What happened Monday

Economy / news

A review of things you need to know before you sign off on Monday; retail rate market quiet, Fonterra positive, grocery price rises slow; swaps stable, NZD holds, & more

10th 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
Conrad Funds (CFML) has trimmed rates today. This review might be helpful. All rates are here. And you can compare the non-rate incentives here.

TERM DEPOSIT/SAVINGS RATE CHANGES
There are none here today. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

RECORD PROFITS
Dairy co-operative Fonterra has issued a second profit upgrade in little more than two weeks and is now forecasting that earnings could be somewhere in the region of a third more than earlier indicated - and a new record high on an EPS basis.

TESTING THE WATERS
Fonterra has also started building out the competitive tension for the divestment of its Mainland division. It has set in play a roadshow to institutional investors for a listing option. The goal here is to test the market value of listing vs the option of a trade sale. It is a big international business with revenues of more than $4 bln. And it would probably drop right into the NZX50, likely in the top 10, if it was listed.

TWO 'NEW' DIRECTORS
Rabobank New Zealand has appointed two new directors to the board, present CEO Todd Charteris, and Laurissa Cooney, (Te Ati Haunui-a-Pāpārangi) who has extensive financial and governance experience. She is a Fellow of the New Zealand Institute of Chartered Accountants and a Chartered Member of the Institute of Directors.

SLOWING COST PRESSURE
The pace of supplier cost increases to Foodstuffs supermarkets slowed further in February, with the Infometrics-Foodstuffs New Zealand Grocery Supplier Cost Index showing an average +1.8% increase in what suppliers charged in February 2025, compared to a year earlier. In February 2024 these costs rose +3.7%. The January food price movement reported by StatsNZ was +2.3%. This will be updated for February data on Friday.

NZX UPDATE
The NZX50 is up +0.3% at 3pm today, after being lower earlier. That means it is heading for a weekly fall of -0.9% to be now only up +4.7% from a year ago. The glow from Fonterra helps the NZX50 rise, but the biggest gains are just recoveries from last week's losers.

SHORT IS POPULAR
Floating rate mortgages surge again in popularity. The latest monthly RBNZ figures show that in January, owner occupiers were still overwhelmingly 'going short' with their new mortgage commitments.

SWAP RATES HOLD, LONG RATES FALL
Wholesale swap rates are probably marginally softer again 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 3.71% on Friday. The Australian 10 year bond yield is up +6 bps at 4.47%. The China 10 year bond rate is up another unusual +10 bps at 1.85%. The NZ Government 10 year bond rate is up +6 bps at 4.70% while today's RBNZ fix was at 4.64% and up +2 bps. The UST 10yr yield is now just on 4.28% and down -2 bps from this morning. Their 2yr is unchanged at 3.99%, so that positive curve is at +30 bps.

EQUITIES MIXED & MINOR
The NZX50 is up +0.5% in late Monday trade. The ASX200 is up +0.2% in afternoon trade. Tokyo is also up +0.2% in early Monday trade. Hong Kong is down -0.7%, and Shanghai is down -0.3% at its open. Singapore has opened down -0.2%. The S&P500 futures trading suggests that Wall Street will open its Monday trade -0.3% lower.

OIL HOLDS
The oil price is a little softer, down -50 USc and now just over US$66.50/bbl in the US, and just on US$70/bbl for the international Brent price.

CARBON PRICE STAYS DOWN
The carbon price is staying lower and down at NZ$61.25/NZU on low volumes. That is a a six month low. 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 HOLDS
In early Asian trade, gold is holding at US$2910/oz, the same as the morning's open.

NZD MAGINALLY FIRMER
The Kiwi dollar is up +10 bps at 57.2 USc from this morning. Against the Aussie we are up +10 bps at 90.7 AUc. Against the euro we are unchanged at 52.7 euro cents. This all means the TWI-5 is just on 66.7 and up +10 bps from where we opened.

BITCOIN HOLDS
The bitcoin price is up +0.9% from this morning's open, now at US$81,880. Volatility of the past 24 hours has again been high at just on +/- 3.5%.

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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14 Comments

by J.C. | 10th Mar 25, 5:00pm 1741579201

Former Bank of England and Bank of Canada Governor Mark Carney to become Canadian PM, without ever being elected by the broader electorate to Canadian Parliament.

Interesting that the progressive ruling elite believe in the capability of central bankers as political leaders. The hoi polloi are screwed.

Mark Carney has forever politicized the Bank of Canada

It doesn't matter that he is no longer in the role, the fact that he once held it is enough.

https://nationalpost.com/opinion/jamie-sarkonak-mark-carney-has-forever…

by rolande | 10th Mar 25, 5:48pm 1741582135

Oh no, so Trump will probably start calling him "Governor" rather than PM

by Independent_Observer | 10th Mar 25, 6:01pm 1741582882

Interesting chart from Hussman - wages from incomes vs corporate profits (adjusted relative to GDP).

Like the housing market, something appeared to break in the 1990s where massive $$ flowed into asset prices or corporate profits in comparison to remuneration to workers.

https://x.com/hussmanjp/status/1898780388316909754?s=46&t=MUwQeKa7MkEJ7…

by Ahuhyeah | 10th Mar 25, 6:41pm 1741585274

Kind of looks like it broke in the late 70 / 80s to me when the downwards trend of labour line set in?

by Ahuhyeah | 10th Mar 25, 6:42pm 1741585366

PS thanks for posting the link. Find this stuff interesting but too lazy to look around myself.

by IT GUY | 10th Mar 25, 6:48pm 1741585712

https://www.epsilontheory.com/

by Independent_Observer | 10th Mar 25, 9:51pm 1741596712

Yes good observation. From mid 1980’s corporate profits appeared to bottom then have grown considerably while worker remuneration continued to slide.

I guess you can understand why people started betting on asset prices as who the hell would want to labour/work for wages for a living and to grow wealth?

It’s another sign to me that we’ve been living in a very unsustainable economic environment these past few decades - more should be done to reverse these trends.

by powerdownkiwi | 10th Mar 25, 10:04pm 1741597497

The trend is reversing itself, without any help from us.

The reversal - wages vs betting-returns - was evident here from about 1980 on. A pity the media never caught on, we could have been informed, and who knows what we might have done...

by J.C. | 10th Mar 25, 6:08pm 1741583339

Russia is worried about China exporting deflation to Russia.

"Russia bought up more than 1mn Chinese vehicles last year, soaking up about 30% of China's petrol car exports. The surge handed Chinese brands' 63% of the Russian market, and sent local brands’ market share down to 29%, according to the CPCA. Russian authorities have begun to push back. In January, Moscow raised “recycling fees”, which function akin to tariffs, to Rbs667,000 ($7,500) for most passenger cars, more than double the level of last September. The charges are set to rise by 10-20 per cent annually until 2030."

https://www.ft.com/content/48cb143e-03ce-4e23-bc6a-7e47d673f1d8

by IT GUY | 10th Mar 25, 6:49pm 1741585760

got to love a good recycling fee

by Foxglove. | 10th Mar 25, 6:55pm 1741586151

China under Mao’s CCP some seventy five years ago embarked on the road map laid out by the Bolsheviks in Russia some thirty years earlier. Subsequently though relations have not always been harmonious especially as Russia considered itself as the senior partner. Now though that has been reversed Russia desperately needs Chinese support economically and more. Here, an old saying seems appropriate - two good men of opposite minds will have greater friendship and prosperity than two bad men of the same mind.

by powerdownkiwi | 10th Mar 25, 8:06pm 1741590369

Noither are capable of footing it alone. China can manufacture, doesn't have the raw resources (particularly energy, without which nothing happens). Russia has resources - particularly energy.

And they both know this a fight to the death, between nations (at first, at least) over 'what's left'. And they can see the US two ways; as a dying hegemony, or as a foe to be taken on. The statement the other day "any kind of war, including a trade war" was telling. Not sure Trump was listening, but it was carefully done.

Alone, they cannot get there. Together - and others will flock - they are probably capable of winning. Who was sapping who in Ukraine? Interesting question.

by Foxglove. | 10th Mar 25, 9:03pm 1741593788

Energy and mineral resources abundant for sure. Except to consider Russia a population of 140 million or so and 1.4 billion or so for China. The latter dwarfs the former. The latter needs food, lots of it. That folk resort to eating bats and marmots for protein signals a rather significant achilles heel before anything starts up. Armies are inclined to march on their stomachs according to Monsieur Bonaparte. Can’t eat gas, oil or oxides. Then again Ukraine, the acknowledged bread basket, was once in some shape or form, occupied by each at different times.

by powerdownkiwi | 10th Mar 25, 10:10pm 1741597822

Can't eat gas>

Oh dear. Yes, we can - and do.

https://ourworldindata.org/how-many-people-does-synthetic-fertilizer-fe…

Since then, Erisman et al. estimate it has supported 42 percent of global births over the past century. This amounts to 44 percent of the global population in 2000 being fed by nitrogen fertilizers, rising to 48 percent in 2008. Here we have extended this estimate to 2015 with the continuation of the assumption that 48 percent of the global population are fed by nitrogen fertilizers. Since the share supported by the process continues to rise, this may in fact be a conservative estimate. This means that in 2015, nitrogen fertilizers supported 3.5 billion people that otherwise would have died.

That's the problem in a nutshell. Fossil energy to food energy = human overshoot.