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. 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
None here either. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
A SOGGY END TO THE YEAR
REINZ data shows housing sales volumes slumped in November while prices drifted sideways. Excessive stock for sales is keeping a lid on this market.
2019 REDUX
The national median multiple has firmed slightly in November from October, but is now only back to where it was at the beginning of 2024, and before that, October 2019. The median multiple measures the relationship between 'average household incomes' and 'average house prices'. As such, neither interest rates now income taxes have any direct impact on the measure. And the averages are very broad, including incomes from people who aren't in the housing market, and prices for houses that just don't need or can't tolerate a mortgage. We prefer the 'home loan affordability' measure which we will release for FHB's in a few days.
HIGH BUT EASING
Monthly partial CPI data out today show falling food prices pointing toward a lower annual inflation rate. Food prices dropped -0.4% in November, lowering the annual increase to +4.4%.
RENT RISES STALL, NOT SO MOST OTHER COSTS
Other inflation data out with the food data shows that rents had their lowest annual increase since at least 2011, up just +0.5% from a year ago for those changing accommodation, but up +1.4% for those staying put. However, this same data shows electricity prices up +12.3%, petrol up +2.8%, but domestic airfares down -14% from a year ago
MODEST TREND IMPROVEMENT
The December BNZ-Seek job ads report shows positive signs, trending upwards off a low base. "It is encouraging to see five consecutive months of improvement (seasonally adjusted). Job ads for the last three months (Sep – Nov) are now up 3.9% on the previous three months (Jun – Aug)." All this is consistent with StatsNZ's weekly filled jobs data.
LAST CHANCE
Consumer spending through the Worldline’s payment network has tracked slightly below year-ago levels in the first half of December but is set to peak in the coming days – traditionally the busiest of the year – ahead of Christmas Day. The lackluster growth is a worry because many retailers have already rolled out their post-holiday discounts to attract business. That means volumes may be higher but revenues and margins are getting a real squeeze this year. It will be tough for retailers who have excess stock after the new year.
'SMALL DETERIORATION', WIDER DEFICIT
The 'delayed' economic recovery has led to a ‘small deterioration in the fiscal forecasts’, Treasury says in its Half Year Economic and Fiscal Update. It now expects a widening fiscal deficit and forecasts a surplus won't return until 2029/2030 at the earliest.
DONE OUR UPDATED QUIZ YET?
Our quiz has been refreshed for the new week. You can do it here.
NZX50 ON HOLD
As at 3pm, the overall NZX50 index is up just +0.1% so far today. That puts it down -0.2% over the past five working days. It is up +2.7% year-to-date. From a year ago it is now up +4.9%. Market heavyweight F&P Healthcare is up another +0.4% so far today. Gainers include Turners, a2 Milk, Meridian and Mercury; decliners are led by Gentrack, Serko, Oceania and Sanford.
MOMENTUM TO SLOW, BUT STILL RISING
Despite the turbulent trade environment, MPI's latest Situation and Outlook for Primary Industries (SOPI) report expects meat exports to rise +7% to $13.2 bln in the year to June 2026. (This follows +9% growth in the same 2025 year.) That is part of the forecast $62 bln primary sector exports and that will be 83% of all our merchandise exports. Dairy exports are expected to grow only +1% next year following this year's +17% rise, horticulture +5% following this year's +24% jump.
EXPANSION WEAKER
The latest S&P Global PMI for Australia for December finds the factory sector expanding in a minor way and a little faster than in November helped by expanding new order levels. But the service sector is now expanding slower, in fact barely expanding.
A SUDDEN DOSE OF CAUTION
Staying in Australia, the Westpac-Melbourne Institute survey of consumer confidence retreated in December and by more than expected and into net negative territory. In fact, no change was expected. The survey found a sharp change in what is expected for mortgage rates, going from a expecting a fall, to now expecting them to rise. Views on the economic outlook and household finances have deteriorated, but those surveyed are still confident about the Australian labour market. Views on =homebuying and house prices have been pared back.
SWAP RATES RETREAT UNDER PRESSURE
Wholesale swap rates may be sharply lower today across the maturity curve as the RBNZ moves to correct 'interpretation errors' by financial markets. 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 2.48% on Monday. Today, the Australian 10 year bond yield is down -2 bps at 4.73%. The China 10 year bond rate is up +1 bp at 1.85%. The NZ Government 10 year bond rate is down -14 bps from this time yesterday, now at 4.53%. The RBNZ data is now 'prior day' with Monday's rate down -2 bps at 4.58%. The UST 10yr yield is down -1 bps from yesterday at 4.17%.
EQUITIES ALL WEAKER, EXCEPT THE NZX
The local equity market is up +0.1% in Tuesday trade so far. But that is enough for it to be the best market among those we follow. The ASX200 is down -0.3% in afternoon trade. Tokyo is down -1.3% in its opening trade. Hong Kong is down -1.5% but Shanghai is down -1.0% so far. Singapore is down -0.4% at its open. Wall Street ended its Monday trade with the S&P500 down -0.2%.
OIL SOFTER AGAIN
The oil price in the US is down -US$1 at just on US$56.50/bbl while the international Brent price is at just on US$60/bbl. Both levels are new two month lows.
CARBON PRICE INCHES LOWER AGAIN
Secondary market transactions are still small and far between, and still inching lower, now to $38.75/NZU. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD SOFTISH, SILVER UP
In early Asian trade, gold is down -US$17/oz from this morning, now at US$4307/oz. Silver is rising however, now just under US$64/oz.
NZD RETREATS
The Kiwi dollar is down -40 bps from this time yesterday, now just under 57.7 USc. Against the Aussie we are down -30 bps at 87 AUc. Against the euro we are down -40 bps at 49.1 euro cents. This all means the TWI-5 is now just under 61.8 and down -40 bps from yesterday.
BITCOIN LOWER
The bitcoin price is now at US$85,930 and down -3.9% from yesterday. Volatility has been moderate also at +/- 2.6%.
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12 Comments
So for the median multiple to be 3x, the average house price would need to be $364,272, cheaper than you can build one for (assuming someone gave you the land for free).
In Queenstown you should be able to pick one up for $346,608, and in central Auckland $391,521
You can easily argue house prices have run away from people, and due to poor increases in productivity, wages have also lagged.
WSJ on the demise of the ad industry. It mentions WPP - the world’s largest advertising holding group for much of the last two decades. Stock price down 59% this year. The Trade Desk, Inc. engages in the provision of a self-service and cloud-based ad-buying platform. Share price down 69% this year.
Critics worry that spending hundreds of billions on AI is a gamble on superintelligence that may never arrive. But Google, Meta, and Amazon aren’t making only this bet. They are methodically consolidating the trillion-dollar advertising industry—and displacing the creative workers who once powered it.
https://www.wsj.com/opinion/ai-is-about-to-empty-madison-avenue-58ab2ea…
AI is super crazy no doubt
Watch this easy to handle account of the rise of Deep Mind now Goggle Deep mind(co founded by Shane Legg a NZer born in Rotorua)
I HIGHLY RECOMMEND THIS LINK
https://www.youtube.com/watch?v=d95J8yzvjbQ The Thinking Game | Full documentary | Tribeca Film Festival official selection
They built the worlds best chess AI, then Go AI , then an AI that could learn any game, not by playing against humans by playing against itself.. Then they built an AI that could solve the protein folding modelling issue.
At one point the founder mentions training a chess AI, playing millions of games against itself, his analogy is at 6am it hardly knows what piece to move, by 9 am its already a ranked chess master, by about 1pm it can out play any human, and it reaches perfection before midnight, perhaps a simplified and accelerated analogy, but what DM illustrates by solving the protein issue, is that AI can become much "smarter"? then the smartest humans we have at biological or physics.... the Chinese realized this when their world champion was beaten by AlphaGo and they cut the TV feed of the match ......
Its not hard to imagine an AI replacing Jane or Bob in accounts, if it can work out what proteins should look like in 3d, double entry accounting should be easy..
I can say that AI is already replacing jobs in my industry.
Its my view that AGI and SGI has the ability to upend everything we know and value, hence possibly why people are turning to precious metals here, I am not sure some past investments will ever return promised returns, as AI will disrupt their revenue flows, before debt is repaid.
Like when the cotton mills or steam engine arreived, no one really knew what to expect. My view is that our economy is based on consumers, and AI does not consume, I think AI will profoundly change the economic world we live in, where we swap our own intelligence for cash to spend in society...
The Thinking Game was shared with me over the weekend. On my bucket list for watching.
In many large organisations there are hundreds of roles that inefficiently extract, analyse and report data from enterprise systems. Some of them have credentials and industry associations that argue how essential they are, but they are all extremely replaceable.
Ironically, i think that data entry (project controls, coordinators etc) will be important because it all works better if the right data is put into the enterprise system in the first place.
In the meantime ELT have started to use ChatGPT to write long and irksome Christmas themed poems about the group's achievements for the year, and then wearing a Christmas hat spend five minutes on the group call reading the poem out loud. When it's all gone I won't miss it. But I do need to figure out where to get some money from :)
The Fed's chart “Distribution of Household Wealth in the U.S. since 1989” shows wealth by generation (Silent and Earlier, Baby Boomer, Gen X, Millennial). The Millennials own <5% of that wealth. Don't expect much different distribution for Aotearoa, Aussie, Canada, UK.
Do the boomers think they're going to sell all their 3x overpriced "assets" to the younger generations? Or will govts will buy their over inflated assets from them because the younger demogs can’t afford them and the ruling elite can’t afford to let them drop in value?
wealth https://www.federalreserve.gov/releases/z1/dataviz/dfa/distribute/chart…
Do the boomers think they're going to sell all their 3x overpriced "assets" to the younger generations?
A small example already happening is the boomers (especially in the USA) trying to sell their classic muscle cars that they have invested/spent tens of thousands of dollars on over the years, and finding no one wants to buy them. Other boomers are too old to get into the hobby and younger generations are either financially unable or are just not interested.
Definitely a thing in NZ. The foolish ones bought a nostalgia project to fix up in their 60's and find no buyers at the end, and constant maintenance for a car with scarce parts that don's last either way. I know two of these people for reference.
If you know a couple then you will also likely know that they were unlikely to ever expect a profit from their nostalgia.....it is/was almost always an expensive hobby done for love not money.
Parts are cheaper than modern cars and readily available. Also simpler to maintain as no complex electronics. Restoring a classic to a high standard does cost crazy money though and there is no way you would recoup your costs if doing it to try and make a profit
Maccy B on top of things as usual. This time looking at why Aussie is ranked second-last among wealthy nations in productivity growth since the COVID-19 pandemic [don't chuckle, Aotearoa is third-last].
“Australia’s multi-factor productivity growth has collapsed to zero. GDP growth now comes almost entirely from more labour hours (i.e., immigration), not efficiency/technology gains”.
https://www.macrobusiness.com.au/2025/12/australias-productivity-collap…
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