 10 year bond rate is down -2 bps at 2.91%. The NZ Government 10 year bond rate is now at 4.18% and up another +4 bps, and still above the earlier RBNZ fix at 4.14% which was up +4 bps. The UST 10 year is now up at 3.66% up +3 bps.

EQUITY MARKETS MIXED AGAIN
The S&P500 ended up +1.3% on Wall Street at the end of its Tuesday trading. Tokyo has opened its Wednesday trading down -0.5%. Hong Kong has opened up +0.2%. Shanghai has opened unchanged. The ASX200 is up +0.3% in afternoon trade today. The NZX50 is up +0.4% in late trade.

GOLD FIRM
In early Asian trade, gold is now at US$1876/oz, up +US$5 from this time yesterday.

NZD SOFT
The Kiwi dollar is at 63.2 USc and unchanged from this time yesterday. Against the Aussie we are -¾c lower at 90.8 AUc. Against the euro we are unchanged at 58.9 euro cents. The TWI is now at 70.5 and down -20 bps from yesterday.

BITCOIN TURNS HIGHER
The bitcoin price has attempted another run up today, so far up +2.3% from this time Friday to US$23,355. Volatility has been modest however at +/- 1.4%.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

Daily swap rates

Select chart tabs

Source: NZFMA

This soil moisture chart is animated here.

Keep abreast of upcoming events by following our Economic Calendar here ».

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.

23 Comments

by kiwikidsnz | 8th Feb 23, 4:03pm 1675825380

I recently received advice from Genesis Energy on the removal of Low User Tariffs coupled with a 5X increase in daily charges over the next 5 years.

My typical annual usage is less than 4000kW/hrs so for me that means a Year 1 oncost of $126pa (incl GST) against a kW/hr consumption saving of $17pa. Over 5 years the daily charge oncost will increase to $633pa vs a consumption charge of ~$1200pa & the fixed daily charge proportion of my energy bill will increase from 9% to 50%.

While I’m sure moving as much as possible to a fixed cost pricing structure at a higher overall price point is excellent business for Genesis it doesn’t work at all for me, nor I suspect the majority of low users (see graph in MBIE link below, 8000kW/hrs pa is said to be the average domestic consumption so all low users & approx half of all people will be worse off). It seems to me that the high salaried jobsworths at MBIE have been completely rolled by the Govt majority owned power companies & the “Independent” Electricity Price Review group in this & their stated logic while high on virtue signalling doesn’t seem to make basic commonsense. Poor people (& I’ve been one before) need to be able to exercise economic discretion as much as possible so having the opportunity to reduce variable costs when necessary is very important (yes even get another jersey on).

Electricity price change information | Genesis NZ (genesisenergy.co.nz)

Phasing-out low fixed charge tariff regulations | Ministry of Business, Innovation & Employment (mbie.govt.nz)

I have started looking at alternatives so a big shoutout & thanks to another Interest commentator pointed me to Nau Mai Ra Nau Mai Rā | Info (naumaira.nz) which has zero daily charges & their daily rate is the same as my Genesis Low User Tariff. I know they’re a startup who really struggled to survive a year ago however I’m seriously considering changing & I’d be interested if anyone has any comments +/- on this company.

by King of the whiners | 8th Feb 23, 4:27pm 1675826825

Meridian did the same to us (removed low user tariff), plus we have a rooftop solar system, so we were out of there in a flash.

Ended up at Octopus - after 6 months we rate them very highly - great interactive interface on your account (3 tariffs throughout the day), and so far we are at least $400 to the good compared to where we were with Meridian.

by KH | 8th Feb 23, 4:39pm 1675827553

Octopus is great. With the price they pay for my solar they owe $375 after four months since August. Yes, they owe me, even after line charges etc.

They do make it clear they will never pay you out, but I'm happy. See how we go over the winter, it might balance out.

by KH | 8th Feb 23, 4:31pm 1675827118

Beware Genesis and others with their daily charge. Many people assume this is the line charge. It's not the line charge. It's a Genesis determined charge.

by Lanthanide | 8th Feb 23, 4:38pm 1675827531

Electric Kiwi still have the low user daily tarif of 30c/day and it seems they don't plan to raise it until they're forced to in 2027. Seems like they're expecting something to change between now and then that means they won't have to shock their customers with an increase from 30c to $1.50/day.

by kiwikidsnz | 8th Feb 23, 4:57pm 1675828665

Thank you all very much for your quick responses & helpful feedback. I appreciate you taking the time.

BTW I'd advised Genesis this morning that I was now looking elsewhere, they left a message just now to call them back ;)

by dumbthoughts | 8th Feb 23, 5:20pm 1675830054

I'm going to be advising Genesis of the same too - actively exploring options to move away.

All these companies are dogs, you've just got to lie down with the one with the fewest fleas.

by EdwardD | 8th Feb 23, 6:02pm 1675832523

Following with interest. I'm also with Genisis and obviously need to start shopping around

by nzforall | 8th Feb 23, 5:38pm 1675831113

Just another tax.

The government largely owns the generators and has no real need to increase taxes apart from their thirst to waste more money.

by Nzdan | 8th Feb 23, 6:12pm 1675833130

I use Powershop in Wairarapa. 25.66 c/kWh with a daily charge of $1.03.

Looked at Octopus. The night rate is quite attractive, although we actually have bugger all use for power at that time. If I split our daily use into 3, then we're even Stevens.

Daily Charge $1.15.
Peak 34 c/kWh
Offpeak 29 c/kWh.
Night 17 c/kWh.

by TwoCents | 8th Feb 23, 9:33pm 1675845217

Thanks for the info. We are very low users due to alternate energy systems as a hobby interest and the modest power requirements of our household (just Mrs Twocents and I). The first daily charge increase came this month (a doubling from 30c/day to 60c/day). The eventual $1.80/day will mean a considerable increase in our monthly power bill, so we are 'considering our options' for the first time in 15 years. There does not appear any significant difference between the main electricity companies, so 'alternatives' have met serious consideration. Octopus do not supply in this area, so after reading all the 'fine print' on Nau Mai Ra's web site we have started the change over process to them. Hopefully it works out as it appears.

by WellingtonInvestor | 8th Feb 23, 9:55pm 1675846537

Frank energy has just done the same thing. Although not surprising since they are owned by genesis. But they also raised the unit rate, even though the unit rate is supposed to drop according to the governemnt website. The whole thing is a bit of a rort imo. Many of the reasons for removing it are also illogical as low power users are going to pay more as a result. So will have to use less power or find more money to pay. So potentially more cold people this winter.

by bw | 8th Feb 23, 4:08pm 1675825695

I guess we'd have an increase in the National Superannuation Benefit of at least 7.1% coming up soon as well? Look all very inflationary to me. OCR topping out at 5.75% you say?..... We'll see about that.

by fortunr | 8th Feb 23, 4:50pm 1675828242

Minimum wage up by inflation rate, Super up by inflation rate, and many other benefits up by inflation rate.....

Many European countries made the same stupid mistake in the 70's - there is nothing better than automatic indexing of minimum wages and benefits if you want to feed an unrelenting wage-inflation spiral.

Maybe the OCR peak will not go higher than 5.75% - but with current policies and settings a very long period (years) of relatively high interest rates close to such OCR peak is guaranteed.

by sit23 | 8th Feb 23, 5:40pm 1675831204

Don't forget that with the ensuing wage price spiral inflation everything goes up except your highly leveraged mortgages. Heaps of us benefitted from this in the '80s. It levered us into a business that my son now runs, to good profit.

by solardb | 8th Feb 23, 4:44pm 1675827846

0.5% rise in OCR justifies 2 % rise in credit card interest to 23.95% ????

by Hemi Ti Wire | 8th Feb 23, 5:31pm 1675830704

Wages up = inflation up.

Stupid bribe that achieves nothing but making the poor poorer.

I out my prices up now + a bit more to cover admin....

You pay more!

RB should tell labour to stop inflationary policies.

Idiots

by Rob Reid | 8th Feb 23, 9:43pm 1675845793

Labour should tell RB that their Monetary Policy is no longer required. Most of the problem solved.

by sit23 | 8th Feb 23, 5:36pm 1675831006

I use Flick. Transparent display of who charges me for what. Fixed charges way more than kwh charges. I am always looking at alternatives. Much cheaper than the "big" guys.

by Grattaway | 8th Feb 23, 8:20pm 1675840821

maybe the generators should not be allowed to be retailers

by JimboJones | 8th Feb 23, 9:02pm 1675843326

Yea it does seem like a bit of a conflict. Meridian imply that you are buying their clean energy off them, so are they allowed to bypass the wholesale market or are they lying?

by Audaxes | 8th Feb 23, 6:02pm 1675832526

In late-released data earlier today, American appetite for consumer credit slowed unexpectedly in December, rising a ting +US$11.6 mln in the month, when a small +US$25 bln was expected.

Net # of loan officers saying banks unwilling to add consumer loans already as high as trough of '90-91 recession, higher than any point during dot-com recession, about same as the Q2 '08 just before the bottom fell out. Consumers tapped out last year, too (low savings rate). Link

by Yvil | 8th Feb 23, 6:14pm 1675833294

DC, the minimum wage is currently $21.20, therefore the rise from 01/04/23 is $1.50 (not $1.70)