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
Wairarapa Building Society (WBS) lowered some fixed rates. Heartland Bank has raised its floating rate by +50 bps to 6.75%, but not their reverse mortgage rate yet. But more broadly, no main bank has yet raised rates following the RBNZ OCR increase last week. The big banks are unusually slow in passing these on - even as they pass on some of the increase to savers.
TERM DEPOSIT/SAVINGS RATE CHANGES
ANZ raised its bonus saver rate today, so that the potential Serious Saver rate rose by only +30 bps to 3.75%. That is however well below BNZ's RapidSave which was also raised today to 3.95% which was raised by +50 bps - and Rabobank's 4.25%.
'SUBDUED'
Latest ANZ Business Outlook Survey shows some further improvement in activity indicators in February - but inflation expectations 'remain stuck around 6%'. As a result, although sentiment and activity are lifting, they still remain 'subdued'.
HEARTLAND PROFIT SLIGHTLY HIGHER
Heartland Group Holdings interim profit rose +2%, or +$1.1 mln, to $48.7 mln with gross receivables up +10% to $6.5 bln. Its net interest margin fell 34 basis points to 3.97%. It'll pay an unchanged 5.5 cents per share interim dividend. Heartland expects its annual profit to be within a range of $109 million to $114 million. Meanwhile, subsidiary Heartland Bank is considering making an offer of up to $125 mln of unsecured subordinated notes.
UPDATE FROM TOWER
Local insurer Tower (TWR) updated its results and claims situation today. They estimate the ultimate cost of the Auckland and Upper North Island weather events to be within the range of $95 mln to $125 mln. Those costs will predominantly be covered by Tower’s reinsurance for catastrophe events which has an excess of $11.875 mln. They also say in Q4, their gross written premiums were up by +12.5% on the same period a year ago "through a balanced mix of rating and volume".
CARBON CREDIT SUSPENSION
Forest owners who lost trees in the cyclone and were ETS-registered will stop receiving carbon credits. They can apply for a Temporary Adverse Event Suspension and if approved, they won't have to pay back carbon credits already received. But the affected forest will stop earning credits until it is re-established (replanted or regenerated), and achieves the same level of carbon storage it had before the loss event. For example, in the case of 20-year-old trees that were windthrown during Cyclone Gabrielle and will get replanted with the same species next year, the pause would be 20 years plus 1 year for the replant interval = 21 years. (H/T PFO) Not sure what happens if a change if public policy prohibits the ability to replant. Anyone reader know?
IS THERE AN COMPETITION INQUIRY COMING FOR THE BANKING SECTOR?
Earlier today, RBNZ Chief economist Paul Conway was reported as saying: "I think the banking sector would be an appropriate focus for a market study [by the Commerce Commission], should the Government wish to go there." In response, the Commerce Minister Duncan Webb has said, “No decisions have been made as regards the focus of the next market study, however I am focused on using the tool to ensure that markets operate fairly for consumers. I am particularly interested in improving markets where the greatest long term gains can be made for ordinary New Zealanders.” (which could mean anything).
THE BIG SLOWDOWN CONTINUES
Latest RBNZ lending figures show the total stock of mortgage borrowing grew by just 4.1% in the 12 months to January, which is the slowest annual rate of growth in exactly 10 years.
THE PAIN CLIFF APPROACHING
As at January, 33.9% of all home loans come up for repricing within the next 180 days. That is $117 bln worth of mortgages. This is the most since May 2022. That also means that $229 bln do not. This is a huge contrast to Australia where most of their mortgager lending is exposed to immediate interest rate changes. Kiwis have organised themselves to be much more insulated and resilient, although when the change actually happens, it can be a substantial shock for those affected (rather than the creeping general corrosion in Australia).
HOUSEHOLD DEPOSITS FALL, BUT WE ARE WORKING THEM HARDER
Household deposits fell -$1 bln in January from December, but they are still +$11.5 bln higher than a year ago. But within that, term deposits rise +$1.6 bln in January from December to be +$23.2 bln higher than a year ago. That means that balances in household savings accounts and current accounts both fell.
IMMIGATION CAN TRUMP DEPRESSED HOUSING MARKETS
In Australia, it is becoming clearer that their immigration surge is turning the housing market prospects around from 'negative' to 'balanced', according to Westpac. They report a material tightening in rental markets. Continued net inflows and subdued levels of new building mean a sustained further tightening across the wider market is likely in coming years. These forces are likely to push the current focus on inflation and interest rates into the background there.
AUSSIE RETAIL SALES RISE
Even though retailer Harvey Norman said its sales were down -10% in January, national Australian retail sales surprised on the upside, coming in up +1.9% from December and up +7.5% from a year ago. These rises are not inflation adjusted however. But they do follow a sharp retreat in December. Today the share market has not been kind to the Harvey Norman share price which is down -12.5% so far today.
GREENWASHING CAN COST
Staying in Australia, regulator ASIC has launched its first court action against alleged greenwashing conduct, commencing civil penalty proceedings in the Federal Court against Mercer Superannuation for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options. ASIC alleged Mercer, which oversees A$27.5 billion in assets, misled members of its Sustainable Plus fund by claiming it excluded companies that were involved in carbon intensive fossil fuels but then heavily invested in 15 stocks from the sector including AGL Energy, BHP, Glencore and Whitehaven Coal.
BIG SHIFTS IN JAPAN
In Japan, their retail sales came in very strong in January, up +6.3% when a +4% rise was expected, and compared with a +3.8% rise in December. But things were not so great for their industrial production, which fell a sharpish -4.6% in January.
SWAP RATES HOLD HIGH
Wholesale swap rates are likely little-changed today. Yesterday they closed with the 2-year at its highest since November 2008. It may hesitate from here before finding a new track. The real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate dipped -1 bp to 5.13% which is now +38 bps above the OCR. The Australian 10 year bond yield is now at 3.88% and little-changed from this time yesterday. The China 10 year bond rate is also little-changed at 2.94%. But the NZ Government 10 year bond rate is now at 4.66% and down -5 bps and still above the earlier RBNZ fix at 4.64% which was unchanged today. The UST 10 year is holding at 3.92% and little-changed.
EQUITIES FIRMISH
On Wall Street, the S&P500 ended its Monday session up +0.3%. Tokyo has opened up +0.4%. Hong Kong has opened up +0.9%, and Shanghai up +0.3%. The ASX200 is up +0.5% in early afternoon trade. And the NZX50 is up +0.3% in late Tuesday trade.
GOLD IN MINOR FIRMING
In early Asian trade, gold is little-changed from this time yesterday, now at US$1818/oz and up +US$5.
NZD SOFT
The Kiwi dollar is little-changed from this time yesterday at its new lower level of 61.7 USc. Against the Aussie we are softish at 91.4 AUc. Against the euro we are also softer at 58.1 euro cents. That means the TWI-5 is now at just over 69.7 and down -20 bps from yesterday.
BITCOIN HOLDS AGAIN
Bitcoin not really going anywhere today, now at US$23,450 and virtually unchanged from this time yesterday (US$23,468). Volatility over the past 24 hours has been modest at +/- 1.6%.
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
66 Comments
And Wagner thunders in.......
Now. Back to the swap rates...
Which particular opera are you referring to?
Believe it was Wagner's fourth symphony there at the end.
In Waggers we trust ! ... just the second test win in history by a single run ...
... hey , if you win by 2 runs , that's just showing off !
Never in any doubt.
Believe the fourth was Adolf’s favourite too. Mind you if I recall correctly, that was the only one Wagner actually completed. But in that particular context anything that accompanies the downfall of the perfidious English, would be appropriate.
I believe that the term " silly mid on " was created in Adolf's honour ... or , dishonour really ... because he was bloody useless in fielding ... and batting ... I'm sure that WW11 would have been averted if the Gerries could've picked a proper national cricket 11 unblemished by a dopey dictator goosestepping between the wickets
He bowled leggies, but his googly was useless
"I am particularly interested in improving markets where the greatest long term gains can be made for ordinary New Zealanders.” (which could mean anything)."
I read that as the banking sector.
Arguably, there is no other market within a million mile that would benefit the average New Zealander more.
We all know the numbers.
Building materials, but that would be a chunkier saving to anyone building or renovating, which most people probably don't do in their lives.
Still, cheaper builds would filter through to lower prices for existing stock.
NZ just won a brilliant test match so I'm going to bask in that and return to moaning about politicians and banks tomorrow:-)
The last four days on sports talkback have been devoted to how we fix this woeful team...... I mean cricket but you can apply this to Labour as well
The Labour Team might get bowled out in October.
I was driving past the basin reserve when the final catch happened, the cheers were legendary! Shirts were off and swinging all round haha
Epic
The trees have been harvested. The credits need repaying or they need to replant.
If they were not insured for this...tough.
Why are we so soft on these vandals?
Most 20-year forests are not ETS registered and most of those forests will still be standing. The environmental damage is mainly from production forests that have been harvested in the last two to five years. The question is not whether or not the forests should be replanted. The question is whether those forests should be for production or for carbon. The forestry cowboys need to be called to account.
KeithW
There's got to be something better than pine.
I'd estimate between 5 and 10% of the trees in my 30 year old block succumbed to the cyclone and are down, and it's not surprising when you look at the wreckage - they're huge tall trees with tiny shallow roots.
The tiny shallow roots are likely to be a function of were the trees are grown. Shallow soils means shallow roots regardless of species. In a permanent pine forest, losing 5 to 10% at 30 years is no big deal. Other trees soon claim the newly incident light. That is how nature works. It is the same with native forests. Wind also blows over native trees. Travel through any native untracked forest is always hugely laborious, with this a direct outcome of nature's windthrow actions.
KeithW
In the same block there's also areas of eucalyptus and kauri, and also some rewarewa that I guess planted themselves in bare areas. They're all standing.
A lot of the trees we saw around the edge of Lake Taupo and Rangipo way didn't fall, they snapped about 8 ft above the ground. Seriously impressive winds to snap them like twigs.
I have a forest in Northland - mostly Tasmanian Blackwood, Leyland cypress, eucalpyts and some natives. Some of the cypresses and Blackwoods had big branches or a whole side ripped off and dropped. Some of the cypresses slumped over on a track or a fence - spent a few hours clearing them. We have fairly shallow soils so some windthrows is expected.
General pattern is the edge trees took the worst of it, as you'd expect, particularly shelter belts. But the stands, which range in age up to 25, are broadly intact. Still, I hope this doesn't happen every couple of years.
Speaking colloquially of cowboys or similar, the NZH two articles at present, one atop of the other. Firstly Mr Winston Peters querying the fate of $15 billion covid funds allocated but unaccounted for and secondly Mr Willie Jackson explaining the $14 million exclusive grant to Maori for cyclone relief as nothing special. Perhaps that is an answer in a small way, and something of an overall explanation, to Mr Peter’s concerns?
.. Big Willie is just following through on his " new style of democracy " with a new style of financial equity ... we were here first ... we're special ... give us whatever we want , no questions asked ( or you must be a pakeha racist ) ...
Except GBH they weren’t here first. An inconvenient truth. They didn’t offer any treaty though. Instead the original ps fled east to the Chathams.
Does it matter who was here first? We signed a treaty with Maori.
Correct. Except for the qualification of that odious word today, colonisation and within that , the true identity of indigenous.
"We"???
I didn't sign anything. I am sure you didn't either.
Absolute rubbish. The notion that the moriori were the first people of this land is completely wrong.
People who state this either don’t know their history or roll it out as an anti-Maori trope.
Right ,so a Maori was absolutely the first human being to set foot on what is considered as the land of New Zealand today? I am not young but I would very much like to learn, at this late stage in my life, by what authority the education I have previously received is proven to be totally false. Not having a go. Was taught a lot of dubious history at school and would actually appreciate such a debunking of my previous understanding of our history and in that regard I learnt it is largely more accurate to rely on what was actually written down at the time. And there is the salient point, if the history was not written down, then it is rather too easy to rewrite it from whatever perspective one might require.
Ok fair enough, probably the by-product of poor history teaching at school. One of the best places to start for all matters NZ history is ‘The Penguin History of New Zealand’ by the late, great historian Michael King.
page 41 of the illustrated version that I have states:
‘Precisely who the Moriori of the Chatham Islands were and where they came from is dealt with in the following chapter. Suffice it to say now that almost everything said about them here - that they were Melanesian, that they preceded the ancestors of the Maori, that they were driven off the mainland to the Chatham Islands - is demonstrably wrong’.
Last read that edition about five years ago. Unfortunately I found a lot of Mr King’s conclusions and explanations rather incomplete and often that seems quite deliberate. For example he opined the expedition ordered by the British government for New Zealand to wrest Western Samoa from Germany was extremely fortunate to not encounter the German naval squadron in the Sth Pacific. In fact he omitted to explain once that convoy reached Noumea it was more than adequately escorted by cruisers including HMAS Australia. History is far too easily distorted even when it has been actually recorded but to insist on actual true definition of New Zealand’s history before Europeans introduced the ability of actually writing it down is more than a stretch and Mr King, like any other historian, has no hard evidence for his musings other than folklore.
genetics, rats say no more
Yep but don’t let that sort of scientific stuff and the opinion of NZ’s greatest historian get in the way of a myth still being perpetuated, often intentionally…
Foxglove here’s a link on a recent document. It’s an easy and educational watch.
https://www.flicks.co.nz/tv/origins-season-1/
Your suggestion and understanding is miles off track from the truth.But not uncommon.
Thanks.
Sorry I was a bit harsh. But seriously it’s not rare for people with an anti- Maori agenda to bring ye olde ‘But they weren’t even the first people’ trope up.
it’s even more common for people with an anti- European agenda to bring ye olde ‘But they weren’t even the first people’ trope up.
... so , McDonalds wasn't here first ? ... well , that disappoints me , with my anti Maccas trope ...
Women and Booze, the rest they just squandered
Which is the more expensive?
Depends on the quality and purity.
On this we agree Jimbo
There is no "missing money". This is just tripe from Peters to get the useful idiots chattering away.
All government money is appropriated in a budget. It is either spent according to the plan, or returned to the treasury department. Nothing "goes missing" - certainly not $14B.
If he wants to know what the money was allocated for, he can read the budget.
... just another whine box for Winnie to pontificate from ...
Most of the infrastructure damage looks to be from forestry.
But look at the damage to our lands. Hills and top soils being washed away which will inevitably lead to barren unproductive lands that are good for nothing - bar small shrubs and weeds.
The farmers are in this too, not just the foresters.
Ironically a lot of the pine went in after Bola did the same thing to hillsides weakened by 100 years of high country farming. It might be a part of the country best left to regenerate native bush.
Bitcoin has been uncharacteristically stable. I wonder if there will be less volatility in the future.
... oh yes , absolutely guaranteed ... Bitcoin is nice & settled , perfectly unvolatile from this day on ...
Oh please, you're not buying bitcoin are you. What's your preference, volatile or stable.
... he should only buy the volatile Bitcoins if the trend is up ... and transfer them into stable Bitcoins immediately preceding another collapse ...
Piece of cake !
Honestly screw these banks and their sluggish response to the OCR lift (and ANZ's meagre .3%)
Shifting my cash out of Kiwibank to a on-call broker account as of tomorrow. Will let them know why - although I doubt they will care.
Try Direct Broking offering as good as 3.50-4.40%
https://www.directbroking.co.nz/DirectTrade/dynamic/cmtInterestRatesFXR…
yes Heartlands 32 day saver has just gone to 4.75%. ANZs 3.75% new serious saver is miserable, BNZ rapid save a little better at 3.95%. Kiwibank are going to have to move that 3.35% call account or funds will exit that.
IMMIGATION CAN TRUMP DEPRESSED HOUSING MARKETS...
More pain for renters.
Here come National with the all too familiar “we will pay for tax cuts by firing back-room bureaucrats”. It didn’t work for them last time, they had to raise GST to pay for their tax cuts.
https://businessdesk.co.nz/article/election-2023/national-party-reitera…
I actually strongly support the idea of a massive cut back on Wellington bureaucracy and have advocated for it several times on this website.
However…. National are conservatives and they are never bold enough so it’s likely to be ineffectual tweaks, especially if some of their key MPs own Wellington property.
You'll end up paying more in taxes to cover the increased costs of consultants to cover all the bureaucracy roles that were cut.
Does Willis provide anything tangible in terms of the likely size of any such cuts?
No simple solution to our bloated bureaucracy problem. Who is going to decide who gets to stay and who goes? The same bureaucrats who are a drag on public sector efficiency or clueless consultants in Wellington?
Holding public servants to account for deliverables and firing higher-ups for performance failures of their responsible agencies should stir things up in my opinion.
Yeah not easy but needs to be done.
Walking into the MBIE headquarters is quite an experience. Like entering the death star in a different universe of weird and wasteful policy wonkery, with thousands upon thousands of bureaucrats on board.
I'm currently having a review of my electricity supplier. Only overpaid MBIE MBIE jobsworths could possibly consider that moving more daily charge fixed cost onto poor people was a good idea (to save them from having to put a jersey on).
https://www.mbie.govt.nz/building-and-energy/energy-and-natural-resourc…
They had to get treasury to invent "improved economic growth" as well as increase GST to make their tax cuts "revenue neutral".
Of course there's no evidence the forecast "improved growth" ever actually happened. So really National:
1. Gave big tax cuts to the wealthy by cutting the 38% rate.
2. Increased GST which is a regressive tax and falls most heavily on those who are forced to consume their whole income
3. Paused contributions to the superannuation fund, which have cost us $23.4B and counting
4. Got treasury to cook the books to be able to claim the whole scheme was "revenue neutral"
5. Borrowed money to meet their other budget obligations - remember that money is fungible, so it can easily be said they borrowed for tax cuts
If you care about the future of this country, don't vote for National.
In Australia, it is becoming clearer that their immigration surge is turning the housing market prospects around from 'negative' to 'balanced'...
The issue is that rent and construction feed through into CPI. Consequently government are actually ensuring rates stay higher for longer.
This picture better than any illustrates how so much development is happening in Auckland, with almost whole sites covered in hard surfaces. The new government rules make it even worse…just swell, right, in heavy rain events…
https://www.trademe.co.nz/a/property/residential/rent/auckland/waitaker…
Particularly when you can see the retaining wall on one side, I assume the other side drops down onto the next property?
"No worries, we've put surface drains at the high points"
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