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. And note, you can compare mortgage offers with our new calculator that takes into account other costs and cashback incentives, here.
TERM DEPOSIT/SAVINGS RATE CHANGES
No changes here either. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
STILL VERY PATCHY
If you squint, look very hard, and take an optimistic spin, you might be able to see signs of an improvement in retail sales from the August electronic cards data released today. Some might says that conclusion is wishful thinking. If there is an upside, it is very minor at this point but the hope is that it will build. Year on year, the retail component of this data is up +0.9%. But then you need to acknowledge this data is not adjusted for price changes - so the 'real' retail activity is likely negative on a volume basis. And it is down from +1.7% in July. It is about now that retail perceptions set up how retailers will respond to the holiday season.
A HOPEFUL GLIMMER DESPITE DISHEARTENING RETREAT
The overall factory PMI slipped back into contraction in August, a 'disheartening" retreat. But there is hope because new order levels expanded again and to their best level in three years and the consecutive third month of expansion. But all other elements going into the overall PMI are running well below their ling run averages, and because any gains are now off a very low base, we shouldn't get carried away by any 'green shoots'.
OUR FISCAL MANAGEMENT PANNED
BMI (a unit of Fitch Solutions) has just published its outlook for New Zealand. They are projecting that our fiscal deficit will get worse. "We expect New Zealand’s public finances to come under moderate pressure in FY2025/26 as the government continues to support households and businesses facing elevated living costs. We project the fiscal deficit to widen to 2.8% of GDP, up from 2.4% in the previous fiscal year."
NZX50 WEAKER
As at 3pm, the overall NZX50 index was unchanged after giving up earlier gains in its Friday session. It is also little-changed over the past five working days. But it is up +1.2% year-to-date. And it is now up +3.2% from a year ago. Market heavyweight F&P Healthcare is down -0.6% today so far. Gentrack, Mainfreight, Vista Group, and Tower lead the gainers as Spark, Oceania, Infratil, and Vulcan Steel drag.
WINDING DOWN FAST
Financial institution settlement accounts at the RBNZ fell a sharp -$4.5 bln in August to their lowest since March 2021. This is accelerating the reductions and they are now back to the April 2020 levels after peaking at $56.4 bln in December 2022. The Funding for Lending program is also winding down, now at just $5 bln after peaking at $19 bln in November 2022.
COFFEE INFLATION IS BACK
We should probably note that coffee prices are moving back up and are now near their record highs in the February to April period earlier in the year. Climate issues with Brazil's huge crop are behind the shortages.
SWAP RATES STILL ON HOLD AT SHORT END
Wholesale swap rates are will probably be little-changed today at the one year term but a touch lower for longer durations. 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 2.99% on Thursday. Today, the Australian 10 year bond yield is down -2 bps from yesterday at 4.22%. The China 10 year bond rate is also down -2 bps at 1.80%. The NZ Government 10 year bond rate is down -2 bps from yesterday at 4.30%. The RBNZ data is now all delayed by one business day now, and was down -3 bps at 4.30% at the end of Thursday trade. The UST 10yr yield is down -2 bps from yesterday, now at 4.03%.
EQUITIES MOSTLY HIGHER
The local equity market is little-changed in Friday trade. The ASX200 is up +0.7% in afternoon trade. Tokyo has opened also up +0.7%. Hong Kong up +1.2% with Shanghai unchanged. Singapore has opened down -0.3%. Wall Street ended its Thursday session with the S&P500 up +0.8%.
OIL DROPS
The oil price in the US is down more than -US$1.50 at just under US$62/bbl with the international Brent price just under US$66/bbl.
CARBON PRICE FIRMISH
There are few trades today but the price has ticked up to $58. The next official carbon auction is on December 3, 2025 and likely heading for another failure. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD JUST OFF ITS HIGH
In early Asian trade, gold is up +US$15 from this time yesterday at US$3649/oz.
NZD RISES ON USD WEAKNESS
The Kiwi dollar is up +30 bps from this time yesterday, now at 59.7 USc. Against the Aussie we are down -20 bps at 89.6 AUc. Against the euro we are up +20 bps at 50.9 euro cents. This all means the TWI-5 is now at just over 66.9 and up +20 bps from this time yesterday.
BITCOIN RISES AGAIN
The bitcoin price is now at US$115,376 and up +1.3% from this time yesterday. Volatility has been again modest just under +/- 1.2%.
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32 Comments
There's daily articles in the MSM about liquidations and business closures. Does anyone know if this is just the media beating up the negative or are they really starting to pump up?
Granny? Possibly smoke signaling to the central bankers that rates need to fall.
Mate its nothing compared to the number of IRD arrangements of 1-2k a month, people borrowed "Be kind payments" say 30k During WuhanFlu, now with interest and fines owe 100k, so paying (BY .... arrangement) at 1-2k a month, if these guys bail to Aussie (and trust me they are as the prospect of paying this for the next 10 years is not appealing ) we will see this number go nuts.
We need a better solution here or we lose a lot of trades professionals.
Aren't they going to have to go further? Like Bali, Thailand, or (getting extreme here) Perth?
Okay, not Perth. Maybe I should have said Darwin.
If you're hoping to evolve, Darwin has cred
stubies and pie and a free show at lunch.....
i passed through in 1991
Numbers released to Stuff in June by MBIE (Ministry of Business, Innovation & Employment) showed that the number of retail business closures in the three years between 2021 and 2024 had nearly doubled from 2704 to 4167.
https://www.stuff.co.nz/business/360822574/two-more-stores-close-smiths…
(interesting they say "nearly doubled" when that would be 5408)
Many zombie businesses didn't survive the Covid helicopter money running out. Nor should they.
most are still in zombie state.... walking dead
Taking liberty with doubled claim indeed.
Suspect these particular numbers aren't all that telling, as businesses were being kept afloat by those interest free loans that might have otherwise gone under at the start of that period.
Actually this is a real issue, so say I am thinking of new carpet or other major purchase. Supplier as per usual wants at least 50 % deposit. As mere personal shopper I have no way to assess if they are going to fall over. So I hesitate, and hesitate, and decide to hold off…
pay with credit card never cash or eftpos
maybe a guy fixing yoiur roof or gutters or even water blastingh, its a massive number , its just invisable
3.6 billion nzd
That August electronic cards data looks really bad doesn't it? Less than inflation, less than last month.
I always think card data is one of the best indicators of how the economy is currently doing. And it doesn't look particularly good.
Only the PolyAnna's did not see this coming. Or those aged 18 and not lived through any recession.
I've already survived through 8 official NZ recessions: practice = performance
you have survived 8 (official ) NZ recessions....how old are you?
70
From Google AI:
Here's a brief overview of some significant historical recessions in New Zealand:
The Great Depression (1928-1933): A global economic collapse that hit New Zealand hard due to the collapse of primary sector prices and the undiversified export market.
The First Oil Shock (1976-1978): Caused by a global oil price rise and reduced terms of trade, leading to domestic recession and high inflation.
The "Wool Bust" (1967-1969): A fall in the global wool market devastated New Zealand's export earnings and triggered a recession.
The Second Oil Shock (1982-1983): Followed the 1979 oil crisis and created pressure on New Zealand's economy and currency.
The Rogernomics Recession (1987-1993): A prolonged downturn resulting from extensive economic reforms, leading to rising unemployment and a significant drop in per capita GDP.
Asian Financial Crisis (1997-1998): A fall in demand from Asia and a severe drought negatively impacted New Zealand's exports and economy.
The Global Financial Crisis (GFC) (2007-2009): A lengthy downturn triggered by international financial markets, leading to the collapse of some finance companies and a fall in economic activity.
COVID-19 Recession (2020): A short, sharp recession caused by the pandemic, from which the country quickly recovered.
Recent Recession (Late 2023/Early 2024): A more recent downturn driven by factors such as high electricity prices and weak consumer and business confidence, from which the economy was still emerging as of mid-2024.
For a more technical analysis including unemployment related recessions since 1961
https://www.waikato.ac.nz/news-events/news/does-fighting-inflation-alwa…
So youre 85 plus....they dont count if you're in nappies.
Just saw the 70...you can wipe out the first 3.
You have been responsible for you and yours since the first oil shock of the 70s at best.
I started full time work in 1972, was married with a child in 1976.
As I pointed out, experts can differ on the definition of recession so there are more noted in the link.
But Orr, Robertson, Aden are older than that???
We should probably note that coffee prices are moving back up and are now near their record highs in the February to April period earlier in the year. Climate issues with Brazil's huge crop are behind the shortages.
China has told Brazil it will now buy any coffee surplus. China has authorized 183 new Brazilian coffee companies to export to the Chinese market, with a five-year permit. China also doing similar deals with Vietnam.
Thanks for playing.
Aotearoans will have to stump up and pay mkt prices. No squealing please.
https://www.reuters.com/world/china/china-welcomes-183-brazil-coffee-se…
"Aotearoans will have to stump up and pay mkt prices" - sounds like those should be a lot less if Brazil can't sell to the US and China barely drinks coffee.
China imported approximately 191,000 tons of coffee in 2024 (USD972 million), 14th largest coffee importer globally by import value.
But China's coffee import volume increased by 24% in 2024 - far ahead of Western countries and Japan - and is forecast to keep growing as coffee consumption rises.
The wonderful Mark Tanner - contributor to interest dot co - will understand well.
In June, Brazilian coffee exports into the U.S. totaled 440,034 60-kilo bags, 7,87 times more than Brazil's sales into China of nearly 56,000 bags that month
The U.S. currently imposes a 50% tariff on all green coffee imports from Brazil.
So wouldn’t they want to sell less to the US, and more to say NZ. Surely China won’t increase its demand by 7x to make up for the US.
Global commodities tend to have global prices, unless its oil, then India can buy cheap Russian oil... on the sly. I worked at Koch once, Oil is not a "clean" market. Any thing involving big $ rarely is....
Koch Industries is one of the largest private companies in the United States, with 2021 revenues reported at $125 billion and approximately 120,000 employees as of 2022. It operates a diverse conglomerate of companies in various sectors, including pipelines, chemicals, consumer products (like paper products), and commodity trading, with a global presence in over 50 countries.
We had a legal obligation to keep voice recordings from the oil trading floor for 30 working days, so we used to change the tape every day, on day 31 we would take the tape and a metal bucket down to the loading bay and burn the tape.... every day... no questions where ever asked, everyone knew the game.
PssT - Do you want to buy some cheap coffee
The World for Sale is a fantastic book about the oil traders. Well worth a read.
Surely the global price is before tariffs and taxes.
So wouldn’t they want to sell less to the US, and more to say NZ.
Particularly if Aotearoa will pay a premium, even as a small mkt. But you have to work balance high margin low vol mkts with lower margin higher vol mkts like China. If I were Brazil, I would want as much of the China pie as possible.
Aussie and Aotearoa are desirable mkts for the Mexican drug cartels because the margins and prices are good.
Sure, but it’s all relative. One country reduces its demand by increasing price via tariff, you would then have to sell more to the other countries via lower prices. It has to be deflationary for the rest of the world.
One country reduces its demand by increasing price via tariff, you would then have to sell more to the other countries via lower prices
Fair point. But I don't think you should expect to see cheaper coffee beans in Aotearoa.
Also, remember the likes of Nestle use mainly lower grade Robusta for instant coffee and ingredients. Will hurt them in the U.S.
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