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.
LOG MARKET FACES STALLED DEMAND
The latest log market report for October shows that China log inventories have stayed low but demand not rising. Local log supply is tight as some forest owners stop harvesting. Local demand has risen post-election however. European demand for sawn timber has stalled.
PUBLIC SERVICE HEADCOUNT UPDATE
Updated public service headcount data shows there were 63,117 FTEs as at June 30, 2023, up +4.5% from a year ago, and up +26.1% from six years ago at the start of the Ardern/Robertson Labour government.
ACC RECOVERS
Out today, the ACC Annual Report reveals a better financial outcome over the past year. They had a surplus of +$911 mln in the twelve months to June 2023, a turnaround from a deficit of -$49 mln in the prior June year. Their investment fund grew Investment Fund grew to $46.9 bln and returned 7.07% in the year. ACC treated almost 2 mln injured Kiwis, and new claims rose by almost +10%. Their outstanding claims liability rose to $51.6 bln, up +2.6%. 2024 will mark ACC's 5pth year of operations.
A P2P RETIREMENT
The Peer-to-peer lending platform Lending Crowd is throwing in the towel, and will close mid November. It has been unable to generate sufficient volume to justify continuing and prospects can't have been promising.
BANK SAVERS ARE SHORT-TERMERS
New data out today as at the end of September shows that 84.3% of customer deposits (non-market) at New Zealand banks are on terms of 6 months or less with 53.4% of them at call. Only 1.0% is on a 1 year term and that is basically unchanged since April 2019. Risk management is vital for bank treasurers because no bank wants to be caught borrowing short (from depositors) and lending long (mortgages) without proper treasury management techniques in place. Banks have $566 bln of funding in place from all sources, up +2.1% in a year, the lowest year-on-year rise since this data series started in 2012.
NOT IN CONTROL?
The FMA has issued an infringement notice to CFD platform CTRL Investments for failing to file audited financial statement by the due date. CTRL Investments is a New zealand-registered operation, having held a derivatives licence from the FMA since 2015.
BOND ENTHUSIASTS MOSTLY LEAVE UNSATISFIED
Demand from just 23 of the 151 bids at today's (Thursday) $500 mln NZGB tender was so hot, they drove down yields. All up just a fraction under $2 bln was bid ($1.974 bln). Far and away the most popular was the May 2030 $225 mln which attracted more than $1 bln in bids. The four winners (of 63) drove the yield down to 5.19% pa from the 5.31% three weeks ago. The May 2034 $175 bond had 5 winners of 52 bids ($693 mln) and the yield fell as well, down to 5.35% from 5.59% three weeks ago. The final May 2051 $100 mln had 14 bid winners (of 36) and their demand saw the yield fall to 5.43% from 5.53% three weeks ago. This is very enthusiastic demand. Just nine bidders set the tone today.
HOW GOOD IS THIS
Watch.
TAKEN AS A STRONG HINT
In his post-meeting press conference, Fed boss Powell said the central bank has 'come far' in its fight against inflation, and market are taking that as a strong hint that they may be done raising rates for now. That pushed up the equity market, with the S&P500 closing up almost +1.1%. It generated a bond price rally, which has seen the UST10yr benchmark yield fall to 4.71%. And it has pushed down the USD.
CRUNCH TIME AHEAD
In Australia, Westpac’s new business banking boss says the fate of many struggling small firms will hinge on the December-January period. Might be so here too. The the new Westpac Australia chief economist, ex the RBA, says her old employer may be forced into more than one more rate rise because inflation isn't tamed there yet. That won't help those SMEs either.
SHARP SHINKAGE IN SURPLUS
In Australia, their merchandise trade surplus fell to a 30-month low of +AU$6.8 bln in September from an upwardly revised AU$10.2 bln in August. The September result was well below market forecasts of an AU$9.4 bln surplus as exports fell -1.4% while imports surged +7.5% from the prior month.
OWNER OCCUPIERS RETREAT AS INVESTORS EXPAND
Housing investor demand (+2.6% from a year ago) is keeping mortgage lending up in Australia, while owner occupiers are borrowing less. Lending for new houses remained at 20 year lows. On the commercial side, construction loans rose, and rather sharply (+55%).
AN 'OLD FRIEND' REACHES THE TOP
In the US, President Biden officially nominated long-time “Asia hand” Kurt Campbell as deputy secretary of state earlier today (Thursday NZT), a move analysts said showed Biden’s commitment to his Indo-Pacific strategy which involves containing China's expansion. Campbell is an 'old friend' of New Zealand. We awarded him an honorary Companion of the New Zealand Order of Merit for services to New Zealand-United States relations in 2014.
SWAPS TURN DOWN SHARPLY AT LONG END
Wholesale swap rates have probably changed little at the short end but probably down a lot at the long end, deepening the inversions. The real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 5.64% and now +14 bps above the OCR. The Australian 10 year bond yield is down -17 bps from yesterday at 4.80%. The China 10 year bond rate is unchanged at 2.71%. The NZ Government 10 year bond rate is down -18 bps at 5.40% from yesterday, but still above the earlier RBNZ fixing of 5.38% which was down -15 bps from yesterday. The UST 10 year yield is down a very sharp -22 bps from this time yesterday to 4.71%. The UST 2yr is down -16 bps to 4.93%, so the curve inversion has deepened to -22 bps. These levels may be different when you read this.
EQUITIES ALL HIGHER
The NZX50 is up +1.5% in late trade today, reacting to global sentiment. The ASX200 is up +1.3% in early afternoon trade for the same reason. Tokyo has opened up a strong +1.2%. Hong Kong is starting its Thursday up +1.8%, and Shanghai is up +0.3% at its open. Singapore is up +0.6% at their open. The S&P500 ended its Wednesday Wall Street session up +1.1% in a Fed relief rally, one that is gathering pace this week.
GOLD HOLDS
In early Asian trade, gold is now at US$1984/oz and up +US$4 from where were this time yesterday. Earlier it closed in New York at US$1983/oz. And earlier still at US$1986/oz in London.
NZD RISES
The Kiwi dollar has risen almost +1c to 58.9 USc from this time yesterday as the greenback falls sharply after today's Fed decisions and the US Treasury bond program announcement. But against the Aussie we are unchanged at 91.6 AUc. Against the euro we are softer at 54.5 euro cents. That means the TWI-5 is up +50 bps at 68.7.
BITCOIN RISES
The bitcoin price is rising today, now at US$35,451 and up 2.6% from this time yesterday. Volatility over the past 24 hours has been moderate at just under +/- 2.2%.
Daily exchange rates
Select chart tabs
Daily swap rates
Select chart tabs
This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
66 Comments
Blackstone Inc.’s $66 billion real estate trust limited investor redemptions for a 12th straight month in October. Basically you don't have access to and can't redeem your investment.
They've got you by the balls.
The real estate trust is a colossus in US property markets, with its reach spanning from apartments to data centers. In late 2022, BREIT curbed withdrawals after redemption requests picked up and its wealthy clients became jittery about having money locked into commercial real estate. Property values have fallen as the costs of borrowing increased with the Federal Reserve’s rate hikes.
https://finance.yahoo.com/news/blackstone-66-billion-real-estate-124602…
Jay Powell said last night: "We haven't really thought about extending the BTFP program."
BTFP is preventing a cascade of bank failures that could occur if the $1.5 trillion of unrealized losses in the US Treasury market had to be realized.
The program ends in March.
Probably nothing. They will if they have to.
public service headcount data shows there were 63,117 FTEs as at June 30, 2023, up +26.1% from six years ago at the start of the Ardern/Robertson Labour government.
No wonder we can't get anything done in NZ !
You are best to come back to Northcote Parkinson’s law in that work expands itself relative to the time available to do it. And then include in that according to as well, personnel available to do it. The conclusion for both elements though is that the efficiency of the work achieved decreases relatively.
Jimbo. You are making a wrong assumption there if you think that all those people are productive. Or the bigger staff roll produces more for us with greater quality.
Once it was believed that there was a swing factor between quality and cost. It was believed that increased quality and output meant more cost.
But amongst many others Japanese car manufactures proved that wrong. Turned it on it's head They vastly improved quality, and reduced cost rapidly. And it continues.
Think about it.
Well now, would venture that the female of our species is much more adept at multitasking than her male equivalent. But that is not to say that the latter is not without virtue in a mindset to not commence on another task until the one on hand is completed. To weigh up the superiority of one or the other you need to consider then , is one completed job more or less valuable than say four not quite completed jobs.
Fair enough. I was expressing my own experiences managing roughly 50/50 genders in chemical process / manufacturing workplaces.
Or maybe I've spent too much time with engineers, most of whom were male...your comment "...a mindset to not commence on another task until the one on hand is completed." rang a bell.
Always seems to be the way. In my industry we get hit up by people for full-time jobs when a Labour govt comes in because the departments are allowed to increase headcount so the lucrative contracting gigs aren't as plentiful. When a National govt comes in it's hard to get people because they're back on the contracting money as National restricts headcount increases. Has been that way in the past, anyway.
public service headcount data shows there were 63,117 FTEs as at June 30, 2023, up +26.1% from six years ago at the start of the Ardern/Robertson Labour government.
An interesting note anecdotally. From my experience working in govt over the last few years, with the large attrition due to competing wages across the board, may departments are desperate to hang onto staff for the loss of efficiency they realise form staff leaving. This has resulted in many medium-higher level roles being easy achievements for those who hung on due to the lack of credible staff left to pick form in the talent pool internally. Many have succeeded in said roles, but many have been promoted without merit and struggle.
The 26% increase in the public service under Labour has done nothing to improve their wilfully obfuscatory practices in hiding information from the public.
Left blogger "norightturn" has done everyone a service by holding them to the OIA, a longstanding feature of the blog.
http://norightturn.blogspot.com/2023/11/why-nothing-changes-in-oia-land.html?m=1
Lol wtf..? The squirrel's too far away.. like on the other side of the planet :D
I did use the past tense. For sure, I don't expect transparency because of the change of govt. I was just suggesting that we should look through all the BS of the soon-to-be-departed govt.
Always interesting how fast the economic outlook can change...
Also interesting how short term kiwis are with their savings, you'd think judging by commentators on interest that people would be locking in their funds longer at 6%+ rates... what are kiwis waiting for, what are they going to use their funds for?
Household deposits at banks rose +5.3% in September from a year ago to a new record high $236.9 bln, up +$12 bln in the year. But transaction account balances fell -$8.9 bln, savings account balances fell -$2.5 bln, while term deposit balances rose +$23.3 bln in the year. Term deposit balances now represent 51.3% of all household bank balances, the highest since July 2020. In July 2020 banks were paying savers 1.5% for a one year TD. Now they are paying 6.1%.
This was from the Tuesday afternoon commentary. Can someone explain this because it suggests that:
- $114billion of household deposits are in transactional or savings accounts. ($23k per person - which seems a lot).
- For reference there is <$100 billion in KiwiSaver.
What's the reason for so much household cash in low yield accounts? Or have I missed something obvious?
53% on call accounts? How many are there because TD's have a minimum amount, and are out of most of the population's reach?
Sad I know, but for those living pay-check to pay-check, at least getting something on a few bucks is better than the nothing most banks pay on current accounts.
TDs are for those with an asset base to start off with and don't need the liquidity.
Nek minit, we welcome them to the party after they see the vid. And then...
https://www.msn.com/en-nz/news/national/we-have-zero-money-migrants-who…
"Many of them paid thousands of dollars to come to Aotearoa New Zealand for work, but when the work didn't eventuate they were put into emergency housing. Now they've been booted out with little notice - given until 10am Friday to get out."
Haere mai. Aroha. Kia ora.
Hasta la Vista.
INCA closing its doors. A restaurant I loved. Sign of the times.
https://www.nzherald.co.nz/business/gut-wrenching-award-winning-restaur…
Headline of the month in Aussie:
Despite rocketing rents and property prices, a key RBA housing analysis group hasn't met for a year
The Housing Market Discussion Group brought together internal experts to share insights on household budgets, the lending markets and the stability of our financial system.
It hasn't met since September 8 2022.
Documents sought through the Freedom of Information (FOI) process reveal the most recent meeting of the group — also known as the Domestic Housing Community Meeting — was one day after the central bank hiked interest rates for a fifth time.
https://www.abc.net.au/news/2023-11-02/despite-rocketing-rents-property…
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.