Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).
MORTGAGE/LOAN RATE CHANGES
ASB trimmed some of its rates today. Westpac did too. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
ASB cut some TD rates today too. BNZ cut two rates. More here. All updated rates less than 1 year are here, for 1-5 years, they are here.
FACING A SECOND GREAT RECESSION
Economists call for faster rate cuts as the recent slowdown in economic activity outpaces the 2008 recession
SPENDING LESS AS BALANCES REDUCED
Actual spending on domestic credit cards fell a whopping -5.4% in August from the same month a year ago. That was a big shift from the +1.3% rise in July on the same basis. And it was the lowest August since 2021. But balances outstanding remain quite low, back to levels first seen in September 2022.
MORE LETTER COMBINATIONS TO LEARN - LEHVF
The Government has launched the Low Emissions Heavy Vehicle Fund (LEHVF) to promote innovation and offset the cost of hundreds of heavy vehicles by ones powered by clean technologies.
SQUIRREL EXPANDS INTO THE SOUTH ISLAND
Update: Auckland-based mortgage broker Squirrel is acquiring a majority stake in the Christchurch-based NZ Mortgages as it expands into the South Island. Squirrel describes itself as NZ's largest independent mortgage broker and says the deal means its advisory team will top 50, with the firm originating over $3 billion in mortgages each year, or one in every 20 new mortgages in NZ by value. Squirrel says. NZ Mortgages founder, Nathan Miglani, will join Squirrel's leadership team, with responsibility to grow market share throughout the South Island.
NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. Pacific Edge and Gentrack make big gains, Serko, SkyCity and Kiwi Property fall again.
RISING INFLATION
Japan reported 3.0% CPI inflation in August, up from 2.8% in the prior three months. It is their highest level since October 2023. The Japanese central bank left its 0.25% policy rate unchanged, as expected. Japanese inflation now seems well embedded, after decades of deflation.
PBOC HOLDS
China left its loan prime rates unchanged today in its September fixing, as expected. These remain at record lows. (It doesn't wish to be seen following the US Fed, even if a cut is warranted at this time.)
SWAP RATES LITTLE-CHANGED
Wholesale swap rates are softer today, but probably not by much. Our chart below will record the final positions. The 90 day bank bill rate is -1 bp lower at 4.99%. That is its lowest level in 280 days. The Australian 10 year bond yield is down -38 bps at 3.95%. The China 10 year bond rate is up +1 bp from yesterday at 2.05%. The NZ Government 10 year bond rate is back down a sharp -9 bps at 4.21% and the earlier RBNZ fix was at 4.19% and down -1 bp from yesterday. The UST 10yr yield is down -3 bps at 3.71%. Their 2yr is now at 3.57%, so that curve is more positive, now by +14 bps.
EQUITIES MIXED, BUT US-EXPOSED MARKETS ROAR
The NZX50 is down -0.7% in its late Friday trade. The ASX200 is up +0.2% in afternoon trade. However Tokyo has surged again in its opening trade up another +2.1%. Hong Kong is up +1.5% but Shanghai is down -0.2%. Singapore is down -0.4% at its open. The S&P500 ended its Thursday session on Wall Street up +1.7% after the Fed's decisions were absorbed.
OIL UP
The oil price is up +50 USc from this time yesterday at just under US$71/bbl in the US, and now just under US$75/bbl for the international Brent price.
CARBON PRICE FIRMS
The carbon price has moved slightly higher today to $61.75/NZU. Volumes traded are still light. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD RISES STRONGLY
In early Asian trade, gold is up +US$30 at US$2591/oz and back near its record high.
NZD HOLDS
The Kiwi dollar has stayed up, now at 62.4 USc, and another +20 bps gain from yesterday. Against the Aussie we have held at 91.6 AUc. And against the euro we have slipped -10 bps to 55.9 euro cents. This all means the TWI-5 is now at 69.8 and unchanged from yesterday.
BITCOIN UP AGAIN
The bitcoin price is up +1.1% from this time yesterday, now at US$62,942. Volatility of the past 24 hours has been modest at just on +/- 1.6%.
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35 Comments
The Japanese central bank left its 0.25% policy rate unchanged, as expected. Japanese inflation now seems well embedded, after decades of deflation.
Just as well. If the BOJ hiked rates, we can assume risk assets being liquidated as the carry trade further unwound.
But as we know already, the BOJ and the Fed are joined at the hip now. So much for the independence of central banking.
Living in Tauranga is a great example of our foolishness at the moment.
We have preapproved plans for a $200m art gallery, town center do up for $100m, one new roundabout at $10m and a desire for a second stadium at $200m.
Rates are going up faster than inflation, borrowings are soaring and most the costs mentioned will be (based on historical examples) about 30 to 50% of the actual cost.
Now.. what's important is that there is no ROI calculation on any of this stuff. So we all incur massive debt with no gain in income or productivity. And it's stuff most people don't even want.
At the same time I suspect our existing infrastructure is not being maintained properly leading to higher future costs.
We are not only already operating on a lower standard of living than counterparts overseas. But we are actually accelerating down a path of poverty.
These same examples I am sure exist across nz at a local and central government level.
But .. in a few years time when the western way of life and economy has crumpled under its own debt our glorious leaders can point to each other (like naughty skool kids) and say they were alldoing it so we just copied.
Reposting from a couple of days ago
"NZIER point out:
Since 2020, interest rates have risen significantly, but the Treasury has not updated the discount rate. This has caused the discount rate to become untethered from interest rates. The last time interest rates were at today’s level, the Treasury’s discount rate was 8.0% – three percentage points above the current value."
https://www.kiwiblog.co.nz/2024/09/the_public_discount_rate_is_too_low…
Undeveloped Nation more apt. One of the most treacherous sea crossings in the world (think 1968 Union Steamship Wahine) and the nation is reliant on mother nature being in a kind mood when vessels choose to go adrift at sea. This one the tugs got to but don’t think these tugs are able to work in high seas, a storm for example.
Xi seems a nice enough bloke to me. As dictators go these days he is arguably one of the better ones.
I have to say that borrowing from him (china) would be akin to the risks of my borrowing from a gang affiliated loan shark who controls the world's biggest army, condones torture and has a nuclear capability.
I might therefore have a beer and a yarn with him.. but feel we are unlikely to do much actual business at this stage..
Interesting data about the future of digital finance.
Blackrock
- 19,800 employees
- $10.4T AUM (10% of world GDP!)
- $5.5b profit
Tether (stablecoin backed by USDT but not publicly audited)
- approx 50 employees
- $119B AUM (0.1% of world GDP)
- $6.2b profit
Tether consider themselves a technology company first. Only a tech company could make more money than the worlds biggest asset manager with <50 people.
Tether get the 1:1 pegged cash and they get to invest that. In Blackrock. When investors park their money, they get returns. Blackrock gets a cut in it, but Tether gets all of it.
No problem chief. If you don't like my water cooler numbers, I would suggest you go to your beloved MSM to validate (or DYOR). But they're not making the comparison. Editorial chiefs not interested.
Here's another comparison.
My apologies good fellow. You're exactly right. Nobody can really prove Tether's profits.
All we really have is BDO's attestation. And that doesn't prove anything.
Assuming it does though, then the idea that Tether is more profitable than Blackrock is not really that outrageous.
https://tether.io/news/tether-q2-2024-attestation-reports-record-breaki…
China left its loan prime rates unchanged today in its September fixing, as expected. These remain at record lows. (It doesn't wish to be seen following the US Fed, even if a cut is warranted at this time.)
Is a cut warranted at this time? I'd advise against it - big time!
(Especially so, as they have no mega-rich that will be demanding it.)
Softly, softly. (Japan's central bank should take note. But most likely too late now.)
Our FM Hon Nicola Willis on the radio today referred to the RBNZ rate cut in late August over 20 times in under 5 minutes in the context that the worst is over and good time are about to roll.
Never mind the fact that we've lost several major industrial players and hundreds of thousands of Kiwis for good in the current downturn.
Amazes me how these elected officials are able to confuse structural recessions that require painful reforms with cyclical downturns that can be fixed with monetary stimuli.
I used to think a 4yr term was a very good idea until the result of Labours unbridled power of their last 3 years.
"Christopher Luxon says referendum on four-year political term could be at next election"
https://www.nzherald.co.nz/nz/politics/christopher-luxon-says-referendu…
But you have a bias one could drive a bus through.
I mean, if the Nact ideology needed a voice...
The problem is that BOTH major parties are peddling GROWTH.
Although granted, Labour did try and get Treasury to value things differently. Real things, rather than keystroke-conjured digits.
Where we'are going, in the not-too-distant future, is a world where there is too little surplus energy, probably, to support national-level politics. That demise hit every irruption in the past, no exceptions.
Japanese inflation now seems well embedded, after decades of deflation.
Is that a result of monetary policy or demographics though? The number of workers in Japan bottomed out in 2021, it would be a miracle if after years of pushing on a rope BOJ had finally had some success.
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