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
No changes to report today.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either.
SETTLEMENT BALANCES SETTLE
The Crown's settlement balances at the RBNZ (R3) rose +$3.8 bln in August from July to be $24.9 bln which was -$7.3 bln lower than the same month a year ago. Financial institution settlement balances fell -$2.7 bln to $49.2 bln which was +$4.7 bln more than a year ago. Settlement balances pay the OCR rate, so the Crown earned $114 mln in interest in August (tax-free, you would assume). Meanwhile banks earned $226 mln in interest and would pay tax of $63 mln on that. In the end, the Crown did better out of their $24.9 bln balances than the banks who had a $49.2 bln combined balance. (Crown = $177 mln in interest and tax on the banks holdings; Banks = $163 mln after tax.)
IT'S EASY RAISING MORE EXPENSIVE FUNDING
There was yet another NZGB bond tender today and it was very successful. There were three maturities totaling $500 mln offered and they attracted 118 bids worth $1.326 bln. The May 2026 tranche went for a 5.20% yield which was up from 5.06% four weeks ago. The May 2031 tranche went for a yield of 4.95%, up from 4.89% two weeks ago. And the May 2041 $100 mln went for a yield of 5.17%, up from 5.08% two weeks ago.
MORE POLICY RELEASED
There was a National Party water policy released today and uploaded to our policy comparison tool.
ANOTHER NZGIF LOAN
Lightyears Solar has recently completed the construction of their first solar farm in Waiuku, South Auckland, with a 3700 panel 2.4 MW farm that is the largest agrivoltaic and tracked solar farm in New Zealand. It goes live this month. It has now received a $15 mln long term loan from the NZ Green Investment Fund to build out the next projects in its schedule, a 7 MW solar farm in Ashburton and a 4.5 MW solar farm in Wairarapa. The NZGIF is a state-owned investment bank with $437 mln in assets and a plan to make $8.7 mln in profit this year.
PART-TIME NATION
In Australia, there was a bigger than expected surge in employment in August but most of it was for part-time jobs. Full time jobs grew by a tiny +2,800 while part-time jobs grew by +62,100. Their jobless rate stayed at 3.7% in August as expected but that remains a 3 month high matching July's rate. There are now 540,500 people without jobs, up +42,600 from a year ago. (For comparison, Australia has 69.5% of their employed workforce in full time jobs, its lowest level in 10 months; New Zealand has 80.0%, a level we have been at for five years and the best since the 1990s.)
ORDERS FALL, BUT ...
In Japan they recorded a drop in new machinery orders in July. This series does not include orders for ships or electric power systems. Including them, orders rose sharply. The decline in core orders was driven mainly by a -5.3% decrease in the manufacturing sector, while the non-manufacturing sector posted a +1.3% increase. Industries in the manufacturing sector with the sharpest falls include for petroleum & coal products where orders fell a startling -57%.
SWAPS ON HOLD AGAIN
Wholesale swap rates were probably little-changed again today across the whole curve, with perhaps small rises at the short end. But the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is down -1 bp at 5.66%. The Australian 10 year bond yield is down -4 bps to 4.12%. The China 10 year bond rate is unchanged at 2.66%. The NZ Government 10 year bond rate is little-changed 5.03%, but still above the earlier RBNZ fixing of 4.98% which was also down -1 bp today. The UST 10 year yield is down -6 bps at 4.23%.
EQUITIES MEANDER
The NZX50 is down -0.5% near today's close. But the ASX200 is up +0.3% in early afternoon trade. Hong Kong and Shanghai are both little-changed at their open today. Tokyo has opened its Thursday trade up +0.9% which has covered all the week's prior losses. And the S&P500 up +0.1% in Wednesday trade on Wall Street.
GOLD HOLDS
In early Asian trade, gold is at US$1910/oz and up +US$1 from this time yesterday. Earlier in New York it closed at US$1908/oz also, and earlier still in London at US$1914/oz.
NZD UP
The Kiwi dollar has risen almost +½c to 59.3 USc. Against the Aussie we are back up at 92.2 AUc and staying it its recent tight range. Against the euro we are also up +½c at 55.3 euro cents. The TWI-5 is up +50 bps to just over 68.7.
BITCOIN FIRMER
The bitcoin price is a little and now at US$26,187 and up another +1.0% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.3%.
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82 Comments
"The last time businesses donated to the Labour Party was 2020. Rorohara Farms, linked to Mainfrieght's Bruce Plested, donated $25,000 and property companies Tirohonga Holdings and GRL Holdings, both linked to Greg Loveridge, donated $25,000 each."
Sir Bob Jones has acknowledged in his weblog today that he & Loveridge donated $50k to save the 2017 Labour party "in the interests of NZ democracy"
https://nopunchespulled.com/2023/09/14/political-donations/#more-5532
A timely article on this website kiwi;
https://www.interest.co.nz/public-policy/124278/there-case-change-putti…
"...Rashbrooke says work on the report gave the authors "a glimpse into quite a murky world" of access and influence. One where party leaders, including prime ministers, fund raisers and big money donors, are in each other's company through a socialisation network featuring big fundraising dinners and other encounters."
"..."Whereas the current system for their funding just encourages them to spend a huge amount of time on a small number of very wealthy people.""
Some time ago when the Labour Party was on the brink of government in 1984 Mike Moore advised his colleagues regarding the business sector “don’t piss them off. In the first term of the next Labour government Finance Minister Cullen attended a session of reasonably powered business leaders north of Auckland and had a road to Damascus moment that encompassed the very same advice. Perhaps the Ardern/Robertson/Hipkins troika have ignored theirown history in this context?
P*ss them off....most businesses had the biggest 'donation' to them in history from the Labour Government...perhaps some should have been left to support themselves, get rid of a few zombie companies that only survive due to having a low tech, low wage business that relies on minimum wage earners that come in endless supply through immigration. Labour even cowtowed to them in the end and allowed the obscene number of immigrants over the last year due to intense lobbying from them.
You are drawing a long bow to say I hate business...just pointing out some facts...we are hardly world leaders in well paid jobs,with companies investing in technology & training of our staff...there are some great businesses out there,but let's not pretend as in all walks of life that there isn't plenty of not so good employers...Australia seems to function pretty well with strong unions,well paid entry level jobs,penal rates etc.
And to make sure NZ stays on the path of a low wage,low skill economy,the clowns from ACT want to remove R&D tax credits...in what world can you justify re-applying tax credits for non productive residential property speculators and remove it from a productive company spending money on R&D...crazy.
An advantage of being an ingrained cynic is the capability of seeing both sides of the coin and disparaging, or less frequently applauding, either as the case may be. Some though, and too many on here, have neither option nor opinion other than to attack, willy nilly, the opposing side, plus their perceived associates, of their viewpoint and political loyalties and in so doing, stolidly defend and satisfy, regardlessly their justification for the same.
Yes,I have admired that company for years,I can remember Bill Buckley at Western Springs Speedway,dirty old leathers with his Vincent powered sidecar...they don't produce 'chips' but the precision electro magnets that are used globally for their manufacture...you gotta love a good productive business;
Amazing what investment in R&D can do aye Mr Seymour;
https://www.stuff.co.nz/auckland/local-news/east-bays-courier/5511952/F….
An electromagnets firm putting New Zealand on the map with its new technologies has been given a $3.5 million boost.
Mt Wellington company Buckley Systems benefited from the latest round of government technology grants which aim to drive innovation, research and development. The money will be given over three years.
Buckley Systems specialises in the manufacture and supply of precision electromagnets to more than 85 percent of the world's silicon chip market.
Chief executive Mike Lightfoot says the business is "one of New Zealand's best-kept secrets".
A couple of others to watch: note also R&D grants
EMROD, wireless power transmission.
https://emrod.energy/#:~:text=EMROD%20is%20pioneering%20commercially%20….
https://www.callaghaninnovation.govt.nz/grants/emrod-prototype-rd
OpenStar, nuclear fusion.
https://www.callaghaninnovation.govt.nz/grants/openstar-technologies-rd…
Ha ha - the chip making market is getting a bit crowded though
We might be better of making the machines that make the chips - one company currently is it - ASML from Holland
Although I recall an article a few years ago about a kiwi who made the machines that were involved
Officials are investigating the use of business leaders' residential property in east Auckland to house up to 30 migrant workers
Tenants have claimed there were initially no bedroom smoke alarms and sometimes no electricity at the big five-bedroom house they were crammed into in the affluent suburb of Shamrock Park.
The 553 square metre house, with a rateable value of $2.97 million, is owned by a couple who are among the biggest donors to the National Party.
https://www.newsroom.co.nz/big-national-party-donors-investigated-for-migrant-hostel
There are worse things in the world than not getting donations from people like these.
I realise it's tremendously unfashionable but I can't help admiring the US economy right now. The rest of the anglosphere is near tipping into recession while they scoot along at 2% GDP growth. As side projects they are grinding down one peer competitor in a proxy and trade war while the other usurper languishes in economic indecision and demographic decline.
Talk of a multipolar world order has aged like milk. There is only one global superpower and they are cementing that position.
It's not as bad as it looks. They may be running a deficit at 5% of GDP but you have to subtract the 2% GDP growth currently being experienced.
Unfortunately in New Zealand we are running an 8.5% budget deficit this year and getting negative GDP growth. I'd very happily swap scenarios.
Wanted: Job paying USD.
Yes we did and all those manufacturing/ production functions plus the various associated subcontracting and supply, services etc provided employment, from which folk earned salary/wages to spend and save and pay tax into the national coffers. Now we have imports, cheap enough to throwaway, and with that New Zealand has thrown away too its resilience and independence.
Watched 19 property auctions this afternoon on Auckland's North Shore at Harcourts (https://www.cooperandco.co.nz/live-auctions/) , 42% clearance rate but the prices were subdued, many bid-less auctions and those selling were nearly all under CV. Not many cash buyers out there...
Speaking to some young people yesterday about the boomer generation. We agreed they don't give a damm as will be long gone anyway, so no changes of any sort please, BAU and let us spend our wealth in peace..stuff the planet, but let us watch/eat the best bits before they disappear.
Climate change is about adaption not denial.
Also, the 3x increase in global population since WW2 which resulted from increased wealth & enables those people including their criticism of those who provide their lifestyle, would not have occurred without a climate change.
Ironic boomers speak of socialism when they grew up with it - free education, health, dental, cheap housing and food, progressively lower taxes during their working life, working time restrictions 9-5 with lunch morning and afternoon tea guaranteed, free roading, state benefits including a non means tested pension at 65 (which is bankrupting us)
And don't forget the ability to survive on one income,enabling the children to be raised and supported in the home if thats what couples wanted.Not like now where most have 2 both work with most of the 2nd wage going to pay a childcare centre to look after the kids,ending up with the worker effectively working for a few dollars an hour.
Yes. In the1970s a first mortgage typically went to ~50-66%, the second to 67-75% & a 3rd (often solicitors trust fund finance) ~10-15%%. All at increasing interest rates, 1st was 15%pa. I had 10% deposit.
Not everyone had access to State Advances/Post Office loans at 3% interest, I was a factory worker so grovelled to the bank manager.
.
i was on the cusp of change around 1984,was with BNZ,who would only give a first mortgage,changed to Postbank,got one mortgage @ 19%,had about a 60% deposit...but it was still way easier than it is today for our young families,rampant inflation at the time made the debt & repayments get easier pretty quickly.
Could you have not just saved a little harder instead of being in such a rush to take out 3 mortgages? Such frivolousness, financial recklessness only rewarded because we embarked on lowering interest rates. Only a 10% deposit when house prices were 2 - 3 x the average wage, so 3 month's savings? That would be like someone today wanting to buy a house with an $18k deposit. LOL.
The dubiousness was on a macro scale. We're sending 12x as many people to tertiary institutions than the time of the boomers, on the premise the education makes for more productive workers. Then most of them finish up with a lot of debt, 3+ years of lost earnings, and fairly mediocre outcomes.
So sounds like a nice idea, that's likely malinvestment.
That wasn't what I said,it was your response to a simple post about the additional cost that young people face with the cost of education that creates a financial burden that previous generations didn't face,then you twisting it into a 'macro' issue on whether the returns were dubious.I merely meant don't begrudge them their education because you think maybe the return was 'dubious'.It was probably more dubious in the early days when the state paid for folks education in the old days.I mean who cared in those days,you went to get an education,broaden the mind possibly,or not.But with it costing you nothing,it wasn't a financial decision.At no point did I say I didn't think you had an education,as with many in here I think you probably have a very high IQ,and as many in here,probably need to work on the EQ and soft skills like empathy.The world is a different more challenging place than the old days.
It's not very different to when I did it, working part time during semester and full time in between to pay for it and avoid the loan. Also didn't get a free year the first year like now.
People seem to think a loan in unavoidable, like Uni is an extension of high school and work gets deferred for another 3-5 years.
Is empathy pity, or saying 'there there'? I actually feel really bad, in our relative comfort in NZ, we're raising increasingly delicate people, filling them with a fairly unrealistic view on what it'll take to get by, all the while we're hurtling towards an extremely challenging future.
my student loan topped out at 177k. and i worked while studying (f/t for minimum wage - when the work was available). higher degrees + not qualifying for student allowance + one stupid 'industry' course that all my friends employers paid for, but not mine. i even moved cities and commuted to study, sleeping in my car, because the rents got too high for a student who wanted to eat.
I was young and dumb - but the government removed the apprenticeship schemes shortly before I left high school, and at least it became interest free later...
upside is, i am the highest paid member of my family - though only ~10% ahead of my sibling who didn't finish high school but went to aussie over a decade ago...
The Crown's settlement balances at the RBNZ (R3) rose +$3.8 bln in August from July to be $24.9 bln which was -$7.3 bln lower than the same month a year ago. Financial institution settlement balances fell -$2.7 bln to $49.2 bln which was +$4.7 bln more than a year ago. Settlement balances pay the OCR rate, so the Crown earned $114 mln in interest in August (tax-free, you would assume). Whoa back up!!!
The Fed's net income is mainly determined by the difference between the interest income generated from its securities holdings in the SOMA portfolio and the interest expense associated with its liabilities. The interest income also reflects earnings from other assets such as repurchase agreements, discount window lending, and other credit and liquidity facilities, but the income from these sources is negligible compared to that generated from the Treasury securities and agency MBS holdings in the SOMA portfolio. In terms of its expense, the Fed pays interest on some liability items, such as reserve balances and the overnight reverse repurchase agreement (ON RRP) facility but pays no interest on other liability items such as currency in circulation and the Treasury General Account (TGA).9,10 Link
It's no different at the RBNZ.
the Crown earned $114 mln in interest in August (tax-free, you would assume).
This is really misleading David. The Crown Settlement Account does not earn interest - it is just an entry on a balance sheet, a count of credit added into the bank settlement account system by the Crown, minus debits (taxes, proceeds of bond sales) taken from bank settlement accounts.
It can be useful to look at the Crown Settlement Account from the perspective of the consolidated Crown. The account 'balance' is an asset of Treasury and a liability of RBNZ. So it *always* nets to zero for the Crown overall. That's why RBNZ don't care if it goes negative by a few billion - the balance could be -$100 billion or +$100 billion, the net worth to the Crown is always zero!
We increased the Crown overdraft facility to assist with the potential for larger-than-usual fluctuations in Crown cash flows
We provide a Crown overdraft facility to help the Government manage short-term fluctuations in its cash flows. We temporarily increased the overdraft from $5bn to $10bn for a three month period to 1 July 2020, to assist with the potential for some larger-than-usual changes in cash flows. The overdraft facility was utilised for a short period coinciding with the Government’s April 2020 bond maturity, and the account was replenished following the issuance of additional bonds and Treasury bills. Link
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