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/LOAN RATE CHANGES
Kiwibank raise all its fixed home loan rates 2 years and longer by either +10 bps or +20 bps. NBS also their fixed one and two year rates. As did SBS Bank today for fixed terms of 6 months to 2 years.
TERM DEPOSIT/SAVINGS RATE CHANGES
The Cooperative Bank raised some rates by +5 bps. But the notable move today is that Kiwibank is the first main bank to offer a 6% TD for a one year term. Eleven other banks offer 6%+ rates, but most are challenger banks and the other main banks who do only offer them for 18 months or two years. More here. Sharesies Save account is dropping back to 4.60% tomorrow from their 'special' 5.00%.
'GOLDILOCKS IS IN THE BUILDING'
The August ANZ business confidence survey was impressively upbeat. Business confidence lifted another 9 points in August to -4, the highest read since mid-2021. Expected own activity also jumped 10 points, to +11. All activity indicators lifted. Inflation indicators continued to ease. More here.
A TEN YEAR LOW
The growth in the mortgage books of banks and non-banks was the lowest for a July from June since 2017, at just +$680 mln. (If the average new mortgage was $500,000, that means the net growth across all institutions was less than 1400 transaction in the month. Given there are 11 banks competing for mortgages, that is an average of only +120 per bank. That is small. The RBNZ data shows the year-on-year 'growth' of only +3.0%, the smallest rise (including during the pandemic shudder) since October 2012. (Lending to business and agriculture isn't growing fast either.)
ALL NEW HOUSEHOLD CASH IS GOING INTO TDs
Household bank accounts rose by +$1.8 bln in July from June, up +$11.4 bln in a year. These are increases at the upper end of the range in recent months. All these increases are going into term deposits, also up +$1.8 bln in July from June.
STILL VERY STRONG DEMAND
There was no shortage of demand for the latest NZ Government Bond tenders - even after some very big and successful bank bond raisings (BNZ's $1 bln was one in the past week). Treasury offered $500 mln and got 148 bids worth $1.3 bln over three durations. Yields rose to 5% or close to it althought the change from the equivalent bond offerings a month ago were only about +20 bps.
ANOTHER BANK BOND
SBS Bank has raised $175 mln by a 5½ year bond issue. They are paying 6.15% pa for these funds. (Remember, SBS Bank has a successful FinanceNow finance company division, so higher-priced money can be put to work there if the bank division can't find a profitable opportunity.)
MORE POLICY COMPARISONS
For readers following our popular election policy comparisons, our resource has been updated with detail for three National Party policy releases: for Tax, Senior Citizens, and Rental Issues.
STAYING VERY HIGH?
Our grocery price monitoring this week shows rises above +9% year-on-year. That is down from +25% year-on-year rises in March, but this latest review is worrying because it is an early (tentative) suggestion that the track down might be over for a while. In early August it was 'only' up +7.5%.
UNINSPIRING
In China, their official August PMI data is out. Their factory activity gauge improved marginally in August, but was still below the 50-point mark that separates a contraction from an expansion amid a global economic slowdown and sluggish domestic demand. Their service secor expansion cooled again and is barely at the 50 benchmark now (51.0). New export orders are weakening although new orders generally are at a steady state (50). The private Caixin equivalent monitoring is not out until tomorrow (factory) and Tuesday (services). Recently that has been marginally more optimistic than the official data.
SWAPS HOLD
Wholesale swap rates were probably little-changed today, but the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is up +1 bp at 5.65%. The Australian 10 year bond yield is down another -2 bps at 4.05%. The China 10 year bond rate is little-changed at 2.60%. The NZ Government 10 year bond rate is down -2 bps to 4.97%, but still above the earlier RBNZ fixing of 4.91%, and down -4 bps. The UST 10 year yield is also down -3 bps from yesterday, now at 4.11%.
EQUITIES LITTLE-CHANGED MOSTLY
The NZX50 is down -0.2% near today's close, again. The ASX200 is down -0.1% in afternoon trade. Tokyo has opened up +0.6%. Hong Kong is unchanged in its opening trades. But Shanghai is down -0.5%, no doubt hurt by the Country Garden trainwreck. Wall Street ended its Wednesday session up another, but more modest, +0.4%.
GOLD IN ANOTHER MOVE UP
In early Asian trade, gold is at US$1946/oz and up another +US$10 for the day. Earlier it closed at US$1942/oz in New York, and earlier still at US$1948/oz in London.
NZD ON HOLD
The Kiwi dollar has moved up slightly against the greenback, now at 59.7 USc. Against the Aussie we have basically held at 91.9 AUc. Against the euro we are marginally softer at 54.6 euro cents. The TWI-5 is unchanged at 68.6.
BITCOIN HOLDS HIGHER
The bitcoin price has slipped from yesterday. It is now at US$27,210 but down just -0.8% in the past 24 hours. Volatility over the past 24 hours has been low +/- 0.8%.
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72 Comments
Oz's pumped hydro scheme has another massive cost blowout & delay. The project is now expected to cost $12 billion, six times the original forecast.
Snowy Hydro expansion hits reset button as costs blow out to $12 billion - ABC News
3x to 6x of original "budget" is pretty typical for any large scale government/local government run scheme.
The plan is to secure funding and get the project underway by quoting absolute best-case scenario figures on limited scope, then slowly but surely meet reality on the good old sunk-cost scam. Otherwise nothing would ever get done.
The plan is to secure funding and get the project underway by quoting absolute best-case scenario figures on limited scope, then slowly but surely meet reality on the good old sunk-cost scam. Otherwise nothing would ever get done.
People making out like bandits time and time again. Kind of related, it reminds me of notorious Aussie politician Barnaby Joyce who wrote a report about droughts in Aussie. The report deliverable consisted of text messages to PM Scomo. And $600K+ of 'expenses' were claimed.
https://www.theguardian.com/australia-news/2019/dec/27/pms-office-refus…
Nick Mowbray, founder of ZULU
https://nopunchespulled.com/2023/08/31/our-bloated-bureacracy/#more-5453
"In the year 2000 New Zealand had 1200 Bureaucrats working in the ministry of education. We had 2800 schools and according to the M.O.E we had 750,000 students. We ranked highly on international metrics such as the program for international student assessment (PISA) We were ranked fourth in reading, sixth in mathematics and fifth in science. Fast forward to today and student numbers have risen a little over 11% and the number of schools has decreased to 2600, but bureaucrat numbers have ballooned, nearly tripling, a rise of 166.7%. And what have we got for it? Nothing. In fact, we have gone backwards rapidly, now ranked 13th in reading, 27th in Math and 20th in science."
I might wager a guess and say a huge number of those working at the ministry don't even write reports. Back during my stint at MBIE, there were roughly 4-5 people on every project whose only job literally was to make sure I did mine.
All these bureaucrats did was pass on my work as a joint deliverable back and forth between a bunch of teams who had no real value to add and mostly spell-checked or dumbed down technical commentary.
Needless to say, that every criticism or query came straight back to me as the "person holding the pen on the project". The others also had managers going up a full chain of command managing teams that "coordinated outcomes" on projects/programme/portfolio.
We need someone like ACT to clean up the mess from the inside-out by cutting funding for all non-core activities!
In the heart of that there is the issue of parenting. Surely a good parent will instil in children that their education is the key to their future? Personally in my time I didn’t much like school but my parents made damn sure I was applying myself, there was no room for cop out. On reflection admittedly, I should have taken greater advantage of the knowledge being offered for free, a hell of a lot more positively.
What's really interesting about voting is that the more people vote for a party, the high the percentage of votes that party gets. And conversely the fewer peoples votes a party gets, the lower percentage of votes that party gets. So you see, a suggestion that we as a nation could opt to vote for parties other than Labour or National would also suggest that those two parties would receive a lower percentage of overall votes, and those parties other than Labour or National would receive a higher percentage of overall votes.
Hope this helps :)
Some small parties could double their votes and still not win a single seat due to how MMP is structured in NZ. In fact, voting for them would actually increase the number of seats given to the bigger parties.
But if support for Labour and National diminished, maybe we could see a coalition of ACT and Greens and TPM?
If you look at the report, most of the decline was in the period 2009-2015, guess which party was in power then?
https://www.oecd.org/pisa/publications/PISA2018_CN_NZL.pdf
The latest report is from 2018, 2022 is not out yet, so we don't really have any idea what impact the current government has had on this metric.
"...we don't really have any idea what impact the current government has had on this metric."
We can make an educated guess
https://www.kiwiblog.co.nz/2023/08/up_on_the_facts_nz_yesterday.html
"KEY INSIGHTS
From the 2022 School Leavers data recently released:
15% left without any NCEA qualification (up 50% since 2017's 10% figure)
25% left without getting NCEA Level 2 (not shown in graph above)
48% (~1/2) left without getting NCEA Level 3 or UE (not shown in graph above)
21.5% left before turning 17-years-old (up 36% since 2017's 15.8% figure)
33% more 16-year-olds left school
63% more 15-year-olds left school
(data for 14-year-olds wasn't provided)"
Clearly covid has had an affect, hard to disentangle that, 2023 data will hopefully give us an idea of whether it stays down or not.
Interesting to note that the increase in retention and percentage obtaining NCEA went up in the period 2012-2018, when the PISA study shows our our students getting lower scores in the same period. Were the passing standards lowered over that period?
As a high school teacher I can say that most things coming my way from MoE are a joke. They also refuse to implement any sort of curriculum beyond a high level booklet of buzzwords where each step is indistinguishable apart from a the use of increasingly complex verbs (understand --> respond --> synthesise, etc). It is devoid of any concerete skills and puts everything onto you as a teacher. It is also well known that the ministry is a 'safe place' for low quality teachers who have management aspirations. A cull, or at the very least a mass redeployment of staff from offices into schools, would be a great thing.
At the same time, not to defend the MoE, but a lot has happened in society in general since the year 2000. Declining numeracy and literacy is an issue globally (I listen to a lot of French media and they are debating it all time), albeit NZ is falling than many places. Another big concern is that declines in these core areas tend to pull down results in all other subjects too.
STEM is hard and somewhat unsexy, BUT its where the money is after uni..... there is no easy big money only easy jobseeker and hosuing allowance.... I doubt many school kids aspire to be cival enginers or work for rocket lab , but those paths need strong physics, maths , logical thinking skills, much like biology and organic chem are needed for medicine..... the removal of streaming for bright kids is a travesty, liets only have a 2nd 15 because having a first 15 would be wrong for those who did not make it
We need a serious shakeup in the mamangement of educatikon / health / policing / justice ie judges.... party vote ACT
National wont change shite, they never do
One issue with STEM careers is they are all fundamentally maths based. But primary school teachers rarely have a passion for maths, and from experience with my own children and what I hear from my wife who is a primary teacher, many teachers don't even fully understand the concepts they're trying to teach themselves.
Simple questions that students are expected to know by the time they leave primary school such as: if these headphones are on sale for $100 and are 20% off, what is the full price? would be a challenge for many teachers. But how do you get teachers that enjoy and are good at maths into the profession when as you mention they can easily make a lot more money elsewhere?
No wonder students don't enter secondary school with an enjoyment of maths and want to take up careers in adjacent fields. Maths is also the butt of so many jokes about being the boring or difficult subject.
I suspect many STEM grads got their passion for STEM via their parents, via hobbies or sports, yacht racing or ham radio, or even IT Tech, you need the motivation of the end result to push through calc. Personally I believe that when people lost a lock up garage they lost a place to tinker with cars/motor bikes and tools, we lost an entire generation of people who learnt practical skills right their..... house prices and the move from rural to city has a lot to answer for.... but IMHO with discipline we could bring private school level education to all.... would require very strong discipline, and the ability to remove troublemakers. not sure teachers are up for it.....
There needs to be a large overhaul of attitude also. Today little johnny can spread nasty tumours about a teacher he doesn’t like and said teacher can be stood down with no factual basis as a result until it is investigated. I imagine teaching like walking on eggshells
if these headphones are on sale for $100 and are 20% off
Trick question though, everyone knows it's not actually a 'sale' and not worth buying until it's over 50% off.
If you want primary school teachers that like maths coming through, maybe lighten up on the other requirements such as [language(s)]. As someone that did well at maths, I find languages (including English) hard. Do those that find languages easy, find maths hard? Does the lack of male primary teachers come into it (I think males tend to be more STEM oriented aren't they)?
The educational issues can all be traced back to Mallard (under the Clark Government) who moved away from phonics and basic facts, to some hokum (and now debunked) whole of language approach and self-directed learning.
Those changes take years to flow through all levels, and now we are seeing the results. Hipkins started to unwind some of the bad but again it will take 15-20 years for the full effects to be realised.
The bureaucrats are the attempt at patching over this. Their purpose was to try and hide these failing by designing a curriculum that would work for kids that were never actually taught (and therefore never understood) the core components of reading, writing, and basic maths skills.
End result is that we will continue to drop, we will also see the results flow through the workforce, and a corresponding drop in productivity, inventiveness, and capability. We failed the entire generation that started school from 1999 - 2021.
The growth in the mortgage books of banks and non-banks was the lowest for a July from June since 2017, at just +$680 mln. (If the average new mortgage was $500,000, that means the net growth across all institutions was less than 1400 transaction in the month. Given there are 11 banks competing for mortgages, that is an average of only +120 per bank. That is small.
“Ultimately there’s no natural income streams to be able to service and repay loans. What you have is capital gains which are contingent on the game continuing. So it’s a Ponzi scheme. says Werner. - https://wire.insiderfinance.io/richard-werner-qe-infinity-707e2c627e03
It’s hilarious how the real estate and building industry is trying to delude everyone (including themselves?) that the recovery is happening or is just around the corner, as if thoughts and prayers alone will magically enable everyone to afford massive new mortgages with 8% interest rates.
I even saw some home builders on the news last night trying to claim the slump in demand for new house builds as due to building code requirements. As i said, delusional.
Downloading the XLS of those accounts really tells a grim story for Non-bank lenders. From their $6.1B highs in 2022, down to $5.4B in July. The last time they suffered such a significant fall on their books was the GFC and that decline continued for 5-6 years.
Big reduction in Sept/Oct 2008 from $8b to $6b - don't recall a lender collapse then though were any NBLs bought at this time?
I'm still mulling over the tax loop from yesterday. Wondering if somebody can help me really get my head around this.
Currently we have a foreign buyer ban, so no foreign investors can run in and snap up property (loopholes aside).
Luxon would like to remove this ban on property >$2m.
We're to assume we can raise $2.9B from a 15% tax over 4 years. That's $19.3b of capital flowing into the private sector from foreign reserves. $4.1b per year after tax debasing our currency for.... what?
We still end up in the same mess we're in now except our houses are worth more and incomes worth less? But we get a cool $250 a fortnight!
Is this really the best tax policy we can hope for from the blue corner? At least with local buyers the capital flow into the private sector is somewhat offset by the interest paid on the loan via future cashflows.
We've currently got ~$10B inflationary govt deficit. Sure. Now we are to expect an additional $4.1b p.a inflationary cashflow from foreigners.
What even is politics. I'd rather Labour wasting money on non-productive workers than this bs.
Don't worry, their numbers are wildly optimistic, so the forex inflows won't happen. We'll just get inflation due to a bigger government deficit and a lower currency instead. The numbers are based on selling the same number of houses to foreigners (excluding Singapore/Aus as they will be exempt due to FTAs) as we did in 2018, the last year before the ban, but now foreigners will be limited to houses of $2m+ and have a 15% tax.
Treasury offered $500 mln and got 148 bids worth $1.3 bln over three durations. Yields rose to 5% or close to it althought the change from the equivalent bond offerings a month ago were only about +20 bps.
And yet the interpolated mid IR swap rate, for today's 1.75% 15/05/41 government tender yielding 5.0802%, was minus 24.48 bps at 4.8354%.
Quite simply, it takes some financial institution’s balance sheet capacity to take on an interest rate swap (the farther the maturity, the more capacity it requires). If balance sheet capacity (the real money in the system, therefore liquidity) is systemically impaired, as in a crisis, or a crisis that doesn’t really end, then to get dealers to give up their precious balance sheet capacity and engage on the other side of a swap someone would have to pay a hefty premium to make it worth it (risk-adjusted) for the dealer to do so. J Snider
I think people are getting a bit carried away. Overall the survey shows business confidence is pretty low still. It’s improved but off a very low base.
As I posted on that story, there’s also probably an element of some business owners feeling more chipper with a change of government looking more and more likely.
Exactly. A change in government will mean zilch in real terms for residential construction, for example. That needs interest rates to fall significantly for a meaningful turnaround. Change of government has no real influence over that, especially in the short-mid term.
The survey will be back in the doledrums come March / April.
Korea's fertility rate slumps further from 0.78 last year to 0.7 births per woman this year. Population collapse is already baked in within Korea, Japan and China.
Link: https://m.koreatimes.co.kr/pages/article.asp?newsIdx=355731
National release construction policy. How many times have we heard them say they will do this sort of stuff??? We all know they are in bed with Fletchers
🥱🥱🥱🥱🥱🥱🥱
https://www.nzherald.co.nz/business/national-unleashes-building-policy-…
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