A review of things you need to know before you sign off on Tuesday; no retail rates changes, strong worker inflows, wind generation capacity important now, solid payroll growth, swaps lower, NZD stable, & more

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
WBS have raised a range of key rates.

A STRONG RUSH IN
Just over 200,000 people arrived in NZ on work visas in year to October, continuing the strong bounce back following the removal of pandemic travel restrictions.

A NEW LOW FEE HIGH GROWTH OPTION
BNZ has expanded its investment offering by launching High Growth Funds for the BNZ KiwiSaver Scheme and YouWealth program. These funds provide those with a long investment timeframe with the opportunity to take a more aggressive approach. This option is worth mentioning here because the fees are only 0.45% which is unusually low for such funds, less than half of most similar funds. (Most KiwiSaver funds with lower fees don't have a five year track record yet.)

SIGNIFICANT CAPACITY NOW
Several new wind farms connected to the grid and started operating this year – Turitea, Kaiwera Downs and Harapiki. This has increased capacity and set new records for wind generation. Two weeks ago, a record of 13.3% of weekly generation came from wind power. As more of Harapaki’s wind generation comes online and electricity demand eases during summer, the share of wind generation will continue to set new records. But individual facilities will be quite variable, although with a broad national set of wind assets, the overall sector should be able to maintain significant minimum capacity.

CATCHING UP
Synlait Milk has raised its 2023/24 payout forecast to $7.25/kgMS from $7.00. They now match the mid-point of the latest Fonterra indication. (Most other dairy companies offer a premium to Fonterra.) A full comparison is here.

SUPPOSEDLY LIQUIDATED & CANCELLED
The FMA has cancelled Foundation Advice Limited’s Financial Advice Provider licence. They were an Auckland-based company offering advice on life and health insurance as well as KiwiSaver. The High Court put them into liquidation on 26 October 2023 following an application filed by the IRD. The Court appointed the Official Assignee as liquidator. So, why is this still out there?

BUSINESS FORMATIONS TAILING OFF
As at the end of October, there were a record number of businesses in operation, of all sizes, 586,257. But the pace of new formations is definitely slowing. In the year to October only a net +7935 were added, the smallest gain on this basis since the pandemic. (The record high was in the year to July 2004 at +35,643, or a +9.2% rise to 420,000.)

PAYROLL STRENGTH ROLLS ON
The number of filled jobs rose by +13,000 in October from September, to 2.4 mln (2,399,693). From a year ago that is up +3.3% in a year which is a relatively fast rise. The average gain since 2000 is +2.1% per year. The October 2023 update of gross payroll paid (on an accrual basis) for October 2023 was $15.5 bln, compared with $14.3 bln in the same month a year ago, a rise of +8.8%. But all this may be better than it first looks. Remember October was when the election took place and there were a number of roles then that obviously were temporary.

BIG IDEA, BIG GOAL, COMPLETELY FEASIBLE
An ambitious national scale environmental restoration initiative that aims to restore and enhance more than 2 million hectares of indigenous forest over the next 10 years has been launched today, "Recloaking Papatūānuku" (the land). That’s 8% of our total land area, approximately the size of the Waikato. Its a project developed by McKinsey and it is expected to sequester carbon at about $32/tonneCO2, compared to international offsets currently priced around $60/tonneCO2. It will involve private and public land, and will cost between $8.5 bln and $12 bln by 2050 through the 10-year program starting in 2024 including fencing, planting, maintenance and animal and plant-pest control. For perspective, the 2023 storms cost the country about the same amount in damage in just a few months.

BUILDING CAPACITY
The October RBNZ disclosure today (F5) shows that they have increased their Foreign Currency Intervention Capacity by another $739 mln in the month taking the total to $18.5 bln which is up +45% in a year. A monthly rise of +$739 mln is the eleventh highest monthly increase in a monthly record that goes back to 2004 (232 months). More here.

NOT POSITIVE
In Australia, consumers apparently hit the pause button in October and retail sales fell unexpectedly to be down -0.2% from September (a tiny +0.1% was expected) and up just +1.2% from a year ago (when inflation has been running at well over 5%). It is entirely possible that consumers decided to await the Black Friday/Cyber Monday sales events. Higher interest rates however flow through to household budgets quickly in Australia, so that is the more likely culprit.

SWAPS TREND LOWER
Wholesale swap rates have probably held today at the short end and fallen for longer maturities. However, 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 5.62% and now just +12 bps above the OCR. The Australian 10 year bond yield is down -10 bps from this time yesterday to 4.49%. The China 10 year bond rate is unchanged at 2.72%. And the NZ Government 10 year bond rate is down -9 bps at 5.06%, while the earlier RBNZ fixing was at 4.98% which was down -4 bps today. The UST 10 year yield is now at 4.40% and down -10 bps from yesterday. The UST 2yr is now at 4.87% so that key curve inversion is little-changed at -47 bps.

EQUITIES BECALMED
The NZX50 is up +0.5% in late trade today. The ASX200 is up +0.6% in afternoon trade. Tokyo has opened -0.1% lower. Hong Kong is down -0.3% at their open. Shanghai is up a minor +0.1%. Singapore has opened down -0.2%. Earlier today on Wall Street, the S&P500 closed down -0.2%.

GOLD FIRMER
In early Asian trade, gold is now at US$2015/oz and up +US$7 from yesterday. Earlier it closed at US$2014/oz in New York and earlier still also at US$2014/oz in London.

NZD AGAIN LITTLE-CHANGED
The Kiwi dollar is little-changed from this time yesterday, still at about 60.7 USc. Against the Aussie we are still at 92.4 AUc and also little-changed. Against the euro we still at 55.5 euro cents. That means the TWI-5 is at 69.7 and little-changed.

BITCOIN SOFT
The bitcoin price has moved back down today, now at US$37,201 down -0.9% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.0%.

This soil moisture chart is animated here.

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