What happened Wednesday

Economy / news

A review of things you need to know before you sign off on Wednesday; renters have the 'power', credit card growth lame, job ads weak, more DMO debt issuance, equities recover, swaps stable, NZD eases, & more

23rd Apr 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 fixed home loan rate reductions from TSB, and UnityMoney today. All rates are here.

TERM DEPOSIT/SAVINGS RATE CHANGES
TSB, Christian Savings, and UnityMoney also trimmed their term deposit rates. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

DAIRY PRICES AT MERCY OF THE GREENBACK
The weekly dairy Pulse auction for SMP and WMP brought little-change in the WMP price from the previous full GDT auction in USD, while the SMP price rose +3.0% on that same basis, but basically a recovery. However things are reversed in NZD due to the weaker greenback, with the WMP price falling -1.4% and the SMP price only up +1.7% in our currency.

RENTERS HAVE 'POWER' OVER LANDLORDS
Residential rents are tumbling as stock of properties available for rent hits an 11-year high, Trade Me Property says. That means people seeking rental accommodation 'should feel empowered', they say.

NOT KEEN TO SPEND MORE
ANZ said transaction activity on the credit card accounts it manages show low demand. Overall card spend growth rose in March, to be up just +0.6% from a year ago, considerably lower than the rate of inflation (2.5%). Some of that is because petrol prices have fallen, but most of it is because people are buying less. Lower spending on hospitality and household durables stand out as weak points.

CREDIT CARD USE RESTRAINED, NO SIGNS OF STRESS
More generally, the RBNZ released system-wide data for credit cards and that showed the same thing - low overall spending growth and lackluster retail impulse. Card account balances are rising, but that is probably just a seasonal effect. The proportion of balances incurring interest also rose, but no more than they usually do at this time of year..

LABOUR DEMAND WEAK
BNZ said they expect the level of unemployment to keep pushing higher to peak at 5½% later in the year. They see the net inflow of migrants stabilising at current levels, while the demand for workers remains flat. Job ads have been relatively stable over the last 10 months, but at very weak levels. They don't see a turn up. We get the March HLFS data on May 7, 2025. While labour market data are lagging indicators, they will still be closely watched.

DESTROYING EVIDENCE
The previous Country Manager of LG New Zealand, Dowan Kim, and two staff members pleaded guilty to criminal charges after material requested by the Commission was destroyed during an investigation into potential anti-competitive conduct. Following assessments of their individual circumstances, all were discharged without conviction.

NO UPDATE FOR HOUSEHOLD LIVING COSTS INDEXES
Stats NZ has cancelled (not delayed) the Household living-costs price indexes for the March 2025 quarter which were due to be released on 1 May. They say this is due to "a range of technical data processing challenges in updating and applying the weights for the HLPIs", following the Consumers price index review of 2024. They say it doesn't affect the veracity of the CPI data.

NZX UPDATE
As at 3pm, the overall NZX50 index is up +1.4% today. That means it is down -0.9% for the past week, and down -8.2% since the start of the year, and up +1.7% from this time last year. Mainfreight, Gentrack, Spark, and Heartland lead the gainers and The Warehouse, Ryman, Summerset, and The NZX lead the decliners.

DEBT INFLATION?
The Treasury's Debt Management Office said that it will run five nominal bond tenders in May, each for $450 mln, so a total of $2.25 bln for the month. This is different to their 'normal' four weekly ones at $500 mln each. So the May debt raising will be for +12.5% more.

FEEDBACK SOUGHT
The Council of Financial Regulators (CoFR) is seeking feedback on a proposal to launch "basic transaction accounts". The idea is that it will give access to banking services for people who might otherwise be turned away, such as an older person whose driver’s license may have expired, someone who has recently been released from prison, or a young person who may not have a passport yet. These will be different to existing bank accounts currently on offer, as they will have additional controls in place (such as transaction limits) that make them unsuitable for money laundering and the financing of terrorism. These additional controls will allow simplified account opening.

FLIP-FLOPPER IN CHIEF
In shameless u-turns from yesterday, US President Trump now says he will cut tariffs on Chinese imports "substantially", and "has no intention of firing" Fed boss Powell. So far there is no evidence China has materially engaged with the US on tariffs. And Powell has said nothing. The bond market is the discipliner.

SWAP RATES STILL ON HOLD
Wholesale swap rates are probably little-changed at the short end again today. Keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was down -2 bps at 3.46% on Tuesday. The Australian 10 year bond yield is down -2 bps at 4.24%. The China 10 year bond rate is up +1 bp at 1.67%. The NZ Government 10 year bond rate is up +2 bps at 4.61% while today's RBNZ fix was at 4.55% and down -3 bps from yesterday. The UST 10yr yield is now just on 4.35% and down -6 bps from this time yesterday. Their 2yr isup +3 bps at 3.82%, so that positive curve is now at +53 bps, retreating -10 bps.

EQUITIES MIXED
The NZX50 is up +1.4% in late Wednesday trade mirroring other bourses. The ASX200 is up +1.6% in afternoon trade. Tokyo has opened up +1.7% in early Wednesday trade. Hong Kong is up +2.2% at its open, while Shanghai is unchanged at its open. Singapore has opened up +0.8%. On Wall Street, the S&P500 ended its Tuesday up +2.5% and making back all of the prior day's sell-off, but not more.

OIL RISES IN USD
The oil price is up +US$1 US$64/bbl in the US, and just over US$67.50/bbl for the international Brent price.

CARBON PRICE MARGINALLY FIRMER
The carbon price is +50c firmer today, now at NZ$50.50/NZU after some unusual temporary volatility. The next official carbon auction is on Wednesday, June 18, with a $68 floor price. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.

GOLD FALLS BACK
In early Asian trade, gold is down -US$124 from yesterday, now at US$3351/oz, and now well off its highs.

NZD DIPS SLIGHTLY
The Kiwi dollar is down -40 bps from this time yesterday, now at 59.7 USc. Against the Aussie we are down -20 bps at 93.4 AUc. Against the euro we are up +30 bps at 52.4 euro cents. This all means the TWI-5 is now at 68, down -10 bps from yesterday at this time.

BITCOIN UP SHARPLY
The bitcoin price is up +5.2% from this time yesterday, now at US$92,816. Volatility of the past 24 hours has been high at just under +/- 3.3%.

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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18 Comments

by Baywatch | 23rd Apr 25, 4:51pm 1745383860

Colin..what are your thoughts on BTC at the moment ...?

by J.C. | 23rd Apr 25, 5:10pm 1745385051

I'm not Colin, but you have to be impressed by the resilience of ratty. But I will also say that I feel that we're well on the path of all the other crypto dogsh*t being sucked into the BTC black hole. All depends how far you go out on the degenerate curve - the devastation out there is apocalyptic. That being said, the most savvy crypto speculators are not stupid; they're recycling their gains into Bitcoin. As for the death of Ethereum, I'm taking a contrarian position on it. The most hated coins tend to outperform when you least expect. Don't be surprised if it reaches 5-10x in this cycle.

The dino dogsh*t is a far better place to be than hoping on 100x+ punts in the trenches where you are at the mercy of the most ruthless grifters - usually younger, tech-savvy people who make Gordon Gekko look like as wholesome and caring as Jacinda Ardern.

by J.C. | 23rd Apr 25, 5:20pm 1745385602

Regardless of whether you see Trump’s change in policy as a retreat or a savvy negotiating tactic, the result is that the administration deliberately caused a financial market avalanche, and it was so severe that they adjusted their policies a week later.

What have we learnt here:

We understand what happens to bond market volatility in the worst-case scenario, we recognize the levels of volatility that trigger a change in behavior, and we are aware of the monetary levers that will be pulled to mitigate the situation. Using this information, the Bitcoin hodlers and crypto degen investors know that the bottom is in because the next time Trump ramps up the tariff rhetoric or refuses to reduce tariffs on China, Bitcoin will rally in anticipation of the monetary ruling elite running the printing presses at max levels to ensure bond market volatility remains muted. Back up the truck.

by Yvil | 23rd Apr 25, 5:48pm 1745387280

"the administration deliberately caused a financial market avalanche"

You give Trump far too much credit. (btw he IS "the administration"). It's simply that the child has no idea what he's doing, and he's backtracking because he's forced to.

Just like failing to end the war in Ukraine, Trump will fail miserably with his tariffs, with making Canada the 51st state, with taking over Greenland, and with anything else this ignorant person will dream up and announce with great fanfare.

by J.C. | 23rd Apr 25, 6:05pm 1745388300

You give Trump far too much credit. (btw he IS "the administration").

No time to vent against DJT Dr Y. When that starts, best excuse yourself from the water cooler exchanges. Wasted energy. Anyway, Kamala was never going to save you.

You need to think a bit bigger. QE and the 'big print' has not started yet. Just a matter of time. And it's going to be epic. But you should think about the implications of if and when the whole monetary system implodes.

by Yvil | 23rd Apr 25, 6:47pm 1745390855

Nice attempt to distract from my rebuttal of your claim that the US "administration deliberately caused a financial market avalanche".

by J.C. | 23rd Apr 25, 7:15pm 1745392514

Nice attempt to distract from my rebuttal of your claim that the US "administration deliberately caused a financial market avalanche".

What did you 'rebut'?

The initial tariff policy represented the worst-case outcome because the US and China both took maximalist positions in opposition to each other. The financial asset market reaction has seen trillions of dollars of losses worldwide. But the real problem was the rise of US bond market volatility measured using the MOVE Index. The index moved to almost an all-time-intraday-high of 172, and then Team Trump bolted from the danger zone. Within a week of announcing the tariffs, Trump moderated his plans by pausing implementation on every nation except for China for 90 days. Then, the Fed stood ready to do whatever it took to ensure well-functioning markets when volatility refused to fall substantially. After that, Bessent told the world his department could dramatically upsize the pace and amount of treasury debt buybacks.

This chain of events saw a pivot from “everything is fine” to “everything is fkd, we must do something."

So, once again, what did you rebut?

by Yvil | 23rd Apr 25, 7:51pm 1745394664

What I rebut is in my original post, here it is again:

"the administration deliberately caused a financial market avalanche"

You give Trump far too much credit. (btw he IS "the administration"). It's simply that the child has no idea what he's doing, and he's backtracking because he's forced to.

If I have to spell it out more clearly, I rebut your word "deliberately"

by J.C. | 23rd Apr 25, 8:07pm 1745395670

If I have to spell it out more clearly, I rebut your word "deliberately"

100% deliberate Dr Y.

by Yvil | 23rd Apr 25, 9:08pm 1745399337

Hmmm, you think repeating your point makes it correct huh.

by Yvil | 23rd Apr 25, 5:51pm 1745387512

Re rents:

The linked article shows rents down 2.3% over the year March 2024 to March 2025.

A recent article about inflation on Interest stated that one of the main contributor to rising prices over the last year, was residential rents.

How can both be possible ?

by J.C. | 23rd Apr 25, 6:35pm 1745390146

Here's an interesting thing to think about Dr Y. Over in Aussie, rental growth is measured in the ABS CPI rental component and actual average spending on rents from CBA.

Cumulative growth since Q4 2019 measurements:

ABS - 17.5%

CBA - 32.7%

CBA has 15.9 million customers and has access to 'hard data'.

This is an example why some of us think the CPI does not adequately reflecting rental inflation and inflation in general.

by Kate | 23rd Apr 25, 6:58pm 1745391517

FLIP-FLOPPER IN CHIEF

The entire Cabinet are a joke. Given everyone is leaving the DOJ under Bondi - it would be hilarious if he tries to use the law firms that caved to his extortion to argue his administrations idiotic positions in court. They owe him a big pot of pro-bono after all :-).

by J.C. | 23rd Apr 25, 7:36pm 1745393794

You think Jay Powell wears the trousers? If so, do you see any problem with central bankers being the ultimate power brokers?

Remember times have changed and the Treasury does the heavy printing now. If Powell were truly concerned with inflation and the long-term strength of the dollar, he would have sterilized the effects of the Treasury’s actions under Yellen and now Bessent.

by powerdownkiwi | 23rd Apr 25, 7:50pm 1745394609

They are out of 'tools'.

Always were, if truth be told.

And we seem to have both our 'left' and our 'right' totally choosing to contiue believe the biggest non-truth of all time.

And thus mis-reading the reason for Trump.

by J.C. | 23rd Apr 25, 8:09pm 1745395755

They are out of 'tools'.

100% Power. But they will continue to use the ones at their disposal. It's all they know.

by Foxglove. | 23rd Apr 25, 8:52pm 1745398321

You don’t have to be a tool to know what a monkey wrench is. But not necessarily so, vice versa.

by Kate | 24th Apr 25, 10:35am 1745447749

Jay Powell's mandate relates to influencing inflation and employment - whether he is in control of either isn't a correct way of looking at it.

But, it seems to me that, as is the case (right down to the individual), it is the "bank" - i.e., those you or any nation owes money to - is in control.

Hence, as David suggests, where the US is concerned it is the bond market calling the shots.

And, as pdk suggests, it seems obvious to me that it (the market) will inevitably withdraw support (likely to pay their own debts) as there isn't enough real productive work (i.e., energy) available to underpin the global money printing/borrowing.

I also think Schumpeter had it right with his theory of creative destruction.