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
BNZ raised fixed rates for terms 2 to 4 years. These increases leave them lower than their main rivals. Unity Money raised their two key fixed rates too. And SBS Bank ended its 3 year 5.99% fixed rate offer, reverting to 6.69% for that term.
TERM DEPOSIT/SAVINGS RATE CHANGES
And Unity Money raised their TD rates as well, taking their 6 month rate to 5.75% but leaving their 1 year rate at 6%.
COMMODITY PRICES DROP AGAIN
The ANZ World Commodity Price Index fell for the third consecutive month, dropping -2.9% in August from July to be down -14% from a year ago. Dairy and lamb prices fell while slightly stronger prices were recorded for other food commodities. In local currency terms, the index fell rose +0.6% from the prior month because the NZD depreciated -2.2% against the Trade Weighted Index. But year-on-year it was still down more than -9%.
MORE DEBT (IF NO AUSTERITY)
Today week (September 12) we will get the Treasury's Pre-Election Fiscal Update (PREFU). Analysts are assessing what is likely to come given the quickly deteriorating fiscal situation. One corner on analysis is the bond issuance program. As much as $10 bln mln extra is likely to be needed to be borrowed over the next four years to 2027. Currently extra debt issuance is scheduled as an extra +$120 bln, but that may have to rise to an extra +$130 bln over those 4 years. The last Crown financial statements revealed gross debt at $134 bln and net debt at $73 bln. From either starting point, the new debt being contemplated is a lot. And see this.
MORE POLICY UPDATES
More policy updates have been loaded to our comparisons. Today the changes are for TOP and their economic policies (including on the RBNZ mandate), TOP and their infrastructure policies, and Act and their economic targets. And there was another political poll out today. All polls are tracked here.
"THE COST IS TOO HIGH"
The high cost of doing business is the stand-out issue for businesses, according to the results of the Deloitte and Chapman Tripp Election Survey released today. 93 percent of respondents said changes made by the Government had increased their cost of doing business. And 85 percent said they didn’t think the current Government had a plan for improved economic performance.
RBNZ & FMA OUTLINE RESULTS OF GOVERNANCE REVIEW
The Reserve Bank (RBNZ) and Financial Markets Authority (FMA) have issued a report following a review of governance practices across a sample of 29 entities from the banking, insurance, non-bank deposit taker and investment management sectors. They found "a variety of governance practices," and have provided individual feedback to those who participated. Key areas for improvement the RBNZ and FMA highlighted include formal frameworks for assessing ongoing board training, board succession planning, and capacity of directors not being assessed in a consistent and robust manner.
EYES ON THE GDT
There is a full dairy auction overnight, and all eyes will be on the WMP price. Remember, it didn't change at last week's Pulse auction.
EYES ON THE RBA
The RBA will review their cash rate target at 4:30pm today (being the first Tuesday of the month), but no-one expects any change from the present 4.10%. They have had a run of continuous small increases since May 2022, and because mortgage holders are very exposed to the floating rate, these bite almost immediately. Reportedly, more than 1½ mln Aussie homeowner-borrowers are feeling heavy home loan stress (and perhaps some remorse for overpaying). A no-change today won't change much other than not intensify the pressures. Today's meeting will be Philip Lowe's last - his term ends on September 17, 2023. (The RBA isn't the only central bank with a new boss incoming. The Monetary Authority of Singapore has also got a new leader, after the prior one retired after 10 year in the role.)
A CAUTIONARY TALE
Turkish inflation, which peaked at over 85% in October 2022, and then fell to 38% in June, is moving back up strongly again. In August it came in at 59% pa. The more conventional monetary policy that was started in July hasn't had an effect on inflation yet - nor their exchange rate either it seems. Once public policy loses control of its policy levers, it is fiendishly difficult to get it back under control. Turkey (and Argentina) remain cautionary tales for most other central bankers.
EXPANDING STILL BUT A SHARP TURN LOWER
In China, the private Caixin service sector PMI for August came in weaker than expected (in contrast to their factory PMI which came in better). The Caixin services PMI is at 51.8 and down sharply from the July 54.1. That is twelve straight months of expansion although the August result is the weakest in that sequence in 2023. (50 is neither expandin nore contracting.) The official services PMI for August was recorded at 51.0. But at least they are still expanding.
SWAPS UP
Wholesale swap rates were probably higher today, with the upward pressure staying strong, 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 to 5.66%. The Australian 10 year bond yield is up another +5 bps at 4.14%. The China 10 year bond rate is up +3 bps at 2.62% continuing its rise. The NZ Government 10 year bond rate is back up another +7 bps to 5.03%, and still above the earlier RBNZ fixing of 4.96% which was up +11 bps today. The UST 10 year yield is up +1 bp from this time yesterday, now at 4.21% and still holding its gain from the end of last week.
EQUITIES ALL LOWER
The NZX50 is down -0.6% near today's close. The ASX200 is also down -0.6% in afternoon trade and giving up yesterday's gain. Tokyo has opened down -0.3% to start its Tuesday. Hong Kong is down -1.5% in early trade with yesterday's positive vibes vanishing. Shanghai has its Tuesday down -0.7%. Wall Street is still on a long weekend holiday. The S&P500 futures are very little changed again today so no big moves are expected wen Wall Street returns tomorrow.
GOLD SOFT
In early Asian trade, gold is at US$1935/oz and down -US$9 from this time yesterday. Earlier it closed at US$1937/oz in London. (New York was closed.
NZD LOWER
The Kiwi dollar has retreated about -¼c to 59.2 USc from this time yesterday. Against the Aussie we are marginally softer 92 AUc. Against the euro we are down -¼c too, now at 54.9 euro cents. The TWI-5 is now at 68.5.
BITCOIN IN SMALL RETREAT
The bitcoin price is lower from, this time yesterday, now at US$25,731 and down almost -0.7%. Volatility over the past 24 hours has been low at just over +/- 0.8%.
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78 Comments
The ANZ World Commodity Price Index fell for the third consecutive month, dropping -2.9% in August from July to be down -14% from a year ago. Dairy and lamb prices fell while slightly stronger prices were recorded for other food commodities.
Not only have our commodity prices performed less well than Australia's in recent years, but the surge of general inflation in recent years means real NZ commodity prices are now below those pre-Covid. Link
Gold made a new all time high in Japan and China today - 3rd and 2nd largest economies in the world. And the barbarous relic has also made new all time highs in Aussie - over $3000 an ounce
So that would make new highs in Aussie, Japan, Europe getting close. UK. Canada just pulled back from new all time highs, but up there. Of course, Turkey has been there a while.
Japanese who have been saving in gold proxies will be up 120% in 5 years.
I was chatting to a mate about what the heck lil' old NZ can do to improve its long-term prospects now the best decades are over, globally
The best idea we came up with was to somehow trigger a medium sized perpetual war in the northern hemisphere between two rich countries that really like high-end beef and dairy but don't make it themselves, and to hope the cargo ships can continue to get fuel and get there, and not have sanctions block our exports, preferably supplying both sides. Fingers crossed.
For a while, I've looked at government capital expenditure as the vote buying stuff. e.g. we will build x new hospital buildings, schools, roads etc. But then the hold up becomes the opex, either through lack of commitment to it, or literally not being able to find the drs, nurses, teachers etc to work in these places.
Even wondered why Semour never lets the rest of his team on TV?
Not saying everyone should run out and vote for ACT, but when you look at the relevance of the bulk of their line up compared to NAT/LAB....
- Nicole McKee - Spokesperson for Veterans, Firearms, Justice, Conservation
- 12 years as a Legal Secretary
- 8 years as a Fire Arms Safety consultant
- Brooke van Velden - Spokesperson for Foreign Affairs, Trade
- Bachelor of Commerce in 2016.
- Chris Baillie - Spokesperson for Police, Small Business, Education, Workplace safety
- Police officer for 14 years including youth aid
- 22 years as a music teacher
- Small business owner employing 30 people
- Simon Court - Spokesperson for Infrastructure, Transport, Local Gov, Environment etc
- Civil and Environmental engineer of 23 years.
- James McDowall - Spokesperson for Immigration, Internal Affairs, Tourism, Economic Development
- Co-Owns an immigration law firm.
- Speaks Cantonese, Mandarin, English
- Mark Cameron - Spokesperson for Foresty, Fisheries, Primary Industries
- Dairy Farmer
- Damien Smith (Not standing this year I think?) - Spokesperson for Revenue, Finance, Stats, Commerce & Consumer Affairs
- Master in Business Administration
- Ex-Banker, Director at Macquarie Capital,
- Consulted to Vero/Suncorp, Amalgamated Holdings, Tower, Allied Security.
The same Mark Cameron who is a climate change denier? No thanks, if I wanted a flat earther in parliament I would vote for Brian Tamaki.
https://www.1news.co.nz/2023/08/29/seymour-says-act-mp-no-longer-believ…
You're diverting from the original point, that is, these people have real world experience in the portfolios they're spokespeople for. Whether you agree with their stance or not that's another story all together. Is he a flat earther or did you just throw that tidbit in for dramatic effect?
Anyway, i'll play devil's advocate on the dudes denial of climate change for a moment. Maybe the oil and gas ban wouldn't have been rushed through if we had a climate change denier in parliament.
But you'd think that's how the world works. The amount of times I've criticized something about National only to be labelled a Labour fanboy. The thing is, it would make more sense for someone to be critical of a party they'd potentially vote to set a higher level of expectation. Why would I expect a high standard from Labour? I have no intention on ever voting for them, so why am I going to waste my breath ranting on about their half baked policies?
Its too late Jfoe. Once you allow hyper inflation through loose monetary policy it is very hard to tame. Hence why the more sensible countries like NZ went hard on inflation once it was apparent that it wasn't just transitory. If we were still running a 0.25% OCR right now we would be the next Turkey.
Turkey attempted to get off the dollar and to shake off the foreign investors making easy money exploiting their dollarised debts. Turkey can print Lira, but they can't print dollars. They were most of the way there with inflation coming down, but Erdogan did some daft deal and now they are back to being milked by foreign capital and in a doom loop of building up dollarised debts, crashing their currency to buy dollars to pay off their debts, whilst traders buy and sell at predictable moments to make a profit.
15% of Kiwi kids now leaving school without any NCEA qualification - theFacts.
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)
- 25% left without getting NCEA Level 2 (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)
What is not the 70's is the Asians have arrived. Their work and study ethic's just smokes the dumb lah Kiwi kids. I went through college in the 80's and got SC and UE accredited but honestly I still mucked about really. If the Asians had been around back then ( I don't remember a single one
) they would have smoked me as well. The kids probably cannot hack the level of competition these days and just quit
I also have a daughter in yr 13, it drives me so mad that they don't get feedback on their tests/essays, that I went to speak with the Dean. I said, "I think the point of school is to learn, so would it not be beneficial for the students to know what they got right and what they didn't so they can learn from it". He looked at me and said, yes I agree. Yet...................................................................................still no results from the previous test/essay
I work at a large public school (1500+ pupils) and we had to have our practice exams marked before the students returned to classes again. It's definitely a big push but not impossible and a few long days marking is more than offset by all the downtime you get once the seniors leave in term 4.
If teachers can't for whatever reason write much feedback they should at least sit with the student for a few min and go through their exam. It's not hard to find the time either during or after class.
According to the collective contract it should be 26. In reality it varies a lot between schools. 'Good' public schools tend to be oversubscribed so you get big classes, and then on the other hand low decile schools can be a mixed bag. In my experience (during/post covid) they can be either tiny because about 1/3 of the class rarely attends, or huge because the school hasn't got the staffing right.
At the moment for juniors (yrs 9-10) I've got 28-30. With seniors, the ones doing NCEA, it is between 22 and 28. Senior numbers are higher at the start of the year because by now a few have gone off to do trades or gone to polytech.
Public services are a joke in this country (maybe your daughter goes to a private school?)
Education, healthcare…
Our daughter has some mental health issues and trying to get a psychiatrist to see her - it’s diabolical. Although debilitating, luckily it’s not serious. What if it was?
seeing a GP? Lucky if we get an appointment within 5 days.
Absolute shambles of a country. And it’s on both the red and blue teams. Cumulatively they have f$&%ed this country over the past 20 years or so. Mainly it’s because of immigration, taxation and housing policy.
With Act in power public services are likely to go even further backwards.
She is quite mature and in her final year, so I have left her to deal with it. She has asked several times but no joy so far. She will escalate it next week. Problem is the teacher marks the mock which affects end of year prize giving so she doesn't want to annoy them.
Yes, I've noticed this trend amongst my nephews and nieces. All leaving early and going into the trades. All from reasonably affluent homes with both parents working professional jobs, so University was not out of the question. My 15 year old niece will be attending school part time next year, while she goes to hairdressing college at Ara for the other half. I cant say I fault their decision, why incur a massive student loan for a degree that qualifies you for nothing these days?
I think this is the fallout from 4 years of school shutdowns and classroom closures due to Covid (not just through the lockdown period but the mandatory isolation periods every time someone in their family or classroom got Covid). It has given them the impression that school is unimportant, that being taught something by a teacher isnt necessary as they can just Google or ask ChatGPT the things they need to know, and many of them now don't actually have the required level of academic instruction to cope with University and they know it.
The tip of Singapore's dirty iceberg...
Chinese expatriates seeking safe haven and a laundromat for their wealth arrived in Singapore as far back as 2016, the banking and property sources say, facilitated by an army of local and foreign lawyers and property and banking agents. They arrived not just in Singapore but throughout Southeast Asia, driven farther afield from Chinese government scrutiny and law enforcement since President Xi Jinping’s anti-corruption campaign began in 2012. According to the insider accounts, communications were channeled between these Chinese individuals and a multitude of property agents through a “master agent”, resulting in what they described as “murky” business dynamics in which a chain of people was complicit in the money laundering.
Chinese Dirty Money and Singaporean Luxury Properties
Money-laundering bust exposes river of illicit money
https://www.asiasentinel.com/p/china-dirty-money-singapore-luxury-prope…
Once public policy loses control of its policy levers, it is fiendishly difficult to get it back under control. Turkey (and Argentina) remain cautionary tales for most other central bankers.
Well said, we need to keep showing that we can keep annualised inflation consistently falling toward our target range and then hold it there. Confidence in Reserve Banks is hard won.
We don't want to be like Canada where inflation rebounded last month and they have ignorant politicians writing public letters to Bank of Canada asking them not to take the required action:
https://www.cbc.ca/news/canada/toronto/doug-ford-letter-bank-of-canada-…
"the results of the Deloitte and Chapman Tripp Election Survey released today. 93 percent of respondents said changes made by the Government had increased their cost of doing business. And 85 percent said they didn’t think the current Government had a plan for improved economic performance."
Harsh reality of an incompetent Labour government !
Asleep at the wheel Cindy and Chippy ?
Anyone noticed the one issue that really cost Labour in the last couple of years is being commented on by no one out loud but we all know what it is (it involves a portion on NZ and a portion of Labour politicians (although less now)), but the polls clearly showed the trend as events unfolded with ex labour MPs. Both main parties should learn from this and show how they are using firm leashes.......
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