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
BNZ dropped its one year fixed rate by -26 bps to 4.49% 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
BNZ cut its Rapid Saver account rate by -25 bps to 2.30%. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
LOOKING FOR A SPRING BOUNCE
The September ANZ business sentiment survey was essentially unchanged from August. But expectations about the future lifted even if recent activity indicators have settled in lower than in Q2. Inflation indicators were marginally higher: the net percent of firms expecting to raise prices in the next three months rose 3 points to 46% while those expecting cost increases rose 1 point to 75%. One-year-ahead inflation expectations lifted marginally from 2.63% to 2.71%.
NEW COLLABORATION
Sorted and Financial Advice NZ (FANZ) have teamed up "to improve access to quality financial advice, boost financial capability, and build consumer confidence." FANZ released details of the "five year agreement" but the Retirement Commission has yet to do so. Update: they have now, here.
HIGH PRICES DON'T DRIVE HIGHER VOLUMES
StatsNZ reported its detailed March 2025 annual balance of payments results and that shows we exported more than $1 bln in gold in the prior year, easily a new record and up +33% from the 2024 year, up +75% in two years. Of course, the rising gold price has a lot to do with that. The March 31, 2025 NZD price was $5477/oz, up +45% from a year ago, up +73% from two years ago. While these indicative year-end prices won't be for the actual gold exported when it was shipped, it does give the idea that the higher prices had not resulted in higher volumes.
NZX50 FIRMER
As at 3pm, the overall NZX50 index was up +0.3% net in its Tuesday session so far, after a slowish start. It is only up +0.2% over the past five working days. But it is up +0.8% year-to-date. From a year ago it is now up +6.0%. Market heavyweight F&P Healthcare is up +0.9% today so far. Overall, there were gains for Kathmandu, Serko, Scales and a2 Milk while Vista, Meridian, Turners and Investore slipped.
RULING OFF A TROUBLED PERIOD
Synlait announced it will quit its new Pokeno (Auckland) facility, and reported a big -$40 mln annual loss. It also said it will pay its 238 farmer suppliers $10.16/kgMS, the same as Fonterra. Plus some suppliers got premiums that averaged 50c/kgMS. Majority owner Bright Foods (65%) said it is ok with the result and the new direction. The Pokeno sale has allowed the company to fix its balance sheet, but it will simplify it to a South Island-only operation,
DRINKING AT THE WELL
And speaking of dairy company retreats, we are interested to know what fees Fonterra is paying its 'advisers' for the sale of its consumer brands to Lactalis. The main advisers have been Jardens and Craigs. Some say the final fee load could exceed $300 mln, but we are interested to confirm the actual levels. It could be a very good Christmas bonus for some. If you know the actual fees being paid, please email us.
FROTHY ENTHUSIASM RETURNS
Bank mortgage books are now growing fast again. They expanded by +$2.0 bln in August, the second most since the end of 2021 - and the most outside a prime real estate selling season in that time. These bank home loans were up 5.6% from the same month a year ago (the most since August 2022) - and that is a +$20 bln rise.
NOT IN THE SAME LEAGUE
For perspective, bank lending to businesses rose +$2.2 bln in the same time (+1.7%) while lending to the rural community was up +$220 mln or +0.3% over the year.
HOUSEHOLDS MORE CAREFUL WITH THEIR BANK BALANCES
After peaking in July, household bank balances actually fell -$677 mln in August, an unusual dip. That left them +6.1% higher than a year ago, the slowest expansion since early 2024. Term deposit balances are still rising however, now at record $144.6 bln, up +5.0% from the same month a year ago. Savings account balances however fell almost -$300 mln and transaction account balances fell more than -$1 bln in August from July.
IT DEPENDS
In China, their official factory PMI contracted again. But even though it is the sixth straight monthly contraction, the pace of decline was the least in that time. (Their factory PMI rose in February and March, but only by marginal levels.) Their official services PMI for September is no longer expanding. These official PMIs have been more conservative than the private surveys (RatingDog, ex Caixin) probably because they have a heavier weighting to Chinese SOEs. The private ones are more attuned to private and foreign enterprises, surveyed by S&P Global, and they report a faster expanding factory sector, and solidly expanding services sector.
SWAP RATES SOFTER
Wholesale swap rates are will probably be softer again today for all short 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 but Monday rates are not yet available on the RBNZ website. Today, the Australian 10 year bond yield is down -3 bps from yesterday at 4.32%. The China 10 year bond rate is unchanged at 1.88%. The NZ Government 10 year bond rate is down -3 bp sat 4.21%. The RBNZ data is now all delayed with Monday's update not yet available. The UST 10yr yield is down -1 bp at 4.15%.
EQUITIES MOSTLY LITTLE-CHANGED
The local equity market is now up +0.2% in Tuesday trade. However, the ASX200 is only up +0.1% in afternoon trade. Tokyo has opened down -0.1%. Hong Kong is up +0.5% at its open with Shanghai up +0.3%. Singapore is up +0.2% at its open. Wall Street ended its Monday session with the S&P500 up +0.3%..
OIL DROPS
The oil price in the US is down -US$2 to just over US$63/bbl and the international Brent price is now down nearly -US$3 to just over US$66.50/bbl.
CARBON PRICE HOLDS
Prices remain range-bound on light volumes and low volatility, holding at $57/NZU. 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 FIRMS TO NEW ATH
In early Asian trade, gold is up to US$3846/oz, up +US$71 from this time yesterday. Silver however has retreated slightly to under US$47/oz.
NZD ON HOLD
The Kiwi dollar is unchanged from yesterday at 57.8 USc. Against the Aussie we are down -20 bps at 87.9 AUc. Against the euro we little-changed at 49.3 euro cents. This all means the TWI-5 is now still under 65.2 and little-changed.
BITCOIN FIRMS FURTHER
The bitcoin price is now at US$114,577 and up +2.4% from this time yesterday. Volatility has again been modest,just on +/- 1.4%.
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12 Comments
On those mortgage figures, worth remembering that the interest added to outstanding loans is currently averaging around 5.5%. So, $1.75bn of the $2bn increase in August was the interest that banks added. Mortgagors only took out $250m of new loans net of repayments.
Similarly, over the year, that 5.5% increase is less than the total interest added. So, mortgage repayments were higher over the last year than new drawdowns. This is a contractionary force on the economy - destroying more money (repayments) than is being created through new loans.
Nicely explained.
Thank you.
So, mortgage repayments were higher over the last year than new drawdowns. This is a contractionary force on the economy - destroying more money (repayments) than is being created through new loans.
Bingo
I don't understand this statement. Its surely not possible to consistently write more loans than our total outstanding cost of borrowing for all of our aggregated debt. To do so a) the cost of money would need to be very low, triggering inflated asset values, or b) our total loan book very low for a spell, but it would grow at a fast % wise and the original premise would become false.
We also ignore the return people might be generating on borrowed money.
At the moment, banks are adding about 5.5% interest per year to about $500bn of outstanding loans. They are also adding about 2.8% of interest to about $477bn of bank deposits (savings and term deposits). Thus, our private sector balance sheet expands as interest is added to our liabilities and assets. Banks cream off the difference as income.
When banks make new loans, they add to the total loans outstanding (a bank asset) and to the bank deposits of borrowers (a bank liability). Voila, more expansion.
"it does give the idea that the higher prices had not resulted in higher volumes." This shows a misunderstanding of mining. You cannot open the taps when prices go higher. Mining more ore involves human, machinery and plant resources and neither are just standing idly by waiting for the price to go up.
Edit. You can mine more ore if the mine is a one shift or two shift operation and can move to two or three shifts but the bottleneck is beneficiation and at least part of that is usually done at the mine so additional beneficiation capacity is required.
Switzerland has offered a "gold sweetener" to Trump in recent trade negotiations, proposing direct investment by Swiss refiners into the US gold-refining industry to persuade the administration to lower the newly imposed 39% import tariff on Swiss goods.
Switzerland proposed that Swiss refiners move lower-margin gold processing activities to the US, notably melting London-traded gold bars and reforming them into the smaller kilobars favored in New York.
The investment in US refining aims to address trade imbalance concerns, preserve Switzerland’s high-value refining expertise, and maintain its status as the world’s leading gold hub.
https://finance.yahoo.com/news/swiss-offer-trump-sweetener-gold-1534325…
I posted this morning about Australia starting to panic about China flooding the market with goods and EVs. While cheap goods are great for Aussies, Aotearoans, and Europeans, it would cause havoc in our business environments, particularly in Ponzi-ravaged micro-economies. Because we have distorted the cost of land and supply chains through credit creation for non-productive purposes, we have to sell goods and services at a premium for things to make economic sense.
I had some research showing that China has 109 EV brands on the market. Well it turns out I'm wrong. According to Reuters, there are 129.
You want free trade then it has to work both ways.
https://www.reuters.com/business/autos-transportation/only-15-electric-…
There will surely be a reckoning with Chinese EV brands.
Something to consider when you stump up for your new Panda Carrier. You're not sure how long the after-sales service will be around.
Some brands will disappear but Chinese cars like Zeekr, BYD, Omoda offer so much more than Euro cars at an incredible price.
And, while I'm at it, total NZ bank deposits went down because Treasury and RBNZ took around $4bn more cash out of the economy than they put in. They sold bonds, took FLP repayments, did some fx exchange etc.
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