What happened Wednesday

Economy / news

A review of things you need to know before you sign off on Wednesday; Westpac cuts retail rates again, residence visas stay elevated, retail sector in survival mode, mortgages get household priority, swaps stable, NZD down, & more

24th Jul 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
Westpac has cut most of its fixed rates again today. Unity Money alos cut rates today, and it withdrew its 24 month FHB special (but kept its 12 month FHB special). The details are here. All rates are here.

TERM DEPOSIT/SAVINGS RATE CHANGES
Westpac also trimmed most of its term deposit rate of 8 months and longer. It not longer offers any 6% rates. Unity Money also trimmed their TD rate offers. All rates less than 1 year are here, for 1-5 years, they are here.

SETTLING IN HIGHER
Just over 4000 people a month are gaining residence visas in 2024. While that is sharply less than the post-pandemic surge, it is settling down to about a third higher than pre-Covid levels.

SURVIVAL THREAT
The retail sector is reporting very tough winter trading. Almost 43% of retailers who responded to a Retail NZ survey were unsure whether they will survive the next 12 months, a substantial jump from 32% in the previous quarter, and also compared with the 36% recorded in the second quarter of 2023.

OPEN BANKING & OPEN ELECTRICITY "ON THE WAY"
The Government introduced the Customer and Product Data Bill today, which they say is an important step for improving the regulation of digital markets and encouraging competition. Their approach is giving more choice to consumers and creating a more competitive environment in which to do business. The focus is on both the banking and electricity markets.

DAIRY POWDER PRICES EASE FURTHER
There was a GDT Pulse auction event overnight. Basically prices fell. The SMP price was down a bit more than expected, down -2.8% from last week's full GDT event and taking it back to levels last seen in April. The more important WMP price was down too, down -1.5% in a lesser retreat than expected.

MORTGAGE PAYMENTS GET PRIORITY
The RBNZ released its Q2-2024 mortgage sector reconciliation today (C35) and it reveals some rather remarkable shifts. The amount of interest borrowers paid in the 90 days from April 1 to June 30, 2024 was $5.5 bln, up +30% from the June 2023 quarter. That is a diversion of $1.275 bln between the two quarters, money not available for the wider economy. Borrowers made scheduled repayments of $7.3 bln in the quarter, the most since this series started in 2014. Perhaps even more remarkable, borrowers kept up their excess payment levels, making another $4.1 bln over and above. And while this was no record, it is still well above the ten year average of excess payments in a quarter. Repayment deficiencies remain very low and nowhere near a record. Write-offs remain insignificant at just $2 mln for the whole $357 bln sector. This situation is very positive for banks and may be continuing; no wonder Westpac said today ""We continue to see fairly low numbers of customers struggling with cost of living challenges ...".

TAX CUT CALCULATOR
We are now just seven days until the personal income tax cuts come in to effect. You can find an estimate of how much you will save here.

NEW PROPERTY TAX TOOL
And the IRD is encouraging people to check out their updated property tax decision tool. They say it is a that tool helps to work out whether the sale of a property is taxable under any of the land taxing rules, including the bright-line test. Find it here.

SWAP RATES HOLD
Wholesale swap rates are likely to be little changed again today on international influences. Our chart below will record the final positions. The 90 day bank bill rate was unchanged at 5.54%. The Australian 10 year bond yield is up +4 bps from this time yesterday to 4.41%. The China 10 year bond rate is down -1 bp at 2.24%. The NZ Government 10 year bond rate is unchanged at 4.46% and the earlier RBNZ fix was at 4.41% and down -1 bp from this time yesterday. The UST 10yr yield is up +1 bp at 4.26%. Their 2yr is now at 4.46% is a notable fall, so that curve is now inverted by 'only' -20 bps.

EQUITIES MOSTLY LOWER
The NZX50 is up +0.2% in late Wednesday trade. The ASX200 little-changed in afternoon trade. Tokyo has opened its Wednesday trade down -0.2%. Hong Kong is down -0.8%. Shanghai is another -0.7% lower. Singapore has opened down -0.1%. The S&P500 was down -0.2% Wall Street in its Tuesday trade. The NZX50 looks relatively good in this group.

OIL DOWN FURTHER
The oil price is down more than -US$1 at just over US$77/bbl in the US (recall it peaked in early April at US$87/bbl), and now to US$80.50/bbl for the international Brent price (US$92/bbl was the April peak here).

CARBON PRICE LOWER AGAIN
Today the carbon price fell again, now $50.50/NZU and down from $52.30/NZU at this time yesterday.

GOLD FIRMS
In early Asian trade, gold is up +US$14 from this time yesterday at US$2413/oz.

NZD LOWER AGAIN
The Kiwi dollar is down almost -½c from this time yesterday at 59.3 USc. Against the Aussie we are holding lower at 89.9 AUc. Against the euro we are down slightly at 54.7 euro cents. This all means the TWI-5 is now at 68.4 and down -30 bps.

BITCOIN RETRACES
The bitcoin price is down -3.2% from this this time yesterday, at US$65,509. Volatility of the past 24 hours has been modest at just on +/- 1.7%.

USE OF AI
No articles on this news service are produced with AI. Occasionally we use AI to derive images. They are always identified in the attribution.

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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77 Comments

by tim52 | 24th Jul 24, 4:09pm 1721794150

Look at our dollar fall. Another week or two of this and we might be getting excited about rate rises. There's some support upcoming but that slope is pretty steep.

by Foxglove. | 24th Jul 24, 4:23pm 1721794983

NZ$ retreating & trading banks hauling back interest rates regardless, and ahead of the RBNZ’s position and forecasting, particularly that of only six weeks ago or so. Judging by recent utterances imagine the government itself is reasonably content to observe this progress. Problem will be that the former will invite inflation before the latter actually returns improved export earnings which may well cause more teeth gnashing & wailing amongst the RBNZ hierarchy.

by bw | 24th Jul 24, 4:36pm 1721795813

Support at 0.5880 then 0.5714 then... then the trap door opens with 0.5030 beckoning?

by Te Kooti | 24th Jul 24, 4:27pm 1721795256

Falling Kiwi = a lack of confidence in the Coaliton perhaps?

There is no back door to growth, we can cut rates to try and stimulate some sort of demand in the economy but no ones getting wealthier in real terms.

Welcome to the reality of progressive politics and economics - everyone is getting poorer but you can sleep at night knowing you are doing your bit to stimulate economic growth in another country.

by Advisor | 24th Jul 24, 4:37pm 1721795857

Plenty of wannabes here were talking up the export boosts for our farmers that come with a weakening NZD.

Let’s start by understanding that we’re a trade deficit nation and more expensive imports will further depress our consumer confidence and worsen retail margins when the sector is already doing it tough.

by Pa1nter | 24th Jul 24, 4:50pm 1721796640

With higher rates, we appear to be a trade surplus nation.

Doesn't appear that retail is doing us many favours other than being a jobs program.

by Jonny.Foe | 24th Jul 24, 5:18pm 1721798329

I hope this little chart helps you understand that one month of trade surplus does not a trade surplus nation make!

by Pa1nter | 24th Jul 24, 6:36pm 1721802988

No, I'm quite aware our recent medium term history is of a nation that consumes more than it makes.

The recent turn against the trend displays what'd make us a trade surplus nation longer term; a dramatic falloff in imports related to internal consumption.

by Murray Falconer | 24th Jul 24, 11:25pm 1721820339

Agree, I suspect higher interest rates would be a blessing in the longer term for NZ Inc. as a whole.

by Te Kooti | 24th Jul 24, 7:07pm 1721804827

A BOGS surplus is a must given our dire Primary Account.

by Uninterested | 24th Jul 24, 7:13pm 1721805228

Except one thing: oil is really low at the moment...

by Toye | 24th Jul 24, 4:34pm 1721795644

Orr may have to be naughty and do what he.. said he was going to do. November or Feb?

by Norm | 24th Jul 24, 5:59pm 1721800759

November, but only if the Fed has dropped before then.

by lonewolfnz | 24th Jul 24, 4:12pm 1721794358

Convert all those equity moves into NZD and you have some very happy investors today

Also Ethereum ETF now running with a healthy $150m or so inflows on day 1.

Let's see what Trump says this week at the bitcoin conference

by J.C. | 24th Jul 24, 4:19pm 1721794743

Let's see what Trump says this week at the bitcoin conference

Word on the street is that Kamala wants to speak at the Bitcoin conference. What do you think she have to offer Wolfie? Doesn't make any sense as it will simply enrage Pocahontas Warren.

by Baywatch | 24th Jul 24, 4:20pm 1721794840

Bitcoin Conference could host huge election showdown with Kamala Harris as potential speaker

That would spook Trumpy

by J.C. | 24th Jul 24, 4:31pm 1721795492

Why? What does Kamala know that the Orange doesn't? The Dems are against banks holding crypto. Research SAB21 accounting is you don't already know. Warren and Pelosi wear the pants. Not Kamala or Sleepy Joe.

by powerdownkiwi | 24th Jul 24, 4:41pm 1721796085

Astute observation.

Yes, they are front-puppets, as was Reagan. Clinton was an insider... The neocon blob elite have run things for decades - but that had to falter at some point. Obama was a useful soft-front, Harris could be too - they cannot stand Trump not because of his human failings, but because he cannot be trusted to champion their interests.

by J.C. | 24th Jul 24, 4:48pm 1721796527

Thanks Power. It's difficult for people to understand the Dems are simply the puppets of their donors. BTW, Soros is behind Kamala.

by Baywatch | 24th Jul 24, 5:25pm 1721798745

"Dems are simply the puppets of their donors"

OMG..your kidding me, face palm moment. Thank goodness the republicans and even closer to home the coalition are independent.

by J.C. | 24th Jul 24, 5:41pm 1721799697

You think they operate on donations from the hoi polloi?

by Foxglove. | 24th Jul 24, 6:11pm 1721801469

Nothing new though is it. For example the ill-fated President McKinley, reasonably well respected and accredited by history, was completely smothered in the pocket of his backer Marcus Hanna. On the other side, at the time, just as much was the large identity of W R Hearst. At least the Kennedys largely financed themselves and that including buying the trade unions etc, votes. The whole damn political system, from community hall to the White House, exists and operates on corruption and pay back. What’s in it for me, what do I get back for giving you something. The republicans are backing Trump first and foremost because they view him as the optimum option to win power and turn the taps on, fill the troughs, for their waiting snouts.

by J.C. | 24th Jul 24, 5:42pm 1721799764

Nancy Pelosi has done alright

by Uninterested | 24th Jul 24, 7:17pm 1721805445

At least they do not erase their opponents like in some other jurisdictions.

by Mr_Jolly | 24th Jul 24, 8:37pm 1721810254

Have you seen the trail of bodies who've been Arkensided?

by Mr_Jolly | 24th Jul 24, 8:37pm 1721810272

Have you seen the trail of bodies who've been Arkensided?

by IT GUY | 24th Jul 24, 4:15pm 1721794531

Rental prices have fallen for the first time since 2022, figures from Trade Me show . Trade Me's latest Rental Price Index revealed a slight decrease in rents, with the national median dropping $5 month-on-month to $645 a week.

by Advisor | 24th Jul 24, 4:45pm 1721796314

Yeah, net migration has turned negative in recent months. Kiwi bank reported that incoming migrants are spending much less than the average consumer in NZ to begin with. The population Ponzi is shooting itself in the foot bringing people willing to bunk in small apartment with 7 other roommates.

You pay peanuts, you get monkeys!

by HouseMouse | 24th Jul 24, 5:25pm 1721798724

Also big surge in rental supply in Auckland

by IT GUY | 24th Jul 24, 7:27pm 1721806053

I didn't see that coming

by JimboJones | 24th Jul 24, 7:29pm 1721806198

That’s what she said

by interesting1234 | 25th Jul 24, 7:07am 1721848031

Net migration negative. Cue the increase in spring listings that will come, more people delisting their for sale properties to try and rent them as they aren’t getting their unrealistic prices, and we have a recipe for further price drops and rent drops die to oversupply. It’ll be interesting to see what xmas looks like this year, buckle up.

by Murray Falconer | 24th Jul 24, 11:31pm 1721820682

Landlords dropping rents in anticipation of lower interest rates?

by Flying high | 25th Jul 24, 6:34am 1721846075

In response to the tax changes... oh and fewer tenants

by J.C. | 24th Jul 24, 4:16pm 1721794578

Something's up in Canada. I read about the Bank of Canada's REPO crisis getting worse - $16 billion of liquidity injections today. This suggests one of the banks is in trouble, but it's unclear which one.

Then I see this:

Canada’s central bank has been shrinking its balance sheet for more than two years, withdrawing the extraordinary stimulus it provided during the COVID-19 crisis. Assets have fallen to around $273 billion from a peak of more than $570 billion as officials have allowed the bonds on their books to mature without replacement, draining liquidity from the country’s financial system.

https://financialpost.com/fp-finance/banking/cibc-says-bank-of-canada-m…

by the Joneses | 24th Jul 24, 4:39pm 1721795988

You know the report must be pretty bleak if Luxon is going to make a representative apology on the topic. He isn't doing it for the woke credit.

https://www.1news.co.nz/2024/07/24/state-care-has-key-role-in-creating-…

by Baywatch | 24th Jul 24, 5:31pm 1721799071

I wonder how many of the commentary here would have any understanding of the link to gangs...

The law-breaking law makers

The abuse in those institutions was one part of the story. The other part was the silencing, another form of abuse. Perpetrators silence their victims, and the state has tens of thousands of victims.

by bw | 24th Jul 24, 4:43pm 1721796180

Interesting night ahead. 0.5915 and looking even more nervous.

by J.C. | 24th Jul 24, 4:56pm 1721797013

You should also keep an eye on JPYNZD. Now up 6.8% in past month. Might be just a flash in the pan but interesting all the same.

by Eschaton | 24th Jul 24, 4:55pm 1721796950

A big green area near where I live, including all the trees/habitat, have been ripped up for fletchers to build a bunch of soulless overpriced sardine tins for our uncontrolled 100% imported population growth. Sad.

by JimboJones | 24th Jul 24, 5:11pm 1721797892

You could have said the same thing 150 years ago...

by Uninterested | 24th Jul 24, 7:23pm 1721805789

Although it is only in recent times that back yards, side yards and front yards have gone missing...

by JimboJones | 24th Jul 24, 7:27pm 1721806033

They may have said “it’s only recently that back forests, side forests, and front forests have gone missing”.

by vman | 24th Jul 24, 5:19pm 1721798380

Sheesh...I think a few folk in here are watching too much Fox News...

by J.C. | 24th Jul 24, 5:34pm 1721799285

Not enough perhaps. Personally I prefer conspiracytheory dot com

by David7 | 24th Jul 24, 8:05pm 1721808337

You think any of the news is real?

by mfd | 24th Jul 24, 5:20pm 1721798400

Looks like New Zealand Oil and Gas are cutting their last ceremonial ties after abandoning the NZX:

"ECHELON, THE NEXT RUNG ON OUR JOURNEY

New Zealand Oil & Gas (ASX:NZO) are pleased to announce that we will be hosting a live webinar on July 31st at 1:30pm (NZST) with Chief Executive Andrew Jefferies"

by Alpeg | 24th Jul 24, 5:52pm 1721800344

Lower dollar will boost tourism no question

by J.C. | 24th Jul 24, 6:08pm 1721801296

Perhaps like Japan

Japan has never seen so many tourists flood into the country so quickly.

The yen’s historic collapse, meaning a cheaper traveling experience for those with tourist dollars to spend, coupled with the post-pandemic surge in global tourism, has sparked interest in the nation like never before.

https://www.japantimes.co.jp/news/2024/06/29/japan/japan-tourism-focus/

by agnostium | 24th Jul 24, 10:18pm 1721816319

It doesn't matter if the NZD drops if prices continue to inflate. Very expensive to visit NZ at the moment.

by Let me be Frank | 24th Jul 24, 6:32pm 1721802754

you think NZD at 0.58 USD as opposed to say 0.62USD will be the determining factor as to whether somebody will book a flight to NZ ?

by JimboJones | 24th Jul 24, 6:48pm 1721803689

You could apply the same argument all the way to infinity. Price will always be a determining factor, and that determining price will vary by person.

by goldni | 24th Jul 24, 9:52pm 1721814745

Less likely not to book a flight of the only news out of NZ they've seen recently is clips of protesting.

by nz-it-worker | 24th Jul 24, 6:11pm 1721801486

NZX50 up 0.85% late in the day and to its highest level in 2 and a half years.

A bit irrational, but I'm not complaining.

by DaveB1978 | 25th Jul 24, 5:47am 1721843244

Dividend stocks will go up as interest rates go down due to people seeking a higher return.

by longjohndrop | 24th Jul 24, 6:12pm 1721801543

Lower Much Faster we go David 🍿🍿

8bp down across the board is not stable.

by RossoCorsa | 24th Jul 24, 6:22pm 1721802157

Well at least in the shorter end of the curve.. 10y only down a couple.

2y IRS down almost 100 bps in 3 months now.

by Retired-Poppy | 24th Jul 24, 6:30pm 1721802638

Now the Brightline has been shortened, it's interesting the IRD have just updated their Property Tax Tool...how timely!

Going forward, under fiscal duress, I think it's more about attention being focused on the intention behind property purchases from the outset. To be assessed under the Intention Rule, there is no retrospective time limit.

by Amokk | 24th Jul 24, 6:46pm 1721803581

We can only hope that their monitoring includes people like this member of the FB Property Investors group (this is far from an isolated post on this subject), where the focus is clearly on capital gains:

"Hi all. We are in the process of purchasing our first investment property using the equity in our owner-occupied home. The purchase price is $450,000, with a rental return of $590 per week. We need to top up approximately $100 a week and are satisfied with these numbers. What should we be aware of regarding taxes, etc.? We will be managing the property ourselves as it is in the town we live in."

by JimboJones | 24th Jul 24, 6:50pm 1721803841

It could actually be based on future rent increases, interest rate decreases, etc. Very hard to prove capital gains was the only reason...

by Beanie | 24th Jul 24, 7:04pm 1721804664

Tax is different to criminal law. The IRD make an assessment and it's up to you to prove they are wrong.

by JimboJones | 24th Jul 24, 7:24pm 1721805889

True. But you really could buy a property right now with the assumption that rents will go up, the RBNZ is mandated to increase them 2% a year.

If anything the IRD should have applied this in the days of capital gains, not now where they are much less guaranteed.

by K.W. | 24th Jul 24, 9:57pm 1721815069

Rents go up over time, mortgaages come down as they are repaid, and eventually you have a debt free income. How does that prove you were only in it for capital gains? The intention test means you intended to sell it at the time you purchased it - it does not mean that you cant change your mind, or that you have to hold the asset for infinity. It is not a capital gains tax - its an income tax.

by J.C. | 24th Jul 24, 7:01pm 1721804507

More "seemingly" corrupt actions between KPMG and the Aussie public sector. Strange thing is that it's related to an agency related to corruption. Nobody wants to answer any questions or be held to account.

They're (KPMG and the public sector) just taking the pis now. Nothing can really seem to be corrected in terms of ethics.

The Department of Climate Change and Water has handed disgraced consultancy KPMG an opaque $62,800 contract in connection to the National Anti-Corruption Commission.

https://theklaxon.com.au/watergate-links-in-question-over-mystery-kpmg-…

by Uninterested | 24th Jul 24, 7:11pm 1721805070

I'm guessing here but I would imagine that the excess mortgage payments may be those who have yet to face the full force of the higher mortgage rates.

In which case this is extremely prudent. Amazingly prudent.

Something which Govts and Councils etc would never ever contemplate.

by nktokyo | 24th Jul 24, 7:45pm 1721807115

Just read the abuse in care summary on the Herald.

I think I'll park the economic news chat until tomorrow. So very sad.

by JimboJones | 24th Jul 24, 8:07pm 1721808437

I can’t understand why anyone would be like that. I guess it’s just evolution, we weren’t as evolved back then. People will look back on current times and wonder how it happened too.

My mum always says things were better back in the old days. But then we hear the stories of almost all kids being beaten and neglected and abused and it’s hard to believe.

by Kate | 24th Jul 24, 9:19pm 1721812774

And of course, because of the trauma, it is almost impossible to become a good parent as a result. The harm inflicted lives through more than a single generation. Sadly, the story seems to be similar for most indigenous peoples - steal their land and then their souls. I find it all very overwhelming - those of us who have had the privilege of a blessed childhood owe so much to those who didn't. We can begin to pay back the harm through understanding, remorse, empathy and generosity in whatever way big or small that we can..

by Foxglove. | 24th Jul 24, 10:16pm 1721816214

The meaning of life is children. Without children humanity has no meaning. Children are born in all innocence to love and trust their parents. That the pure honesty of that gift should be ignored and rejected is the most profound betrayal that could ever be experienced by any child and sadly, it is the setting for the unhappiness and trauma that more often than not, follows.

by singautim | 25th Jul 24, 12:52am 1721825527

Roughly half of modern adults have no children - do they have no meaning to their life?

Babies are not born loving their parents. That develops over time. To grow up successfully from birth and for several years they need adults (usually their parents) who love them and especially to provide warm physical contact.

Adopted in the first six months children grow up no different from children with blood parents.

by Baywatch | 25th Jul 24, 8:17am 1721852275

The meaning of life is children. Without children humanity has no meaning. - you need to go back to the drawing board Foxy

by singautim | 24th Jul 24, 10:31pm 1721817088

You Mum was right. 60 years ago my grandparents may well have worried about me and my siblings being beaten by other kids or caned by a teacher although they knew we'd not be killed. Now I am a grandparent and worry about my grandchildren's mental health, worried about self-harming, worried about children committing suicide. None of those troubled your Mum's generation. I feel sorry for modern teenagers - that was the age when my generation felt most free.

Ref the abuse: power corrupts and absolute power corrupts absolutely.

by DaveB1978 | 25th Jul 24, 5:45am 1721843115

The problems always existed. You just hear about it more now. You hear about lots of things more now.

Road deaths is a good example. In 1990 there were about twice as many road deaths as there were in 2022. That doesn’t even take into account the fact there are far more cars now. The suicide rate is lower now than in the 90’s (any is too many) but it feels it is getting worse. Mental health is something people talk about now. Never heard of that years ago. It didn’t mean people didn’t have a lot of serious mental health issues. People just didn’t talk about it and suffered in silence.

by singautim | 25th Jul 24, 8:17am 1721852261

You are right to an extent. Less was reported officially but 'suffered in silence' only applied to those in small isolated houses in unusually small families. Nosey gossip ruled unlike today where you have little idea of the people living in your neighbourhood. The data collected from the surveys where they ask people 'are you happy' are clear - young women in particular are dramatically less happy. As teenagers we had thin girls and plump girls but no anorexics and no clinically obese.

by JamesM | 24th Jul 24, 9:22pm 1721812975

Tragic and sickening.

by Baywatch | 24th Jul 24, 9:56pm 1721814994

'A national disgrace': scale of state care abuse laid bare

I dare some of you to read the stories...

https://www.abuseincare.org.nz/reports/whanaketia/survivor-experiences/

by pacifica | 25th Jul 24, 3:48am 1721836126

For many disabled people those stories are all too familiar, with intergenerational & past trauma and even current abuse in medical care services. Sir Robert Martin is literally a hero and the best most resilient person NZ had.