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
First, late yesterday, Westpac tweaked some fixed rates lower, matching rivals. Resimac has reduced its fixed rates, some by as much as -40 bps.
TERM DEPOSIT/SAVINGS RATE CHANGES
Westpac also trimmed some TD rates, although it did raise its 6 month rate by +10 bps to 6.10%, a notable level. And China Construction Bank has cut all its term deposit rates for terms 5 months and longer.
"SIMPLY MISERABLE"
The results of the BNZ-BusinessNZ PMI for December were 'particularly grim'. As BNZ said: "November’s bounce in the PMI looks increasingly like it was of the dead cat variety. December’s outturn was simply miserable and saw the vast majority of the previous month’s gains reverse. With a headline reading of 43.1, December’s PMI represented the 10th consecutive month of contraction for the sector. The production indicator, at 40.5 was particularly grim."
SPOTTY TOURISM RECOVERY
Inbound tourism is recovering but it is spotty. The November data shows the overall recovery in foreign tourist arrivals ticked up to 82%, from 80% in October of the pre-pandemic levels. Australian arrivals rose to 84%. Infomentrics noted that Australian tourism has been lumpy over the past year, with November’s result sitting just two percentage points above the recovery level in November 2022. Chinese arrivals slipped again to 52% of pre-pandemic levels, taking the recovery to its lowest point since June 2023. But arrivals from the USA are now fully back to pre-pandemic levels. On the other hand, outbound tourism is also all the way back. Kiwi departures rose to 98% of pre-pandemic levels.
FULL IMMIGRATION RECOVERY - AND MORE
The net population gain from migration hit a new record of 127,000 in year to November according to the Stats NZ 12/16-month rule monitoring. Population growth from migration is now almost double what it was pre-Covid.
'DON'T CUT SOON; DO TAX REFORM INSTEAD'
In Australia, the IMF has released the results of its annual staff review. The IMF wants to see meaningful tax reform and doesn't like that the are markets pricing interest rate cuts in 2024. They [rightly] point out that inflation and inflation expectations are still far too high there. The IMF's call for tax reform in Australia is a long-standing position - but one Canberra ignores. (The last IMF review of New Zealand was in August 2023.)
AUSSIES EXTRACT SYNERGY BENEFITS FROM Z
Staying in Australia, Ampol, the owner of the Z Energy business in New Zealand, said it is on track to deliver record results. This is because "Non-refining earnings included a consistently strong performance in the Australian Convenience Retail business and delivery of performance improvements and synergies within Z Energy."
STILL NOT CONVINCING
Japan's December CPI inflation rate came in at 2.6%, down from 2.8% in November. And their core rate was at 2.3%, down from 2.5% in November. That is the 21st consecutive month it has been above the Bank of Japan's 2% target. But with this slippage, the central bank will likely remain very cautious that Japanese inflation is really back. 2.3% is a 17 month low even if over all of 2023 inflation was at a 41 year high in Japan. To help ensure that inflation stays embedded, Japan's government is urging businesses to raise wages ahead of annual spring negotiations between employers and labour unions. The largest union is demanding a 5% rise.
APOLOGY
As too many readers will know, we have an issue where a pop-up appears, warning about using an adblocker. This is a fault at our end and we are obviously working on it. You may find that doing in via our home page helps. We are sorry that this is occurring, and apologies to those whose feedback messages we haven't responded to.
SWAPS UP
Wholesale swap rates may be higher again today. However, the key reaction will come at the close. Our chart below records the final positions. The 90 day bank bill rate is up +1 bp at 5.65%. The Australian 10 year bond yield is up another +6 bps at 4.33%. The China 10 year bond rate is unchanged at 2.52%. And the NZ Government 10 year bond rate is up +8 bps at 4.84%, while the earlier RBNZ fixing was at 4.75% and up +7 bps from yesterday. The UST 10 year yield is now at 4.17% and up another +7 bps from this time yesterday. The UST 2yr is at 4.37% and up +3 bps, so that inversion is now -20 bps.
EQUITY WINNERS & LOSERS
The NZX50 is up +0.2% from yesterday, and if this holds that will lock in a -1.3% fall for the week. The ASX200 is up +0.8% in early afternoon trade, and if that holds it will end down -1.2% for the week. Tokyo has opened up +1.3% for Friday trading is a week that has seen high volatility. Hong Kong has opened up +0.7% but it hasn't been a good week for them so far, down -4.7% and there are suggestions the 'home team' has been called in to help, unusual for Hong Kong. But not for Shanghai; they have opened down -0.4% and heading for a more modest -1.4% weekly retreat - presumably after ETF buying by maniland policy banks and funds. Singapore has opened up +0.2% but so far it is down almost -2.0% for the week. On Wall Street, the S&P500 ended its Thursday session up +0.9% and in this shortened week is back where it started.
OIL RISES AGAIN
Oil prices are up nearly +US$1 from yesterday at just under US$74/bbl in the US while the international Brent price is now just over US$78.50/bbl.
GOLD SHIFTS UP
In early Asian trade, gold is now at US$2022/oz and up +US$14 from yesterday. Earlier it ended in London at US$2012/oz.
NZD SOFTENS FURTHER
The Kiwi dollar is now at 61.1 USc and down again from this time yesterday although all the fall happened overnight. Against the Aussie we are down more than -½c at 92.9 AUc. Against the euro we are marginally lower at 56.2 euro cents. That means the TWI-5 is now just under 70 and down another -10 bps
BITCOIN SLIPS FURTHER
The bitcoin price has eased again today to US$41,168 and down -3.3% from where we were this time yesterday. There's been moderate volatility over the past 24 hours of just on +/- 2.8%.
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 ».
16 Comments
The Nikkei has been on a tear and some of the returns on individual stocks are mind boggling. Even well-known companies have seen their stock prices rise 2-4x+ over the past 4-5 years. For ex, Itochu up 245%; Asics up 213%. Too many to mention.
Interesting to note that the Chinese have been strong buyers of Japanese ETFs and equities.
Chinese investors have been piling billions of yuan into exchange-traded funds (ETFs) that track Japanese stocks, fuelling a bull run that has helped Tokyo’s benchmark index surpass its counterpart in Shanghai.
A weak start to the year for Chinese stocks has prompted some investors to shift to other markets with a brighter outlook in Asia and globally. Japan’s Nikkei 225 index, as well as the Topix gauge of a broader pool of stocks on the Tokyo exchange, has hit the highest levels since 1990 as the country has managed to walk out of deflation. Japan’s bourse operator has also taken a slew of initiatives that require listed companies to return more value to shareholders.
https://www.scmp.com/business/china-business/article/3248205/chinese-in…
"That is the 21st consecutive month it has been above the Bank of Japan's 2% target."
"To help ensure that inflation stays embedded, Japan's government is urging businesses to raise wages ahead of annual spring negotiations"
Very odd. Maybe the government should change the target if they want more than 2%.
IMF reckons the RBA should lift interest rates further and the Aussie governments (federal and state) have to reduce spending cuts to reduce inflation to target before 2026.
Given that the Ponzi is essential for the Aussie economy and state coffers, it was also interesting to see this:
The IMF renewed calls for states and territories to replace stamp duties on property purchases with recurring land taxes, with revenue from a higher GST potentially helping bridge the proposed reform.
“At the state and territory level, implementing recurring property taxes in lieu of stamp duties on housing transactions would promote housing affordability, more efficient use of the housing stock, labour mobility, and more stable tax bases over the medium term,” it said.
https://www.afr.com/policy/economy/rba-should-lift-rates-labor-ought-to…
"recurring property taxes in lieu of stamp duties on housing transactions would promote housing affordability"
Zero poulation growth would do the same, along all the other benefits of not crushing the natural environment with yet more humans. Can't expect the yeasty boys at the IMF to think outside the pin prick size of knowledge their training/indoctrination gave them though.
https://www.channelnewsasia.com/asia/china-population-decline-cna-expla…
"CNA Explains: Could China's shrinking population become a global crisis 'beyond imagination'?
CNA looks at how bad the decline is and what it could mean for Beijing's economic future and global influence."
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.