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
BNZ made some minor changes (increases) today but none are market leading. But it has taken their 1 year rate to 6.00%. Of the main banks, only ANZ and Westpac now don't have a 6% one year rate offer.
'STRUGGLE STREET'
Manufacturing is struggling low, as reflected in the BNZ-BusinessNZ PMI results for August. The contraction of the sector is extending, with an almsot continuous downslide since August 2022. In fact, the contraction is now its deepest since the pandemic-induced pullbacks of April 2020 and August 2021. Outside of those two special events, you have to go back to 2009 to find a tougher environment for 'making stuff' in New Zealand. Of particular concern is that the 'new orders' component is also at its weakest level since 2009.
FEWER BUTTERFAT PRODUCTS AHEAD
Fonterra said it is cutting back product offered at the GlobalDairyTrade auctions in the next year, specifically for butter and AMF. They say weather conditions in the North Island, and farmer suppliers cutting back as costs weigh on them, are behind the shift lower, and are part of extended demand, product mix, and weather uncertainties.
WMP PRICE JUMP HESITATES
There was a GDT Pulse event this week where WMP is auctioned. That recorded a -1.7% fall in price to US$2,655/tonne from the $2702/tonne achieved at the full GST auction a week earlier. But at least it was +8.4% higher than the record low Pulse event price hit on both August 22 and 29.
TRACTOR COMEBACK
After a tough July, the number of new tractors sold in August bounced back to about the same level as a year ago. The 264 sold in August (vs 267 in August last year) is about the best since 2018.
SEVEN MONTHS & LESS THAN 60% OF CLAIMS PAID
Insurers say the latest estimate of the cost of general insurance claims for the twin climate disasters of the Auckland Anniversary Weekend floods and Cyclone Gabrielle is now $3.5 bln for the 112,812 claims. It has been 31 weeks (seven+ months) since these events and so far paid out $2.053 bln of that, or 59%. If the Christchurch earthquake is any guide the final 40% will be paid out even slower. In addition to the Auckland Anniversary Weekend floods and Cyclone Gabrielle events, extreme weather in the North Island between 21 and 28 February (2,801 claims, $20.8 mln) and again over 9-10 May (3,822 claims, $41.4 mln) bring the total for climate related claims in 2023 to 119,435 worth around $3.563 bln.
MORE POLICY UPDATES
Today there are policy updates in our Election 2023 comparison tool for: National, on Agriculture, ACT on benefits and income support, and some policy starting to come through from Labour, today on Health, Justice & Courts, and Training & Apprenticeships.
HARDLY CREDIBLE
China said the cost of new houses slipped -0.1% in August from July, the same slippage the month before. Given the known low sales levels, this seems a dubious outcome, especially as only 16 of the 70 largest cities reported prices holding or advancing very slightly. The rest fell. For pre-owned houses, prices inched up in only 3 of the 70 major cities in August from July. The reported slippages in the other 67 cities were remarkably similar, which also doesn't pass the smell test. This all has significant implications for international travel volumes, and visitor levels from China.
CHINESE CAR SALES STALL IN AUGUST
China also said that "the total retail sales of consumer goods was 3,793.3 billion yuan, a year-on-year increase of 4.6%. Among them, the retail sales of consumer goods other than automobiles were 3.382 billion yuan, an increase of 5.1%". It is simple math to extract from that "retail sales of automobiles" and that showed virtually zero growth.
MORE CREDIBILITY ISSUES
Meanwhile, Chinese electricity production stalled in August from July, coming in -2.5% lower, which for a country as large as China is quite a drop. Year on year, electricity production rise only +1.1%, also not indicative of an expanding economy. But nevertheless, they reported industrial production rose +4.5% from a year ago. Either China is undergoing a recent spectacular burst of energy efficiency and reduced energy density, or one of those statistics is unreliable.
SWAPS STILL ON HOLD
Wholesale swap rates were probably little-changed again today across the whole curve. But the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 5.66%. The Australian 10 year bond yield is down a rather large -11 bps to 4.01%. The China 10 year bond rate is unchanged at 2.66%. The NZ Government 10 year bond rate is down -2 bps at 5.01%, but still above the earlier RBNZ fixing of 4.94% which was down -4 bps today. The UST 10 year yield is up +5 bps at 4.28%.
EQUITIES REVEAL THE NZX50 NOT GETTING THE GAINS
The NZX50 is up +0.1% near today's close and heading for a -0.2% weekly slip. But the ASX200 is up a very strong +1.8% in early afternoon trade and heading for a +2.3% weekly rise. Hong Kong is up +1.6% in opening trade, heading for a +2.2% weekly gain. Shanghai isn't showing anything like that however, up +0.3% on opening trade and if that holds it will be up +0.5% for the week. Tokyo has opened its Friday trade up +1.3% and if held will put them +2.8% higher for the week. And the S&P500 up +0.8% in Thursday trade on Wall Street and so far for the week, up +1.2%.
GOLD UP
In early Asian trade, gold is at US$1916/oz and up +US$6 from this time yesterday. Earlier in New York it closed at US$1911/oz, and earlier still in London at US$1902/oz.
NZD HOLDS
The Kiwi dollar is unchanged from this time yesterday at 59.3 USc. Against the Aussie we are back down -½c at 91.7 AUc and still it its recent tight range. Against the euro we are up another +½c at 55.7 euro cents. The TWI-5 is little-changed at just over 68.7.
BITCOIN HIGHER
The bitcoin price is higher and now at US$26,606 and up another +1.6% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.2%.
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41 Comments
Some 'shocking' predictions for Aussie from a range of different commentators (incl the venerable Chris Joye - #2)
#1 Australian food prices will rise beyond our expectations
#2 Australia enters the worst corporate default cycle since GFC and 1991 recession
#3 The international travel boom is about to bust
#4 Superannuation will make Australia the wealthiest nation in the world (on a per capita basis) (will take 20 years)
#5 'Sticky' inflation to collapse and return to long run average
#6 The end of obesity
https://www.livewiremarkets.com/wires/6-shocking-predictions-for-2024-a…
On the travel boom busting, I have absolutely zero data to back up this claim but there seems to be a lot more actual deals coming down the pipeline for travel, at least intl travel ... main center domestic can have ok deals, regional is as ruinous as ever.
Particularly for economy class - business is chocca with cashed-up boomers enjoying high TD %s, noters wanting to note, travel vloggers & influencers trying to make up for lost time and Covid revenue, and what I'm guessing are those overpaid, underworked civil servants that David Seymour is always banging on about. Don't forget my MiL who's happy to leave the rest of the whanau down the back of the bus, claiming she has a medical condition that prevents sitting in the cheap seats.
Maybe forward bookings, at least for peasant class, are looking a bit weak?
Those new BNZ TD rates are significantly lower than ASB for 3 to 5 years. Why is BNZ prepared to pay high rates for 5 yr bonds but not to their customers on TDs?? Also plenty of debate going around on the Nats tax cuts. I guess time will tell if its 'Nicola' or Trickola', my thinking is they know of cuts where they will make up the shortfall. If history is anything to go by and you're in the public sector, then funding cuts are coming your way I would suggest.
Franklin Templeton filed for an ol' rat poison ETF two days ago. Slipped under the radar or the media are trying to look the other way. Current list of spot BTC ETF applications with size of portfolios:
- BlackRock ($10T AUM)
- Fidelity ($4.5T)
- Franklin Templeton ($1.5T)
- Invesco Galaxy ($1.5T)
- WisdomTree ($87B)
- VanEck ($61B)
- GlobalX ($40B)
- ARK Invest ($14B)
- Bitwise ($1B)
- Valkyrie ($1B)
Total: $17.7T Probably nothing.
@J.C. what is the significance of this? I realise its a lot of money.
The significance is that these companies represent the holdings of the traditional finance world who have no exposure to BTC. The last time something like this happened was when gold was financialized into ETFs. However, at this point, this is looking much larger.
And what is its significance to the hoi polloi? Probably not much at this point. What does it mean to the rat poison community? Recognition from the mainstream that BTC is a bona fide asset class.
Of course it's for sale.
They just need to wait till the proles bid the price of what's available up in a ferver.
For someone who obsesses so much about markets and movements you seem to struggle understanding basic principles like "buy low, sell high".
The story you've swallowed about most Bitcoin now being unavailable has been put there to increase the illusion of scarcity.
Teetering on the edge now. Everyone's getting excited about the economic boost of inward migration, but the people arriving are not billionaires splashing suitcases full of cash. We have welcomed nearly 100,000 people to the country (a 2% to 3% increase in working age adults), but consumer spending has still fallen in real terms. Card spending is stuck around $9 billion per month and interest payments on business and mortgage debts have risen to around $2.6 billion per month (twice as high as a year ago). Rent is now breaking out - rising well above inflation and earnings in Auckland and Canterbury.
What happens next? GDP next week for Q2 will show a marginal quarter-on-quarter increase (0.5% is my guess) but will be zero (or just below) on a per capita basis. Then the Q3 results will be right back in the negative just as a new Govt gets stuck into their dumbass austerity plan... which will tip us deeper into the abyss.
This is so bloody avoidable.
Everyone's getting excited about the economic boost of inward migration, but the people arriving are not billionaires splashing suitcases full of cash
My description is busloads of Chinese turning up in your suburb with suitcases of cash willing to pay a king's ransom for dreary, cold suburban homes.
This seems to be the sizzle currently being sold by the Gnats to the sheeple. I'm not sure I buy into the idea.
Someone was asking him during an interview the other day that because he owns rental properties, will he be dropping the rents on them once they add back in interest deductibility (which he said WILL drop rents). He avoided the question completely "Oh... I haven't run the numbers, I don't know", total bull dust.
The inward migration decreases wages, increases the supply of labour, and probably doesn't add much to demand other than for housing. So it should help kill inflation. Whether the quick fix to inflation is worth it given our infrastructure issues is another question.
Immigration won't slow inflation any more than it already has. Most domestic inflation is being driven by food, housing and transport all of which are accelerated by rapid population growth. We are also starting to importing inflation via a lower kiwi dollar and higher oil.
Government policy is substantially exacerbating inflation. RBNZ have a fight on their hands.
I suspect higher cost of infrastructure from rapid population growth will more than offset any reductions in CPI from cheaper imports.
3-waters, power, health, education, roading, policing are all under the pump and need significantly more funding in the years to come to keep up with higher input costs and additional demand pressures.
I just thought that story about French supermarket giant Carrefour putting pressure on suppliers to stop shrinkflation was noteworthy. It shows you what a healthy competitive environment in food retail looks like: https://www.bbc.com/news/business-66809188.amp
China's auto exports hit record high in August
Clown show continues: Europe is opening a probe into China with respect to EVs claiming they are keeping prices artificially low by huge state subsidies. Link
Every picture tells a story don't it
https://www.abc.net.au/news/2023-09-12/sydney-airport-lithium-ion-batte…
Some ruptures in Xi’s ranks? The man himself looks sick / very stressed recently:
https://www.japantimes.co.jp/news/2023/09/15/asia-pacific/politics/chin…
There's probably a very strong correlation between people who fall out with Xi, and people who get exposed for corruption. I'd say usually the former happens first, then the latter.
How could it be a brutal corrupt dictatorship, if it's finding and stamping out corruption?
That PMI report pretty much confirms what I've been expecting.
"Higher for longer"? Yeah, right.
That OCR cut is coming sooner. The question will be though, whether it has any effect given the amount of money that comes from offshore. (BoP will look awful.) In any event, the banks will persist with their "rocket and feather" pricing so whatever the RBNZ does won't show up in retail rates for ages. (But deposit rates will fall sharpish.)
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