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
Heartland Bank told clients it is cutting its fixed rates sharply soon. SBS Bank has cut most of its fixed rates too. More here. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
Westpac has raised its 5 month rate by +30 bps to 5.70%. SBS Bank has trimmed its 1, 2, and 3 year TD rates. All updated rates less than 1 year are here, for 1-5 years, they are here.
CONVINCED THE FUTURE WILL BE BETTER
The September ANZ-Roy Morgan Consumer Confidence survey rose slightly, its third straight month of improvement. Even though it it is still well below par, it is at its highest level since January 2022. The lift was driven by expectations about the future, rather than views of the here and now. Meanwhile this same survey shows inflation expectations were unchanged at 3.8%. Expected house price inflation lifted from 2.8% to 3.2%, led by the North Island.
AUCKLAND COUNCIL REPORTS
Auckland Council released its Group accounts today. They want you to know they spent "invested a record $3.2 billion in assets such as the roads, pipes and buildings used to provide services", +$487 mln more than in the previous year. “A big positive has been that our costs are under control and we’re back on track getting ourselves in a good position to tackle some of the big physical and financial challenges council has been facing for too long,” Mayor Brown says. The financial statements accompanying them shows revenue from Rates was up +10.7%. Total revenue was up +7.7%. Total expenditure was up +23.7%. Their surplus was almost halved to $584 mln. It's an organisation with $74.4 bln in assets. (See pages 52, 53.)
'WE AGREE'
Westpac has upped its milk payout forecast to $9/kg, matching Fonterra's recent increase.
NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. Strong gains by a2 Milk, Kathmandu and Serko. But FBU keeps falling with Turners and Spark
BUILDING LONG-TERM IMPROVEMENTS
StatsNZ today released its detailed data on our "net international investment position" (IIP) - what we owe the rest of the world. As at March 2024 that is just a touch shy of $200 bln, the most ever. The detail shows that foreign companies have equity investment positions in New Zealand of $171 bln, also a record high. But our economic activity has grown. And since 2000, the proportion of IIP is now near its lowest in relation to GDP (-48.5%), and the proportion of equity ownership in enterprises here is also near its lowest on the same basis (42%). Respectively, net IIP was -84% in 2009, and foreign ownership was 51% in the same year. So steady progress that has meaningfully shifted these relationships for the better.
BIG FISCAL BAZOOKA COMING
As you know, we keep an eye on what is happening in China. Leading economist Ren Zeping (任泽平) believes the recent round of mass loosening measures unveiled by the Chinese central bank is paving the way for fiscal stimulus of at least ¥10 tln (NZ$2.2 tln). What we have had from the central bank is just the warmup act. But the effectiveness of monetary policy is thought in Beijing to be about exhausted. Now they will issue a mountain of bonds (fiscal policy, effectively money-printing), and about half of that could go towards propping up housing and the property development sector.
FROM POLICY DECISIONS TO ACTION
Still, the signaled changes from the People Bank of China are now being rolled out. Today they cut the seven-day reverse repurchase rate by 20 bps to 1.5%. They also cut the reserve requirement ratio (RRR) by 50 bps, the second reduction this year, bringing the weighted average RRR for financial institutions to around 6.6% after the cut.
WHY STIMULUS IS NEEDED, REASON #13
The Hong Kong and Shanghai equity markets may be roaring, in anticipation of the coming stimulus. But Chinese industrial profits are weak. For the eight months to August, they are a touch less than for the same period last year. For August alone they were -23% lower than the same month in 2023.
NO STIMULUS NEEDED HERE
In Taiwan, consumer sentiment rose in September to its highest level since March 2020. The independent island nation is an uncomfortable mirror for its huge neighbour.
WE ARE ON THEIR RADAR TOO
The Chinese Ministry of State Security (MSS) used its WeChat account to criticise New Zealand for its recent report describing the PRC as a “complex intelligence concern”. According to the MSS, the NZ report “openly smears the broader overseas Chinese community and students. Following the release of this report, some overseas Chinese in New Zealand have been subjected to harassment and intimidation by so-called New Zealand "intelligence personnel.“ The agency also warned New Zealand: “Whether out of imagination, ulterior motives, or instigation by external forces, creating contradictions and differences between China and New Zealand and pushing someone else's agenda will not solve any of one's own problems, but will instead harm one's own interests and bilateral relations.”
SWAP RATE HOLD
Wholesale swap rates are probably little-changed today at the short end. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 4.90%. That remains its lowest level in ten months. The Australian 10 year bond yield is also unchanged 3.99%. The China 10 year bond rate is up +4 bps at 2.09%. The NZ Government 10 year bond rate is down -1 bp at 4.28% and the earlier RBNZ fix was at 4.23% and unchanged from yesterday. The UST 10yr yield is still at 3.79%. However, their 2yr is now at 3.63%, so that curve is less positive, now by +16 bps.
EQUITIES ALL HIGHER
The NZX50 is up +0.4% in its late Friday trade, up +0.5% for the week. Fonterra's share price hit a three year high today. The ASX200 is up a modest +0.1% in afternoon trade. And Tokyo is also up only +0.1%. However Hong Kong is up another giant +2.7% at its open, up +12% for the week so far, but only back to where it was in April 2023. Shanghai is up +1.0%. Singapore is down -0.3% at its open. Wall Street rose in Thursday trade with the S&P500 ending up +0.4%. That was enough to make it a record closing level.
BAD BETS
Regional casinos are having a tough run. The 'house' supposedly "always wins". Not anymore. SkyCity Entertainment is down -20% so far this year. Australia's Star Entertainment's business is down -53%, most of it in the past month. And Crown Reports was delisted in 2022 and has probably lost similar 'value' even after their earlier major flubs. Not very entertaining for shareholders, but others might see it as karma.
OIL FALLS SHARPLY
The oil price is down -US$2.50 from this time yesterday at just under US$67.50/bbl in the US, and now just over US$71/bbl for the international Brent price.
CARBON PRICE HOLDS
The carbon price has changed little today, still at $61.20/NZU. Volumes traded are still light. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD HIGHER
In early Asian trade, gold is up +US$12 from this time yesterday at US$2667/oz and a new high.
NZD MOVES UP
The Kiwi dollar has risen, up +40 bps from this time yesterday to 63.1 USc. Against the Aussie we have risen +10 bps to 91.1 AUc. And against the euro we up +20 bps at 56.5 euro cents. This all means the TWI-5 is now at 70.4 and up +30 bps from this time yesterday.
BITCOIN RISES
The bitcoin price is up +2.5% from this time yesterday, now at US$64,866. Volatility of the past 24 hours has remained moderate at just on +/- 2.0%.
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50 Comments
Interesting look at who negative gears in Australia in the AFR today.
"With an average total income of $480,000, surgeons are Australia’s highest-paid profession and also the most avid property investors.
About 42 per cent of the 4170-strong workforce of surgeons have an investment property, and about 22 per cent are negatively geared, according to Financial Review analysis of the Tax Office data.
More than 20 per cent of internal medicine specialists and anaesthetists are negatively geared. Negative gearing is also popular among psychiatrists (19.5 per cent), school principals (17 per cent), IT managers (17 per cent) and dentists (16 per cent).
However, middle-income workers like secondary school teachers, administrative assistants and registered nurses are among the largest claimants of negative gearing in absolute terms due to their sheer numbers."
One might almost draw the conclusion that NZ's tax settings are one reason that NZ is failing to attract surgeons, internal medical specialists, anaesthetists, pyschiatrists, teachers, IT managers, dentists, and registered nurses....... all of whom apparently want to buy investment properties.
The Left may need to grow up and admit that NZ's "green" image is no longer sufficient to attract highly skilled professionals to NZ, or to keep the ones we already have here.
It's increasingly looking as though negative gearing on investment properties will be an Oz election issue next year.
https://www.abc.net.au/news/2024-09-25/albanese-leaves-door-open-to-neg…
Much like removing cash payments of franking credits, taxing unrealised gains on super funds with more than $3M in assets, and previous attempts at abolishing negative gearing - it wont survive the election. Last time they made it an election issue, they lost on it.
Interest deductibility should be ring-fenced to a property and negative carry not applicable to your wider tax obligations. It drives up house prices and reduces the tax take significantly.
Australia also has the highest gambling losses per capita of any nation. Quite a weird pace.
Gambling is normalised to a crazy extent there it seems. From that traditional 'two-up' coin toss game on ANZAC day through to pokies, casinos, sports betting etc it just seems (from anecdotal observation) more common and acceptable than in NZ.
I remember going to a stag do in Aus about 5 years ago, as I knew the groom-to-be reasonably well and my wife was over there for the hen's do, so he kindly invited me along. Only Kiwi in the contingent of about 20 guys, and they were shocked when the sports betting started at one of the pubs and I said "I've never bet on sports I legitimately don't know what to do".
I might go to the casino once a year and have a $50 flutter on something, that's it.
Negative gearing is one reason why Australians put up with a 45% top tax rate. Along with the ability to salary sacrifice and make personal superannuation contributions. Unlike NZers, even ordinary Australians are aspirational and want to improve their financial situation themselves rather than rely on Govt handouts and welfare.
So sitting around doing nothing and getting money from a family of taxpayers is a good and noble cause, but taking a small amount of money from all taxpayers while sitting around doing nothing is what bad people do? What about if that bad money from the government pays their rent to the good people? It is all too complicated.
Hundreds of jobs at risk under proposal to close Timaru meatworks.
The writing has been on the wall for a while "We simply cannot maintain excess processing capacity when livestock numbers don't support it." however that is still a hard blow for the many families affected & Timaru
https://www.rnz.co.nz/news/national/529208/hundreds-of-jobs-at-risk-und…
they will be able to find solitude knowing they have played their role in fixing climate change.
I thought that was primarily the woke communities in places like Grey Lynn who are so pious about their contributions to saving the planet, while they hobnob in their trendy cafes.
If only you could eat pine needles. And if only pine forests required workers. Oh no mind, when NZ is one large pine forest with a couple of ghost cities with empty cycle lanes in between, we can all be happy that we offset all the carbon emissions from China and India......
Leading economist Ren Zeping (任泽平) believes the recent round of mass loosening measures unveiled by the Chinese central bank is paving the way for fiscal stimulus of at least ¥10 tln (NZ$2.2 tln).
Epic. All I can see happening right now is global central banks Frankenpumping asset prices.
Now, in the case of ratty, its dominance tends to decrease significantly within 12-18 months after a halving event - last in April 2024 - leading to increased capital inflow into altcoins. For example, after the third halving in May 2020, Bitcoin's market share dropped from 66.43% to around 40%, while altcoin market capitalization soared from $90 billion to over $1 trillion. Ethereum soared 1,300%.
Amazing what could happen this time with so much liquidity.
We are so lucky to be living in NZ.
The storm made landfall in the sparsely-populated Big Bend area, home to fishing villages and vacation hideaways where Florida’s Panhandle and peninsula meet.
“Please write your name, birthday, and important information on your arm or leg in a PERMANENT MARKER so that you can be identified and family notified,” the sheriff's office in mostly rural Taylor County warned those who chose not to evacuate in a Facebook post, the dire advice similar to what other officials have dolled out during past hurricanes.
There's centuries of knowledge where & why there's a Hurricane season in the southern USA - yet, people keep living there...
Help please. Sold today for $1.71m
https://www.barfoot.co.nz/property/residential/auckland-city/epsom/hous…
What am I missing?
A Lotto winner with more money than sense ?
QV says its only worth $1M
https://www.qv.co.nz/property-search/property-details/3393857/
Not sure what you mean? That is an excellent area - I lived about a block away in my early 20s. Walking distance to AGS, EGS, and Dio, plus AU's teacher's college if you have teens aspiring to that. Also only a 45min walk to the CBD or 10 mins to Newmarket - unless you are of the cycle/scooter persuasion (the Porsche will get stuck in traffic).
That would be an investment in you family's future - and if your income supports sending your kids to any of those schools, the price is likely not an issue either.
Location, location, location. It’s sits in zone for Epsom Girls Grammar and Auckland Grammar Schools. Both have long wait lists for out of zone enrolments so the only way to get your kids in is to live in zone. There was an article in the herald earlier this week about it.
https://www.nzherald.co.nz/nz/politics/prime-minister-christopher-luxon…
A shock, huh? Really?
I guess basic economics isn't his strong point?
(What a twat. Too harsh? I think not.)
A little more complex than the Fat Controller understands. No idea of the NZ meat industry and its challenges, even less idea of the future challenges for red meat globally and is of the opinion that recent inflation was not the sole construct of the previous administration and was a global event. Perhaps a belt around the ear will straighten him up to fly right.
There was some discussion the other day about overheating terrace housing, with some misinformed opinions about ‘physics’. I recommend this from RNZ today if you are interested in this matter, which highlights the problem and best solutions:
https://www.rnz.co.nz/national/programmes/ninetonoon/audio/2018957363/a…
‘A record 87% of Americans now believe it is a bad time to buy a home, more than DOUBLE the 2008 peak.
At the peak of the 2008 Financial Crisis, just 40% of Americans said it was a bad time to buy a home, according to Reventure.
In fact, even when mortgage rates hit a whopping 18% in the 1980s, sentiment was not as bad as it is now.
In the 1980s, this metric peaked at 79%, 8 percentage points BELOW current levels.’
https://x.com/kobeissiletter/status/1839387031278866622?s=46&t=MUwQeKa7…
New PM for Japan. Not sure if it means much in terms of economic policy for the economic powerhouse. Probably not. Koizumi Jr. certainly has a reformist bent, like his dad
https://www.japantimes.co.jp/news/2024/09/27/japan/politics/ldp-electio…
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