What happened Thursday

Economy / news

A review of things you need to know before you sign off on Thursday; no retail rate changes, weak building sector, high demand for NZGBs, more bosses depart, swaps firmish, long yields rise, NZD firm, & more

6th Mar 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 RATE CHANGES
There were no changes today, but this review might be helpful. All rates are here. And you can compare the non-rate incentives here.

TERM DEPOSIT/SAVINGS RATE CHANGES
No changes here either. But Kiwibank has simplified its rate card, no longer offering lower rates for balances under $10,000. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

SHRINKING SECTOR
Residential building work fell -4.9% to $4.5 bln and non-residential building work fell -3.1% to $2.8 bln in the final quarter of 2024. From the same quarter a year ago overall building work completed was down -6.4%. These are larger than expected falls in both residential and commercial activity. In a detailed corner of this data it might be worth noting that alterations activity is rising.

WEAK DEMAND, PRICES STABLE
Residential building costs were up by just +1.5% in year to February, and QV reports that construction costs flatten out as weak demand keeps a lid on prices.

VALUES RISE SLOWLY
CoreLogic says median value of NZ homes was $807,164 in February with values slowly rising around the country.

LOWER ENVIRONMENTAL TAX TAKE
Stats NZ says environmental taxes dropped -21% to $5.2 bln in the 2022-23, driven by energy and transport output declines.

NZX UPDATE
The NZX50 is little-changed as at 3pm trade today. There are 37 gainers today led by Vulcan Steel (+3.9%), Skellerup (+2.4%), Vector (+2.4%) and Infratil (+2.4%). There are 34 decliners led by Kathmandu (-3.9%), Property for Industry (-2.3%), and Meridian (-2.1%). Market heavyweight F&P Healthcare is down -0.7% so far.

EXPANDING LOCALLY
F&P Healthcare is expanding again at its 42 ha East Tamaki site. It will build a fifth 28,000 m2 building on its campus which houses 3900 employees.

IMPROVING
The Crown accounts for the seven months to January 2025 show an operating surplus of +$1.1 bln. On an OBEGAL basis it is a -$5.0 deficit. Either way, these results are better than forecast in the HYEFU.

HIGH DEMAND, FIRMER YIELDS
There was more very high demand for today's NZ Government bond tenders. They drew 147 bids worth $1.77 bln for the $500 mln on offer in three maturities. In all cases yields were higher than the prior equivalent tenders. Only 46 bids won anything.

ALL $10 NOW
Rabobank has raised its dairy payout forecast for the 2024/25 season to $10.00/kgMS, bringing it into line with most others. But they are warning that without rain soon, the current season may end rather abruptly. It hasn't offered a forecast for the 2025/26 season however.

DAIRY CO CEO STEPS DOWN
Low-carbon dairy company, Miraka said their CEO Karl Gradon has decided for personal and family reasons, to step down after three years in the role.

RICH RIGHT-WING CANADIAN SEEKS CONTROL OF NZME
North American culture wars are coming directly to the NZ Herald and ZB radio. "Right-leaning" may be about to get a hard shove further. The individual behind the move is under fire from Canadian tax authorities for a "sophisticated tax scheme".

GOFF SACKED
Phil Goff as High Commissioner to London has been sacked by the Government, on the basis he said unflattering things about Donald Trump. Truth is no defense in diplomacy.

FORAN QUITS
Greg Foran has resigned as AirNZ's CEO.

SWAP RATES HOLD, LONG RATES JUMP
Wholesale swap rates are probably marginally firmer 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 down -1 bp at 3.72% on Wednesday. The Australian 10 year bond yield is up +9 bps at 4.53%. The China 10 year bond rate is unchanged at 1.76%. The NZ Government 10 year bond rate is up +8 bps at 4.76% while today's RBNZ fix was at 4.67% and up +10 bps. The UST 10yr yield is now just on 4.31% and up +5 bps from yesterday. Their 2yr is up +4 bps at 4.03%, so that positive curve is little-changed at +28 bps.

EQUITIES MIXED
The NZX50 is unchanged in late Thursday trade. The ASX200 is down -0.6% in afternoon trade. Tokyo is up +0.7% in early Thursday trade. Hong Kong is up +2.4%, but Shanghai is only +0.7% its open. Singapore has also opened up +0.7%. Wall Street ended its Wednesday session up +1.1% and almost making up the prior day's drop.

OIL EASES FURTHER
The oil price is now lower, down -US$1 now just under US$67/bbl in the US, and just under US$70/bbl for the international Brent price.

CARBON PRICE STAYS IN RANGE
The carbon price is still within its range, holding at NZ$62.50/NZU on lightish volumes. The next release of units at the official auction is on March 19, 2025. But that auction's floor price is $68/NZU, so it is heading for a failure. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.

GOLD FIRMS AGAIN
In early Asian trade, gold is up +US$16, now at US$2924/oz.

NZD FIRMS FURTHER
The Kiwi dollar is up +70 bps at 57.4 USc. Against the Aussie we are unchanged at 90.4 AUc. Against the euro we are down -20 bps at 53.1 euro cents. This all means the TWI-5 is just over 66.9 and up +60 bps from yesterday.

BITCOIN FIRMER
The bitcoin price is up +3.9% from this time yesterday, now at US$91,132. Volatility of the past 24 hours has again been moderate at just on +/- 2.8%.

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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33 Comments

by IT GUY | 6th Mar 25, 4:24pm 1741231457

Orr, Goff , Florin gone Prebble jumped

WGTN water chair and Spark CEO going next .......

who next this is like watching a episode of The Apprentice

by J.C. | 6th Mar 25, 4:27pm 1741231645

Goff seems to believe that he's a 'statesman' instead of a bureaucrat. Let's be honest, his role in the UK is little more than a golden parachute.

by Foxglove. | 6th Mar 25, 6:03pm 1741237421

Appeared to almost clone himself on Helen Clark. Except he had neither the innate savviness nor decisiveness. Became instead overly cautiously politically correct. Here though, he has dropped himself in it. As an old timer at work once said about a real talker in the office, the wind blows up his bum and waggles his tongue.

by kiwikidsnz | 6th Mar 25, 4:37pm 1741232268

...Mallard?

by J.C. | 6th Mar 25, 4:47pm 1741232841

Probably worse. I think Mallard decided his job by himself and there would have been little in the way of process to get the best person for the job. Reminds of NSW Deputy Premier John Barilaro who tagged himself for a trade commissioner role in NYC because he wanted to play on the taxpayer's dime. Zero experience in building trade relationships. Fortunately things fell apart and Barilaro was exposed as a grifter. Without people exposing the grift, he would have got away with it.

https://www.theguardian.com/australia-news/2023/feb/06/john-barilaro-ne…

by KH | 6th Mar 25, 6:00pm 1741237232

The Irish do understand a joke.

by J.C. | 6th Mar 25, 4:25pm 1741231551

Low-carbon dairy company, Miraka said their CEO Karl Gradon has decided for personal and family reasons, to step down after three years in the role

Much hype was made about Miraka and its relationships in ASEAN, particularly VinaMilk, which had made small investments in Miraka as far back as 10 years ago. But nothing has actually got off the ground.

by redcows1 | 6th Mar 25, 4:33pm 1741232030

$10/kgms payout......... Dry affecting production.

Bloody typical.

Actually it's not showing on the soil map as maybe we're a bit small or perhaps it's the Kikuyu but we're still ok. Infact currently 16% for the start of the month.

by J.C. | 6th Mar 25, 4:36pm 1741232178

China is preparing to withdraw $62 trillion worth of its securities from the European market.

Hong Kong authorities are working on creating an alternative to European securities depositories Euroclear and Clearstream to reduce dependence on Western financial infrastructure, the Financial Times reports.

The Hong Kong Exchange (HKEX) and the Hong Kong Monetary Authority plan to transform the Central Money Market Settlement System into an international depository capable of handling cross-border payments and currencies including the yuan.

China's debt securities market is valued at $25 trillion, of which $5 trillion is managed by CMU, while Euroclear and Clearstream currently administer $42 trillion and $20 trillion, respectively.

https://www.ft.com/content/0ecc09d2-4dc4-4ba3-b5d7-adc6d2aa9d2b

by kraken | 6th Mar 25, 4:58pm 1741233528

Does this have anything to do with European bond yields spiking, or is it just Germany’s infrastructure spending? Seeing about a 30bps spike in Germany, Italy, France, Spain, Portugal, and the UK.

by J.C. | 6th Mar 25, 5:16pm 1741234590

No it doesn't. What you're talking about is what I saw referred to as the "Bond Hunger Games". If global savers can’t or won’t buy govt bonds, the central banks or commercial banks will print money to buy them instead. Whoever prints first, prints best.

Hong Kong authorities creating an alternative to European securities depositories is to reduce dependence on Western financial infrastructure.

by IT GUY | 6th Mar 25, 6:41pm 1741239719

In a spontaneously announced press conference, the political leaders of CDU/CSU and SPD presented a significant shift in German politics and policies. The four leaders, Friedrich Merz, Markus Söder, Lars Klingbeil, and Saskia Esken, agreed on a special fund for infrastructure investments of €500 billion over the next ten years. Additionally, the likely next Chancellor, Friedrich Merz, announced an agreement to change the constitutional fiscal debt brake to allow for higher defense spending. Specifically, defense spending of more than 1% would be exempted from the debt brake. The balanced budget requirement for regional states in the debt brake will also be loosened.

For both initiatives – the infrastructure fund and the change to the debt brake – both parties aim to use the ‘old’ majorities in parliament to secure an agreement next week. In the ‘old’ parliament, which will still be active for another two weeks, CDU/CSU and SPD, together with the Greens, would have a two-thirds majority. In the newly elected parliament, they wouldn’t. If there is a two-thirds majority in favour of these changes, the Federal Council would also need to approve them with a two-thirds majority.

Thinking big but with some hurdles on the way

To be clear, tonight’s announcement is the result of informal coalition talks. By agreeing on crucial financing aspects, both parties preemptively removed potential stumbling blocks for the official coalition talks. They also learned an important lesson from the last German government: not openly discussing financial issues in a coalition eventually backfires. Therefore, today’s announcement is a smart move and demonstrates a strong intention to establish a robust government coalition.

At face value, these two policy announcements would clearly benefit the German economy. A €500 billion infrastructure fund would address urgently needed investments, providing both short-term economic support and increasing long-term growth potential. This aligns with our previous view of additional investments of 1% to 1.5% of GDP over the coming years. However, we wouldn't rule out that the official coalition talks will still bring some expenditure cuts, which would lower the positive impact of the announced fiscal stimulus.

Importantly, the change to the fiscal debt brake to allow for defense spending is politically astute, as it allows the CDU/CSU to present the change as driven by recent developments. This approach would not deceive CDU/CSU voters who hoped for no changes to the debt brake but follows the old political principle: if the facts change, I change my mind. It is also important to note that both parties want to bring these changes to parliament next week, meaning they would not be conditional on successful coalition talks.

However, there are a few potential hurdles to implementing these almost historical changes. Not all CDU/CSU party members favour changes to the debt brake and could oppose or even vote against it. Such opposition would be a public revolution within the party and would strongly undermine Friedrich Merz’s leadership. Another political hurdle could be that today’s announcements might be perceived as breaking election promises, as the CDU/CSU had a strong commitment to the debt brake in its election programme. Using the ‘old’ parliament to push these changes through at the last minute might also not sit well with all voters and could encourage some CDU/CSU or SPD members to oppose today’s proposals.

Another historical day of so many recently

All in all, Europe is in the midst of historical changes. The developments of the last few days have pushed the likely next German government to make a historical move by announcing a fiscal package that could finally mark the start of better years for the economy.

by Independent_Observer | 6th Mar 25, 5:03pm 1741233780

1 year swap looks like it may still fall a bit more but it would appear that the 2 year through 10 year swaps are forming some type of floor (could be wrong of course). Although it did appear a peak was forming in swaps back in 2023-2024 and now it would appear that some type of bottom is forming in the current period.

I wouldn’t be betting on mortgages being significantly lower in the future (ie next few years) but who knows what black swan events could be around the corner that at drive rates in either direction - either way I think we may see a new trend developing in the next 6 months (ie it will become clearer if it really is higher for longer as the 2 year through 10 year look like they are in a position where they are going to break in one direction or the other in the coming months and this should give a good indication of where markets and rates are heading over the next few years).

A lot of if, buts and maybes but that appears to be where we are right now (in my personal opinion..).

by kraken | 6th Mar 25, 5:08pm 1741234096

Higher highs and higher lows in the 2y and especially the 10y yield, in my opinion.

by Yvil | 6th Mar 25, 5:14pm 1741234450

There have been repeated warnings that swaps will rise imminently, but looking at the graphs provided above the 1, 2 & 5 year rates area all very near their lows since Covid. Of course it doesn't mean they won't rise, tariffs are certainly inflationary but then again, a recession and lower oil prices are not.

by Independent_Observer | 6th Mar 25, 6:32pm 1741239172

Yes just as there have been imminent warnings of house price rises these past few years. Not everyone (or anyone) is right about everything all the time.

by IT GUY | 6th Mar 25, 6:43pm 1741239783

forget NZ House prices, world now focused on a global recession or not trade....

by kraken | 6th Mar 25, 6:58pm 1741240734

Lower oil prices > lower inflation > lower rates > higher house prices, I think that’s what Yvil is getting at. But if the drop in oil prices comes from a recession, higher unemployment could hit house prices harder than high rates.

by Independent_Observer | 6th Mar 25, 7:02pm 1741240964

Exactly - the assumption is lower rates = higher house prices with 100% correlation.

This isn’t true.

by kraken | 6th Mar 25, 7:14pm 1741241699

This is an example of lower rates, but no one is buying due to high unemployment, 90’s recession: https://x.com/ShaziGoalie/status/1878466231671701512

by IT GUY | 6th Mar 25, 7:23pm 1741242235

started with the 1987 share crash, funny thing was around 1995 was a great time to buy as no one else wanted to or could due to unemployment.... maybe 2027/8 in NZ.

by kraken | 6th Mar 25, 7:36pm 1741242997

27/28 i'm thinking too. However, not sure wife can wait that long. I've got this year to see how things go

by profile | 6th Mar 25, 5:12pm 1741234336

"Right-leaning" may be about to get a hard shove further.

Let's hope so! ZB's endless reel of Democrat/Labour/Green talking points and dripping wet left wing offshore commentators needs a wring out.

by J.C. | 6th Mar 25, 5:22pm 1741234960

What a time to be alive.

German bond yields saw their largest rise since 1989 today after their growth forecast was revised higher. Japan 10 year hit 1.5% tonight for the first time since 2009.

https://finance.yahoo.com/news/japan-10-bond-yield-reaches-002714030.ht…

by kraken | 6th Mar 25, 5:37pm 1741235862

I was watching Japan’s 10Y this week, thinking about when it would hit 1.5%. This is the yen carry trade unwind. BOJ will hike rates, and global liquidity will continue to dry up.

by IT GUY | 6th Mar 25, 6:44pm 1741239885

Liquidity will reverse, and yen also may go full on safe haven at the same time, its times like those NZDJPY can fall 8 big figures in a day, this time I am going to be on the right side of the trade....

by agnostium | 6th Mar 25, 8:35pm 1741246547

I don't trade currency, can you talk me through what you're doing...

by rastus1 | 7th Mar 25, 9:04am 1741291440

He's gonna sell NZ$ buy Yen and pocket when (if)Yen goes up.

by kraken | 6th Mar 25, 9:08pm 1741248483

The spike in the Japanese 10Y yield and the sell-off in the US10Y are going to put pressure on US equities. Right now, US equities are being supported by a weaker USD, DXY dropped to 104. If the bond sell-off keeps going and the US10Y heads back to 4.5%, we either see DXY below 100 or a crash in US equities. I'm thinking a crash mid march. Already have seen a double top. 5 years from the last crash march 2020.

by powerdownkiwi | 6th Mar 25, 9:17pm 1741249065

With the greatest of respect for your expertise, this time it's different.

I think of people like you, as experts in the bilge-depth of No2 hold, RMS Titanic. Great grasp of the slop from side-to-side - but this time it's sinking. Meaning a lot of bets will be off.

Someone else was spot-on - this is an amazing time to be alive. Not because of cross-rates or inversions - but because our species has, for the only possible time at a global scale, hit the physical limits to growth. With exponential suddenness - who'd'a thunk?

by agnostium | 6th Mar 25, 11:05pm 1741255557

Our research does not indicate that collapse of the world economy, environment and population is a certainty. Nor do we claim the future will unfold exactly as the MIT researchers predicted back in 1972. Wars could break out; so could genuine global environmental leadership. Either could dramatically affect the trajectory.

But our findings should sound an alarm bell. It seems unlikely that the quest for ever-increasing growth can continue unchecked to 2100 without causing serious negative effects – and those effects might come sooner than we think.

From 2014

https://www.theguardian.com/commentisfree/2014/sep/02/limits-to-growth-…

by IT GUY | 6th Mar 25, 6:47pm 1741240047

During the GFC central banks worked together US/UK/ECB/JCB/CHINA to act in unison, now they are economic war with each other... there will be no co-ordinated response when things get worse, rather some may well stick another knife in.

by kraken | 6th Mar 25, 8:46pm 1741247205

Here's one for JC, I'm also a gold bug.

Gold sales to the US in December 2024 saw a dramatic jump to $1.17 billion, followed by an even more staggering $4.62 billion in January 2025 (87% of the $5.272 billion total), more than twice the value of exports to the same destination for the entire calendar year of 2024.

Sure, I believe them when they say "non-monetary." Meanwhile, the US has suddenly turned into a net importer of gold since Trump took office. Fort Knox gold audit incoming.

https://mining.com.au/australias-non-monetary-us-gold-exports-skyrocket…