What happened Tuesday

Economy / news

A review of things you need to know before you sign off on Tuesday; 'fighting scams needs unified approach', NZGIF raises another $175 mln; many policy updates, swaps firm, NZD on hold, & more

[updated]

19th Sep 23, 3:59pm by David Chaston

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 so far.

TERM DEPOSIT/SAVINGS RATE CHANGES
TSB raised a number of term deposit rates today (6m, 9m and 18m), but none are market-leading.

SCAMS FEATURE WITH BIG JUMP
The Banking Ombudsman Scheme’s annual report shows customer complaints about scams rose +43% on the previous year, making up 625 of the 3,513 complaints received in 2022-23. Nearly a third of all complaints formally investigated were about scams, and the average loss was $57,000. Phishing and investment scams predominated. They said "To slow this trend, the banking sector, along with other organisations, must take a more coordinated and unified approach to the problem." Also see this.

EASY FUNDING FOR RESIDENTIAL SOLAR
New Zealand Green Investment Finance (NZGIF) has raised $170 mln for its Solar Finance program. The bulk of the private placement funds came from international investors First Sentier Investors and Natixis Investment Managers ($90 mln between the two). These funds are long-term, fixed rate debt. The funds are for the residential PPA (Power Purchase Agreement) portfolio, managed by solarZero. This is the no-upfront-cost option for rooftop solar. (Update: An earlier version ascribed the funding from First Sentier and Nataxis incorrectly.)

MORE ELECTION POLICY UPDATES
There is much more election policy being released and our comparison tool includes all the new stuff. That now includes: Labour on minimum pay, Labour on Women's Issues, Labour on Housing, National on "Building Workforce - International Graduates Visa", Te Pati Maori on disabilities, Te Pati Maori on food, more from National on the economy, and the Greens on education policy.

WAIT FOR THE ECHO
Japan's Nikkei news service has an interesting story about a huge jump in interest rates being offered to Japanese depositors. SMBC is about to raise interest rates on US dollar-denominated term deposits from 0.01% pa to ... 5.3% pa. That is actually more than Americans can earn on TDs at major banks. SMBC is a major bank, and if it holds, rates like these can have echoes around the world.

WHY NO-CHANGE
The RBA minutes were out today and were not market-moving. They were a lot of words, showing they were across the issues, but mostly to justify a no-change decision.

EYES ON WMP
On Thursday morning, Fonterra will release its 2022/23 Annual Report. That is almost certainly going to confirm a high $8.20/kg milk payout and a very good earnings result for the last year. All eyes will be on the dividend payout they decide. Don't forget the payout prospects for the 2023/24 season will be sharply lower and already indicated ($6.75/kgMS) but shareholders will be hoping earnings stay resilient. But tomorrow there is another dairy auction, one that comes after markets got the message that new season milk volumes are under pressure. All eyes on this auction will be on the response to that. For the record, the WMP price has gone from US$2450/tonne a month ago (GDT Pulse) to the last GDT auction of US$2,702, to the latest Pulse price of US$2,655/tonne, a wobbly and low track. At these levels many farms won't get break-even milk payouts in the new season.

SWAPS STAY FIRM
Wholesale swap rates probably pushed a little higher today across the short end of the curve. But the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is little-changed at 5.67%. The Australian 10 year bond yield is back down -5 bps to 4.16%. The China 10 year bond rate is down -1 bp at 2.69%. The NZ Government 10 year bond rate is unchanged at 5.08%, but still well above the earlier RBNZ fixing of 5.01% which was up +3 bps today. The UST 10 year yield is now at 4.30% which down -5 bps from this time yesterday.

EQUITIES DOWN LOCALLY, HOLD ELSEWHERE
The NZX50 is down -0.6% near today's close. The ASX200 is down another -0.5% in afternoon trade. Tokyo is down -1.2% after yesterday's holiday. Hong Kong has opened its Tuesday trade essentially unchanged from Monday, and Shanghai is following suit. On Wall Street, the S&P500 ended its Monday session also very little-changed.

GOLD EDGES UP
In early Asian trade, gold is at US$1932/oz and up +US$5 from this morning's open. It closed earlier in New York at US$1934/oz, and earlier still in London at US$1925/oz.

NZD STUCK IN TIGHT RANGE
The Kiwi dollar is little-changed from this time yesterday at 59.5 USc. Against the Aussie we are firmish at 92 AUc. Against the euro we are still at 55.4 euro cents. The TWI-5 is little-changed from yesterday at just over 68.5.

BITCOIN INCHES UP AGAIN
The bitcoin price is higher again and now at US$26,780 and up another +0.5% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.6%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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39 Comments

by blobbles | 19th Sep 23, 4:12pm 1695096744

Holy moly, that's a massive move from SMBC. Reasons?

by J.C. | 19th Sep 23, 4:18pm 1695097088

It is big but I remember when I was living in Japan prior to GFC and post-GFC, it was quite common for Japanese retail banks to be advertising foreign currency term deposits in USD, but particularly the high-yielding AUD and NZD. Bank customers took the currency risk (article mentions exchange rate risk). AUD and NZD were smashed against JPY during the GFC - falling up to 50%.

by Audaxes | 19th Sep 23, 4:36pm 1695098172

Matching US MMFs and 1 month US TBill rate. US MMFs park investor's deposits in Fed's RRP facility (5.30%), when US TBills are in short supply.

All of which leaves the gap between bank deposits and money-market funds gaping as wide as ever...

by J.C. | 19th Sep 23, 4:12pm 1695096766

U.S. Government debt spikes past $33 trillion. And to give that a little perspective, +$1.6 Trillion since the debt ceiling and +$2.2 Trillion over the past 12 months.

So much money. Seemingly out of nowhere.

But here's an interesting perspective on it. The median US household will now surrender - via inflation and / or taxes - a record-high 18% of gross income to pay for the national debt. This is 50% more than in 2021 and twice as much as in 2003.

In 1984, interest rates were 13% but <4% today. Even if rates were cut in half, the debt burden would still be 14% of income, among the highest in history.

https://wolfstreet.com/2023/09/18/congrats-america-%f0%9f%a5%82we-made-…

by Te Kooti | 19th Sep 23, 4:32pm 1695097966

What does it say about us when Kiwi is near 10 year lows againist the $? Buy cars, buy boats, buy houses, but whatever you do, don't save.

by Neutral_Observer | 19th Sep 23, 4:44pm 1695098644

Run a huge deficit, GDP numbers look great, everyone happy. It's so easy.............

by dumbthoughts | 19th Sep 23, 4:20pm 1695097233

Petrol prices seem to be back to doing that weird thing where they chance (only in one direction, mind you) every time you go past the station.

by IT GUY | 19th Sep 23, 4:34pm 1695098049

I am filling 2 x 44gal drums of diesel tomorrow just south of the hill

by Audaxes | 19th Sep 23, 5:04pm 1695099841

SAILING INTO THE BLACK – US SANCTIONS WAR IS GOOD FOR RUSSIAN SHIPPING, GREEKS TOO

by Poission51 | 19th Sep 23, 4:55pm 1695099353

Mercury announced FID with geothermal expansion,starts 24,Increase in capacity of 390GWh enough for 50 k households 24/7,comes with CC program reducing total site emissions ready by end 25

https://www.nzx.com/announcements/418491

by Officebound | 19th Sep 23, 5:47pm 1695102446

Terrific,

Low carbon, baseload generation, and representing a good investment (14% @ 8c per kw/h).

by IT GUY | 19th Sep 23, 5:53pm 1695102831

The sad thing about the transpower transfer pricing is the geo guys have to offer low as they cannot turn off......

by Poission51 | 19th Sep 23, 6:34pm 1695105284

They are turning off both Thermal baseline and the now 4000 GWh,of Geothermal generation in delivery reduces the need for Onslow,The additional capacity will be used in battery storage for peak shaving,and substantive decrease in Co2 emissions with forecasts now showing 97% renewable by 2026.

by Hamish | 19th Sep 23, 6:43pm 1695105817

How many years of net immigration does that cover?

by IT GUY | 19th Sep 23, 5:13pm 1695100417

entire country waiting for Luxon to add another 5% to the vote count ?

by Mr. Smith | 19th Sep 23, 5:26pm 1695101181

Trying to understand his logic that we can afford tax cuts, but first we need to invent a new tax and shift all the chairs around.

So can we afford a tax cut or not?

by Baywatch | 19th Sep 23, 6:10pm 1695103824

No..unless we means test super

by HouseMouse | 19th Sep 23, 5:16pm 1695100602

Bloody heck, unleaded 91 predicted to go to $3.50 by Xmas. This is really bad (i guess there is an environmental upside)

https://www.nzherald.co.nz/business/petrol-prices-91-octane-expected-to…

by Palmtree08 | 19th Sep 23, 5:37pm 1695101860

No it's good. If the environment is to be trashed, at least pay for it. Fossil fuels are an amazing resource. Try pulling your boat by hand to the Coromandel, with the wife and kids and tell me $10 a litre is expensive for what it will do?

At least Luxons fancy new roads will be empty, except for the occasional passing donkey.

by HouseMouse | 19th Sep 23, 5:40pm 1695102020

Agree. But it’s not good in a conventional economics sense.

It’s probably the trigger for me to go to EV.

by Hamish | 19th Sep 23, 6:04pm 1695103462

So the EV subsidies weren't really necessary after all.

by kiwikidsnz | 19th Sep 23, 6:39pm 1695105588

https://i.stuff.co.nz/motoring/132967990/ford-reveals-plugin-ranger-ute…

by Yvil | 19th Sep 23, 7:01pm 1695106879

Just buy 98 octane now, so you can get used to it 😅

by Te Kooti | 19th Sep 23, 5:49pm 1695102594

Does the porker run on anything else?

by Te Kooti | 19th Sep 23, 5:49pm 1695102544

There will still be a thousand 2023 Rangers towing 2250 Stabi Ultracabs at the local boat ramp.

by HughJorgan | 19th Sep 23, 5:55pm 1695102916

So true. Imagine the cost for a day out fishing.

by Te Kooti | 19th Sep 23, 6:08pm 1695103735

Including bait, burley, lures/soft baits, ice and gas, probably around $200+ depending on the boat and range. There are cheaper ways to catch fish...

by powerdownkiwi | 19th Sep 23, 6:25pm 1695104718

There were.

The fish aren't there any more - we won.

Not.

by Te Kooti | 19th Sep 23, 8:00pm 1695110444

Some common ground at last PDK. The way we treat our fish stocks disgusts me, I see the trawlers sneak into the gulf shallows at night and it's a disgrace. Sick to death of hearing about carbon when we rape the ocean under our very nose.

by nigelh | 19th Sep 23, 7:32pm 1695108774

i catch mine in the super market. If you have a $60,000 odd dollar boat and go fishing its an expensive hobby, not a means to supply your family with the odd bit of food.

by J.C. | 19th Sep 23, 7:06pm 1695107186

So true. Imagine the cost for a day out fishing.

Cheaper to go to the most expensive fish shop you can find.

by kiwikidsnz | 19th Sep 23, 7:38pm 1695109139

True...however out fishing youself you get the extra mental health care as a big bonus. And theres nothing tastes like fresh fish off the boat.

I sold my last boat a couple of years ago during Covid for 90% what I paid for it new 10 years ago. I'd been missing it for a while so couple of months ago I bought a winter project 2nd hand jetski that I've now setup for fishing. Quite a cheap option, I'll give it a summer or 2 & see how it works out.

by dumbthoughts | 19th Sep 23, 5:49pm 1695102596

Reckon there's time for a wee captain's call fuel tax cut before October 14th?

by HouseMouse | 19th Sep 23, 5:53pm 1695102780

Lol

by J.C. | 19th Sep 23, 7:36pm 1695109000

Sam Bankman Fried's parents being sued by FTX's bankruptcy estate to claw back millions of dollars' worth of "misappropriated funds".

Good read.

A question that has come up repeatedly in the FTX scandal has been the role of Sam Bankman-Fried's parents. Namely, how could such respectable people—Stanford law professors famous for their sense of ethics—have raised a sociopath who stole billions of dollars under the guise of altruism? As it turns out, they were Bankman-Fried's primary accomplices.

As a scorching cover story in BusinessWeek reveals, Barbara Fried and Joseph Bankman didn't just raise a criminal, but actively took part in running FTX and enjoying the spoils of the fraud. They regularly turned up in the company's offices and were included on important emails, and, most critically, flexed their prestige to open doors in Silicon Valley and Democratic power circles for their son. Meanwhile, these two advocates for the poor helped themselves to a $16 million luxury villa in the Bahamas and $10 million in cash—paid for by FTX customers.

https://finance.yahoo.com/news/sam-bankman-fried-parents-enabled-154745…

by Rob Reid | 19th Sep 23, 9:35pm 1695116132

I know an old person who I'm assured is loaded. Downside is nobody can stand them, even the family. I wonder if all that money fills the gap in their life? They are pretty toxic, and paranoid about being cheated, so seems to be a poor tradeoff.

by Squishy | 19th Sep 23, 9:45pm 1695116739

The RBA minutes were out today and were not market-moving. They were a lot of words, showing they were across the issues, but mostly to justify a no-change decision.

Cowards, they know that the next inflation print will be very higher due to rising energy but they're sitting on their hands to try to support housing for as long as possible.

by blobbles | 20th Sep 23, 7:50am 1695153031

Yeah but putting up interest rates is not going to stop someone in far off countries restricting oil supply. Why would anyone think it would?

by kiwikidsnz | 20th Sep 23, 1:44pm 1695174262

"...they're sitting on their hands to try to support Labour for as long as possible."