Here's our summary of key economic events overnight that affect New Zealand, with news markets have essentially been on hold overnight awaiting the US Fed's decision.
In the end, the Fed's FOMC trimmed its key rate by -25 bps to 3.75% as markets had guessed it would do. But it was not unanimous. The Trump stooge on the committee wanted a far larger cut. But the professional members fear inflation still and the small trim was the uneasy compromise. The voting was 9 members to cut by -25 bps, two to hold unchanged, and Miran wanting a big cut.
Immediately after, the UST 10yr benchmark was active with a softish tone but really little-changed. the S&P500 rose, and the USD fell slightly. More reaction will come after Chairman Powell's press conference which is about to start soon.
Earlier, the report on US mortgage applications was quite positive, up 4.8% last week from the week before which you may recall brought a small but unexpected retreat. The latest week however was all about refinance application which were up +15% on that same prior week basis.
An Q3-2025 data for US payroll compensation costs (pay plus payroll taxes plus benefits) were up +3.5% from a year ago, rising at about that rate in the latest quarter too. So American inflation isn't getting any respite from this direction.
Quite how odd the US public policy has become is revealed in a current court case. US Federal prosecutors spent over a year extraditing a Belarusian woman to the US to face charges she illegally smuggled US tech to Russia for its war on Ukraine. Then ICE stepped in accusing her of being in the country illegally, and deported her, collapsing the case. Moscow smirked in satisfaction.
In Canada, their central bank stood pat, holding their policy rate unchanged at 2.25% as widely expected. The say this is about the right level in the current uncertain environment. But they were surprised by the upside growth of GDP at +2.6% in the third quarter, found the labour market improvement better than anticipated as their unemployment rate fell. CPI inflation slowed to 2.2% in October and they see core inflation remaining in the 2.5% to 3% range.
Across the Pacific in China, there was a slight rise in CPI inflation, enhance because the previous inflation was so low. Their inflation rose 0.7% in November from a year ago, as expected and accelerating from a +0.2% increase in October. This time, food price inflation was very low. It was the second consecutive month of consumer inflation and the fastest pace since February 2024.
Meanwhile China's producer prices fell into a steeper deflation, down -2.2% in November from a year ago.
And the IMF has raised its forecast for growth of the Chinese economy for 2025 and 2026, now expecting to see an expansion of +5.0% this year.
And some influential analysts are saying the Chinese yuan is 25% undervalued and will appreciate more than forwards contracts are pricing for 2026.
And in the EU, the ECB boss Christine Lagarde says they will likely raise their forecast for EU growth as well.
In Australia, if you are retired and have assets, you need to pay a tax on a deemed rate of interest on your assets (irrespective of what they actually earn, if anything). That rate depends on how many assets you have. They raised it in September 2025 and have now signaled they will raise it again in March.
The UST 10yr yield is now at 4.16%, dipping -1 bp from this time yesterday and holding that after the Fed decision. The key 2-10 yield curve is still at +57 bps. Their 1-5 curve is now positive by +15 bps and the 3 mth-10yr curve is still positive by +45 bps. The China 10 year bond rate is down -1 bp at 1.85%. The Japanese 10 year bond yield is holding at 1.96%. The Australian 10 year bond yield starts today at 4.78%, unchanged from yesterday. The NZ Government 10 year bond rate starts today at 4.64%, up +3 bps.
Wall Street has started its Wednesday with the S&P500 up just +0.1% after the Fed decision. Overnight, European markets were mixed between Paris's -0.4% drop and London's +0.1% rise. Yesterday, Tokyo ended its Wednesday trade up +0.1% again. Hong Kong was up +0.4% but Shanghai ended down -0.2%. Singapore was little-changed. The ASX200 ended its Wednesday with a -0.1% dip. But the NZX50 finished down -0.6% and the most of any markets we follow.
The price of gold will start today at US$4204/oz, and down -US$17 from yesterday. And we should note again that silver has set a new record high, just under US$61/oz.
American oil prices are little-changed at just on US$58/bbl, while the international Brent price is just under US$62/bbl.
The Kiwi dollar is +10 bps firmer from yesterday, now at just under 57.9 USc. Against the Aussie though we are again essentially unchanged at 87.1 AUc. Against the euro we are down -10 bps at 49.7 euro cents. That all means our TWI-5 starts today at just over 62, and down -10 bps from yesterday.
The bitcoin price starts today at US$92,274 and down -2.3% from this time yesterday. Volatility over the past 24 hours has been modest, at just over +/- 1.4%.
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54 Comments
"Quite how odd the US public policy has become is revealed in a current court case. US Federal prosecutors spent over a year extraditing a Belarusian woman to the US to face charges she illegally smuggled US tech to Russia for its war on Ukraine. Then ICE stepped in accusing her of being in the country illegally, and deported her, collapsing the case. Moscow smirked in satisfaction."
Odd is not a suitable descriptor. The world (outside US tech) should be panicked by the misuse of power underway as declared in the recent US strategic review....if they remain undeterred we can forget about any so called economic norms.
Comical is better, but I doubt even a script writer out of Hollywood would have dared include that scenario in a comedy show. They'd run the risk of getting their citizenship cancelled and deported to a place called "No mans land".
It would be comical if it wasnt so dangerous...remember all our economies are dependent upon (and open to) the tech lords.
USD is about to fall I think buy AUD for the xmas lift trade
When is the trick.
Others will think you're just being Chicken Little.
"In Australia, if you are retired and have assets, you need to pay a tax on a deemed rate of interest on your assets (irrespective of what they actually earn, if anything). That rate depends on how many assets you have. They raised it in September 2025 and have now signaled they will raise it again in March"
Is this a manifestation of the "Boomers ripped us off" attitude? Superficially it almost feels like being prudent with your earnings, like saving, is becoming a crime of sorts. Ordinary people are not supposed to get ahead somehow across a working life? Are we supposed to be dependent and grateful to the governments who provide for us? What about the governments who hold us back, and work to keep us poor?
IIRC I understood that deemed rate only applied to people receiving state pensions (< half aged population).? Happy to be corrected.
"If you’re a member of a couple and neither of you get a pension
The first $53,100 of each of your own and your share of joint financial assets has a deemed income of 0.75% per year. Anything over $53,100 is deemed to earn 2.75%."
Basically irrespective of whether you actually have any cash inflow, you'll get a tax bill. All from:
- savings accounts and term deposits
- managed investments, loans and debentures
- listed shares and securities
- some income streams
- some gifts you make.
It all feels like a rip off by the government. Socialist policies that resent people being able to build a nest egg for retirement.
Thanks for that, I'd found but hadn't read the link
Unlike NZ Oz does not have universal super. Oz's super is means tested and a deemed rate of return is applied to asset rich retirees to ensure rich people do not receive a state funded benefit. No income tax is payable on the deemed rate of return, the calculation is only for determining eligibility for state super.
NZ needs the same system so poor young people are not forced to pay for a benefit paid to multi millionaires over 65.
Agreed. With scarce public sector resources the option of funding a multi-millionaire retirees second foreign holiday of the year must fall pretty low in the priority list.
$53K is a long way from being a multimillionaire. And today a million $ asset may be something that costs to own - like a house.
That whole environment has changed in the last 25 years. I didn't buy my house as an investment and still don't regard it as one. It's tripled in value since I bought it just over 20 years ago, and that has increased my liability, but not my tangible wealth. I can't use it to pay my bills without signing the ownership over to someone else who expects to profit from it and who will end up being my landlord. That is way beyond unacceptable.
If someone resents that attitude - then when they've put in a 50 year working life and gone without what others have, to put that roof over their head, then we can talk about it. I had no control over the housing market or even influence on it. So don't penalise me because of it.
I haven't read in detail yet, but from the post above it looks like having 50k in assets would only reduce your super by 400 dollars a year or so.
Edit: I don't have time to look into it right now, but it could even be your super is reduced by your marginal tax rate * 400 dollars, so maybe $1-200?
Total Fertility Rate is 25% below replacement. With no bodies to tax (unborn already borrowed against), governments will have no choice but to go after assets to prop up the welfare state until it collapses. They are coming for your house. Free stuff doesn't come cheap.
It's tripled in value since I bought it just over 20 years ago, and that has increased my liability, but not my tangible wealth.
Not taking a dig Murray, but have you leveraged that increase in capital gain to benefit your life? Invest? Purchase another property? Get a private operation? If so then you have improved your wealth in some regard. Again, not a dig, just a different angle to consider :-)
No, No, No!
Houses are not included as financial assets. Also the $53k deems a rate of return of 0.75% (basically $400 a year). If you have $53k in shares or cash and cannot get a return of $400 a year something is wrong. For a couples age pension to be reduced to zero they would have to have a deemed 2.75% return on $1.6m in financial assets. If someone has $1.6m in shares or cash why are the getting a benefit from the government paid for by many young people with no financial assets?
That is what is happening in NZ at the moment. In NZ you could have $50m cash in a 4% term deposit generating $23.4k a week after tax and still pull NZ super of $380/wk. Crazy.
"..., the calculation is only for determining eligibility for state super"
At face value that doesn't appear to be correct, refer Murray86 reply to my link
I suggest you watch the video on the link you posted.
Tax isn't a punishment
It's a certainty
"Ordinary people are not supposed to get ahead somehow across a working life?"
What are you trying to 'get ahead' of Murray?
And if you're saving as you say you are above...then have your wealth in savings accounts, which gets taxed....but no you have it all locked away in real estate in a manner that it never becomes taxed....then you whinge if somebody tries to tax your 'savings' (while those trying to save for a house with a savings account get those savings taxed...). When really its a form of tax avoidance. But all in the spirit of 'getting ahead'. (of what exactly?) Do younger people locked out of the market because your savings plan (real estate) has been so thoroughly successful also want the opportunity to do well? How do they do that if all of the spoils have been given to one generation and not others? (via crazy monetary policy, fiscal policy, immigration settings, and tax regulations).
Taxation, if done well, is a way to share the love (and the pain) - those who have received much can help those who have not, but the odd thing is is that in your case Murry those who have received a lot (hundreds of thousands or even millions of dollars of capital gains for often minimal labour on the properties they own) don't want to share the love at all for those who they have created a lot of pain for (those locked out of the market or those who have had to take on $500,000 + loans just to buy a shitty starter house in a bad suburb that is falling apart).
So how many hundreds of thousands of dollars or even millions of untaxed capital gains have you received in the property you own, that you are now complaining about if any of that wealth gain was ever possibly taxed? Be honest....Most of the boomers I know have received well over $1,000,000 - and that $1,000,000 is a cost that the following generations have to pay via greater debt on the properties they have purchased (because that is how this system works - their debt, is your capital gains). But yes, poor old boomers, being treated so badly....we just want to 'get ahead'...(of what again? Your children?)
The Govt is clipping the ticket on inflation which is not any real "gain". For property owners its still the same asset with the same relative market value. The $ price +/- simply reflects money as the medium of exchange, re/devalued by monetary and fiscal policies outside the control of asset owners. A logical policy of Deeming / CGT would see refunds for any capital losses.
I believe they factor for that by having a lower rate than income tax.
We are all trying to get ahead of the debt burden, that prevents us being able to afford to retire. I didn't buy my house as an investment and the money I used to pay for it was taxed when I earned it. I bought it as a necessity, just as I did my car. That it's value has appreciated in the 21 years I have owned was not planned, expected or even hoped for. From my perspective it is nothing more than accidental. I worked hard, and saved hard - going without what many others did or had to be able to buy my home and pay it off. Why do you resent that I achieved that over a 50 year working life? My house is a liability that costs more and more to own, well over inflation. Ever increasing rates and insurance, maintenance cost and time. None of which are stable or reducing. Any capital gains on my house are incidental and mean nothing to me. I've not realised them in any tangible way. I have no plans to sell currently, but if i do guess what? All the houses in the market have gone up around the same ratio, so everything else is commensurately dearer. But you still think I should be taxed on some meaningless paper value because it's gone up? What if that value goes down?
I'm with Murray.
I don't now live in the house I built in the 70s. But if I did, so what that it cost me $40K then and worth about Mil now.
It's not some clever swindle. It's a necessary and useful place to live.
What is IO on about? What's the chip.
That said I think the house price explosion of recent years has been New Zealand greatest social disaster. Harm everywhere. Said it here a number of times.
I am pleased that house prices are dropping. Including for the house I live in. Makes no difference because the house value ain't cash to spend. I need a place to live.
To clarify your view above:
’I have no problem with the massive capital gains I’ve received my adult life via property but this same thing is also NZ’s greatest social disaster’
So you don’t have a problem with something (massive capital gains), but the same thing is also a social disaster (overpriced housing)…which is it? Only a hypocritical mind can have it both ways.
Abuse does not become you IO. Nor does it support your view. Whatever it is.
Both Murray and myself have made it clear that the house is not capital gain. It's our place to live. And if the price goes down, as it has, then it's not a capital loss. It's still a place to live. Same place it's been.
As for your other misrepresentation that I have no problem with house price increases you are wrong on that one. I thought that was nuts. Dangerous for our society. And I said so clearly.
Go spill your inner rage elsewhere.
Just because it's unrealised, does that also exclude it from being wealth?
One could use that same logic for justifying wealth stored in classic cars as transport, paintings or precious metals as decorations etc.
A house is not wealth unless and until it is converted to it somehow. it is a liability and a big one.
So wealth or not is measured by personal use and liquidity, rather than whether one has rights over?
Would you seek to exclude the family home, 1 vehicle etc from a wealth tally?
Why are you trying to twist the conversation? I have made it clear that my house is not a source of wealth to me, but is a drain on my wealth as in money in my bank account. Why are you trying to twist that?
Why make an arbitrary decision on whether a household should only own one vehicle?
Okay I'll be straight to the point
Could you please be clarify what you would consider to be wealth Vs not wealth?
Only money in the bank account?
Is land wealth?
a house?
Vehicles?
Shares?
A company you own?
Boat?
Jewellery?
Foreign Fiat currency?
Trading cards?
Cryptocurrency?
Why/ To what end?
What twisted paradigm are you working towards?
Are you the type of person who resents what others have when you don't?
I'm curious what people of different generations consider as fair to be included Vs excluded in a wealth tax.
No worries if you don't feel comfortable to give an answer
I don't have time for resentment, it's disempowering and life sucking
You don't come across as just curious, but rather one of those who resent that others saved successfully to provide a home for themselves. I've never been what i would describe as wealthy. At 68 I'm still working because i can't afford to retire, especially as when I retire I expect to go on living and not just sit around waiting for God to tap me on the shoulder as some seem to think I should be. The economic literature today is that the GRI is not sufficient to live off. But for people my age it was promised when the government stole our superfund. I didn't vote for that!
I do think investments should be taxed at a reasonable rate, but then i also think the entire tax system is not fit for purpose from the perspective of how money works in the economy. 20 years ago $1 million was a lot of money, not so much today. 'Investment' really just comes down to why was the purchase made.
I know a lot of people into classic and vintage cars, 99% of whom lose money on them. Its a hobby and passion, not a money making exercise unless you're a professional rebuilder. Crypto is an investment regardless of what people claim, so is a second house, and art and whatever else they hope to make money on. But here's the thing if a capital gain is to be taxable, so must a capital loss be considered in tax. It can't be a one-way street.
I respect your work ethic murray86 but unfortunately the take on me is incorrect. I'm about to purchase my next house using a mix of savings and debt.
I doubt many people on this site would fit a resentful-do-nothing profile, as interest.co.nz tends to attract mostly people who are keen to improve their situation rather than pay a few bucks a month to just have a moan
I actually agree with you on a lot of points
Good chat. Have a great evening sir / madam
Fair comment Make Change.
I exclude things we need to use. Don't see it needs to be minimal standard. eg. Tent versus house.
Classic cars , art and precious metals are not bought as necessities for living. They are clearly a form of investment (admittedly some instances of classic cars my challenge that as I know a bloke who bought a brand new Chevy four door in 1956 and still owns it and drives it daily).
My house on the other hand was not bought as an investment, never intended it to be, other than forced saving. But unlike savings it comes with costs not interest.
Thanks murray86 for the perspectives
No rage - you still fail to see the hypocrisy of your position - no problem with the massive capital gains you’ve received (your gain) but simultaneously think the same thing is the biggest social disaster the country has seen (social and financial loss for younger people/country).
How is it that you are simultaneously ok about something (massive capital gains in housing market) and also not ok with it?
The cognitive dissonance is quite high.
It’s like saying ‘I like to eat ice cream but I also hate it because it makes me fat’. But if anybody attacks me about my weight from eating too much ice cream I will lash out in response because they are being unfair.
Abuse IO. Just stop it.
It's easy to save in a time of plenty Murray.
That time has rapidly come to a close. Younger generations are clearly poorer than their parents as resource depletion/climate change and wealth inequality are taking hold. I don't think I know any young people that are doing well, even working multiple jobs. Most are barely scraping by, can't even think of saving. One guy I know is late 20s, lives with his parents, works 3 jobs (gig economy) and is really proud because he has saved $1000 over a couple of years. Comes to me for investment advice on his sharsies account. He works probably 50-60h weeks, has low costs (board only) and can't get ahead at all, even though he has a degree, he has now been out of stable work for so long he is almost unemployable. This is a story being played out all across young peoples lives now, right across the developed world.
Are you saying I lived in a time of plenty? It didn't feel like it. I was in my early thirties before I had saved enough money with my then wife for a house deposit. I couldn't afford a new car, nor overseas holidays, or internal ones for that matter. I was in my 50's before I could afford to fund my first OE. The young today claim to be shafted when they can't do in their twenties. We weren't going out for meals of even the movies. Every last cent was on just getting by and paying the bills. That wasn't a time of plenty by any measure.
You could save for a house deposit? Wowsers, you did live in a time of plenty!
Most young are running in place now just to survive rent/food/energy. Or going backwards. You might see the occasional young person doing well, but most are relying on the bank of mum and dad or some other lucky event in their lives that gave them a chance at a good life.
I know kids today earning just over the minimum wage who are managing to save by not following current fashion trends for trips gadgets and other things. So that means today must also be a time of plenty. Stop your whingeing.
Dream on mate. Thats about $700 after tax for a 40hr week on minimum wage. Have you been to the supermarket lately? Rent? Power? Gas?
There was a big benefit from rapidly increasing workforce population. That is gone and the young of today have to support an ever spiralling welfare promises. Their OE's are going to be one way.
"Over the past quarter century, GDP per capita increased in most later wave regions as a result of increasing working-age populations as a share of total population, creating a demographic dividend. Yet in most regions, this dividend will diminish or disappear entirely by 2050."
https://www.mckinsey.com/mgi/our-research/dependency-and-depopulation-c…
"Looking again at UN global data, when I was born in 1949 there were about eight people of working age (25–64 years) for every person over the age of 65 years. ...By 2100 CE, when the children born in the first third of this century are elderly, and with a low TFR for the rest of this century, this ratio is expected to have dropped to about 2. In other words, when my grandchildren are elderly, the world will have only about two people alive aged between 25 and 64 years for every person alive over the age of 65 years."
https://insightplus.mja.com.au/2024/8/health-care-in-for-a-roller-coast…
Murray it’s wrong to tax the gain on hard earned income for those trying to get ahead, while not taxing the easily earned investment gain for those already ahead.
Australian travellers to US face forced disclosure of social media history
The Trump administration has proposed the change for travellers from Australia, the UK, France and other countries that don’t require a visa for entry.
so probably better not to comment on trump from here on in....
Probably even better to not visit or pass through America - they are becoming a hostile state.
While I have family there in the Northwest, I'd choose Guatemala any day of the week over the USA. Fantastic Rum, the Mayan culture still alive, the old done-up US school buses of old (think forrest gump), good food and climate, and very affordable.
But would you have to transit through the US to get to Guatemala? Dang it, caught by the same rules...
Here’s what Trump’s border force will look for on your socials
Anti-US rants are likely red flags under new border rules targeting social media. But Australians heading to the US could also be made to hand over their DNA.
No thats a step to far , I am not handing over DNA.
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