What happened Monday

Economy / news

A review of things you need to know before you sign off on Monday; a few more small rate cuts, rents weak, PMI/PSI still contracting, tractor sales very low, deceptions punished, swap curves steepen, NZD holds, & more

16th Dec 24, 4:00pm by David Chaston

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
No changes to report today. All rates are here.

TERM DEPOSIT/SAVINGS RATE CHANGES
Rabobank trimmed its one year TD rate to 4.80%, a -10 bps cut. Gold Band Finance has trimmed all its rates. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

OUR TD RATE TABLES HAVE CHANGED
Non-Bank Deposit Takers will be included in the Deposit Compensation Scheme starting in mid-2025. Our rate tables now identify these regulated financial institutions.

RENTS SOFTEN. TIME TO CHANGE LANDLORDS
Rents are up +4.1% in November from a year ago on a 'stock' basis, which includes dwellings that did not change tenants. But for new tenancies available (the 'flow' basis) the story is quite different. In Auckland, November rents for new tenancies fell -0.6% from what was asked for a year ago. In Wellington they were down -2.2%. In Christchurch they were up +4.9% on that same basis.

AIRNZ HIKES FARES FOR CONCERTGOERS
Statistics NZ's Selected Price Indexes show continuing subdued pricing pressures - other than a spike in air fare and accommodation costs that 'coincided' with performances around the country by several global overseas artists.

REALLY TOUGH FOR MANUFACTURERES, IMPROVING FOR SERVICES
Activity in NZ's services sector has improved, but still remains at contractionary levels, while manufacturing has moved further into contraction, according to the BNZ/BusinessNZ PMI and PSI for November. It's 'another case of things getting less bad before they get good'.

CHEQUEBOOKS CLOSED ON THE FARM
Tractor sales are diving with only 166 sold in November. That is the lowest November since 1998.

NZX EQUITY MARKET UPDATE
Here is a summary of how the NZX equity market traded today, as at 3pm. Kathmandu, Mercury, and PFI top the gainers to start the week, with Oceania, Summerset, some gentailers leading the decliners.

NEW AUDITOR FOR WESTPAC NZ
Following the lead of its Aussie parent, Westpac NZ has appointed KPMG as its external auditor from today (December 16). KPMG replaces PwC.

JAIL FOR TAX EVASION
An Auckland man has been sentenced to just over two years in prison for tax evasion. Wai Kheong Kong was sentenced to 2 years 1 month in prison in the Auckland District Court. He had earlier plead guilty to 16 charges of tax evasion and 84 charges of taking PAYE from his workers’ wages but not passing it on to the IRD.

STILL RISING, EVEN IF AT A SLOWER PACE
The pace of supplier cost increases to Foodstuffs supermarkets picked up slightly in November, with the Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index showing an average +2.1% increase in what suppliers charged in November, compared to a year earlier. Essentially this means the big increases from a few years ago are never going to be rolled back.

LATE, BUT COMING
In case you are wondering, yes, the November reports from the REINZ are late. We have heard they will be available tomorrow at 9am. Join us then. (In December 2023, they released the November report on December 13, 2023.)

CALLING IT A GAIN IS STRETCHING IT
Consumer spending in the first 14 days of December has continued to trend up on the same time last year but in a very weak way, although some regions have shown stronger growth than others. A couple of provincial regions are showing more-than-inflation gains, but that is not the case in Auckland, Wellington nor Christchurch.

DECEPTION PUNISHED
The Commerce Commission has won a $243,000 fine against Beau Ideal Limited, previously known as Beaurepaires and now trading as Advantage Tyre Solutions, for breaching the Fair Trading Act in the sale of the extended warranty “Road Hazard Cover.” Beaurepaires’ invoicing system automatically added Road Hazard Cover to all customer quotes for tyre purchases, and required customers to opt-out if they didn’t want the product. Customers were reliant on Beaurepaires employees to both tell them about the additional product, and manually remove the Road Hazard Cover from the quote if requested.

"FAILING TO PROTECT CUSTOMERS"
In Australia, financial system regulator ASIC is suing HSBC Australia alleging failures to adequately protect customers from scams.

IMPROVING
In Japan, their November PMIs revealed that their factory sector is now barely contracting (an improvement from October), and their services sector is now expanding faster. They had their strongest rise in private sector activity in the past three months. So perhaps it is no surprise to know that machinery orders are on the rise, after a lean period.

CRISIS I
It might seem a tad ironic for a major oil producer, but Iran is proposing sweeping closures of public facilities, a move officials attribute to icy winter temperatures and the need for energy management while the country suffers massive shortages due to infrastructure failures. “Iran is on the brink of a 40% blackout in just 18 days,” said one local analyst.

CRISIS II
Closer to home, there are rumours that many NZ Government staff have been offered no pay increases in their latest negotiations, and this seems likely to result in strikes or other stoppages. Maybe some might cheer (or jeer that no-one will notice) - unless that includes Passport and/or Border Security staff. We will know more closer to Christmas.

SWAP RATES STEEPEN AGAIN
Wholesale swap rates are probably marginally lower at the short end today, but the long end higher again, so the steepening is still underway. Our chart below will record the final positions. The 90 day bank bill rate was unchanged on Friday at 4.29%. The Australian 10 year bond yield is up +5 bps from this morning at 4.37%. The China 10 year bond rate has fallen another -2 bps to just over 1.75% and yet another all-time low. The NZ Government 10 year bond rate is up +8 bps at 4.60% while today's RBNZ fix was 4.54% and up +5 bps. The UST 10yr yield is now at 4.39% and little-changed from this morning. Their 2yr is now at 4.24%, so that positive curve is now +15 bps, with yet another rise.

EQUITIES MOSTLY LOWER, NZX UP THOUGH
The NZX50 has slipped -0.2% in late trade today. And the ASX200 is down -0.3% in afternoon trade. Tokyo has opened its Monday trade +0.1% firmer. Hong Kong is up +0.2% and Shanghai is also up +0.2%. Singapore is up +0.2% as well at its open. The S&P500 futures suggest Wall Street will open a strong +1.3% rise tomorrow.

OIL ON HOLD
The oil price is little-changed from this time yesterday, still at US$71/bbl in the US, and still just under US$74.50/bbl for the international Brent price.

CARBON PRICE TURNS BACK UP
The carbon price is up +$3.85 today at NZ$63.10/NZU with some renewed trading in the market. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.

GOLD SLIGHTLY FIRMER
In early Asian trade, gold is up +US$5 from this morning, now at US$2653/oz.

NZD FIRMS
The Kiwi dollar is up +10 bps from this morning's open, now at 57.7 USc. Against the Aussie we are up +10 bps at 90.6 AUc. And against the euro we are unchanged at 54.9 euro cents. This all means the TWI-5 is now just over 67.7 and up +10 bps from this morning.

BITCOIN RISES
The bitcoin price has risen to US$105,412 and up +2.3% from where we were at this morning. Volatility of the past 24 hours has been moderate at just over +/- 2.4%.

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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50 Comments

by lonewolfnz | 16th Dec 24, 4:05pm 1734318345

" In Auckland, November rents for new tenancies fell -0.6% from what was asked for a year ago."

Credit for National. Their policies seem to have severely blunted rental increases.

by ChrisOfNoFame | 16th Dec 24, 4:25pm 1734319558

So nothing to do with the 000's of new dwellings built over the last 4 years and exit of many to overseas jobs?

by lonewolfnz | 16th Dec 24, 4:40pm 1734320419

Rents were surging during the last few years. New dwellings didn't seem to do anything.

As you will have seen from the interest.co.nz updates, investors are now back in the market and it seems returning in droves.

by HouseMouse | 16th Dec 24, 4:41pm 1734320488

I assumed sarcasm

Edit - maybe not….

by Jonny.Foe | 16th Dec 24, 4:54pm 1734321287

Lol, all the reductions tell you is that the recession has hit Wellington and Auckland hardest. This works two ways: (1) People move out of the city when the jobs dry up so there is less demand for available rentals, and (2) People are not earning as much so when there is competition for rentals the price doesn't get bid up as high (noting that the rental market is basically a Dutch auction).

You can see the same situation playing out in the jobs data - Wellington and Auckland job growth is now firmly negative. Chch is starting to falter too, so expect rent rises to moderate there in a few months. Outside of the major centres rent rises are still going strong.

by lonewolfnz | 16th Dec 24, 5:06pm 1734321981

And yet according to the Living Wage website, average pay is up 6.9% in 2024. Yes there is some unemployment but total wage growth is still strong enough to offset that.

Rents usually track wages, and right now they are not

by J.C. | 16th Dec 24, 5:09pm 1734322161

Rents usually track wages, and right now they are not

With you on this Wofile. I think Jfoe would be as well.

by Jonny.Foe | 16th Dec 24, 5:24pm 1734323080

Forget average hourly pay - what matters is income / earnings, and, more specifically, how much the cohort of people looking for a rental at a given time can afford to pay for the rentals available at that time. So, Auckland rents spiked in 2023 when the borders opened and people moved in and took unfilled jobs in health, care, ECE etc. Now the jobs tide is going out again, and rents are falling as people leave or lose jobs / earnings. At the national level, annual rent growth adjusted for earnings is currently 0% - i.e. rents are closely tracking earnings. However, local markets differ a lot due to population movements and a heap of other factors. For example, Dunedin sees a big jump up in rental prices every summer. Guess why!

by J.C. | 16th Dec 24, 5:59pm 1734325196

For example, Dunedin sees a big jump up in rental prices every summer.

I was a bit shocked to learn about the costs of student accommodation (halls of residence) in Auckland. But when the whole package was explained to me, it wasn't too bad.

by The Man3 | 16th Dec 24, 9:24pm 1734337476

Not too sure why you think that ChCh rents are faltering?

Is this from personal experience or here say?

Our rents are increasing as well as every other landlord in ChCh that I know!

The thing is that we generally do not get extra bond off our existing tenants and this would be pretty common, so they wouldn't know that the rents have increased!

by 26@Main | 16th Dec 24, 5:46pm 1734324390

A landlord's take, ultimately he says it's about supply and demand - The Government’s changes to tax policy were a relief and landlords’ would make future decisions based on the new settings, he said. “Still, the reality is we are paying tax for 24 months ago, so in terms of landlords seeing a difference in their bank accounts - we are 18 months away from that.” Interest rates going down had helped, but other costs such as rates and insurance had doubled and were weighing on costs, he said.

“But rents are not driven by costs, they are driven by supply and demand. Small mum and dad landlords might respond to cost increases, but property managers will set them according to the market.”

https://www.thepost.co.nz/business/360469895/down-or-sideways-whats-going-rents

by kiwikidsnz | 16th Dec 24, 6:02pm 1734325363

Rents are primarily set by peoples ability to pay (cf accommodation supplement). You could argue thats "supply & demand" to conflate & confuse the root cause.

There's a lot of pressure on everyones budgets atm, so while wages maybe still slightly growing that's not directly = affordability.

by Dgm | 16th Dec 24, 4:12pm 1734318777

All bad news, except for the rising yield curve..

Keep rising.. the sky is the limit..

by lonewolfnz | 16th Dec 24, 4:17pm 1734319068

Unless you hold bitcoin of course it seems.

Or Fartcoin lol

by Baywatch | 16th Dec 24, 4:26pm 1734319598

I am sure some are feeling a bit sick on this news,

Nasdaq 100 Welcomes MicroStrategy: Billions in Passive Flows for Bitcoin-Focused Stock

Invesco QQQ Trust (QQQ), with $300+ billion in assets under management that tracks the Nasdaq-100 will have indirect bitcoin exposure through MicroStrategy.

by RookieInvestor | 16th Dec 24, 4:38pm 1734320298

a strange world we live in.

by lonewolfnz | 16th Dec 24, 4:41pm 1734320480

A little sick but only because I sold most of my BTC at 70k in March

by Baywatch | 16th Dec 24, 4:49pm 1734320954

I hope you took up my recommendation of MSTR at the same time ...?

by lonewolfnz | 16th Dec 24, 5:07pm 1734322026

Haha I bought that years ago. Still holding. Up 1400% I think

I do have a lot of crypto stocks so hopefully tomorrow is a good day

by Baywatch | 16th Dec 24, 5:09pm 1734322154

You must be a Rocket Engineer lol

by lonewolfnz | 16th Dec 24, 5:33pm 1734323582

No but I do hold Rocketlab shares if that counts

by J.C. | 16th Dec 24, 5:25pm 1734323132

I am sure some are feeling a bit sick on this news,

What you should be concerned about (not necessarily sick) is that MSTR sells at a premium to ratty and the issue of 'arbitrage strategy' on the other side of the trade. If you are familiar with what happened with Grayscale when it was also priced at a premium to the underlying asset, you should be aware of what happened with 3AC who engaged in this arbitrage strategy by borrowing Bitcoin from Genesis and converting it into GBTC. At its peak, 3AC held approximately $1 billion in GBTC. By March 2021, the premium that had previously supported GBTC's value disappeared, leading to significant losses for institutions like 3AC that were heavily invested in GBTC.

by dumbthoughts | 16th Dec 24, 5:24pm 1734323080

Never gonna forgive myself for missing Fartcoin. Spent my whole life laughing at toilet humour and missed the chance for generational wealth off the back of it. And then I slept on the aptly-named $hitcoin yesterday as well.

by J.C. | 16th Dec 24, 5:31pm 1734323480

Never gonna forgive myself for missing Fartcoin. Spent my whole life laughing at toilet humour and missed the chance for generational wealth off the back of it

Easy come easy go. Still 30x+ on ETH over 5 years. Wander out the risk curve only if you want to.

Mind you, 58x in a calendar year is nothing to sneeze at. All power to the degens.

by dumbthoughts | 16th Dec 24, 5:33pm 1734323633

Yeah memecoins are the epitome of easy come, easy go. Been spending a bit of time "at the source" (on pump fun for the Solana dogs) just looking around ... never seen anything so degenerate in my life. Endless scams, rugpulls and the like. Real dog eat dog stuff.

by J.C. | 16th Dec 24, 5:43pm 1734324218

You've got $500 to your name. Realistically, what is tradfi going to do for you? Fartcoin would have given you an approx 0.2-0.3BTC in 2024. That's a superb effort.

by dumbthoughts | 16th Dec 24, 5:52pm 1734324732

I don't necessarily disagree. I think a lot of younger people - at least what I've observed on TikTok, Reddit etc - are basically putting their hands up and saying "hey, extremely risky trading in memecoins is one of the only chances we've got to actually 'make it'" - same goes with the normalisation of degen YOLO/ape-in options trading you can see on places like Reddit. Lots of it seems to be younger people who are otherwise locked out of prosperity.

by J.C. | 16th Dec 24, 6:09pm 1734325773

Lots of it seems to be younger people who are otherwise locked out of prosperity.

In many ways, they're behaving rationally. And they understand probability / tail risk better than the boomers. Yes, it might be described as 'financial nihilism' but that is also wrong-headed to some degree.

by JimboJones | 16th Dec 24, 7:06pm 1734329173

It’s just concentrating money from many to few. Almost like buying lotto. But the few are the ones that get in early and use their status to pump it up, the ones that least need it.

by J.C. | 16th Dec 24, 7:39pm 1734331193

You can margin trade Fartcoin - MEXC and Bitget offer futures and margin trading specifically for Fartcoin.

So you can easily take on 'the few' if you choose by shorting the position.

by kiwikidsnz | 16th Dec 24, 5:11pm 1734322276

refocusing local authorities on their basic priorities

"Brown said the local government reform programme will:

Remove references to the ‘four well-beings’ from the Local Government Act 2002, restoring a purpose focused on fixing pipes, filling potholes, and delivering core local services.

Refocus local government on basics, guiding council decision-making and avoiding duplication of roles with central Government.

Benchmark council performance. The Department of Internal Affairs will publish a yearly report on key financial and delivery outcomes, helping ratepayers hold councils accountable.

Modernise outdated rules, including removing requirements for newspaper notices, to drive efficiency and cost savings."

https://www.rnz.co.nz/news/political/536837/live-chrisopher-luxon-at-ye…;

by Foxglove. | 16th Dec 24, 5:38pm 1734323924

Something has to be tried at least. The spendthrift attitude and management has been disgraceful. Local councillor of more than three terms was recently recorded as saying something like - we can hear you, we are listening, you want us to concentrate on basic services. Pity said councillor had been tone deaf up until now apparently. Same identity seemed to believe building $13 million of cycleway enhancement to a main thoroughfare would solve road flooding 20km distant caused by the council stuffing up by altering & raising street levels without enough thought to improving storm water drains to cope with the change. Elect donkeys, expect donkey poop.

by Hardly | 16th Dec 24, 5:14pm 1734322447

Do you remember when National promised to pay for all their tax cuts just by cutting comms staff and consultants?

by IT GUY | 16th Dec 24, 6:12pm 1734325965

I hear surplus is another year away now 2029?

by Advisor | 16th Dec 24, 7:24pm 1734330280

Nicola Willis is claiming to have saved $1.5 billion worth each year from public sector job cuts. This was a misleading statement by the minister because the depts/agencies were asked to produce savings from this fiscal year's budgets, not baseline funding, so many one-off cost cuts have been presented as annual savings.

Then, about 30% of that amount is clawed back by the Crown as income taxes right away. So the net annual savings is actually $1 billion.

Over the same period, there was $800m reduction in revenue from reinstating interest deductibility to landlords.

by ChrisOfNoFame | 16th Dec 24, 6:22pm 1734326554

Government's report card due tomorrow.

Rumor has it it'll be pretty damning of the National Party's economic performance.

by HouseMouse | 16th Dec 24, 6:33pm 1734327209

I would give them a D+. All they have effectively done is cut and cancel. Some of that was certainly necessary, but what have they offered that is positive in intent and takes the nation forward?

by JimboJones | 16th Dec 24, 7:02pm 1734328965

After all those years of accusing labour of not delivering anything.

by HouseMouse | 16th Dec 24, 8:19pm 1734333597

Jimbo, newsflash! Both parties are mediocre!

I will give Labour this - their intent was often right, even if their delivery and execution most certainly often wasn’t. There was some positive intent there at least.

I just can’t see any from the Nats. Unless you are a rentier, I guess

by Jonny.Foe | 16th Dec 24, 9:05pm 1734336301

Indeed. They appear to genuinely believe that if you shrink the state and deregulate etc than this will create an unstoppable wave of innovation and private sector growth, which will float all boats. It is batsh*t crazy.

by powerdownkiwi | 16th Dec 24, 10:07pm 1734340051

Yes, it's batshit crazy.

But look at all the folk who ain't - who don't see it.

The attempt to do cycleways was a genuine attempt to run BAU while addressing one - just one - of many Planetary Boundaries. Note that it was alongside BAU (cars on tarmac) so didn't diminish/replace it. That is because the imparative is GROWTH.

The problem is that GROWTH is faltering, being artificially kept alive, and the bet-overhang will kill transactions-with-trust as we have come to know them.

by The Man3 | 16th Dec 24, 9:45pm 1734338753

They inherited an absolute shocking situation and have made so many things that will benefit the country.

Labour stuffed everything and it is not something that can be fixed in one year.

Tax received is down due to the economic mismanagement of the previous government.

I give them a c+ but is only going to get better but we have been burdened with a huge amount of extra debt from Labour, and the Left should never ever be running any country!

by powerdownkiwi | 16th Dec 24, 10:09pm 1734340141

Bollocks.

The problem is that we have hit the Limits to Growth.

And rentiers without useful skills, are likely to be regarded as superfluous.

by The Man3 | 16th Dec 24, 10:47pm 1734342477

Limit to growth is only caused by people not prepared to grow!

Geez, pleased that this rentier has all the skills to prosper in any conditions.

Maybe the best days for rentiers are in fact over with returns on property from rents on property being purchased now very skinny.

That is why the investors have changed their business plan.

by gregwani | 17th Dec 24, 1:14am 1734351275

Not really the Labour governments fault if Luxon allows the loonies to run ideological riot! Trying to use austerity to get out of recession has been rubbished time and again. C+ is incredibly generous!

by J.C. | 16th Dec 24, 5:35pm 1734323707

Mark Bryers sentenced to 8.5 years jailtime over the ditch. Guy used to be a legend in Aotearoa across the water cooler, BBQ, and social media ecosystems.

https://www.rnz.co.nz/news/world/536811/disgraced-nz-businessman-mark-b…

by Te Kooti | 16th Dec 24, 5:41pm 1734324104

Good Lord, who would take tax-structuring advice from him, was he using an alias?

He finally ran into a real regulator, soon to be 501'd in 5+ years.

by kiwikidsnz | 16th Dec 24, 6:01pm 1734325308

I was pleased to see karma finally caught up with him

~20 years ago my wife & I succeeded in a small court claim against Bryers, several $000 related to a personal guarantee he gave on an investment property. Plus costs.

He may not have expected any individual to seriously call him out on it. We had to send Baycorp after him to collect however he paid up.

by JamesM | 16th Dec 24, 10:41pm 1734342118

Very happy to see karma catch up with him. Despicable human being. Never forget sitting in a meeting in Sydney a few weeks after Blue Chip collapsed and happened to look across the lobby and there was Mark Bryers drinking champagne at 11.30am.

by JamesM | 16th Dec 24, 10:43pm 1734342223

Can’t help but see parallels with Kenyon Clarke and DuVal