What happened Wednesday

Economy / news

A review of things you need to know before you sign off on Wednesday; significant mortgage rate changes, dairy prices firm, real estate market quiet, inflation as expected, NZX50 little-changed, swaps stable, NZD on hold, & more

22nd Jan 25, 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
Later yesterday, ANZ cut rates to match ASB. More here. Then today, BNZ did the same, plus it launched a market-low 5.29% two year rate. More here. And the Co-operative Bank trimmed its 12/18/24 month fixed rates to 5.49% for each period. All rates are here. Also, see this.

TERM DEPOSIT/SAVINGS RATE CHANGES
ANZ has cut more popular TD rates now too. But BNZ has yet to make TD rate cuts in this cycle. The Co-op Bank also cut all its TD rates 6 to 24 months. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

DAIRY PRICES FIRM
Dairy prices rose modestly today, up +1.4% in USD terms. But WMP was up +5.0% and SMP was up +2.0%. Butter was up +2.2% and Cheddar Cheese up +2.8%. Volumes offered and sold were seasonally lighter. Also notable is that Chinese buyers were more active than recently. And that increased demand came from Europe. Today's outcomes will allow the high payout forecasts to be held.

HOUSING MARKET IN DOLDRUMS
The REINZ said December was 'a particularly quiet month for residential dwelling sales'. Buyers had plenty to choose from as housing inventory surged. Prices changed little.

AN INFLATION LEVEL THE RBNZ WILL LIKE
Inflation held steady at a 2.2% rate for second consecutive quarter in Q4-2024. High interest rates slowed economic activity and falling import costs eased inflation pressures. The RBNZ will like that non-tradable inflation is not where the new pressure is coming from; it is from the tradable components like international travel, cars, and the soft exchange rate that the Q4 pressure came from. As the BNZ economists noted, inflation is now no threat to RBNZ rate cuts.

NZX50 ON HOLD
Here are the key changes to know about in the New Zealand equity market. As at 3pm, overall prices have barely moved. a2 Milk, Scales, NZX, and Oceania lead today's gains, and Hallenstein, Heartland, Ryman, and Channel Infrastructure lead today's decliners

SUGGESTIONS OF IMPROVEMENT
In Australia, they are getting a small uptick in economic activity. While the growth signal from the Westpac-Melbourne Institute Leading Economic Index is not particularly strong, it has shown a clear improvement on the persistently negative, below-trend reads recorded over the previous two years.

RECOVERING I
And staying in Australia, new data out today for the September 2024 quarter shows that residential dwelling construction is rising. New dwellings commenced rose in Q3 from Q2 at an annualised rate of +4.2%, driven by new house building, up +5.2%. Overall these dwelling starts were almost +14% higher in Q3-2024 than in Q3-2023. But their rental market "has well and truly past the peak". Real estate offices that specialise in the rental market are hurting now. Overall inventory for sale is up sharply and investors are quitting, especially in Victoria. A lot of the investor sales are to FHBs there.

RECOVERING II
Korean consumer confidence took a hiding in December in the midst of their political crisis (one that is still playing out). But the latest survey has consumer sentiment bouncing back - not quite to the pre-crisis levels (and still net negative) - but a notable recovery anyway.

SWAP RATES HOLD
Wholesale swap rates are probably little-changed today, but keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was unchanged on Tuesday at 4.06%. The Australian 10 year bond yield is up +2 bps at 4.50%. The China 10 year bond rate has slipped -3 bps to just on 1.64%. The NZ Government 10 year bond rate is down another -7 bps at 4.69% while today's RBNZ fix was 4.65% and down -6 bps. The UST 10yr yield is now just on 4.59% and up +4 bps from where we were this time yesterday. Their 2yr is down -4 bps to just on 4.29%, so that positive curve is now at +30 bps.

EQUITIES QUITE MIXED
The NZX50 has risen a mere +0.1% in late trade today. But the ASX200 is up +0.4% in afternoon trade. Tokyo has opened its Wednesday trade up +1.4%. But Hong Kong is down -1.4% and Shanghai is down -1.0%. Singapore is up +0.1% at its open. Wall Street closed up +0.9% in its Tuesday trade on the S&P500 in its post-holiday session.

OIL DIPS FURTHER
The oil price is down -50 USc from this time yesterday at under US$76/bbl in the US, and now just under US$79.50/bbl for the international Brent price.

CARBON PRICE FIRMS
The carbon price is up +50 NZc at NZ$63.50/NZU. The best you can say is that it is 'holding' because it really isn't going anywhere. The next release of units at the official auction is on March 19, 2025. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.

GOLD RISES FURTHER
In early Asian trade, gold is up +US$33 from yesterday, now at US$2748/oz.

NZD LITTLE-CHANGED
The Kiwi dollar has risen +20 bps from this time yesterday, now at 56.6 USc. Against the Aussie we are down -20 bps at 90.3 AUc. And against the euro we are down -10 bps at 54.3 euro cents. This all means the TWI-5 is still just on 67.1 and essentially unchanged from yesterday.

BITCOIN FIRM
The bitcoin price has moved up to US$105,899 and and up +4.3% from this time yesterday. But most of that was last night. Volatility of the past 24 hours has been moderate at just on +/- 2.0%.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

Daily swap rates

Select chart tabs

Source: NZFMA

This soil moisture chart is animated here.

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42 Comments

by nzlegofan | 22nd Jan 25, 4:15pm 1737515750

BNZ chief economist argues people should consider fixing longer on the same day BNZ does a market-leading 2 year rate... interesting

by IT GUY | 22nd Jan 25, 4:14pm 1737515679

pure co-incidence ......

by M0ralHazard | 22nd Jan 25, 4:35pm 1737516917

At some point it will be the right time to move from short fixes to a longer fix as the interest rate cycle changes. Is that point now? In 6mths? If anyone knows, I'm all ears!

by Pa1nter | 22nd Jan 25, 5:53pm 1737521601

The global economy or geopolitical situation shitting the bed is the unpredictable wildcard.

by J.C. | 22nd Jan 25, 4:38pm 1737517081

Ross Ulbricht - creator of the Silk Road - to be pardoned and freed. Methinks Aotearoa (and the West in general) can learn much from this. Ross was an entrepreneur who created a marketplace. Now I personally don't agree with selling illegal goods and services, but that was not what Ross was about - he was not a drug dealer. He created a market where people where people bought and sold things the govt didn't like. Politicians targeted both Silk Road and Bitcoin as criminal enterprises that needed to be shut down.

The judge and the establishment threw the book at him as a first-time, non-violent criminal - two life sentences. The DOJ seized 173,991 Bitcoin directly and indirectly from Ross - USD34 million when they took it (today worth over USD18 billion). Arguably, some of that BTC should be returned to Ross.

So much to consider here morally, philosophically, and politically here as it relates to commerce, political economy, and even finance.

https://www.npr.org/2025/01/21/nx-s1-5270051/trump-pardons-dark-web-mar…

by redcows1 | 22nd Jan 25, 4:48pm 1737517706

Reckon he'll do the same for kim.com. same argument.

by J.C. | 22nd Jan 25, 4:51pm 1737517901

Google, Microsoft enable exactly what Dotcom did with no questions really asked.

by David Chaston | 22nd Jan 25, 5:02pm 1737518574

Quite wrong. Basically a smear that seems to have currency these days, cheap whataboutism.

by J.C. | 22nd Jan 25, 5:06pm 1737518784

Would you like to explain how it is different?

by Silvi | 22nd Jan 25, 4:52pm 1737517963

The Law and Order President. Threatening both Canada and Mexico on drugs. If that guy had not been arrested with his laptop open the Fed's would have never been able to prosecute. But to today, giving a pardon gives both Mexico and Canada some great negotiating stances methinks. And if Trump laughs it off, remind him on his opinion on Hunter Biden. If the Feds had not got this guy, unpaid taxes in the billions I suspect, would have been mind boggling.

I really think as we watch the next four years the one overwhelming conclusion one will draw of and about the Donald is he sure doesn't ever think what if!

by David Chaston | 22nd Jan 25, 5:01pm 1737518495

Citizenship (of the world?) relies on people being basically civil to each other. Activities that either prey on others or enable others to prey on the weaker should always be proscribed. They should be outside the law and deserve punishment. Ulbricht is a useful exhibit. But now we have a view that anyone should be 'free' to do anything. No problem to push addictions. No problem owning guns that are solely used to kill others. No problem enabling predatory activities, like grooming the vulnerable for nefarious tasks (most religious zealots). No problem rioting and killing guards assigned to keep the peace. All in the name of 'freedom'. 'Freedom for me' but not for you. It's a twisted notion, in my view. And it can't end well when the definition is that the law should be used to protect the powerful to give them freedom to take advantage of the weak. And anyone who seeks to put in place sensible civil arrangements for society is a threat. I don't believe anyone, including most Americans, signed up for such twisted notions. But that is what we seem to have in the US. We need to make sure we don't get it here.

by Te Kooti | 22nd Jan 25, 5:48pm 1737521333

Increasingly, political parties in the UK and US are prepared to openly treat their voters preferentially. Labour in the UK gave train drivers a 20% pay rise and funded it by removing pensioners winter fuel allowance, there is also plenty of evidence their judiciary is treating voters differently. Trump pardons the J6 rioters, Biden pardons his family and selected bureaucrats before any investigations have commenced. I would argue Biden started it with the charges against Trump, but it's a moot point.

Politics is heading in a dark direction. Rather than build on the past, a change of government now focuses on unwinding past policies - what we had here. Much more adversarial and tribal.

by Pa1nter | 22nd Jan 25, 5:56pm 1737521814

Much more adversarial and tribal.

It's far more advantageous for the power wielders if we're fighting amoung each other, and our political candidates will play to that end.

Once the political torch gets handed to Gen Z or Millennials, the boomers are likely screwed. The poorer ones, anyway.

by Te Kooti | 22nd Jan 25, 6:11pm 1737522679

It's patently obvious that Labour and the Democrats are looking to import voters, remove ID requirements etc while the opposition are rallying the traditional conservative base. I don't see at as a generational battle, given the demographics that wouldn't be wise.

by IT GUY | 22nd Jan 25, 6:38pm 1737524284

Te Kooti,

Politicians used to sell dreams of the amazing things they could do for us,

Now they sell a promise to protect us from the Nightmare the other "side" would deliver....

by Pa1nter | 22nd Jan 25, 6:52pm 1737525144

It'll become a generational battle once the demographics shift enough (they're not making any new boomers). Boomers are already publicly unpopular, they're going to get more expensive as they age out, and government revenue is going to get stretched.

by IT GUY | 22nd Jan 25, 7:11pm 1737526276

I was born a few years after the boomers, so I got to enjoy all the benefits, but can technically deny being a boomer.

by Te Kooti | 22nd Jan 25, 7:43pm 1737528200

They also have a lot of wealth and the birth rate is falling. The boomer vitriol is so intellectually lazy.

by Pa1nter | 22nd Jan 25, 8:18pm 1737530333

They're a very easy scapegoat. Stolen our future, pull up the ladder, etc.

Won't be many years shed when a future populist leader throws them under a bus.

by powerdownkiwi | 22nd Jan 25, 6:10pm 1737522618

You need to read up on what the US has done to almost everyone else, to maintain its hegemony, DC.

The Secret History of the American Empire is a good place to start. What the US citizenry signed up for, and what is done off-camera to support their resource-appetite, are diverging narratives. Which is why Trump.

The US has been civil to how many nations?

Edit - an overshot species (and 8 billion humans is 6-7 billion overshot) will increasingly be uncivil to each other.

by Foxglove. | 22nd Jan 25, 6:13pm 1737522821

Suggestible post WW2 the Marshall Plan for Western Europe and MacArthur’s reconstruction of Japan were both generous and effective. Certainly there was more to it than that with deep seated occupation of US industry interests generating payback but more pointedly, demarcation lines were fixed vis a vis once were not long ago allies, now the opposite, Russia & China. Still without those, let’s say enterprises, Europe and the Pacific regions would likely be quite some different today. Not sure how we in New Zealand would have been placed if otherwise.

by Zachary Smith | 22nd Jan 25, 9:05pm 1737533126

No problem rioting and killing guards assigned to keep the peace.

When did that happen? You have severe Trump derangement syndrome.

by Zwifter | 22nd Jan 25, 9:22pm 1737534133

January 6th, people died in those riots.

by Rampart | 22nd Jan 25, 10:25pm 1737537916

One overdose, one protestor was shot and 3

died of natural causes..

by Zachary Smith | 23rd Jan 25, 7:10am 1737569444

No "guards" died that day.

How Many Died as a Result of Capitol Riot?

by J.C. | 22nd Jan 25, 4:49pm 1737517744

Gold/JPY now up 50% since Jan 2024.

But more interestingly, Japan's national wealth hits a record high of JPY4.16 quadrillion (USD26.8 trillion) +4.1% YoY at the end of 2023. Japanese households comprising ~¾ of the country’s total at JPY3 quadrillion in assets, up +3.7% “boosted by rising stock and land prices.”

https://www.japantimes.co.jp/business/2025/01/21/economy/national-wealt…

by Silvi | 22nd Jan 25, 4:54pm 1737518051

Interesting bond story ongoing now. I do wonder how the UK gilts and the EU will play out.

by J.C. | 22nd Jan 25, 5:03pm 1737518596

Yes. Sticking with Japan, the majority of Japan household assets is in cash, stock holdings at ‘23 end were in single digit % of total household assets. As opposed to the government and financial institutions, who aren’t concentrated long JPY, the world’s fastest deteriorating currency.

So, while it’s “very nice” that household assets are at record highs, those things are all JPY-denominated, or rather, are just pure JPY. Things like roads that the govt owns - those things don’t “go up in value by +44%” in a year - it’s the currency’s value that is getting decimated.

by Te Kooti | 22nd Jan 25, 5:04pm 1737518665

I have never been more bearish on a country than I am on the UK today. They are in terminal decline socially and economically.

From the lies and deceit over the Southport attacks and grroming gangs, to the enormous unfunded pension deficit, high tax and low growth economy, they are in serious peril. They just repealed the non-dom status for the wealthy ex-pats which is the final nail in the coffin for London as a major financial centre.

by Pa1nter | 22nd Jan 25, 5:57pm 1737521862

Good news is we're running roughly the same system, just 10-20 years behind.

by agnostium | 22nd Jan 25, 6:48pm 1737524884

The coalition is desperately trying to close that gap to 5-7 years behind.

by 26@Main | 22nd Jan 25, 5:18pm 1737519532

Anyone else have the issue that the back button doesn't always work on their lap top to leave a page on this site? I don't think it's my lap top and don't have the issue on other sites but have read some sites use it to increase web traffic by making you open a new web page?

by IT GUY | 22nd Jan 25, 6:50pm 1737525017

I do not have that issue with this site and use many different machines to access it

by 26@Main | 22nd Jan 25, 10:02pm 1737536531

Thanks

by TronMVP | 22nd Jan 25, 5:53pm 1737521602

And in other news, Auckland CVs are delayed for another 3 months - they should have been out in May last year!

by J.C. | 22nd Jan 25, 6:09pm 1737522590

News headline of 2025:

Boomer unleashes at $7 obsession that is stopping young Aussies from buying a home: 'They're addicted'

https://www.dailymail.co.uk/news/article-14303017/Boomer-7-coffee-Peter…

by legrandsoir | 22nd Jan 25, 6:34pm 1737524086

meh, anything will equate to a house deposit if you extrapolate it out long enough. Not going to deny that my generation (millenials) and the ones after us (gen z) aren't that good at saving, but all I see here is a boomer trying to be relevant by changing up the avo on toast meme from 2017.

by IT GUY | 22nd Jan 25, 6:52pm 1737525143

I spent it on booze and girls, the rest I just squandered.

by agnostium | 22nd Jan 25, 6:52pm 1737525145

Boomers never smoked, and boomers never went down the pub and boomers never spent anything on anything other than paying for their house, oh wait... was it that or was it that homes/land was cheap enough and wages high enough that a single income household could pay off their mortgage in a decade or less...

by J.C. | 22nd Jan 25, 6:59pm 1737525540

He has a point. When McDonalds first arrived, it was a nice-to-have choice over potato fritters, battered fish, or a Hawaiian burger. Similarly when mobile phones emerged in the 80s, they were only for the well heeled generally speaking.

On the other hand, if cafe sales volume fell say 20%, the impacts could be devastating in more ways than one.

by Chaosinflesh | 22nd Jan 25, 7:58pm 1737529089

People who don't own houses shouldn't have nice things. Like coffee, take out, food - these are the domain of landowners you plebians. Now shut up and pay my rent - these Dependables don't pay for themselves!

by Firstclass | 22nd Jan 25, 10:40pm 1737538830

Inflation is 2.2% but domestic inflation is 4.5% (rates, rents, insurance)