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
No changes to report today. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
NBS cut its 9 and 18 month rates, raised its 3 yr rate. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
"COULD HAVE BEEN WORSE"
Annual inflation rose to 2.7% in June as local authority rates and payments, actual rentals for housing and electricity escalate, But the overall result was up from 2.4% in March but a bit lower than the 2.8% expected. Tradeable inflation rose to 1.2% whereas non-tradeable inflation fell to 3.7%. Food inflation rose to 4.2%. Whether 2.7% overall is enough for an August 20 rate cut, who knows. Currently financial markets are only pricing in two-thirds of a chance of a -25% rate cut although if not then they seem certain there will be one by October 8. Separately, economists see a higher chance. The NZX50 rose sharply after the data was released.
PROPERTY DEVELOPER WANTS A RATE CUT
Ex-prime minister (and land banker) John Key wants a -100 bps OCR cut, now.
CONSPIRACY THEORY DEBUNKED
Federated Farmers had convinced themselves the Net-Zero Banking Alliance was a co-ordinated cartel by banks to foist on them a cost for what they see as a phantom risk. The Commerce Commission has investigated and found no evidence to support their complaint. That probably won't stop Fed Farmers working to avoid having to face up to climate risks, risks they would rather see socialised than show up in credit risk.
NZX50 WITH GOOD BOOST TO START WEEK
As at 3pm, the overall NZX50 index is up +0.5% so far today, boosted by the better-than-expected CPI data, now up +2.1% over the past week. It is now down -0.9% since the start of the year although up +4.2% from this time last year. Kathmandu, Spark, SkyCity casino and Turners lead gains, while Chorus, Air New Zealand and Mainfreight, and Gentrack decline.
HIGH IIB YIELDS
Markets are expecting a new IIB (inflation indexed bond) from the NZ Treasury sometime this year, likely one with a 2050 maturity. NZ break-even inflation rates are currently attractive, and real yields are the highest among AAA/AA countries, Westpac's Imre Speizer is noting.
LPR STABLE
The People’s Bank of China kept key Loan Prime Rates (LPR) at record lows during the July fixing today as was expected. The economic resilience in the Chinese economy means they are keeping their powder dry, even though American tariffs and threats remain a concern. But those resonate less at present.
SPEEDING UP THE INNOVATION PROCESS
China seems to be taking quite broad central policy actions to transform its industrial policies. Using the excuse of the "trade-war crisis" as motivation, it has released a digital transformation plan for their auto industry alongside similar initiatives for machinery and power equipment. Within those they are moving to promote the "orderly exit of outdated production capacity" as part of its broader industrial strategy.
SWAP RATES SOFT
Wholesale swap rates are likely a little lower across all durations today. Keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was unchanged at 3.26% on Friday. The Australian 10 year bond yield is down -2 bps at 4.34%. The China 10 year bond rate is firmer at 1.68%. The NZ Government 10 year bond rate is down -3 bps at 4.61% but up +1 bps at 4.58% in the earlier RBNZ fix today. The UST 10yr yield is up +1 bps at 4.43%
EQUITIES MIXED
The local equity market is up +0.4% in late Monday trade. However the ASX200 is down a sharpish -1.1% in their afternoon trade, somewhat in reaction to the Japanese election result. Locally the reaction isn't so marked; Tokyo is down only -0.2% in early trade today. Hong Kong is up +0.4% at its open while Shanghai is up +0.5%. Singapore has also opened up +0.5%. Wall Street is anticipating a strongish opening tomorrow with e=the S&P500 futures up +0.7% so far.
OIL ON HOLD
The oil price in the US is unchanged from this morning at just under US$67.50/bbl and just under US$69.50 for the international Brent price.
CARBON PRICE STILL ON HOLD
The carbon price is still at NZ$58/NZU with hardly any trading activity. The next official carbon auction is on September 10, 2025. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD STILL STABLE
In early Asian trade, gold is little-changed, down -US$5/oz to US$3353/oz.
NZD DIPS SLIGHTLY
The Kiwi dollar is down -10 bps from this morning at 59.5 USc. Against the Aussie we are down -20 bps at just on 91.46 AUc. Against the euro we are down -10 bps at 51.2 euro cents. This all means the TWI-5 is down -10 bps from where we started today, now just under 67.4.
BITCOIN FIRMS AGAIN
The bitcoin price is now at US$118,408and up +0.3% from this morning. Volatility has remained low, now at just on +/-0.9.
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22 Comments
Electricity went from $25/MWh at 3am to momentarily 100x that at 7.30. Looks like we had to crank up the diesel generator to keep the grid running?
https://app.em6.co.nz/?stackedgwap.filter.gridZone=15&stackedgwap.filte…
Frost in Auckland 2c at silverdale at 730am
We're lucky Pdk is not the CEO.
HSBC UK give up on phantom risk and leave the Net-Zero Banking Alliance, joining JP Morgan, Citigroup, Bank of America, Morgan Stanley, Goldman Sachs, Bank of Canada, Wells Fargo... I guess some gold plated turds are too distasteful even for vampire squid.
March quarter CPI: +0.90% (≈ 3.6% annualised)
June quarter CPI: +0.50% (≈ 2.0% annualised)
Inflation is trending down - despite what the headlines say. We have to remember: the last surge was caused by the Treasury and central bank conjuring $50 billion out of thin air to lend to themselves. That money printing stopped in 2021 - and now the hangover is finally wearing off. We won’t see another spike like that unless the printers start up again.
Maybe but I think rate rises are due to deferred maintenance and insurance is a reassessment of risk?
more of this coming imho
Its funny how we are smack bang in the the centre point of the inflation target but people are screaming for rate cuts..
And a few years ago we had like 5% inflation and people were screaming 'its transitory, ignore it!'.
Intriguing insights into our biases and heuristics (and far greater fear of deflation than inflation). Why? Because deflation causes debt/asset bubbles to pop in nominal terms within months. High inflation just does the same thing over years in real terms.
Yup. Keep the heat on and let the bubble pop and drain. Just like pus in a blister.
A reminder that US long term bonds are trading at levels last seen before the GFC (i.e 4.5 - 5%).
https://fred.stlouisfed.org/series/DGS30
https://fred.stlouisfed.org/series/DGS10
They aren't screaming that we have an imminent deflation problem. The trend since 2020 indicates the opposite (but who knows what black swans are around the corner...)
I think Russia is about to collapse... cheap oil everywhere if the right hardman takes over, better put Putin is about to collapse...
The fringe "far-right" Sanseito party has emerged as one of the biggest winners in Japan's upper house election - picked up 22 seats and holds the balance of power. Another right wing populist party, the Conservative Party of Japan, has also won 2 seats.
Once a fringe movement, spreading conspiracy theories about vaccinations and global elites during the COVID-19 pandemic on YouTube, the party is now gaining momentum with its "Japanese First" rhetoric and criticism of immigration, globalism, and foreign capital.
https://www.dw.com/en/japans-ishiba-vows-to-stay-on-after-election-defe…
So nearly 20% of the 124 upper house seats up for grabs?
Massive considering uyoku usually get less than 3% tops.
Seems like a bunch of interesting drivers: over tourism, immigration, inflation, online organising, fear of China and security issues, general antipathy to elites
Massive considering uyoku usually get less than 3% tops.
The Uyoku have no political party in the Diet. There have been some efforts by radical right-wing candidates affiliated with such ideologies to contest elections, but their success is very limited. For instance, the Party for Japanese Kokoro (PJK), a right-wing party with views close to Uyoku nationalist perspectives (like revising Article 9 of the Constitution and historical revisionism), contested in national elections but failed to achieve meaningful electoral success, gaining less than 1% of the votes before being absorbed into the LDP.
I meant uyoku with lower case u meaning the various assortment of parties, factions, and black van drivers :)
And they do sometimes poll as high as 3% but yes haven't been able to convert, until now
Wait to you fine out about the climate models.
Comvita CEO has departed. In his own words:
"Before joining Comvita I spent 15-years globetrotting, working for international packaging firm Tetra Pak across Europe and the Middle East. I was exposed to multiple product launches and ‘go-to-market’ strategies by both large international and small local producers in the highly competitive FMCG categories of dairy and beverages."
"I saw many examples of NZ brands in dairy, red meat, and wool, that failed to understand how to position themselves and compete on the global stage. NZ primary industry exporters were often bullied by large supermarket chains, competing on price in a race to the bottom, and destroying value along the way."
"I worry we all seem slow to learn from the mistakes of the past! As gold-rush fever hit the NZ honey industry in the early 2000s, pressure began to build. Honey moved quickly from a supply constrained growth opportunity, into large scale overproduction and a honey glut. We all saw it coming but felt relatively powerless to prevent the inevitability of another primary industry train wreck! Or were we just too slow to act?"
"Let’s be clear. The current crisis confronting the NZ honey industry is self-inflicted. For the past 25-years since the last economic crisis hit the industry, there’s been inadequate controls and regulation, and poor alignment between disparate industry groups. The supply side of the industry is experiencing a substantial correction after years of rapid growth. Low barriers to entry have resulted in overproduction and surplus inventory that needs to be cleared."
"To fix this, we need an industry-wide, united approach. Consolidation is inevitable across all aspects of the supply chain. Longer-term, this should result in enhanced pricing power linked to security of quality supply, improved supply chain efficiency."
Yep JC regarding the honey thing. Seen it with "me own eyes" . Fools gold in my opinion. Even though I know people who profited nicely from it.
Just had a peek at the financials. Looks dreadful. 2024 was brutal with substantial asset impairments. At the end of the day, if China is the key mkt, less consumer discretionary spend will be hurting.
Sounds like another CEO who doesn’t like competition and believes the regulations haven’t been set in his favour.
Aussie banks showing who wears the trousers. As more Aussies save, banks are cutting interest rates for deposits faster than the RBA’s official cash rate.
The slide is a sign banks are taking advantage of Australians’ high demand for savings accounts instead of competing for deposits, according to Sally Tindall, the data insights director at Canstar.
“Money in the bank is at a record high, so banks aren’t having to compete for people’s deposits,” she said.
“Australians are absolutely focused on putting their funds away for a rainy day [so] the banks are flush with cash.”
https://www.theguardian.com/australia-news/2025/jul/20/as-more-australi…
"Net-Zero Banking Alliance" Joining this alliance immediately puts a huge question mark over bank lending practices. Found no evidence. I don't think they looked hard enough and were given a nod and a wink not to find anything.
They should have signed up to Bloomberg. You would have to be naive to thinks banks are in this because they are blessed cotton socks runaway global warming believers.
"Bankers will soon be able to claim credit for emissions they say their financing has helped avoid, as the world’s largest voluntary carbon accounting framework for the finance industry works on broadening standards."
https://www.bloomberg.com/news/articles/2024-12-03/bankers-to-start-inc…
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