What happened Monday

Economy / news

A review of things you need to know before you sign off on Monday; TSB launches low mortgage rate, auction activity resilient, labour market data resilient too, swaps steady, NZD holds but yen falls, & more

29th Apr 24, 3:59pm by David Chaston

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
TSB cut its one year home loan rate by -25 bps to 6.99%, a level well below almost all other banks and certainly well below the main banks. We also have some analysis of who is borrowing what, and why, here.

TERM DEPOSIT/SAVINGS RATE CHANGES
Westpac trimmed its 8 month special back -10 bps to 6.00%. Kiwibank did something similar taking its 12 month rate down -10 bps to 6.00%, but it did raise its 4 month rate +10 bps to 4.50% and its five month rate by +20 bps to 4.90%. TSB was another it trim ist one year rate by -10 bps to 6.00%

RESILIENT IN SOME AREAS, NOT OTHERS
Overall residential auction activity held its own last week but the shine is coming off results in some regions. There were weak auction results in Waikato and Bay of Plenty, falling sales rates in Gisborne and Canterbury.

LABOUR MARKET SHOWS RESILIENCE FOR THIRD CONSECUTIVE MONTH
Ahead of the March quarter labour market report due Wednesday, Stats NZs monthly employment indicators (MEI) were more upbeat than analysts were expecting. But they also downwardly revised their February data even it was still positive. The MEI is drawn from PAYE employer returns, making it a comprehensive record of people in work, and helping to fill a gap in the otherwise mostly quarterly data on the labour market. The number of jobs is still trending higher but the pace of that expansion has slowed, up +2.0% from a year ago, and about half the peak of +3.6% in April 2023.

BOOMERS WIN AGAIN
The cost of living for the average New Zealand household increased +6.2% in the 12 months to the March 2024 quarter, according to figures released by Stats NZ today. But the pace is slowing. In the Q1-2024 quarter it is up only +1.0% for the average household. For beneficiaries it was +1.1. For Māori it was up +1.0%. For superannuitants it was up +0.7% and the least of the monitored groups. Stats NZ monitors 13 groups and that quarterly +0.7% rise was the least of them all (and the least on an annual basis too, 5.2%).

RURAL PAY RISES
The 2024 Federated Farmers-Rabobank Farming Salaries Report shows that since the last report in 2022, the average salary for a farm worker has increased by $7,480 to $71,411 and the weighted average annual salary across the 13 surveyed on-farm position categories has grown by +13%. CPI rose +12.2% in the same period. For example, the average salary for a dairy herd manager is up +19% to $74,185. A sheep/beef farm manager is earning an average +22% more than two years ago ($88,381) and the average income for an arable farm manager is up +28% to $101,264. But for general hands and shepherds, their TPV (total package value) rises were less than +10% over the two years.

SWAP RATES STEADY
Wholesale swap rates are have likely to be little-changed today. Our chart below will record the final positions. The 90 day bank bill rate is -1 bp lower at 5.63%, a level it has hovered around for more than 60 days. The Australian 10 year bond yield is unchanged from this morning at 4.54%. The China 10 year bond rate has firmed +4 bps to 2.38%. The NZ Government 10 year bond rate is down -2 bps to 5.04% and the earlier RBNZ fix was at 4.97% and +7 bps from Friday. The UST 10yr yield is unchanged from this morning at 4.33%. Their 2yr is now at 5.00%, so the curve is now -30 bps and a slightly lesser inversion.

EQUITIES ALL FIRMER
The NZX50 is up +0.4% in late trade today. The ASX200 is up +0.7%. Tokyo is closed for a public holiday (Showa Day). Hong Kong is up +1.9% in early Monday trade taking the five day rise to +7.8%. From mid-January it is up +20% so perhaps a bull market is developing there. Shanghai is up +0.7% in its early trade. Singapore is little-changed at its open. The S&P500 futures is suggesting that Wall Street will open +0.3% higher.

OIL SOFT
The oil price is soft today from this time Friday at US$83/bbl in the US, while down -50 USc to US$87.50/bbl for the international Brent price.

GOLD SLIPS
In early Asian trade, gold is down another -US$5 from Friday, now at US$2326/oz.

NZD BASICALLY HOLDING
The Kiwi dollar has made back its weekend fall back to 59.7 USc. Against the Aussie we are down to 90.9 AUc. Against the euro we are firmish at 55.7 euro cents. This all means the TWI-5 is now at 69.3 and little-changed.

YEN SLIDES FURTHER
The Japanese yen weakened sharply to 160 to the US dollar, sinking to its lowest levels in over three decades as traders piled on bets against the currency despite illiquid, holiday-thinned trading in Japan. Analysts suggested that the move was exacerbated by stops at the key 160 level that are being taken out. Those losses came as the Bank of Japan refused to yield to market pressure last week, keeping interest rates unchanged. The drop took the NZD to 95 yen, also a 34 year low(high).

BITCOIN DIPS
The bitcoin price has slipped to US$62,659 and down -2.8% from this time Friday. It started a sharpish retreat at 2:30pm today. Not clear why yet. Volatility of the past 24 hours has been modest +/-1.2%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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53 Comments

by kiwiriwi | 29th Apr 24, 4:20pm 1714364428

TSB probably finally realised / learned / gave up price matching of the non-carded rates from the banks and lowered their carded rate. 6.99 / 6.89 has been standard one year 20% LVR rate from the big 4 banks for at-least 6 weeks now.

by Jonny.Foe | 29th Apr 24, 4:40pm 1714365645

So jobs are up 2% as care homes, bus companies, early years, uber(!), and other low-wage employers fill up jobs that have been vacant for ages. Meanwhile jobseeker numbers are up 12% - much higher in urban centres.

What is going on? We have basically boosted our working age population by 3%+ and brought in lots of people who will live ten to a house and work nightshifts in care homes for minimum wage. Our economy relies on tens of thousands of people doing crap, precarious jobs for minimum wage. When the borders are less open, these jobs simply do not clear at the wage offered - leading to business leaders screaming about tight labour markets.

by K.W. | 29th Apr 24, 5:10pm 1714367436

Sadly we still have businesses screaming out for skilled workers whilst we pump record numbers of unskilled people into the economy. There are 15,000 less skilled workers coming to NZ per year than were coming in pre-Covid. While immigrants open vape shops and liquor stores on every street corner, staffed by even more recent immigrants, we are still desperately short the number of medical specialists, engineers, C-Suite executives, technologists, etc that are needed to raise productivity, innovation and output. Meanwhile low skilled NZ workers are rapidly being replaced by cheap wage immigrants, landing them all on JobSeeker. The immigration system is truly broken.

by Jonny.Foe | 29th Apr 24, 6:06pm 1714370789

Caveat: Obviously we don't blame migrants for coming here seeking a better life - we are all a few generations ahead of people that did the same.

Successive Govts have shown a complete lack of vision, strategy and common sense on economic mgmt (incl migration). The rapid (unprecedented) demographic changes we have seen in the last 12 months, along with a self-inflicted economic downturn, are going to hurt us for years as communities fracture and people look for 'others' to blame.

I might be wrong, or applying too simple a model, but I simply do not see where the money is going to come from to pay everyone. Govt is locking spending down, bank lending is flat, domestic savings are locked away, and offshore savings ($90bn of bonds alone) are still accumulating.

by Grattaway | 29th Apr 24, 5:22pm 1714368146

Well they are only crap wages (not necessarily crap jobs) because your greedy landlords keep putting the rent up and the Govt keeps taxing them more - otherwise they would be fine

by Nzdan | 29th Apr 24, 6:00pm 1714370415

Look, these people you call greedy landlords are actually hard working "mom and pop" trying to save for their retirement.

They provide much needed existing houses to those who wouldn't normally be renters, but are consigned to because they don't have the huge head start with borrowed deposits and generous tax breaks afforded to those wanting to grow little property empires, while claiming altruism and rolling out the "I'm just [insert reasoning]" to deflect heat and criticism.

by powerdownkiwi | 29th Apr 24, 6:28pm 1714372125

Existing and much needed, don't belong in the same sentence.

You don't provide existing; it exists already. So you are parasiting...

by Jonny.Foe | 29th Apr 24, 6:12pm 1714371126

Any *minimum wage* job that is monotonous, precarious, repetitive, demeaning, physically very wearing, and / or at unsocial hours is a crap job.

Employers are not be able to fill crap jobs at anywhere near full employment. If the labour market were a free market, employers would have to increase wages until they attracted employees. But the labour market is not free - RBNZ use rates to keep it loose, and govt subsidises low wages with in work benefits.

by Te Kooti | 29th Apr 24, 6:30pm 1714372223

Where would immigrants live if there were no houses to rent? With interest rates here you need to put down 50% deposit to break even on most rentals - so do you expect landlords to lose even more money?

A functioning rental market is a necessity to any economy, you having an ideological dislike of it is irrelevant.

by JimboJones | 29th Apr 24, 6:37pm 1714372671

Landlords will never disappear forever - but they may disappear at current house prices and return once they are more affordable to buy and rent. I doubt anyone has an issue with buy to rent landlords that maintain a quality house, it’s the speculators that are only wanting capital gains that are the issue.

by Jonny.Foe | 29th Apr 24, 8:14pm 1714378475

Private sector landlords dropped from 60% to 8% of properties in the UK between 1940 and the 1970s. The economics of the rental market changed - particularly quickly in the mid-70s, and both right and left leaning governments welcomed the transfer of properties to the state / social sector because it saved them money in rent subsidies, enabled them to house people more efficiently, and, back then, most people thought landlords were rentiers.

by earnedincome | 29th Apr 24, 8:39pm 1714379996

back then, most people thought landlords were rentiers.

I genuinely believe that since we in the west (and elsewhere) convinced ourselves that our particular brand of capitalism is somehow 'the natural order of things' we have lost sight of some fundamental economic realities. There was a lot to be said for having healthy discussion and debate around alternative economic systems. Even without agreeing with a communist or other hardcore socialist, having their ideas taken seriously strengthened the understanding of capitalism for its proponents.

To put it another way, the successful moving and restricting of the overton window by neoliberal technocrats has left us all intellectually worse off. Amongst other things, they've convinced everyone that those enjoying a free lunch have actually earned it.

by ChrisOfNoFame | 29th Apr 24, 11:07pm 1714388841

Even up to 2000. I never mentioned my rentals in the UK as the dirty looks and comments came thick and fast. Odd too as the yields were way higher than anything you'd get in NZ. Strangely though, my reno projects got enthusiastic response (although I'd never mention some of them were retained as rentals).

by mfd | 29th Apr 24, 6:45pm 1714373111

With interest rates and house prices, you mean. One interpretation would be an investor class with little-to-no yield sensitivity buying houses to the moon, and then clamoring for public support of the rental market because they have bid yields too low with a vague assumption that cap gains will see them right in the end.

by Te Kooti | 29th Apr 24, 7:16pm 1714374988

There is a place for landlords, without them renters would have to stump up and buy somewhere - and prices would be the same with or without investors investors if renting wasn't an option. It still costs $1m to build a basic house.

The issue is capital gains tax which I have always been in favour of. If it's a business then tax it as one.

by HouseMouse | 29th Apr 24, 7:24pm 1714375474

by HouseMouse | 29th Apr 24, 7:20pm 1714375251

What if the government started building lots of housing for FHBs - you know, like it used to do in the distant past.

That would equal fewer parasitic developers, and fewer parasitic landlords.

And much less of a boom / bust economy

by ChrisOfNoFame | 29th Apr 24, 7:59pm 1714377574

The decision was made back in the 90s (or 80s?) by a National government that they'd support the private sector in providing more rental accommodation. So we've got exactly what National Party supporters voted for (assuming they even knew they were voting for this.) At the time, many economists - both nationally and internationally - predicted this would not end well. Golly. How right they were.

by sit23 | 29th Apr 24, 10:35pm 1714386908

The problem with Capital Gains Tax is that it is a tax on money that doesn't exist. I have paid a fortune in tax when selling properties for profit, but not until I had the income in my hand. That is horrible but fairer than demanding that government forces people to pay tax on income they haven't earned yet.

by RickStrauss | 29th Apr 24, 10:52pm 1714387962

Eh. Capital gains are a form of income, and tax is paid on that income. Not some other time.

by Rampart | 30th Apr 24, 7:01am 1714417291

How do you pay for the capital gains tax if you haven’t sold the asset?

by ChrisOfNoFame | 29th Apr 24, 11:15pm 1714389305

You're referring to just one CGT system - and an outlier at that. Most countries pay the CGT tax on realization. The problem with the 'realization' approach is that tax revenue is extremely lumpy. Further, it distorts the market as people may hold off hoping to pay less CGT tax (which is another reason why taxing annually made sense).

(Bit confused as to how my comment prompted an unrelated comment on CGT. Care to enlighten me? Have I missed something?)

by Nzdan | 29th Apr 24, 11:19pm 1714389541

Uh, sorry, what? A capital gains tax is what you pay on the profit you take when you sell a property, so it's definitely a tax on money that exists. It's not some "holding tax" where some bureaucrat decides the property you still own is now worth $100k more and you have to pay $33k in tax.

You might be confusing it with a wealth tax?

by ChrisOfNoFame | 29th Apr 24, 8:01pm 1714377666

"It still costs $1m to build a basic house."

LOL. Really?

by HouseMouse | 29th Apr 24, 8:59pm 1714381151

LOL indeed

by mfd | 29th Apr 24, 10:10pm 1714385437

I find it hard to imagine that investors have not helped drive house prices higher. It's obviously not all their fault, but they tend to be a big part of the feeding frenzy when prices are rising fast.

There's obviously also a need for a rental market. Students and mobile workers, or people new to a city, will want somewhere to live without putting down six figures. I just think we'd be better off with a smaller rental market and more home owners. There's plenty of people out there who want to own their home but are priced out.

by Nzdan | 29th Apr 24, 11:29pm 1714390156

You just have to look at RBNZ C31. Compare Investors vs FHB for number of borrowers and aggregate average borrowed amounts.

Even where Investors are borrowing less, if you add 20% to FHB and 40% to Investors the FHB will be outbid.

2015 : 22k FHB @ $323k average vs 65k Investors @ $335k average
2016: 23k FHB @ $373k average vs 62k Investors @ $342k average
2017: 21k FHB @ $388k average vs 41k Investors @ $331k average
2018: 26k FHB @ $393k average vs 40k Investors @ $341k average
2019: 28k FHB @ $417k average vs 36k Investors @ $353k average
2020: 30k FHB @ $464k average vs 42k Investors @ $394k average
2021: 32k FHB @ $549k average vs 37k Investors @ $494k average
2022: 23k FHB @ $573k average vs 22k Investors @ $524k average
2023: 26k FHB @ $555k average vs 21k Investors @ $490k average

by J.C. | 29th Apr 24, 4:43pm 1714365780

The Japanese yen weakened sharply to 160 to the US dollar, sinking to its lowest levels in over three decades as traders piled on bets against the currency despite illiquid, holiday-thinned trading in Japan.

Has Yellen made sure Japan doesn't dump their US treasuries to rescue JPY? Are people even contemplating what havoc that may cause to the carry trade?

Now I have seen this scenario.

If Japan can buy oil and gas in JPY, rather than USD, they can print JPY to buy energy and then Saudi / UAE / Kuwait could take those JPY to buy goods and services from Japan or buy Japanese assets or make investments in Japan. This would slow down the need for Japan to sell UST to raise USD to buy more expensive energy, keep their trade account in better control and reduce the pace of imported inflation, which many believe is the reason Japan will intervene in the first place. Weak JPY has also been good for domestic tourism industry in Japan which helps their current account as well.

The US will be pissed off but really what can the US do at this point to stop them when Japan owns $1.1trn in USTs that it will need to sell to defend the JPY?

by J.C. | 29th Apr 24, 4:58pm 1714366696

Oh my. In the space of 5 mins, JPY starts rocketing. JPYUSD +2%. No idea what's happened.

This is like crypto.

We are witnessing something historic. Gold should be rocketing.

by Baywatch | 29th Apr 24, 5:01pm 1714366904

Can you explain to all of us "normies" JC whats going on? Its sound exciting...have aliens landed?

by J.C. | 29th Apr 24, 5:10pm 1714367409

Can you explain to all of us "normies" JC whats going on?

Well the only explanation I can think of is BOJ intervention. It's a public holiday in Japan but no doubt the central bankers and investment bankers will be at the desks.

This is something to take seriously as it does have global implications. One would think gold would catch a bid here as this is quite chaotic.

by ChrisOfNoFame | 29th Apr 24, 5:11pm 1714367464

Japan decided they had too many USD?

(Just quietly, I hope their central bank knows what it's doing.)

by powerdownkiwi | 29th Apr 24, 5:18pm 1714367890

They have a yen for that kind of work...

by J.C. | 29th Apr 24, 5:23pm 1714368196

If JPY keeps falling, China is going to have to devalue the yuan.

Japan and China are large holders of USDTs.

Sooner or later, JPY carry traders could be forced to dump USD-denominated assets.

by ChrisOfNoFame | 29th Apr 24, 7:33pm 1714376024

Japan used to be a big investor in China. Are they still?

by Rhumline | 29th Apr 24, 5:17pm 1714367869

Bit of pushback from somewhere? Struggling to get under 155?

by Audaxes | 29th Apr 24, 5:39pm 1714369198

Japanese Yen PLUNGING, Worrying Governments Around The World

It's not just that Japan's yen is crashing, it's what a yen crash means to everyone not only in Japan. But why? All you'll hear from the mainstream and most "experts" is that every currency exchange rate movement including JPY must be somehow related to a central bank, especially the Fed. It's a myth easily debunked. When doing the debunking the real truth emerges and it's not good.

by J.C. | 29th Apr 24, 6:05pm 1714370738

Thank you for sharing sir. I watched this and this is important in terms of not behaving like a Karen when it comes to trying to understand everything through interest rate differentials and how govts react. No doubt the likes of Nomura are playing their part. As Jeff points out, the impacts on stability are concerning.

by Dgm | 29th Apr 24, 5:44pm 1714369445

When I log in via Press Patron, it says my account is blocked?

by Justa comment | 29th Apr 24, 5:45pm 1714369522

The NZX surged at the close, looks like RYM shorts jumped back in.

by Flying high | 29th Apr 24, 6:55pm 1714373737

Volatility index will be high. Gainers incl interest rate sensitive ... mmm

by JimboJones | 29th Apr 24, 6:30pm 1714372236

Kiwikidnz no mention of this poll? https://www.stuff.co.nz/politics/350259986/live-labour-greens-and-te-pa…

by HouseMouse | 29th Apr 24, 7:07pm 1714374471

Both options are so crap, I imagine it’s going to keep looking this way for many years, whoever is in government. Ie. New government gets in, people see they are rubbish, opposition starts polling well. And vice versa

Unless we get a massive improvement in the calibre of politicians - unlikely, I would suggest.

by ChrisOfNoFame | 29th Apr 24, 7:48pm 1714376890

I'd prefer we got a massive improvement in the calibre of VOTERS !!!

by HouseMouse | 29th Apr 24, 9:00pm 1714381215

Nice!

I guess we get what we deserve

by kiwikidsnz | 29th Apr 24, 7:44pm 1714376681

Seeing as you asked: i suggest that the polls are swinging within the margin of error. Roy Morgan in a week or so will be interesting, my understanding is they poll over a longer period.

Remember that I have previously disclosed that I have historically voted Labour (90%) for ~50 years including Jacinda twice. So, unlike several blinkered propagandists here I try to consider what's best for everyone. Therefore, if I were the Coalition I'd double down on the program.

by ChrisOfNoFame | 29th Apr 24, 7:53pm 1714377222

Closely following the poll result, One News had a segment on how construction workers are disappearing because there's no work for them.

A common thread among the business people interviewed was that the NACTF government - by abruptly canning works put in place by the previous government - had killed off all the work they had lined up and had not actually got anything going to replace it. i.e. a massive hole in the revenue stream that'll last for 9-12 months. And when it does resume ... there'll be no workers to do it.

Golly! Who'd have seen that coming? /sarc

Just shows that the Luxon talk of what an excellent manager and strategist he was going to be was just that ... Talk.

(And some here still think they're doing a great job? OMG how one-eyed can you get!)

by kiwikidsnz | 29th Apr 24, 8:03pm 1714377834

"OMG how one-eyed can you get"

ROFLMAO

by sharetrader | 29th Apr 24, 8:04pm 1714377872

both parties do that, labour canned some of nationals roads after they got in, it is frustrating because it increases the cost for us as we have to bring the people in for the projects, train people, buy in equipment rather than move it from project to project, a classic example is the puhoi to warkworth motorway, the next section to wellsford should have been ready to go as it was being wound down and finished so the people and equipment could move onto it, instead a lot of the people have left the area and the equipment has been sold and some shipped offshore

by agnostium | 29th Apr 24, 8:24pm 1714379065

Simian Brown canned a whole bunch of shovel ready projects late December, lots and lots of small scale, low cost low risk, fully consulted and with community support. Things like school crossings and bus shelters.

Why? Spite and ideological blinkers. It was a Labour programme and that was enough for him to can it without ever even being briefed properly, or discussing the projects with the council's that had put them together.

Luxon is undoubtedly the worse National leader in living memory but Simeon is possibly the worse Transport Minister NZ has ever seen (and yes, I'm ranking him lower than Twyford and Wood who must take quite a lot of the blame for the Light Rail fiasco).

by HouseMouse | 29th Apr 24, 9:05pm 1714381553

Yep there was already a very low bar. As I said after the election, the last government was pretty bad, but there was every chance this mob would be worse

by HouseMouse | 29th Apr 24, 9:02pm 1714381347

Yes LOL

Although I think a big part of the work drop-off is private sector house building. I think that would have happened anyway (KO were already pulling back big time in 2023)

by ChrisOfNoFame | 29th Apr 24, 11:20pm 1714389653

In which case blame should be targeted at the RBNZ and their utterly antiquated way they attempt to 'control' inflation ( - inflation they helped to kick off too!)