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
There are no changes to report today. All current mortgage 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
There are none here either. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
INFLATION PRESSURE RISING, "WORRYINGLY HIGH"
Annual inflation rose to 3.1% in the December quarter - with electricity, rent, local government rates continuing to drive the increase. At this level it has breached the RBNZ target range.
WHERE THE INFLATION PRESSURE IS
Oddly, it is tradeable inflation that is rising fastest at present, up from +0.3% in March to +2.6% in December. Non-tradeable inflation is easing, going from +4.0% in March and now down to +3.5% in December. Of note however are these outsized annual increases: health insurance +20.3%, "Tertiary and other post-school education" +22.6%, household energy +12.3%, property rates +8.2%, central and local government charges +8.7%, postal services +8.4%. It is very noticeable that apart from health insurance, all these other outsized rises are from the public sector or the energy sector where the government has more than a 50% ownership of the four largest suppliers. Higher policy interest rates work to restrain prices in the private sector - but the public sector can just ignore them.
RISING RATE EXPECTATIONS
Bank economists at ANZ are the latest to bring forward their expectation for an OCR rate hike, although they still don't see it until December 2026. For the record, financial markets had a +25 bps rate hike fully priced in before October at the end of yesterday and a second one by December. It will be fascinating to see how that is priced on Monday.
WHAT SAY YOU, SHAREHOLDERS?
Fonterra has scheduled a Special Meeting on Thursday, February 19, 2026, for shareholders to vote on the return of capital from the sale of its global consumer and associated businesses, Mainland Group, to French-owned Lactalis. They are targeting a tax-free capital return of $2.00 per share, equivalent to around $3.2 bln, once the sale is complete. Meeting documents were distributed today. It will be interesting to see how many shareholders and unitholders vote against the distribution. They may get a North Korean landslide.
CAPITAL GAINS VANISH
The REINZ today acknowledged that the 2025 housing market ended with an odd mix of data, a +10% rise in sales transactions but a 0% change in average prices. Many sellers needing to exit this market struggled to achieve 2024 prices, but some obviously did.
OUR LATEST QUIZ IS OPEN TO PLAY
Our quiz has been updated for this week's edition. You can do it here. And a new one will be added every Monday.
NZX50 SAGS TO END THE WEEK
As at 3pm, the overall NZX50 index is down -0.5% so far today. That puts it down -1.6% over the past five working days. But is up +5.5% from six months ago. From a year ago it is now up +3.3%. Market heavyweight F&P Healthcare is up +0.1%. There are 33 gainers led by EROAD (1.6%), Tourism Holdings (+1.5%), Oceania (+0.6%), and Fletcher Building (+0.5%). There have been 45 decliners, led by Precinct Properties (-2.1%), Argosy (-2.0%), Infratil (1.9%) and Spark (-1.8%).
QUICK-CHANGE LESSONS FROM AUSTRALIA
In Australia yesterday, they posted stronger than expected labour market data. That has sharply changed financial market pricing. And in turn there has been a rush by banks, both a major (NAB) and some challengers, to hike their fixed home loan rates today. They get their December CPI result next week and it is widely expected to challenge the upper end of their policy tolerance. If it does, suddenly Australian floating mortgage rates are at risk of a rise on February 3, 2026. If they do hike then, the Aussie policy rate will be 3.85% (3.60% +25 bps). And that will put it 160 bps higher than the RBNZ current 2.25%. It has been 14 years since this difference was that large.
FASTER EXPANSION
In Australia, private sector output expanded at its fastest pace in five months in December according to the S&P Global 'flash' PMI report. Both the factory and services sector expansions picked up, the services sector more than the factory sector however. Faster new order growth, including for exports, was a noted feature.
JAPANESE INFLATION EASES SHARPLY
Japanese inflation eased to 2.1% in December from 2.9% in November, the lowest since March 2022. Food inflation fell to a 13-month low of +5.1%, driven by the slowest rise in rice prices in 16 months.
ON HOLD
The Japanese central bank reviewed its monetary policy and no change was made, held at 0.75% - because an election is imminent. But now inflation concerns seem to be easing too.
STAYING LOOSE
In an interview with state media Xinhua, the Chinese central bank governor indicated that cuts to their interest rates and reserve ratio requirements are on the cards in 2026.
SWAP RATES RISE
Wholesale swap rates are probably higher today after the CPI report. 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 2.50% yesterday. Today, the Australian 10 year bond yield is up +1 bp at 4.81% and consolidating after yesterday's labour market data. The China 10 year bond rate is unchanged at 1.83%. The Japanese 10 year bond is now at 2.24% and down -3 bps today after their lower inflation result. The NZ Government 10 year bond rate is up +4 bps from this time yesterday, now at 4.62%. The RBNZ data is now 'prior day' with Thursday's rate up +1 bp at 4.57%. The UST 10yr yield is unchanged from yesterday at 4.25%.
EQUITIES UP MODESTLY, EXCEPT ON THE NZX
The local equity market is now down -0.4% in Friday trade so far. The ASX200 is up +0.4% in afternoon trade. Tokyo is up +0.3% in its opening trade. Hong Kong is up +0.7% today so far and Shanghai is up +0.2%. Singapore is also up +0.7% at its open. Wall Street ended its Thursday trade with the S&P500 up +0.5%.
OIL FALLS
The oil price in the US is down -US$1 at just under US$59.50/bbl while the international Brent price has hardly moved, now just under US$64.50/bbl.
CARBON PRICE DIPS
Secondary market has seen more transactions and the price is back down -$2 at $35/NZU today. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD EYES US$5000/oz
In early Asian trade, gold is up +US$159/oz from this time yesterday, now at US$4958/oz and easily its record high. Silver up at US$98.50/oz, up +US$6.50 and platinum has taken off to US$2660/oz.
NZD SHARPLY FIRMER
The Kiwi dollar is up +70 bps from this time yesterday, now just on 59.2 USc again as the USD fades. Against the Aussie we are up +40 bps at 86.5 AUc and back to Wednesday levels. Against the euro we are up +30 bps at 50.4 euro cents. This all means the TWI-5 is now just on 63.1 and up +60 bps. The USD has slipped again to its lowest against the Chinese yuan since May 2023 and now under ¥7 to the USD
BITCOIN BATTLES RELEVANCE SLIDE
The bitcoin price is now at US$89,819 and down a mere -0.2% from this time yesterday. Volatility has been low at +/- 0.9%.
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16 Comments
NZD and 1 year swap breaking higher here. (or USD weaker depending on your bias)
All banks to raise mortgage rates next week?
Probably.
The correlation between the two recently is interesting.
This will help with tradeable inflation also.
Might do some of the heavy lifting for the RBNZ over the rest of the year if it continues.
Wondering if the price of fuel has been rated as tradeable now we are not refining locally, it at least the proportion changed.
Agreed, remember early on in this inflation blowout, Labour lowered tax on Petrol for a period. If petrol has a price spike in Singapore, the tax is a multiplier effect to CPI, I suggest Willis needs every cent to offset borrowing, but they would have to do the same if it was a global event causing a spike.
NZD going here is a direct market belief that the Sept 26 first OCR Lift is way to far out... swaps as well. Market now thinking that last cut was NOT Needed and RBNZ will be hiking much sooner. National will love this, its a bet that markets recovery will be in by Nov pretty much making them odds on to be re-elected.
"Market now thinking that last cut was NOT Needed and RBNZ will be hiking much sooner"
In my opinion the market was saying the last cut was not needed before the cut was made. As I voiced repeatedly on here at the time (and saying I wouldn't be surprised if we were talking about OCR hikes leading into the Feb meeting).
If we're heading into strengthening stagflation, I don't see it as a positive for the currently elected government.
Good thing the RBNZ is an independent entity
Doesn't seem to be much of a lift in swaps - perhaps markets already expecting this higher inflation number?
But that big move by Kiwi it smells of trailing buy stops, and resistance breakout model trading buying opens at the same time .
If that is reality the market was surprised and people stopped out and in due to it.
Also 60 is setting itself for an explosive move up if 60 is clearly broken. end of a long term down trend
Place your bets will Gold hit $5,000 first or will silver hit $100 first ...? Unimaginable levels a year ago
Silver futures hit USD99.20 today. And gold USD4,967. Few saw this coming.
The users of silver certainly are. Only a few weeks ago Elon came out and said “this is not good” regarding silver’s price rise.
Think gold will get there, doesn’t face the same manipulation as gold. Not a bad thing as gold to silver ratio would stay around 50
someone has been really burnt on that ratio
by profile | 16th Jan 26, 5:46pm
Gareth - why did electricity price go up in December when the generation cost was rock bottom? Where did the cost increase come from?
Electricity generation is still free now:
https://app.em6.co.nz/?stackedgwap.filter.gridZone=15&stackedgwap.filte…
"Murders fell 21% last year in 35 large U.S. cities — the biggest one-year drop ever and likely the lowest rate since 1900, Axios-reviewed data shows."
https://www.axios.com/2026/01/22/murder-rate-century-low
Cat, meet pigeons....
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