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 today.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either today.
LOW SALES, TRACKING SIDEWAYS
Residential property sales as released by the REINZ were the second-lowest for the month on November in 12 years. ANZ said this market is "going nowhere quickly".
STILL EXCESSIVE
Instead of just food prices being released monthly, Stats NZ is also releasing a wider set, building up to the Quarterly CPI. Almost half of the CPI is now released quarterly. Food prices were up +6.0% in November from a year ago, and as high as that is, it is lowest rise in nearly two years. From October they actually fell and that is the third straight month that has happened. Some analysts were surprised but the recent softer trends. So there are reasons to be encouraged about the recent trend in food prices. But domestic airfares and local travel accommodation rose, while international airfares and fuel both fell on the same basis (ie from the prior month).
STUCK AT A LARGE CURRENT ACCOUNT DEFICIT
The September current account deficit narrowed by another -$600 million for the prior year, holding at -7.6% of GDP which isn't a level to be proud of. (It peaked at -8.8% in December 2022 but was just -0.9% in September 2020.) The improvement came from welcoming more incoming tourists. Unfortunately the goods trade deficit widened to -$13.2 bln. The Q3 GDP record of economic activity is released tomorrow and the expectation is that it will show a small annual expansion of just +0.5% and still no quarter yet suggesting a recession is imminent.
NET INTERNATIONAL INVESTMENT POSITION IMPROVES
Our net external debt is pegged at -$184 bln as at September (47.9% of GDP), -$3 bln less than the -$187 bln a year ago (52.2% of GDP). Maybe somewhat surprisingly our gross external debt rose -$10 bln but offshore entities owed us +$13 bln more than a year ago. (Nominal GDP probably grew by +$27 bln in the year and touching $400 bln for the first time ever.) ANZ noted that our current account is still "far too out of balance to call it sustainable" and said progress is stalling.
OPEN, BUT DEMAND IS WEAK
ANZ is the next bank to release analysis of their merchant card activity. That shows annual growth in most categories of spending continued to slip in November, down -3.2% from a year ago (and more than the -2.6% drop in October). Spending related to housing is lackluster, and clothing retail continues to weaken. Neither population growth nor inflation shows up in this ANZ data, just emphasising its weakness.
SLOWING RAPIDLY
The Auckland-based Employers and Manufacturers Association says a marked increase in requests for restructuring and redundancy support from employers is further evidence that the economy is rapidly slowing.
BEST & WORST ACCORDING TO CONSUMER
Consumer NZ has surveyed the nation’s mobile and internet customers to gauge their satisfaction with their service providers. Skinny and Sky Broadband have come out on top of those respective categories. One.NZ has the most customers and the most unsatisfied customers and was at the bottom of the mobile rankings. Contact emerged as the worst internet service provider, just enabling One.NZ to not score bottom of both.
NO MANDATE
Support for keeping & enhancing our smoke-free laws is widespread according to a very recent poll. The coalition compromise to roll back these protections has caught many voters by surprise.
NO MORE FUNDING SUPPORT
The new coalition Government has declined a KiwiRail request to contribute significant additional funding to address cost escalations in the project to replace the InterIslander ferry fleet. KiwiRail had sought an additional $1.5 bln, part of which was for cost escalations related to Wellington and Picton harbourside infrastructure. But the cost of this project has almost quadrupled since 2018 to approximately $3 bln.
THE LUCK RUNS ON
Australia's Mid Year Economic & Fiscal Outlook (MYFEO) was released today and it was surprisingly positive, signaling that they may in fact get another surplus this year - making it two years in a row Canberra has achieved that. It is built on the "usual suspects" - very high mining profits and delaying infrastructure spending. The tax receipt uplift is due predominantly to personal income taxes being +$30 bln higher than forecast, including +$9 bln for this financial year, and company tax receipts being $34 bln higher over the four years and $9 bln higher for this financial year. The tax-to-GDP ratio has reached 23.7%, the highest since the 23.9% in the very early 2000s. (New Zealand is at about 34%.)
SWAPS STILL ON HOLD
Wholesale swap rates are little-changed today, possibly easing slightly. However, the key reaction will come at the close. Update: There was a big retreat at the end. Our chart below records the final positions. The 90 day bank bill rate is unchanged yet again at 5.63% and still +13 bps above the OCR. The Australian 10 year bond yield is down -6 bps at 4.29%. The China 10 year bond rate is down slightly at 2.67%. And the NZ Government 10 year bond rate is down -8 bps at 4.91%, while the earlier RBNZ fixing was at 4.90% which was down -2 bps today. The UST 10 year yield is now at 4.20% and down -3 bps from yesterday. The UST 2yr is now at 4.72% so that key curve inversion is now out to -52 bps.
EQUITIES UP EXCEPT CHINA
The NZX50 is up +0.5% in late trade today. The ASX200 is up +0.3% in afternoon trade. Tokyo has opened up another +0.7% in their early trade. Hong Kong is down -0.6% at its open, and Shanghai is down -0.5%. But don't forget the "home team" can be brought into play late in the session - just like it was yesterday. Singapore has opened its Wednesday session little-changed. The S&P500 was up +0.5% on Wall Street in Tuesday trade
OIL LOWER
The crude oil price is down -US$3 from this time yesterday, still at US$68.50/bbl in the US, and the Brent benchmark is still at US$73.50/bbl.
GOLD ON HOLD
In early Asian trade, gold is now at US$1980/oz and down -US$4 from where we were this time yesterday. Earlier in New York it also closed at US$1980/oz, and earlier still in London at US$1981/oz.
NZD HOLDS
The Kiwi dollar is now at 61.3 USc and essentially unchanged from this time yesterday. Against the Aussie we are also unchanged at 93.3 AUc. Against the euro we are also down -20 bps at 56.7 euro cents. That means the TWI-5 is still at about 70.7.
BITCOIN SLIPS AGAIN, BUT LESS
The bitcoin price has moved down to US$41,118 and a slip of -1.4% from where we were this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.7%.
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