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). It's a skinny edition today.
MORTGAGE/LOAN RATE CHANGES
Heartland Bank cut its fixed home loan rates sharply today. Details here.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here today.
LOSSES EXTENSIVE
A quarter of all apartment sales nationwide in the fourth quarter were made at a loss, notes CoreLogic. 10% of all residential property sales in Auckland made at a loss.
"SOFT TIRES"
ANZ's truckometer monitoring in January continues to point out the weakness of any growth it does find. It isn't strong, and kike with the GDP data,very strong population growth is masking per capita weakness.
ANOTHER SEES MORE
ASB has now raised its farm gate milk price forecast to $8.00/kgMS. This follows Westpac yesterday (at $7.90), and a good recent dairy auction.
SENTENCED
The FMA says that a prosecution bought successfully by them against Yuen Pok (Paul) Loo, a former financial adviser, has resulted in a sentence of a combination of six months’ community detention with a 7pm to 7am curfew, 200 hours’ community work and 12 months’ intensive supervision. Loo was charged with fraud, using forged documents, operating without a license, and failing to comply with FMA orders.
FOCUSING THE GROCERY COMMISSIONER'S WORK
The Commerce Commission has extended its whistle-blowing tool used to report cartel offences anonymously, to its Grocery Commissioner initiative. That will allow supermarket insiders (including suppliers) to report on illegal practices (or more generally "concerning or inappropriate behaviour") in a way the supermarket chains can't identify the source of the information. The tool is here.
SAVING 0.06%
Consumer NZ is touting that the average saving for Powerswitch users is now $409 per year. They say that in 2023, Powerswitch users who switched energy providers collectively saved over $6 million. They say the power plans on Powerswitch cover about 97% of the market. Many more people need to use the tool. After all, Meridian Mercury had $3.2 bln of revenue in 2023, Contact's revenue was $2.1 bln. For Mercury it was $2.7 bln. And for Genesis it was $2.3 bln. Just for those four, that is annual revenues exceeding $10 bln. So $6 mln saved isn't actually that much. Obvious not all the power company revenues relate to household costs - but much of it does. Consumer could perhaps do a better job getting the word out (?). But in the end, it is up to consumers to act on the opportunities.
VERY GOOD, BUT GOOD ENOUGH?
The NZ Superfund has issued a statement noting it achieved a 16.03% return in 2023, pre-tax. The Fund rarely issues media statements on performance unless they are very good (the last one was in September 2021), but they do release actual results monthly on their website. Although they can be proud of the 16%+ result (and it is far better than their opportunity cost benchmark of 5.16%), they did note that it wasn't as good as their "reference portfolio" which achieved an 18.3% return in the same period.
NO MORE REGIONAL FUEL TAX, BUT MORE TARGETED USER PAYS
National says it will kill Auckland’s regional fuel tax. The current 11.5c fuel tax will be replaced with toll roads, congestion charging, and targeted property taxes.
STRONG BIDDING FOR RISK-FREE YIELDS
At today's NZ Government bond auction, there were 116 bls totalling almost $1.5 bln for the $500 mln on offer. But about half the bids won something. The May 2031 $275 bond brought a 4.67% pa yield, down from 4.79% nine weeks ago at the prior equivalent tender. The April 2033 $$150 mln offer was also very popular, but bidders got a 4.75% yield, up sharply from 4.51% just one week ago. Worth keeping an eye on that. And the April 2037 $75 mln tranche went for 4.95% yield, little-changed from the 4.92% tow weeks ago.
LENDERS HESITANT, OR BORROWERS RELUCTANT, OR BOTH
New lending flow data from the RBNZ (C70) shows stable personal lending from a year ago although weakening over the last 8 months, commercial property lending has been low but rising in the last three months of 2023. Lending for farming remains in the dumps especially for dairy. New borrowing for residential property is going nowhere, whether it be by owner occupiers or investors.
SHORT IS POPULAR
The latest Reserve Bank figures indicate that New Zealand's home owner-occupiers are increasingly focusing on shorter term fixed mortgage rates - presumably in the assumption that rates will come down sooner rather than later
BATTLE AGAINST DEFLATION GETTING SERIOUS
China released its January CPI data and it isn't calming nerves. Consumer prices fell by -0.8% in January from a year ago, marking the fourth straight month of decline which was the longest streak of drop since October 2009. This data came worse than market forecasts of a -0.5% fall, and is the steepest retreat in more than 14 years. Food prices declined at a record pace with beef prices down -7.7% in a year and lamb prices down -5.9%. Milk prices were more insulated, down just -0.8% in the year.
ON THE FACTORY FLOOR TOO
Meanwhile the -2.5% drop in producer prices is actually an easing of the declines in the factory sector, even if it is running more deflationary than consumer prices.
SWAP RATES RISE FURTHER
Wholesale swap rates will probably be modestly higher yet 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 +2 bps to 5.70%. The Australian 10 year bond yield is up +2 bps at 4.12%. The China 10 year bond rate is little-changed at 2.45%. And the NZ Government 10 year bond rate is up another +4 bps at 4.85% and a one month high, while the earlier RBNZ fixing was at 4.81% and up +8 bps from yesterday. The UST 10 year yield is now at 4.10% and up +1 bp from yesterday. The UST 2yr is at 4.42% and so that key inversion is still at -32 bps.
EQUITY WINNERS & LOSERS
The S&P500 closed its Wednesday session up +0.8%, strong all day. It closed just a whisker under the 5000 index level. But the NZX50 is down -0.7% late in its Thursday session. But the ASX is up +0.6% in early afternoon trade, still encouraged by the talk of potential Chinese stimulus. Hong Kong has opened its Thursday session down -0.3%, but Shanghai is up +0.9% at its open. Singapore has opened down -0.3%.
OIL PRICES UP
Oil prices are up +50 USc from this time yesterday at just over US$74/bbl in the US while the international Brent price is now just under US$79.50/bbl, a slightly higher rise.
GOLD FIRMS SLIGHTLY
In early Asian trade, gold is now at US$2037 and back up +US$3 from this time yesterday. It closed in London at US$2,035/oz.
NZD FIRM AGAIN
The Kiwi dollar is now just on 61.1 USc and barely higher than this time yesterday. Against the Aussie we are up +30 bps however to at 93.7 AUc. Against the euro we have firmed marginally to 56.8 euro cents. That means the TWI-5 is now at just under 70.4 today and up +20 bps from yesterday.
BITCOIN UP STRONGLY
The bitcoin price has risen strongly today, now at US$46,546 and up a sharp +7.9% from this time yesterday. There's been moderate volatility again over the past 24 hours of just on +/- 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 ».
58 Comments
low wage immigration combined with wholesale neglect of infrastructure.
Already in full swing. Not as aggressively as Aussie, but definitely part of the cunning plan.
Anyone with any street knowledge will also know our education 'export' is largely a front for selling visas.
There are a few reasons (in addition to being xenophobic etc) some of us have been 'down' on immigration for 20 odd years!
That said, when you consider the alternative of employing a 'lazy' local that wants to keep all 'their' wages I guess it's easy see the attraction.
I suggest 50k paid upfront to INZ for each annual work visa a business wants.
I dont understand it, a huge media beat up by real estate mouthpieces in the news tonight about the raging bull market BUT
Swap rates are going UP
And according to Barfoots own analysis prices are still falling.
Time period Number of sales* Total value of sales Average value of each sale
January 2024 504 $546,077,448 $1,083,486 (down 2.5%)
January 2023 431 $480,881,196 $1,115,733
12 months to January 2024 8,675 $9,584,114,840 $1,104,797 (down 5.8%)
12 months to January 2023 8,099 $9,502,787,003 $1,173,328
https://www.barfoot.co.nz/market-reports/2024/january/market-update
Although they can be proud of the 16%+ result (and it is far better than their opportunity cost benchmark of 5.16%), they did note that it wasn't as good as their "reference portfolio" which achieved an 18.3% return in the same period.
Imagine if it had a 1% allocation to the ol' rat poison. Coffee would be spit out of cups around the water coolers of the nation.
they would actually do better by buying Jimbo Coin, as long as they can convince every other fund to do so too
You need to convince the likes of Ray Dalio (recommends 2% allocation to BTC funds) and Larry Fink that Jimbo Coin has value.
Indirectly, I suspect the Super Fund may have some exposure to MicroStrategy, which is a proxy for owning ratty.
Two observations
China wins the inflation war by driving tradables down ie paying global suppliers less?
and if the Super fund is so good govt should just borrow a couple of hundred billion $$ and chuck it in the scheme - voila $10 billion extra to spend each year so Nicola's budget would balance
Alibaba's earnings results saw strong growth from International, in particular driven by Aliexpress, which delivered over 60% yoy growth, especially the Choice section. This is is enhanced experience to consumers by combining better product selection, price and quality with speed of logistics and great customer support.
Choice represented about half of AliExpress’ total orders in January 2024 and continues to deliver rapid order growth.
Another positive data point for Chinese economy: Yum, as its fourth-quarter revenue grew by 19% on the year to $2.49 billion and net profit jumped 81% to $97 million. It was a similar trend for the whole year, with revenue reaching $10.39 billion and net profit hitting $827 million, marking an increase of 14% and 87%, respectively. Yum China aims to expand its store count to 20,000 by 2026, with most of that growth coming from lower-tier cities. The market responded positively to Wednesday’s results, with its share price rising 14.8% to close at 332.8 Hong Kong dollars, though still well below the more than HK$500 it marked in May. Link
Some more good investments coming onto the market soon: https://www.stuff.co.nz/nz-news/350172508/state-emergency-bluecliffs-ho…
More insights on the China property crisis (paywalled):
"These problems are not only rooted in the bad behavior of corrupt officials, greedy capitalists or overextended households. All of these actors were responding to incentives set up by China’s development model, which grew increasingly dependent on real estate and land development for growth."
China's economic problems are structural, and not just the result of fraud or other forms of bad behavior.
https://www.worldpoliticsreview.com/china-property-crisis-evergrande/
China is Proper F&^ked.
But many very rich Chinese have extracted there money moved offshore and taken their gains with them.
I am looking at business opportunities , at the moment everyone is pricing their business on last year or before....... meanwhile revenues are 15-25% down while inflation is pushing expenses up, going to be so disappointed vendors come offers.
The first offer tends to be the best offer.
Skid steers and diggers dropping by 1-2k a month at the moment
just wait for liquidation auctions
At today's NZ Government bond auction, there were 116 bls totalling almost $1.5 bln for the $500 mln on offer.
But the interpolated mid IR swap rate, for today's 2.75% 15/04/37 government tender yielding 4.9499% was - minus 28.75 bps at 4.6624%.
Quite simply, it takes some financial institution’s balance sheet capacity to take on an interest rate swap (the farther the maturity, the more capacity it requires). If balance sheet capacity (the real money in the system, therefore liquidity) is systemically impaired, as in a crisis, or a crisis that doesn’t really end, then to get dealers to give up their precious balance sheet capacity and engage on the other side of a swap someone would have to pay a hefty premium to make it worth it (risk-adjusted) for the dealer to do so. J Snider
The Australians are here obviously, recruiting our police officers ... and also the fact that we’re going to have senior police officers that are coming up to retirement age,” Mitchell said.
“It does pose some challenges ... but the reality of it is that we’ve committed to deliver those 500 additional police officers over the next two years and so now we just have to work really hard, supporting the police, coming up with ways that we can actually do that.”
Our Police Minister openly admitting they have no idea how they will meet their election promise of 500 new police officers. Quite a difference being in charge and having to deliver on what you promised.
More police officers is a good vote winner , but is it the most efficient way of reducing crime , increasing victims positive outcomes?
A large part of their work is domestic violence , are police the only repsone to this ?
Increased use of cctv, and other technology could be a more efficient way of producing better outcomes. Lets face it , if a low value (less than $ 500 ) item is stolen , your chances of seeing it , or getting a conviction would be less than 10 % .
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.