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
There are no changes to report today.
TERM DEPOSIT RATE CHANGES
Rabobank raised its savings account rates. Its PremiumSaver rate is now 4.25%. Its 60-day NoticeSaver is now 4.50%. Both are higher than any main bank rate for a term deposit less than 6 months. Unity Money raised its term deposit rates.
FAST-TRACK STOP GAP
The Government has launched a new fast-track "recovery visa" designed to attract overseas workers needed for storm cleanup and remediation. It will last for six months only, however. It is targeting experts such as insurance assessors, infrastructure and utilities engineers and technicians, heavy machinery operators and debris removal workers. However, there was an extreme need for skills before Cyclone Gabrielle, so this latest program doesn't actually address that.
LOWER FARMGATE MILK PAYOUT
Fonterra cut its milk payout forecast for the current season by -50c to a narrower mid-point of $8.50/kgMS. This was the second time they have trimmed it. Perspectives are here.
A BEAR MARKET IN CARBON
The local carbon price is still falling, now down to $67/NZU. It peaked at $88/NZU just before the end of 2022, so from there it is down -24%.
THE WAR ON DIRTY MONEY
We have a new 'Of Interest' podcast out, looking at the war on dirty money (which we don't seem to be winning).
HUGE SLUMP
The RBNZ said that monthly new mortgage commitments were $2.8 bln in January and down a very sharp -$2.3 bln (-46%) from the $5.1 bln in December. This is the second lowest value of new commitments in a month since the series began in August 2013. The lowest value recorded was $2.7 bln in April 2020 when pandemic restrictions were in place across the country. Adjusted for inflation, the January 2023 levels are far the lowest.
THE TABLES HAVE TURNED
Even though they slumped too, the most resilient corner of the mortgage market was for first home buyers. They took 23% of all approvals, the highest proportion since this series began in 2014. At the other end are investors; they had their lowest ever share of mortgage approvals in this data series at 15.4%. Recall they peaked at 34.8% share in June 2016.
ANOTHER BNPL BITES THE DUST
Latitudes Genoapay buy-now-pay-later offering is being closed in New Zealand. This will be effective April 11, 2023.
SAMOA IN GOOD ECONOMIC SHAPE
ANZ has been reviewing Samoa's economy, and their note suggests it has weathered the pandemic well, and has a bright future.
A 42 YEAR HIGH
Japan reported CPI inflation in the year to January of 4.3%, up from 4.0% in December. This is their highest rate in 42 years, since December 1981. Food prices were up 7.3%. But generally it was driven by rises in the cost of imported raw commodities and yen weakness. The annualised rate of change between December and January was almost +5%, so the pace is quickening. There is now a greater chance the Bank of Japan will pivot away from its long-standing ultra-loose policies. Not only is there a new BofJ boss incoming, but major companies are starting to raise wages sharply, a key factor for the central bank.
FOOD STRESS
New Zealand is a big exporter on onions, but this year weather issues have limited supply significantly. But low onion supply isn't just a New Zealand phenonium; it is a global issue and prices are rocketing higher. In some countries (Turkey, Philippines, for example) they cost more than meat.
SWAP RATES HIGHER AGAIN
Wholesale swap rates are likely little-changed today. But the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps to 5.10%. The Australian 10 year bond yield is now at 3.87% and down -3 bps. The China 10 year bond rate is unchanged at 2.94%. The NZ Government 10 year bond rate is now at 4.68% and up only +1 bp and now matching the earlier RBNZ fix at 4.68% and up +13 bps. It looks like policy rates may be further away from the top than markets had been pricing and so there is some catchup underway. The UST 10 year is down -4 bps at 3.88% in a further slip.
EQUITIES MIXED BUT WEAKISH
The S&P500 ended up +0.5% on Wall Street and eating into losses earlier in the week. Tokyo is back trading today after their public holiday (Emperor' Birthday) and is up a full +1.0% in early trade. Hong Kong is down -0.7% in early trade and Shanghai has opened today with a very minor slip. The ASX200 is up +-0.3% so far in early afternoon trade and if this holds it will end the week with a -0.6% net fall. The NZX50 is down -0.2% in late trade today and heading for a weekly fall of -2.3%. But at least that is less than the -3.6% retreat is was facing on Wednesday.
GOLD HOLDS
In early Asian trade, gold is unchanged from this time yesterday, still at US$1825.
NZD STABLE
The Kiwi dollar is little-changed from this time yesterday at 62.3 USc. Against the Aussie we are also little-changed at 91.5 AUc. Against the euro we are marginally firmer at 58.8 euro cents. That means the TWI-5 is now at just over 70.3 unchanged from yesterday.
BITCOIN HOLDS
Bitcoin has retreated again from yesterday to be now at US$24,067 which is a tiny -0.4% slip. Volatility over the past 24 hours has been moderate at +/- 2.1%.
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
70 Comments
Notice ANZ still lagging the other majors with their TD rates. How long ago was it their chief honcho remarked they didn’t need to pay as much simply because they were the biggest. Has that playbook been dusted off then?
So a lack of competition then? Also we all gave them cheap money via the FLP, which they didn't need.
They clearly dont want any 4 or 5 yr TDs. The NZ 10 yr incredibly strong at 4.68% today. Still nothing from the big 4 on savings rates, Rabos 4.25% Premium Saver announced today is 0.8% higher than the big 4 and Kiwibank. Looks like they are just going to bank the difference until next week.
Rabo premium saver has only been increased to 4.25%
noted, edited
new mortgage commitments were $2.8 bln in January and down a very sharp -$2.3 bln (-46%) from the $5.1 bln in December
A sharp drop indeed, but, since not much happens for the first 2 weeks of January, it would be better to compare the mortgage commitments of January 2023, with January 2022, to get a better picture of the reduction.
Down 40% from 4680M from Jan 22
edit for typo
Thanks 3Veg
And how many of those new commitments would just be churn? Borrowers with a good equity position swapping lenders to take advantage of the generous cashbacks on offer. To try and offset the effect of rising interest rates.
Well, whichever month you compare it with, there would also have been churn then, so churn doesn't affect the change much.
Due to house price fluctuations (which have been quite extreme) rather than comparing the amount borrowed, I prefer to compare the number of mortgages as report in C31 E1.
The number of new mortgages lent in Jan 2023 was 8680 - the lowest for any month since RBNZ began reporting data (August 2014). It was even lower than the pandemic lockdown affected April 2020 of 9,461 (which is now the second lowest on record).
The 8,680 in January 2023 compares to January months in:
2022 = 12,033
2021 = 19,186
2020 = 19,276
2019 = 18,774
2018 = 18,600
"It looks like policy rates may be further away from the top than markets had been pricing and so there is some catchup underway."
Now. About that long-dated mortgage rate bargepole that no one was supposed to touch.....
It's going to be progressively more difficult to raise debt as we go forward, and as such, what debt is accessible is likely to be fought over by those who need it. And that....is why interest rates are probably to keep going "further.... than markets had been pricing".
Simply Red then, moneys too tight to mention! Dance to it folk!
Took me 20 minutes to drive 100 metres on Remuera road today… cant wait till they pump the immigration numbers
Yeah, cause that roads been easy to traverse at any point in the last 30 years.
Cept maybe rona' shutdowns.
I live in Remuera you 🔔 end. I know what the traffic flow is like.
You are not stuck in traffic. You are traffic.
Settle down. I used to live there, traffics always been bollocks. On account of all the people and cars.
More people should fix it.
If they all weren't driving, sure.
Have you got a tractor? :)
But aren't they are increasing infrastructure in line with population growth. That would be the logical thing they should be doing.
Hahaha pull the other one!
I was thinking the same thing this week on the Auckland motorways, with schools back and parents working again the traffic jams are back to horrendous. The roads cant cope with ANY immigration at this stage.
Hence public transport and cycling investment required. But not in Auckland under this Mayor. He'll rage against the solutions required and waste another 4 years doing nothing to solve the problem. Will not even consider removing parking on arterials to help bus and traffic flow. I hope everyone who voted for him is revelling in the warm glow of his fixing things by writing strongly worded letters. He's a joke, and reflects the know it all old white guy attitudes prevalent in some comment sections.
Wee bit racist….and completely ignorant.
You managed to slot in racist, ageist and sexist comment in a one sentence, that’s surely helps with your point. Not.
Hi might be one of the ist's that Auckland needs. A realist.
... wow ! ... and you're the one calling for others to be moderated or banned .... racist / sexist / ageist all in one rather nasty little sentence ...
Praetorian Guard, GBH. Arisen. The empress has departed. Long live the emperor. It’s election year. Attention!
Chiefs thrashed my beloved Crusaders , Mr F ... oh the pain , the pain , the pain of it all ...
... bring back the horsey & the sword ... what's a Crusader without them !
same problems there that they only just got away with last year. halfbacks that can’t get the backline flowing and only pass when they forget to kick. Long ago an old AB and AB coach held two hands out in front of me and said when the ball is here I have it, if I kick it it’s gone and there’s no guarantee we’ll get it back. last night was a woeful display of woeful kicking. I turned off halfway through the second half. this sort of rugby style and tactics will never win a RWC.
I'm an old white guy and his views reflect most of the old white guy views I encounter. Not sure how that is racist, ageist or sexist but if it has offended I apologise.
Wow! …. and not in a good way.
Well LTL, at least you shamed an edit out of the ranter.
Exactly. There’s not the infrastructure capacity, at least right now, for another influx. The systems are at breaking point. Crazy.
small and very targeted immigration (key social services) fine, and needed.
Once you hit having "one car per green light, per lane" onto your motorways, youre already using bandaids for the incapacity...
And how long have these been in use ?
I remember when I visited Taiwan. Taipei and Taichung have way more people than Auckland with less than ideal topography/geography, but they are fantastic at moving people around. The motorways are full of taxis and the side roads are full of scooters. We could learn a lesson, we spent a week there and I was amazed.
There was a point when the equivalent of NZs entire population would travel through the same train station in Tokyo daily.
The lesson is these rail companies struggle to be viable with 4x the density of Auckland, and they made driving so unaffordable cars can't compete.
About 10 years
Pretty clear investors are fleeing the markets.
With the tax rules (still incoming) high interest rates, flat rents, brutal regulations and risk of tenancies - PLUS potential for double the yield from term deposits, who would crazy enough to buy a rental now?
Once building halts and immigrations numbers start to go up, watch the rental market start to encounter issues (from the tenant's side that is)
Can you imagine losing money - both in cash flow and capital, the former from your own pocket, and STILL getting a hefty tax bill?
I've started hearing wails from colleagues who have 1, 2 or 3 rentals, most didn't appreciate the scale of the tax bill coming, and most don't realise it's only a quarter so far...
The Ponzi is a black hole that will eat every cent NZ has and can borrow. The no interest deductibility rule will have to go at some point in the near future.
Govt books are strained . Would be hard to give up the additional cashflow. Even for the Nats if they get in. You might find this item kicked for touch into a future review of tax legislation, "do it once and do it right" type thing. So maybe 2026 at earliest if books are looking better by then.
The Government has launched a new fast-track "recovery visa" designed to attract overseas workers needed for storm cleanup and remediation. It will last for six months only, however. It is targeting experts such as insurance assessors, infrastructure and utilities engineers and technicians, heavy machinery operators and debris removal workers.
I wonder how many highly skilled people in this field are prepared to pack up at short notice and move to NZ for 6 whole months.
As Scribe said, not many, if any.
What’s the difference between an insurance assessor and a debris removal worker? Many experienced in post Canterbury EQs would struggle to answer that.
An insurance accessor covers everything up in multi layers of unnecessary sh*t , and then tangles it all up with a deft twist ...
... a Debris Removal team does the exact opposite of that ...
Heaps I'd say. Debris removal workers. That must include everyone on the planet who can walk. The min wage is a fortune in NZ - set up your NZ visa agency at a lithium mine in the Congo.
Well now that you make the point, a couple of “assessors” that visited our dwelling may well have been trained by mercenaries in the Congo.
The number would depend on the time of year. Who wants to work in winter?
Any insights as to what's happening with Carbon market?
My understanding was they are virtually under-written by government at strong future price points, so surprised to see the ass fall out of it.
... surprised , why ? ... the ass fell out of this government in 2017 ... everything they've touched or attempted has completely turning to sh*t ever since ... surprised ? ... not really ...
"A BEAR MARKET IN CARBON?"
What does this even mean? No one is doing anything? Emissions are being ignored? Maybe work is being done using a magical new zero carbon energy source? The ETS dysfunctional?
It means they're being used for speculation rather than anything useful.
Japan reported CPI inflation in the year to January of 4.3%, up from 4.0% in December. This is their highest rate in 42 years, since December 1981.
Instead of rising confidence among European businesses, Japanese businesses are already suggesting global recession (like a lot more data than not). Japan's (Reuters) Tankan negative two months in a row, a recession signal that isn't as much about Japan (see: trade plummeting). Link
The Fed can focus on deflators and hike rates, but right here is the reason why it won't last. It already hasn't and, according to oil market, worse is yet to come if it hasn't already. https://youtube.com/watch?v=zzEFWu Link
So in quite a few of my comments last year I said by March things will not be good, well here we are, and for investors things are not flash... I am currently saying things will be bad H2, any stupid spruikers want to start an argument?
Oh yeah and climate change......
"I said by March things will not be good" "I am currently saying things will be bad H2"
Com'on IT, can you be any more vague? With a general prediction like that, of course you're going to be able to claim you were right.
What storm
Right, so when you don't have a come back, you just change the subject...
Let's face it. 2023 is a DGMs wet dream.
I've worn a groove in Youtube to every persistent inflation, real estate crash, Taiwan invasion, global trade breakdown, endless grinding Ukraine war, hopeless ice-melting climate change, and survivalist channel there is.
And I'm sure they are still talking things up to soften the blow.
... when the gloom & doom chicken littles are running around in circles , with their tinfoil hats on , shrieking that we're all doomed ... doomed !!!! ...
Then you know it's time to go shopping : time to snaffle up the treasures they're jettisoning in their panic ...
Doomed , huh ? ... yeah , right !
That's showing you what you trained it to show you.
Start watching puppy videos or something
Thank you for those few kind words, GBH and Pa1nter, but it's too late for me. I can't pull up now. I'm going to binge watch Schiff and DFA this weekend to get it over with.
Just don't watch Robert Kiyosaki
Not sure that DC's enthusiastic use of "slip" to detail a fall in whatever, is entirely appropriate....
The Government has launched a new fast-track "recovery visa" designed to attract overseas workers...
They're going to send inflation/cost-of-living to the moon adding demand to an already stressed market. This post-GFC playbook won't work in a gigh inflation environment.
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