What happened Wednesday

Economy / news

A review of things you need to know before you sign off on Wednesday; Cotality sees a buyers market, jobless rate rises, dairy prices hold, universal RUCs coming, Kiwibank shamed, swaps soft, NZX50 firmish, NZD firm, & more

6th Aug 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 RATE CHANGES
No changes to report today. All rates are here.

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

BUYERS MARKET
Cotality says housing market conditions remain subdued and it's still a buyer's market in Auckland in July.

JOBLESS RATES HOLDS HIGH
The jobless rate roses to 5.2% in June. This was higher than the 5.1% in March but less than the market expectation of 5.3%. There are now 153,800 people classed as unemployed (actual), up from 138,200 in June 2024. Young people are avoiding the weak labour market, suppressing headline unemployment and boosting education numbers.

DAIRY PRICES HOLD HIGH
The overnight dairy auction brought results similar to what the derivatives market expected, maybe slightly better because of some early season strength in WMP demand and prices. Volumes sold were the highest since October 2024. And helping the tone was the fall in the NZD which boosted the rise in local currency. Overall the event ended up +0.7% in USD and up +1.5% in NZD. The industry will be satisfied the new season is off to a good start.

BNZ RAISES MILK PRICE FORECAST
BNZ have raised their new season milk price forecast from $9.50kgMS to $10.25kgMS. That is the highest of the analysts we cover. All current forecasts are listed here (at the bottom of the page).

BETTER WAY
We are going to move to a universal road user charge system, and drop fuel taxes for that purpose. All vehicle owners will pay for the roading network through electronic road user charges rather than petrol tax. Fuel efficient petrol cars will no longer get the benefits of fuel efficiency, and will pay based on distance travelled for the weight of the vehicle. The change is slated to start in 2027. Will pump prices fall?

PUBLIC SHAMING
The FMA says Kiwibank overcharged thousands of customers a total of close to $1 mln between 2011 and 2024, and have been 'warned'. The penalty here is the public shaming.

MORE ON FOOD
Consumer spending increased again in July, although data released by Worldline points to higher prices as a large influence. This data shows consumer spending recorded through all Core Retail merchants rose to $3.72 blbn, which is up +2.4% on July 2024.

NZX50 RISES MODESTLY TODAY
As at 3pm, the overall NZX50 index is up only +0.2% so far today. And it is up +0.4% over the past five days but down -1.3% year-to-date. It is sitting +5.4% higher year-on-year. Infratil leads the gains with Gentrack, Chorus, and Spark; but Briscoes, a2 Milk, SkyCity casino, and Scales edge lower

BIG IS BETTER, SMALL BRINGS FEW (IF ANY) OPTIONS
The Commerce Commission has today released the second Annual Grocery Report, which monitors key measures of competition to present a macro-level view of the grocery sector. It notes, "When we dig deeper, we can see geographical differences in the supermarkets’ dominance. Consumers in Auckland and other main cities have a range of options, but consumers in smaller towns and rural areas typically have minimal to no choice within their locality, with some stores in small towns functioning as a localised monopoly."

EYES ON THE RBI
We are watching for the Indian central bank rate review due out today. It is currently 5.25% and no change is expected. But if they do make a change, it could have some international implications.

LIVING COST RISES SLOW DOEN
Australia said living costs rose for all type of households in June. Over the past year, all LCIs rose between +1.7% and +3.1%, slowing from annual rises of between +2.4% and +3.5% to the March 2025 quarter. Housing, Food and Beverages were the main contributors to annual living cost increases across the household types. Smaller annual rises in living costs came with a continued slowing in growth for Insurance and financial services and a larger annual fall in Transport compared to the March quarter. The interest rate cut by the RBA was a key reason the "financial services" category retreated.

FOR OUR AUSSIE READERS
We now have a separate service for our Australian readers; interest.com.au

SWAP RATES STOP EASING
Wholesale swap rates are probably turned back up today and across the whole maturity range. 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 3.14% on Tuesday. The Australian 10 year bond yield is up +3 bps at 4.25%. The China 10 year bond rate is down -1 bp at just under 1.70%. The NZ Government 10 year bond rate is holding at 4.46% while down -1 bp at 4.42% in the earlier RBNZ fix today. The UST 10yr yield is up +2 bps from yesterday at just under 4.22%.

EQUITIES MIXED
The local equity market is now up another +0.3% in late Wednesday trade. And the ASX200 is up +0.6% in afternoon trade. Tokyo has opened also up +0.6%. Hong Kong is down -0.1% at its open but Shanghai is up +0.2%. Singapore has slipped -0.1%. Wall Street fell in its Tuesday trade with the S&P500 down -0.5% as equity investors worry about what the bond market is telling them.

OIL DIPS
The oil price in the US is down another -50 USc, now just over US$65.50/bbl. And the international Brent price is now at US$68/bbl.

CARBON PRICE QUIET
The carbon price was unchanged today at NZ$57/NZU but only because we are struggling to find trades. 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 STABLE
In early Asian trade, gold is up +US$3 from yesterday at US$3375/oz.

NZD MARGINALLY FIRMER
The Kiwi dollar is up +20 bps from yesterday, now at 59.2 USc. Against the Aussie we are unchanged again at 91.3 AUc. Against the euro we are up +10 bps at just over 51.1 euro cents. This all means the TWI-5 is up +10 bps at 67.0.

BITCOIN SLIPS
The bitcoin price is now at US$113,528 and down -1.0% from this time yesterday. Volatility has been modest, also at just on +/-1.0%.

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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31 Comments

by powerdownkiwi | 6th Aug 25, 5:14pm 1754457289

Re petrol charges - you cannot repulse entropy by changing the way you divvy-up proxy.

Obviously there's some ideology there - they need us to consume more so they need to disincentivise efficiency - but the bigger picture overrides; energy, and everything made of or by it, is going to become more contested. Which means folk are going to become 'poorer' (less able to access energy). Which means they'll drive less. Which will mean less money in the coffers - by any pathway, current or proposed.

Which means, which means...

by LouB | 6th Aug 25, 6:17pm 1754461071

True, PDK.

yet in the meantime the road infrastructure will continue to be used and maintained.

What I like about universal ruc is that petrol purchased that is for non-road use, will no longer include roading tax, just like diesel. Sure you can claim that petrol tax back, but who does...

by kiwikidsnz | 6th Aug 25, 6:26pm 1754461617

IIRC for many years now only farmers & businesses could claim it back, not private boat owners

by interesting1234 | 6th Aug 25, 8:18pm 1754468314

boaties rejoice!

by JimboJones | 6th Aug 25, 7:23pm 1754465025

Petrol is the same real price now as it was in 1985: https://figure.nz/chart/APkj4QS9piQmanzU-FdOmji07z594nMeY

by powerdownkiwi | 6th Aug 25, 7:45pm 1754466347

Do you think there's still the same amount in the ground?

by JimboJones | 6th Aug 25, 8:55pm 1754470520

I doubt that’s possible. But that price implies there is no foreseeable shortages. Why take it out the ground and sell it for bugger all of you knew it’s almost all gone?

by powerdownkiwi | 6th Aug 25, 9:35pm 1754472935

There is currently one quadrillion (current USD) of debt held on the planet.

Absolutely not all backable - not even close.

Price? What is that?

by Colin Maxwell | 7th Aug 25, 8:30am 1754512248

Just curious as to how you calculated that $1quadrillion, PDK?

As of 2024, the planet's total debt figure was ~$307 trillion = ~336% of GDP

Govt debt ~$91T

Corporate Debt ~$164T

Household Debt ~$52 T

If you included Global Unfunded Liabilities, of an estimated $150 - 200 trillion, then that total climbs up to ~$450-500 trillion - still a ways short of your $1 quadrillion.

If you intended to include global derivatives, they are not technically debt as they represent financial contracts tied to underlying assets such as bonds, currencies, or interest rates, etc, rather than traditional debt.

They are bets on future price movements, not loans, and most exposures offset one another, and a relatively small derivative position can control a huge notional value.

Estimates of the total notional value of the underlying assets for these bets vary from the BIS stab in 2023 of $1.2 quadrillion, up to double that figure, depending on who you listen to.

What this does is it adds a mind-numbing extra element of risk to the entire stack of cards. The gross market value after netting is estimated to be more like $20 trillion. This is still a massive risk, because of counterparty chain reactions, like what happened in the 2008 GFC debacle with Lehman Bros.

Adding it all up then, I make it...

Total global debt ~$307 trillion

Unfunded Liabilities ~$200 trillion

Netted Derivatives ~$20 trillion

A Grand Total ~$707 trillion

That's ~$0.707 Quadrillion [which is 3/4 of the way to your $1 quadrillion, PDK]

Either way, whether we like to work in capital Ts or Qs - adding unfunded liabilities, and allowing for netting out of derivatives, it all adds up to a mind-numbing 673% of global GDP.

Which is precisely about the level of the debacle we should expect, as long as we leave the keys to the electronic printing presses in the hands of a cartel of private bankers.

Regards

Col

by Pa1nter | 6th Aug 25, 11:28pm 1754479712

Most human minds struggle comprehending a billion, let alone a trillion.

End of the day most of us are born into the world owning nothing, so currency should be looked at as fun tokens which you can borrow, earn, exchange or save however you choose. Although the very notion you can somehow own parts of the universe is a fairly ridiculous concept.

Pretty hard for most large civilisations to allow the masses much more than serfdom. If it's not currency devaluation, it's higher prices from things like controlled or disputed supply, proliferation of companies, market dynamics (we pay a lot more for food we produce now we have to compete with the rest of the world for it on price), and so on, and such forth.

Freedom from that, is found more between your ears than on a balance sheet or bank account.

by Pa1nter | 6th Aug 25, 10:32pm 1754476350

There's less total now today

The first oil wells went down about 20 meters

The deepest today are over 10 kilometers

So the accessible amount today, probably greater than a century ago.

by Phoenix (FKA JC) | 6th Aug 25, 5:26pm 1754457989

When Dalio speaks, I for one listen. His comments on Linkedin last night are something many people attribute to the mad uncle after a few too many at the BBQ. Nevertheless, important considerations.

The U.S. dollar used to be backed by gold — and it’s not farfetched to think we may be headed there again in the future.

History shows us that the same cycles repeat time and time again.

One such cycle is related to currency devaluation.

Once people start to lose trust in the fiat system, we see a specific cause and effect reaction occur.

1) Governments print a lot of money

2) They pay off the debt with the cheap money

3) Nobody wants to hold the devalued currency

4) Governments go back and link money to gold Will this same pattern happen again? I

t’s hard to say, and it wouldn’t happen anytime soon. But it is conceivable.

https://www.linkedin.com/posts/raydalio_the-us-dollar-used-to-be-backed…

by Independent_Observer | 6th Aug 25, 6:14pm 1754460870

I personally don't think people realise the plight the US is in unless they resolve their deficit spending in the near future.

History repeats and nations don't remain the reserve currency forever.

by Pa1nter | 6th Aug 25, 6:22pm 1754461335

I personally don't think people realise the plight the US is in unless they resolve their deficit spending in the near future

There's been klaxons about this for years and it's a fairly big talking point.

What is harder to determine, is how weak others are in relation.

by IT GUY | 6th Aug 25, 7:34pm 1754465656

It’s a big issue once the usd is the most dirty shirt

by interesting1234 | 6th Aug 25, 8:21pm 1754468483

The question is: will it end with international conflict as Dalio indicates history would say so, or will we see the demise of the US through loss of faith in their fiat currency. Many are already divesting from US markets, dumping their shares and investing elsewhere.

by Phoenix (FKA JC) | 6th Aug 25, 5:31pm 1754458300

The Trumpster hit the nail on the head here:

“The Banks are not afraid of anything except regulators… and their wives”

This is in relation to his allegations that major banks such as JPM and Bank of America had denied him services, and he used this phrase while explaining banks' concerns about regulatory scrutiny and personal pressures.

https://www.cnbc.com/2025/08/05/cnbc-transcript-president-of-the-united…

by Phoenix (FKA JC) | 6th Aug 25, 5:42pm 1754458936

The Albo govt has decided not to implement a recommendation that would restrict business-class flights for bureaucrats on shorter domestic journeys, meaning taxpayers will continue to fund premium travel for public servants in many cases.

A recent review of Australian Government travel policies recommended that public servants, including senior executives, should fly economy class on all flights under three hours. This was intended to generate savings by cutting business-class use on high-frequency short routes like Canberra-Sydney or Canberra-Melbourne. The review noted that although business class represents only 4% of domestic bookings, it accounts for 8% of the government’s domestic travel spend.

https://procurementandsupply.com/public-servants-ordered-to-fly-economy…

by kiwikidsnz | 6th Aug 25, 5:50pm 1754459440

Troughers gotta trough...business class gets you lounge access without accruing airports status

by Phoenix (FKA JC) | 6th Aug 25, 6:03pm 1754460206

To me it's symptomatic. No incentive to look for the cost-effective option. Team Albo doesn't give a rats now they have power. Not saying it would be any different if the wingnuts held the reins.

by interesting1234 | 6th Aug 25, 8:22pm 1754468576

How else do they get their champagne in before crucial meetings

by AN Other | 6th Aug 25, 5:54pm 1754459670

That reminds me - I haven't seen anything by The Juice Media lately. Hopefully they are working on a new video as I type.

by JimboJones | 6th Aug 25, 7:26pm 1754465203

Why should public employees fly economy while private fly businesses ?

by IT GUY | 6th Aug 25, 7:51pm 1754466674

Because we cannot afford it?

by JimboJones | 6th Aug 25, 8:20pm 1754468404

We being the Aussies? They seem pretty loaded to me

by kiwikidsnz | 6th Aug 25, 8:26pm 1754468761

Because the public sector is using other people's money (& in any case the article is only quoting the proposed economy class flights <3hrs)

I used to work for a global company. For a couple decades we were expected to work on long flights so the global rule was >4hrs was business class (eg for NZ staff that meant beyond Oz but most Europe & Asia staff hubs were economy). Then when Personnel evolved into HR then HRBP then People&Culture...& we got hit with the post GFC cost savings coupled with the increasing use of videoconferencing & other Internet enabled teamwork solutions (pretty difficult to look at factories on the VC room camera) resulted in more restricted policies to the extent that if we did travel we were expected to travel 12+ hr flights in economy. No work got done on the flights, we just travelled a day sooner to prep & a day later to collate reports so added another couple of nights accommodation to the bill (+ + the bar bill).

by IT GUY | 6th Aug 25, 8:37pm 1754469472

People & Culture, what a crock of shite...

You forgot Human Capital

Enter by yourself but leave with a a lawyer

by JimboJones | 6th Aug 25, 9:03pm 1754471008

So only the government take business class on short trips? Maybe they should rename it to public class! If they really want to make savings perhaps they should move the government to Sydney?

If I had a job that forced me to fly all the time I’d probably want the company to make it more bearable. It’s normally in your own unpaid time, and the gloss sure wears off after a few trips.

I tend to find this jealousy of politicians a bit weird. If they have it so good, why not become one yourself?

by Colin Maxwell | 6th Aug 25, 6:38pm 1754462329

SIGNS OF PENDING MUTINY ON WALL STREET - blimey, against of all things, their own currency - a new rendition of the Wall Street shuffle?

Do the Wall Street shuffle

Hear the money rustle

Watch the greenbacks tumble

Feel the Sterling crumble

You need a yen to make a mark

If you wanna make money

You need the luck to make a buck

If you wanna be Getty, Rothschild

You've gotta be cool on Wall Street

I was knocking around some numbers today looking at Panda Bonds, as every day I hear whispers that Wall Street is, in effect, mutinying against their own currency as they seek far cheaper off-shore funding.

Once you start digging you find that the $278.7 million, of 5-year 1.98% Morgan Stanley issued Panda bonds, are only the tip of the proverbial iceberg.

On the suface this appears to be a sign of a significant opening up of China's capital markets, coming hot on the heals of the US Treasury's announcement that they need to borrow $1.01 trillion, for the 3rd quarter of 2025, almost double the $554 billion that they had expected, and due to a much lower opening cash balance, plus high net outflows, and a tariff 'policy' that is not exactly going swimmingly.

And then came these projections...

Projected 2025 Issuance by high profile U.S. Firms

Company / Potential 2025 / Issuance Likelihood

Tesla ($420M–$700M) High

Apple ($700M–$1.4B) Medium

Intel ($280M–$560M) Medium

McDonald’s ($140M–$420M) Low-Medium

Goldman 'Sucks' ($420M–$840M) Medium

It is notable too that the biggest drop in US denominated reserves is led by traditional allies like Japan, Switzerland and Canada* - Japan alone -$54B in the first half of 2025, Switz. -$22B, and even Norway down 11%.

*[anything to do with 'Goldfingers' kicking loads of sand in their faces? - who knows]

VW, BMW, Mercedes are expected to each issue between $280M - $700M in Panda bonds for 2025 = a total of between $840 million and $2.12 billion.

NB these are projected issuances of Panda Bonds, as most corporate Panda bonds for these carmakers are announced in (Q3/Q4).

SOVEREIGN COUNTRIES KNOWN/PREPARING TO ISSUE PANDA BONDS SO FAR IN 2025

Hungary: ~$630 million (RMB 4.5 billion) - they have been a frequent issuer of Panda Bonds, continuing their strategy to diversify funding sources.

United Arab Emirates (UAE): ~$700 million (RMB 5 billion. They issued their debut Panda Bond in 2025 to strengthen financial ties with China.

Egypt: ~$420 million (RMB 3 billion). Egypt returned to the Panda Bond market in 2025 to tap into Chinese liquidity.

Philippines: ~$350 million (RMB 2.5 billion). The Philippines issued new Panda Bonds as part of its broader funding strategy.

Germany: ~$1 billion (RMB 7 billion) (Rumored). Germany may issue its first sovereign Panda Bond in late 2025, pending approvals.

Trends in 2025:

More countries are turning to Panda Bonds, due to lower borrowing costs compared to Eurobonds and strong Chinese investor appetite.

Brazil is openly preparing to issue them and the mood Lula is in lately after the Cosa Nostra-like stunt Goldfingers tried to pull to get his buddy Bolsanaro (AKA Tropical Trump) off his charges* I would be amazed if this is not a very popular source of funding for both the Brazil and its companies.

*[Bolsonaro is under investigation for allegedly plotting to overturn the 2022 election results which he lost to Lula. He is accused of conspiring with military officials to stage a coup and remain in power. His aides allegedly discussed declaring a state of emergency to prevent Lula from taking office]

Even without Brazil, this is over $2 billion already, but it looks to me as if it is in danger of turning into a tidal wave if Chinese policy continues to support this opening up of its capital markets

Also if any of dah Fed cuts actually happen, weakening the dollar further ['poor' Jerome is going to find himself between a rock and a very hard place] and with the BRICS promoting local currency debt, this could be a very attractive source of funding for ALL countries, let alone those with strong trade ties to China.

Uh-uh, China has strong trade ties with ~120 countries, representing 66% of the non-Chinese world population.

China is the #1 trade partner with 65 countries, ~32% of the non-Chinese world population.

If the US dollar weakens further, nations will have an even greater incentive to shift toward yuan-denominated trade and debt.

And now back to that song, and maybe even some popcorn

Col

by Averageman | 6th Aug 25, 9:00pm 1754470836

Indeed. Will todays Orange Emperor be found to be walking naked?

In today modern world, with near instant commuication and movement of capital, how quickly could the US Doller be found to be the joke it increasingly is being printed into...?

The steps to disagreement. Trade war. Currency war. Shooting war. We are at the mid point. Hold onto your hats.

by powerdownkiwi | 6th Aug 25, 9:37pm 1754473027

See my post above. One quadrillion. About to be reconciled...