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
First Credit Union, and NBS (Nelson Building Society) both trimmed key home loan rates today. All rates are here. Update: ANZ has cut all fixed rates. More here.
TERM DEPOSIT/SAVINGS RATE CHANGES
Heartland Bank by all its TD rates for terms of 6 months and longer. AMP made the same cuts. Heartland took -10 bps off all its savings & notice saver offers, except its Digital Saver account with got a -20 bps cut to 4.80%. All updated rates less than 1 year are here, for 1-5 years, they are here. Update: ANZ has cut many key rates. More here.
FEWER NEW HOMES TO BE BUILT
Tough times are getting tougher for the building industry as fewer and fewer new homes are being consented. In fact, 17,000 fewer new homes consented in year to August compared to two years ago. That is a -34% drop. At the same time our population expanded by +221,000 people. Builders are doing to tough (see below). But investors sense an opportunity is the disparity (also, see below).
BUSINESSES START INVESTING AGAIN
But non-residential consent levels had their best month since January, with $953 mln of consents issued in August, up +27% from a year ago. It was growth that was underpinned by $316 mln of office consents, representing the strongest month for this building type since May 2022. There was a $100 mln consent for Fisher & Paykel Healthcare’s new Auckland headquarters, as well as consents totaling $102m for offices in the expanding Māngere-Ōtāhuhu precincts.
LOW CAR SALES, BUT HIGHER HYBRID SHARE
Pandemic excepted, September has usually been a strong car sales month, delivering about 10,000 sales of new cars.. But not in 2023, and again, not in 2024 when only 8588 were sold. Only 7216 used imports were sold in the month too. But if there is a positive detail it is that the NEV share was up to 54%, its highest level since the end of the Clean Car Discount subsidy. But pure electrics remain unpopular; hybrids are dominating with more than 80% of all NEV sales.
PRICING POWER SIDELINED
The NZIER's Quarterly Survey of Business Opinion (QSBO) found that only 3% of firms were able to lift prices in September. This weak pricing data in business survey supports further interest rate cuts, the NZIER says.
NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. Scales, Spark, FBU, Vista, and Channel Infrastructure all released need-to-knows.
CONTACT FILES MANAWA CLEARANCE APPLICATION WITH COMCOM
The Commerce Commission says Contact Energy has lodged a clearance application to acquire Manawa Energy following the two energy retailers entering into a Scheme Implementation Agreement (SIA) back in September. Contact has valued Manawa as being worth $1.86 bln but will need approval from ComCom for the scheme to get over the line. If successful, Contact will acquire Manawa’s 25 hydro schemes and one thermal power station located across New Zealand. Contact generates electricity from two hydro dams in the South Island as well as from geothermal and thermal power stations located across the North Island. The Commission said on Tuesday that it expects to issue a statement of preliminary issues and call for submissions on the clearance application in October.
AUSSIE-OWNED SUPERMARKET POSITION SAFE
The Commerce Commission has declined the merger application of the two big NZ-owned regional Foodstuffs co-operatives, citing concerns around the merged entities having ‘greater buyer power’ and shrinking NZ’s grocery competition further. (Aussie-owned Woolworths is undoubtedly cheering privately, with its national footprint no longer under challenge.)
INVESTOR RISK APPETITE RISES
The mortgage pile held by residential housing investors expanded by the most in more than three years in August. It would be too early to say the housing investors 'are back' - but they do appear to be stirring, as evidenced by latest Reserve Bank figures.
A SECTOR HIT HARD BY LIQUIDATIONS
Credit bureau Centrix sees a construction sector hit with a rising number of liquidations. And business debt defaults also climb across the industry.
A SMALL EXPORT SUCCESS
Blueberries may not be quite so available this upcoming season. That is because South Korea has granted enhanced import procedures for the fruit sourced from here. It is expected to take about $5 mln, a lot for this small sector.
FRACTIONALLY SHORTER
It will be no news to regular readers who will recall that the overwhelming term customers have with their deposits in banks is very short. More than 83% of all these deposits (non-market funding) is due in six months or less, and another 13% between 6 and 12 months. Only a miniscule 3.6% is there for any term of 1 year or longer. It been like this for a long time. But there is a faint shift recently. The level due is six months or less as at the end of July has slipped ever-so-slightly to its lowest level since October 2018. (It peaked at over 90% in February 2021.) It is not really right to say "we are going longer" but it is a start, I suppose.
NO MORE BIG MOVES
In the US, Fed boss Powell today emphasised that the recent 50 bps rate cut was probably just a one-off and that future changes will be "a more neutral stance" after that 'recalibration'.
SWAP RATES HOLD
Wholesale swap rates are probably little-changed again today. Our chart below will record the final positions. The 90 day bank bill rate is down -1 bp at 4.86%. That is -39 bps below the OCR and its lowest level in ten months. The Australian 10 year bond yield is up +2 bps at 4.00%. The China 10 year bond rate is down -4 bps from yesterday at 2.18% even though the are on holiday. The NZ Government 10 year bond rate is up +1 bp at 4.30% But the earlier RBNZ fix was at 4.27% and up a very sharp +9 bps from yesterday. The UST 10yr yield is now at 3.78% and up +2 bps from yesterday. Their 2yr is now at 3.63%, so that curve is less positive, now by +15 bps.
EQUITIES MOSTLY FIRMER
The NZX50 is up +0.6% in its late Tuesday trade. However, the ASX200 is down -0.4% in afternoon trade. But Tokyo has recovered +1.8% after yesterday's big drop. However Hong Kong is on holiday and not trading. It will return tomorrow. Shanghai is also closed today and will be until this time next week. Mid-Autumn Festival. Singapore is trading but unchanged at its open. Wall Street ended its Monday session up +0.4% on the S&P500.
OIL LITTLE-CHANGED
The oil price is little-changed from this time morning at just under US$68.50/bbl in the US, and now just over US$71.50/bbl for the international Brent price. And this despite all the crazy Middle-East tensions.
CARBON PRICE HOLDS
The carbon price is again little-changed today, still at $62/NZU, basically starting the new month where it ended September. Volumes traded are still light. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD SOFTER
In early Asian trade, gold is down -US$14 from this time yesterday at US$2639/oz.
NZD MOVES BACK LOWER
The Kiwi dollar has fallen -30 bps from yesterday to 63.4 USc. Against the Aussie we are down -40 bps at 91.5 AUc. And against the euro we down -10 bps at 56.9 euro cents. This all means the TWI-5 is now at 70.5 and down -30 bps from this time yesterday.
BITCOIN SLIPS AGAIN
The bitcoin price is down -2.1% from this time yesterday, now at US$63,401. Volatility of the past 24 hours has been modest at just on +/- 1.6%.
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This soil moisture chart is animated here.
Keep abreast of upcoming events by following our Economic Calendar here ».
32 Comments
Yes I took what I wanted of the 5 yrs at 5.2 to 5.5%. Although 4.5% doesn't sound that flash right now, it could still be a good option in hindsight in a couple of years time. Depends how low we go this time, and for how long. I really doubt the reserve bank will go back below OCR 2.5% this time after the pain and suffering we have all been through caused by the cheap money in 20/21. 5 years is a long time the way the world is now, no one knows. Hopefully we get a balanced 5% mortgage/ 4% TD this time round, for a good portion of the next 5 years.
And NZ has the most expensive groceries.....
https://www.abc.net.au/news/2024-09-30/grocery-prices-comparison-austra…
Dr Bryce Edwards writes about Jacinda Ardern and the 'massive fees' she can command for public speaking (Janet Yellen gets far more). It's not worth debating whether it's right or wrong. It is what it is. And remember, the wealth of the Clintons, Obamas, Tony Blair rocketed after leaving politics, even though they seemingly do very little that's tangible. They're very much fixers and influencers. And to be frank, Jacinda is probably only a C-grade grifter in the grand scheme of things. However, it is somewhat of an indicator as to how broken the Anglosphere in particular is.
Maybe Ardern will have to start thinking about her reputation, which could be severely damaged if she is associated with leveraging her celebrity and public office experience for personal profit. She might think that doing some charity work and celebrity appearances on the side for "good causes" might offset the profiteering, but that won't wash.
Perhaps it's time for Helen Clark to have a word with her protégé and remind Ardern about the merits of public service over exorbitant profits. She could even follow Clark's footsteps and set up "the Jacinda Ardern Foundation". However, if that just became another business vehicle for making money from speeches and consulting to the wealthy and powerful, then it'd really just be "business as usual".
https://democracyproject.substack.com/p/jacinda-ardern-cashes-in-on-her…
How is this different from the CEO's that do the same thing?
That depends on the company. For ex, if the fees benefit the company, then I personally would look favorably on it. Which CEOs do you know of that get paid handsomely for public speaking?
A.G. Lafley, the former CEO of Procter & Gamble, co-authored the book Playing to Win: How Strategy Really Works as a comprehensive guide on how to develop and implement effective business strategies. He significantly increased sales and profits while enhancing the company's market value by over $100 billion.
Lafley has a speaking fee that typically ranges from $10,000-$20,000 per engagement.
As someone that nearly voted for her at one point, I wouldn’t pay $1 to hear her speak and think those that do are behind the times.
I feel her legacy will be a divided country. She didn’t originate it, but she certainly made it worse. The flag debate was “peak kiwi” for me and its been downhill since.
”It is what it is.” True enough, and she is what she is. Then and now. Still in the early halcyon days as PM, very few would have imagined that she would become nationally, the most polarising figure since PM Muldoon. But even so, doubt very much in the aftermath, that she would see fit to cast herself similarly in such as The Rocky Horror Show.
Finally some coverage on one of the biggest economic news stories of the past few weeks:
https://www.nzherald.co.nz/business/personal-finance/investment/aucklan…
https://www.nzherald.co.nz/nz/real-estate-agent-kun-hu-fined-25000-for-…
Just in case anyone thought the agent works for the vendor.....Nothing to see here said his barfoots manager its just normal practice in the industry
Hu’s manager at Barfoot and Thompson, John Urlich, gave evidence to the tribunal that the practice of commission sharing was “rife” in Auckland and many agencies simply turned a blind eye to it.
Hu was fined $3,000 and found guilty of unsatisfactory conduct but not misconduct, but he made a $365,000 commission.
Not hard to see a link between agencies turning a blind eye and the tribunal's findings ... one of the most corrupt industries in NZ, no wonder the coalition is bending over backwards to support them ...
ANZ-Roy Morgan New Zealand Consumer Confidence hits highest points since January 2022 at 95.1
https://www.roymorgan.com/findings/9682-anz-roy-morgan-nz-consumer-conf…
Your govt...working for you ...lol
https://www.nzherald.co.nz/nz/politics/revealed-christopher-luxon-avoid…
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