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
ANZ raised its 6 month rate to 5.85% and their 1 year rate to 6.00%. Both are +5 bps increases. The Co-operative Bank made similar changes.
AFTERBURNER
Retail rates may not have moved much today, but wholesale rates are on the move up with quite a jump. After the US Fed 'hawkish hold' and dot-plot signals, benchmark US bond rates have rise sharply. And with the stronger-than-expected local growth outcomes, the New Zealand wholesale rates have moved up at a premium to the US. One bank now reports that wholesale rates are suddenly pricing in a +25 bps OCR hike by February 2024. At the start of the week, the chance of that, even by April, was very low (+8 bps). (See more details below.)
LOTS TO CELEBRATE
Fonterra's prior season was a good one, both for farmers and the co-operative (a rare occurrence). They boosted profits 170% from the prior year and more than doubled dividend payment, while paying farmers $8.22 per kilogram of milk solids (the third highest ever). They reported after-tax profits of $1.577 bln (an all-time high), paying a full-year dividend of 50c per share (second highest ever). But the best bit is that they were able to build shareholder funds at the same time, usually difficult when shareholding farmers want to extract their maximum from the company.
WRONG, BUT NOT CHANGING THEIR TUNE
Not only did we not slip into recession in Q2-2023, it turns out we moved solidly the other way. The national economy expanded +0.9% in the June quarter from the March quarter, and the March (and Dec-22) quarter was revised up. All this handily beat forecasts. The economy was +2.1% larger in real terms in the June quarter from the same period a year ago. But generally economist analysts weren't satisfied. To a man, they are still warning a recession is in our future.
MORE ELECTION POLICY
The Election 2023 policy releases keep coming. Today we have added: ACT - Education (identifying under-performance), Labour - Health (to rebuild the Hawkes Bay hospital), and National - Education (fast tracking international student visas and expanding work rights). All released policy is compared in our Election 2023 tool here.
WHAT THE INTERNET SAYS
Google Trends are now following internet activity related to Election 2023. You can see that here. There are some pretty unexpected trends being uncovered in their analysis. (H/T RS)
HIGH DEMAND FOR HIGH YIELDS
There was another $500 mln in Government Bonds tendered today in three maturities. That attracted 125 bids worth $1.4 bln. The yield on the $200 mln May 2028 offer went up to 5.21% from 4.92% three weeks ago. The yield on the $225 mln May 2032 offer went up +15 bps to 5.16% over the past two week. The yield on the $75 mln May 2051 offer went up to 5.34% from 5.14% four weeks ago.
SFO FAILURE ON CBL FAILURE
Former CBL Insurance Chief Executive Officer and Managing Director Peter Harris and former Chief Financial Officer Carden Mulholland were today found not guilty on theft, false accounting and obtaining by deception charges following a High Court trial-by-judge in April. CBL had a market valuation of just under $750 mln when it collapsed in 2018 in one of New Zealand’s largest corporate failures.
HAVE WE GOT A DEAL FOR YOU
Noel Leeming has signed up to the Latitude Financial "interest free" option. But it is not fee-free. "Conditions, fees and charges apply." Essentially, the interest is baked into the cost of the item and fees capitalised into the borrowed amount, plus you get either a Visa or Mastercard credit card as part of the deal. The payments for the specific product you buy will be "interest-free" but none of the other transactions on those credit cards will be. And Latitude's Visa and Mastercard interest rates are among the highest in the market (27.99%)
STEADY STATE
Meanwhile, the August data update for credit cards revealed that total credit limits were $21.1 bln. This was -0.8% lower than a year ago and the lowest since April 2015. The data for spending levels ($3.9 bln) and balances outstanding ($6.07 bln) both changed little.
IAG FLAGS SHAKE-UP FOR CUSTOMERS HIT BY FLOODS & CYCLONE
Dominant insurer, IAG, has flagged an uncomfortable shake-up for customers hit by the North Island floods and Cyclone Gabrielle earlier in the year. They are "encouraging" customers whose properties were hardest hit by the extreme weather events 'to reside elsewhere'. Essentially, this will push pressure on the taxpayer and ratepayer to bail out the 'victims'.
SWAPS MOVE UP STRONGLY
Wholesale swap rates pushed much higher yet again today across the whole curve, probably up more than +10 bps. But the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps at 5.69%. The Australian 10 year bond yield is up +16 bps to 4.32%. The China 10 year bond rate is up slightly to 2.70%. The NZ Government 10 year bond rate is up +8 bps to 5.22% and a new high high, but still well above the earlier RBNZ fixing of 5.16% which was also up +8 bps today. The UST 10 year yield is now almost at 4.44% which up another +7 bps from this time yesterday and more than a 15 year high (back to levels pre-GFC). The UST 2yr is up +7 bps too, to 5.19% and you have to go back to October 2000 to find a higher level.
EQUITIES WEAKEN
The NZX50 is down -0.1% near today's close. But the ASX200 is down a sharpish -1.2% in afternoon trade. Tokyo is down -1.1% in early trade. Hong Kong has opened its Wednesday trade down -1.2%, and Shanghai has opened down -0.5%. On Wall Street, the S&P500 ended its Wednesday session down -0.9% with a late fall away. All these markets are making the NZX50 look quite good today.
GOLD EDGES DOWN AGAIN
In early Asian trade, gold is at US$1926/oz and down -US$4 from this time yesterday. It closed earlier in New York at US$1930/oz, and earlier still in London at US$1943/oz.
NZD SOFTER
The Kiwi dollar is down -40 bps from this time yesterday, now at 59 USc. It had risen to 59.8 USc earlier. Against the Aussie we are unchanged at 92.2 AUc. Against the euro we are little-changed at 55.6 euro cents. The TWI-5 is down from yesterday to just over 68.2.
BITCOIN MOVES DOWN SLIGHTLY
The bitcoin price is slightly lower today, now at US$26,966 and down -0.8% from this time yesterday. Volatility over the past 24 hours has been low at just over +/- 0.8%.
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59 Comments
hahahahahah. Noel Lemming latitude.
A reason we need to teach our kids basic maths and basic logic. Instead we entertain them with songs and stuff.
One feature teachers could put to the kids. "You can beat the chains down quite easily when you offer cash. They know the items often are elsewhere and you can buy there. But in the weeks they offer interest free, you won't get any reduction. Explain".
Latitude are predators, and the Warehouse Group should know better, given their clientele.
Also Latitude should've been sunk into the ground over their cavalier data protection and handling leading to the loss of 14 million customers sensitive data, but sadly the penalties in our laws are just not up to the task.
Another recession forecasted - who would have thought. Others money is about to get even more expensive.
This painful adjustment currently in progress is better sooner rather than swallow an even bigger one later. Hopefully, over the medium term we won't get labelled a debt junky by those that lend us money and then charged rates accordingly.
Haha National, Labour, any of them have no clue. They all learned economics the same way we all did, through the political narrative and media. They listen to the central bank and bank economist's just like everyone else. Without a bigger picture vision other than economic growth, they're unable to offer decent reform. What would that suggest about we the people?
Most economist's are unable to critique their own science or question the validity of their trained way of thinking. They're just as captured by the growth mantra and have no bigger picture vision. If economics is the bible of our time and asset wealth our god what's the vision of heaven for the people and the natural world?
Show me where that enlightenment switch is.
Another round of OCR increase must increase OCR to 10% in the begining of next year and then Pause of 1 time.. Third round OCR increase to be started in middle of next year.By end of next year, OCR must reach 20% or more.
Evident clearly say higher OCR will lead stronger economy and better life. 20% OCR will bring 10% GOP grow at least !!!!
Rental crisis in Aussie predicted to last 10+ years. It really is an appalling state of affairs, but nobody is accountable, yet the ruling elite is hellbent on letting anyone into the country.
https://www.macrobusiness.com.au/2023/09/rental-crisis-to-last-10-years…
But it gets even worse for the govt's reputation. Bloomie does a report on Aussie housing as 'Why Australia’s Housing Crisis Is a Warning for the World'.
https://www.youtube.com/watch?v=IqKIlLS7ln4&t=2s
The Gnats doubling down on education as a proxy for selling visas. Same playbook as Aussie. I for one am not surprised.
National is promising to expand work rights for international students, and increase student recruitment from a wider number of countries.
https://www.rnz.co.nz/news/election-2023/498433/national-promises-to-ex…
Last night the GOP reintroduced the CBDC Anti-Surveillance State Act, a bill that aims to prevent the Federal Reserve and its member banks from issuing a CBDC and using it to implement monetary policy.
I personally think this is crucial, but I'm also aware of smoke and mirrors, particularly in the English-language countries.
https://www.foxbusiness.com/markets/gop-takes-on-federal-reserve-in-bat…
NFTs trending to nothing. Who could have predicted this.
https://www.rollingstone.com/culture/culture-news/nfts-worthless-resear…
Might be time to have a nibble. Normies still can't really get a grasp on what NFTs are and how they may evolve. It goes beyond the idea of a JPEG. No reason why NFTs will one day represent ownership of hard assets like public utilities and businesses.
We're very early.
An NFT is more than a pretty pixel people trade for bitcoins. NFT and blockchain technology could have major real world implications in the coming decades, I find it interesting, other people see it as speculative pretend money. But hey, FIAT is the real deal, right?
I think the technology could lead to a change in the entire monetary system, but not change in who controls it. I would not want to have stacked debt if that change happens.
The technology has potential as a service though, not an asset.
As useable money though, pretty hopeless, because it's only cheaper because it lacks all the infrastructure and legislation that your regular money does. As it stands, there's not much of a use case for it for what you use most of your fiat on already.
Yea as a service. An NFT as a pixel asset, that’s speculation. An NFT as a signed legal document, that’s powerful.
What’s important in the future is control over money, as it has been. There are only so many times you can juice an economy with debt, then pull the rug and suck up all the lint bunnies and inflate again before there needs to be an increase in the value of money against that debt. As is happening now. The value of the dollar is stagnant, and the value of the debt is increasing with every bps. At some point you have to put another $20 in the machine before you can spin the wheel again. The question is, will that be a fiat system? Or something else. If it’s something else, will it be inflationary as fiat (print forever) is or deflationary as bitcoin is (market cap)
I for one viewed it as 'late stage' capitalism and a massive hype of greed and liquidity chasing more money.
Whilst technology and blockchain offers us another medium for creativity, another tool, it's still subject to the perverse speculative nature that currently behests mankind.
I for one viewed it as 'late stage' capitalism and a massive hype of greed and liquidity chasing more money.
To some extent, yes. FYI, former Chair of the U.S. Securities and Exchange Commission Jay Clayton is now strategic advisor at a company called Collectable (https://collectable.com/)
Whilst technology and blockchain offers us another medium for creativity, another tool, it's still subject to the perverse speculative nature that currently behests mankind.
If it's made to introduce artificial scarcity via fixed supply, you don't get speculation, you get hoarding. This is partially why we don't use gold as a currency basis, as over time, the money ends up in fewer hands, and not in circulation for the purposes of operating a market.
This is partially why we don't use gold as a currency basis, as over time, the money ends up in fewer hands, and not in circulation for the purposes of operating a market.
‘Gold is the money of kings, silver is the money of gentlemen, barter is the money of peasants – but debt is the money of slaves.’
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