What happened Friday

Economy / news

A review of things you need to know before you sign off on Friday; both home loan rates and term deposit rates are cut by majors, PMI still contracting, rents stable, swaps hesitate, NZD little-changed, & more

17th Jan 25, 3:59pm 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
ASB has cut some key fixed rate by -20 bps. Details here. All rates are here.

TERM DEPOSIT/SAVINGS RATE CHANGES
ASB, Westpac and the Nelson Building Society has each cut TD rates today. More details here. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

STABLE RENTS
The national median rent has not changed for 10 consecutive months through to November and have generally settled at levels slightly below their record highs.

'STUCK IN CONTRACTION'
The factory PMI ended the year in continuing contraction. About the best you can say about this is that it is not getting any worse (but it is not getting better either). The signals for 2025 are not great, as new order levels are still contracting, but perhaps not as fast as previously. It's not much to hang on to though. BNZ analysts reckon 2025 will improve however.

RELENTLESS FALLS FOR CHINA HOUSE PRICES
China’s new home prices in 70 cities dropped by an average -5.3% in December from a year ago, slowing from a -5.7% decline in the previous month. This was the softest fall since August but is the 18th consecutive month of decreases. "Second hand home" prices fell faster, and there were no cities where prices rose. The string of decreases come despite efforts from Beijing to reduce the impacts of a prolonged property weakness, efforts such as lowering mortgage rates and cutting home buying costs. Meanwhile, the CEO of property developer Vanke has been 'detained' for questioning as that Shenzhen giant is now on its knees. He has been detained by Shenzhen authorities, and we should note that the Shenzhen local government is Vanke's largest shareholder. It is not good to dud your largest shareholder especially if they are also the effective 'law'.

CHINA DISCLOSES WEAK ELECTRICITY DEMAND/PRODUCTION
China's electricity production was only up +0.6% from a year ago in December. For the whole of 2024 the rise was +4.6%. The year ended weakly with neither November nor December rising more than +1%. This is a telling indicator of real activity. (This is the metric then-to-be Premier Li Keqiang famously referred to after dismissing their GDP results.)

CHINA CLAIMS RISING GDP, ABOVE TARGET
But they said industrial production was up +6.2% in December. Retail sales were up +3.7%. And through all this they claimed Q4-2024 GDP rose +5.4% and its fastest pace of the year. Frankly, that is hard to see based on the components that make it up. But the links here, plus this one, should be enough to inspect their data and for you to make your own judgement.

EXPORT PROWESS
Singapore’s exports surged +9% in December from the same month a year ago, after a +3.4% gain in November. This exceeded the +7.4% rise in November and is the fastest pace in export growth since August. A key driver is a sharp rebound in non-electronic product sales.

SWAP RATES SOFTISH
Wholesale swap rates may have fallen back again slightly with all other fixed interest yields today, so keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was up +1 bps on Wednesday at 4.12%. The Australian 10 year bond yield is down -5 bps at 4.53%. The China 10 year bond rate has dipped -1 bp to just on 1.64%. The NZ Government 10 year bond rate is up +1 bps at 4.82% while today's RBNZ fix was 4.73% and down -3 bps. The UST 10yr yield is now just on 4.61% and down another -5 bps from yesterday. Their 2yr is down -4 bps to just on 4.24%, so that positive curve is little-changed at +37 bps.

EQUITIES QUITE MIXED
The NZX50 has risen another +0.6% in late trade today. But the ASX200 is only up +0.1% in afternoon trade. Tokyo has opened its Friday trade down -1.2%. Hong Kong is down -0.1% and Shanghai is down -0.3%. Singapore is up +0.2% at its open. Wall Street ended its Thursday session down -0.2% on the S&P500 following the aggressive rise yesterday.

OIL DIPS
The oil price is down -US$1 from yesterday, now just on US$79/bbl in the US, and now just under US$81.50/bbl for the international Brent price.

CARBON PRICE HOLDS
The carbon price is holding at NZ$63/NZU. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.

GOLD FIRMER
In early Asian trade, gold is up a minor +US$17 from this time yesterday, now at US$2714/oz.

NZD ON HOLD
The Kiwi dollar dipped -10 bps from this time yesterday, now at 56.1 USc. Against the Aussie we are unchanged at 90.3 AUc. And against the euro we are down -20 bps at 54.4 euro cents. This all means the TWI-5 is now just on 67 and down -10 bps from where we were this time yesterday.

BITCOIN UP AGAIN
The bitcoin price has moved up to US$101,490 and up +1.4% from where we were this time yesterday. Volatility of the past 24 hours has been moderate at just on +/- 2.3%.

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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24 Comments

by Squishy | 17th Jan 25, 4:16pm 1737083793

China’s new home prices in 70 cities dropped by an average -5.3% in December from a year ago, slowing from a -5.7% decline in the previous month. This was the softest fall since August but is the 18th consecutive month of decreases.

Can China just get one with posting those cheques? I don't want to end up in a reeducation camp making solar panels but it's ridiculous how mediocre their government response has been.

by J.C. | 17th Jan 25, 4:29pm 1737084568

Looks like a Goldilocks property crash to me. Not too fast, not too slow. Similar to what happened in Japan - like a deer caught in the headlights. House prices didn't collapse like commercial property values and you could argue it was a 'slow melt' that just went on and on and on..... At one stage, Ginza land prices were down up to 80% from peak. For those unaware, Ginza is prime real estate and still very expensive, so you can imagine the eye-watering prices back then - $139,000 per m².

https://market-bulls.com/japanese-asset-price-bubble-explained/

by IT GUY | 17th Jan 25, 5:34pm 1737088452

China operates two economic environments

A: what happens internally all transactions in yuan

B: what happens externally all in USD

Internally is a bit screwed but if they want they can print. crap quality of life for Chinese people which is why they will not consume, no safety net and they know it and also already lost most of there investment in WMP that invested in RE, very hard to grow a consumer economy now, miracle has died and not enough new kids to support model anyway.

Externally they import the most oil of any country , around 13 million barrels of oil a day

They import 40% of the food they consume every day

This is the model Trump is trying to hurt as that way he can hold there ability to move forward in tech and defense (attack).

serious point to note is the interior losses are much bigger then the exterior trade surpluses and not same flows, ie trade surplus with US but buy oil of Saudis etc.

They are going to have a lost decade like Japan is there best outcome

They need to balance there external acc, the plebs in the inside they can re educated if needed

by J.C. | 17th Jan 25, 4:29pm 1737084590

Extraordinary happenings in the crypto space at present as the most hated of all cryptos - XRP - is absolutely killing it. Back in 2013-2014, this coin was USD0.001. But in the last week, the XRP price has rocketed past USD3 and even crushing the mighty rat poison on near-term performance.

This is incredible after 4 years of litigation involving the SEC where the price has been suppressed beyond recognition. Even after the SEC filed a brief to appeal the court's decisions in XRP's favor y'day, the price has continued skyward. We can draw some parallels with GameStop and the Wall Street Bets degenerates have been cheering it on. You could even argue people are betting against the govt agencies.

XRP has now outperformed Bitcoin over the past 3 and 5 years as of today. Plenty of anger from the BTC community. But an important learning here: 99% were wrong and the market has been right.

by Baywatch | 17th Jan 25, 4:32pm 1737084772

What is rat poison?

by AN Other | 17th Jan 25, 4:40pm 1737085219

Bitcoin (aka BTC). J.C. likes to chide Lonewolfnz about it.

One of the many reasons to subscribe to Interest.co.nz

by J.C. | 17th Jan 25, 5:18pm 1737087524

Wolfie cashed in at $70K. No drama. Do what you gotta do. Doesn't matter if you own BTC100 or BTC0.0001. Everyone's different.

Back to my post though. Personally I would prefer to hold BTC over XRP. But there's no reason why people need to get salty about XRP degens having their time in the sun (as is happening).

by HodlKiwi | 17th Jan 25, 5:08pm 1737086933

Happy to be a degen of the bankers coin. It sure has been a hell of a ride to this point

by J.C. | 17th Jan 25, 5:10pm 1737087024

All power to you.

by JimboJones | 17th Jan 25, 7:32pm 1737095578

My memory is always vague, but wasn’t XRP meant to be the one that could actually be used as a currency? With that sort of deflation it’s useless as a currency.

by J.C. | 17th Jan 25, 9:29pm 1737102571

With that sort of deflation it’s useless as a currency.

XRP monetary policy is different to that of ratty. The fiat price of XRP is not necessarily representative of deflation. In fact, it's more about price discovery.

by phalanax | 18th Jan 25, 7:51am 1737139897

Lets see , newbie never bought any crypto ... Trump coming to power... Do I buy a miniscule fraction of a BTC or do I buy XRP ? ....seems to me the XRP wins hands down for a low value buy in . Scaled, BTC's enemy is its HIGH value . Heres an absurd scenario...Trump buys (roughly 1btc worth of xrp) 30000 XRP before he takes office and next year the Fed govt chooses XRP over BTC who wins....lol ... BUT .. Anything can happen XRP could bottom out ... lifes a gamble.....

by Justa comment | 17th Jan 25, 4:31pm 1737084679

On todays poll, Winston still decides either government. In any case still a long way out from the next election. National still need to get things done, some resistance in the first year from some sectors, some CEOs will have to go, watch this space.

by IT GUY | 17th Jan 25, 5:35pm 1737088527

lets see a poll of polls before I take this outlier seriously

by kiwikidsnz | 17th Jan 25, 6:50pm 1737093020

I've published Roy Morgan links here throughout the last year, whether Left or Right. AFAIK its still the only poll thats taken over the whole month. Probably the next will be Jan month poll in mid Feb.

I'm unsurprised to see National falling (if you sit on the fence too long you'll get splinters) & NZF ACT making gains. And as I've repeatedly said, the polls are consistent that the next election will be decided by child bearing age women.

by JimboJones | 17th Jan 25, 7:34pm 1737095675

Is it because they are sitting on the fence, or because they are in bed with the extremists?

by kiwikidsnz | 18th Jan 25, 1:07pm 1737158844

Remind me again which political party facilitated the secret development of the He Puapua ethnostate roadmap.

"You can’t have a liberal democracy if two babies born on the same day already are determined to have preexisting grievances against each other.” Thomas Sowell

by J.C. | 17th Jan 25, 4:49pm 1737085740

As of late 2024, Americans now collectively owe about $1.17 trillion on credit cards, a rise of $24 billion from the previous quarter. Water cooler buddy said 'meh' and mentioned that credit card debt hit $1 trillion back in 2023. He's correct.

But here's the more interesting insight for me: credit card lenders wrote off $46 billion in seriously delinquent loan balances in the first nine months of 2024. That's the highest level since the GFC 2008 crisis and up 50% in a single year.

Probably nothing. We'll see.

https://www.newsweek.com/credit-card-defaults-skyrocket-americans-unabl…

by AN Other | 17th Jan 25, 4:57pm 1737086257

That's $3,510 per head of population! I can only dream of being so frivolous.

So what happens when all the defaulters have their cards cancelled and debts written off? Is America's credit system so unconnected that they just go to another credit card provider and start again?

Or do they just stop buying? (I appreciate that not all of that $1.17T will be written off.)

by J.C. | 17th Jan 25, 5:16pm 1737087378

So what happens when all the defaulters have their cards cancelled and debts written off? Is America's credit system so unconnected that they just go to another credit card provider and start again?

Good questions. Start with late fees and higher interest rates on the outstanding balance. Then downgraded credit scores. Debt sold or passed to debt collection agency. Creditors may file lawsuits to recover the owed amount. If successful, they can obtain a judgment that allows for wage garnishment or liens against property.

The default will remain on the borrower's credit report for up to seven years, making it difficult to secure new credit or loans in the future. It also leads to higher interest rates if new credit is obtained.

by IT GUY | 17th Jan 25, 5:36pm 1737088587

They are farming the poor, clearly the profits are bigger then the write downs and they are just part of the game.

Google AI - The average American has about four credit cards. However, the number of credit cards a person has can vary depending on their generation, state of residence, and other factors.

So as long as you have a few, if one gets cancelled no problem, you just start on the most empty card....

if you want to try this in NZ buy an Iphone on no 24 months interest - you will get the 2k on the credit card and perhaps you have to pay off in 2 years... as long as you meet monthly no interest, as soon as you pay off they increase your limit to 10k, you are a good payer.

Do again with another company - same deal...

blow some out

now me and you have assets they could come after, but the typical person playing this game do not

its an easy game, no point trying to bankrupt as the people paying the game often have no money

by J.C. | 17th Jan 25, 6:24pm 1737091486

And so it begins. The incoming US govt preempting attack and going after the FDIC for Operation Chokepoint 2.0 - basically the Biden admin attempt to take down the crypto industry through debanking. Senator Lummis has written to the FDIC and told them not to destroy any documents. Whistleblowers are suggesting that FIDC staff with access to these materials are being closely monitored by management to prevent them from being supplied to the Senate before they can be destroyed. Certain staff have been threatened with legal action to prevent them from speaking out. Of course this is illegal and unacceptable behavior by the bureaucrats.

In Lummis own words "the FDIC is attempting to hide Operation Chokepoint 2.0 and the FDIC must preserve all documents related to digital assets immediately. Tim Scott and I will get to the bottom of it." ...“it will result in swift criminal referrals to the U.S. Department of Justice.”

https://www.lummis.senate.gov/press-releases/lummis-demands-fdic-immedi…

by JimboJones | 17th Jan 25, 7:36pm 1737095783

QAnon styles?

by J.C. | 17th Jan 25, 7:48pm 1737096526

I think most suburbanites would think Chokepoint 2.0 was related to money laundering and illegal activity. The Biden admin and the banks trying to shut down crypto would be seen as a conspiracy theory. Therefore it's good that Lummis is on the attack. Transparency is necessary.