What happened Wednesday

A review of things you need to know before you go home on Wednesday; more retail rate rises, food prices jump, business costs jump, rents up, Aussie Covid deaths rise, swaps flatter, NZD stable, & more

13th Oct 21, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
Although ASB said they were holding their floating rate for the rest of the year, not passing on the recent OCR increase, they actually increased their Back my Build rate by +25 bps today to 2.04%. The Police Credit Union added +30 bps to its one year fixed rate.

TERM DEPOSIT RATE CHANGES
The Police Credit union raised some TD rates today. And ASB raised their Fastsaver, On Call, Cash Pie and bonus savings rates.

ANOTHER COST OF LOCKDOWNS
Food price rises are increasing again, up +4.0% in September from a year ago when they were up +3.1% and in September 2019 up +2.1%. Prices for food also rise quickly in the 2020 April-July lockdown periods too and at about the +4% rate. In between the pressure eased. Fresh fruit and vegetable prices led the rises, probably because growers can't get the labour to harvest in lockdown conditions.

BUSINESS COST STRESS RISES
It is not just food that is rising in cost. Businesses' cost pressures remain 'extreme' and inflation expectations running over 3% according to the latest ANZ Business Outlook Survey that shows a net 85% of businesses are expecting higher costs. (However, overall, businesses remain confident about their own prospects.)

+5% ANYONE?
This overall cost pressure is expected to show up in the next CPI data for September, which is due out on Monday, October 18. It was up +3.3% in the June quarter. There will be little surprise if it rises more than +4% in the upcoming release. ANZ are picking +4.5%, BNZ +4.3%, but to be fair both are also seeing downside risks to economic activity which will constrain it further out.

RENT RISES RUMBLING
One cost that doesn't seem to be rising is the cost of rent, according to the Stats NZ rental price index. At least that is the case for those not shifting. The overall rent increase nationwide for existing tenants is holding at +3.2% pa (stock). It is not so happy if you want to move however (flow). Rents for these properties jumped +7.8% pa nationally, and that was held back by 'only' a +4.1% rise in Auckland. The fiercest rises are in provincial North and South island centers.

ALL NORMAL ON THE FRESH WATER FRONT
Auckland's water reservoirs are now 90% full, which is average for this time of year. Our hydro lakes are fuller than normal at this time of year. The Auckland situation is a sharp recent improvement, even though it hasn't been excessively wet recently.

HOW TO DO IT RIGHT
The FMA has issued new guidance on how firms should be advertising financial products.

CAN YOU HELP?
The RBNZ says it is developing an enforcement framework "to promote confidence and consistency in our enforcement decision-making and actions". An Enforcement Department was established in March, and now they want feedback on the principles and criteria to guide their enforcement decision making process.

VARIABLE
Japanese machinery orders slipped in August from July, which was a bit of a surprise. But year-on-year the improvement grew and the trend higher is still in place.

PANDEMIC UPDATE
In Australia Delta cases in Victoria have risen to 1571 cases reported there today, and that wasn't exactly expected. Deaths rose there to 13 yesterday. There are now 19,627 active cases in the state. In NSW there were another 444 new community cases reported today with another 309 not assigned to known clusters, and another unexpected rise. They now have 6,044 active locally acquired cases which is lower, but they had a sharp jump to 13 deaths yesterday. Queensland is reporting zero new cases again. The ACT has 58 new cases. Overall in Australia, more than 63% of eligible Aussies are fully vaccinated, plus 19% have now had one shot so far. There were zero new cases in New Zealand at the border, and 55 more in the community. So far, 59% of eligible Kiwis now have both shots, another 23% the initial shot. So far the New Zealand vaccination effort is faltering (82.7% of Kiwis nationally aged 12 and over and only rising slowly) and the Australian rate is also slowing with theirs now at 82.8% of all 16 year olds and over.

GOLD FIRMS
Compared to where this time yesterday, the gold price is up +US$6 at US$1762/oz in early Asian trade.

EQUITIES STILL SOFT
The S&P500 fell away again, down -0.2% today. The very large Tokyo market has also opened down -0.2%. Hong Kong hasn't opened due to a typhoon warning. Shanghai has opened -0.3% lower. The ASX200 is unchanged in early afternoon trade. The NZX50 is up +0.2% in late trade.

SWAP & BONDS RATES FLATTEN
We don't have today's closing swap rates yet. They probably rose slightly at the short end and fell at the long end. We will update this if there are significantly different changes when the end-of-day data comes through. The 90 day bank bill rate is up +2 bps at 0.68%. The Australian Govt ten year benchmark rate is now at 1.69% and down -3 bps from this time yesterday. The China Govt 10yr is now at 2.98% and up +1 bp. The New Zealand Govt 10 year rate is now at 2.08% (-6 bps lower from this time yesterday) and slightly lower than the earlier RBNZ fix for that rate at 2.09% (-4 bps). The US Govt ten year is down -3 bps at 1.58% although most of that fall happened overnight.

NZ DOLLAR HOLDS
The Kiwi dollar is holding at 69.3 USc today. Against the Aussie we are little-changed from this time yesterday at 94.5 AUc. Against the euro we are firmish at 60.1 euro cents. The TWI-5 is still at 73.1 and still in the middle of the 72-74 range we have been in for most of the past eleven months.

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BITCOIN HOLDS
The bitcoin price is now at US$56,341 and a slip of -1.1% from this time yesterday. Volatility in the past 24 hours has been higish at just on +/- 3.3%.

This soil moisture chart is animated here.

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Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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52 Comments

by CWBW | 13th Oct 21, 4:30pm 1634095832

Looks like A2 Milk is turning into your typical OTC penny stock class; filled with day traders and pump and dump professionals (read the spruik).

by Cowpat | 13th Oct 21, 4:49pm 1634096986

Bubs

by J.C. | 13th Oct 21, 5:47pm 1634100461

Short squeeze you reckon?

by custard | 13th Oct 21, 4:56pm 1634097382

“The RBNZ says it is developing an enforcement framework "to promote confidence and consistency in our enforcement decision-making and actions".”

Well, a bit rich me thinks - I would suggest it might be more to the betterment if they focused and markedly improved on the following "to promote confidence and consistency in our decision-making and actions”.

However, I, along with others sadly have very little confidence in their decision making and actions – it has become rather apparent that Orr and his lack of ability is simply not made for these times.

by MortgageBelt | 13th Oct 21, 5:07pm 1634098064

How many NZ businesses have failed or shut their doors for good over the last 5 months?

Several small businesses I spoke to today are on the verge of closing down. Cafes, motor mechanics, hairdressers, trades etc - all trying to provide physical world goods and services in a WFH virtual world.

https://www.rnz.co.nz/news/business/425053/covid-19-could-mean-10-000-b…

by custard | 13th Oct 21, 5:17pm 1634098634

Yes – I think the govt have lost the plot a bit here.

Case numbers to date show a very large percentage are under 29 – a big percentage under 12 – the numbers also suggest they mostly don’t end up in hospital.

Those that are in hospital are older and unvaccinated – thanks.

I know there’s cause and effect – but after around 8 weeks the end result of all this currently is a couple of deaths and we have 30 or so in hospital.

The human and economic cost of this is immense – and perhaps outweighs the above.

by HouseMouse | 13th Oct 21, 5:40pm 1634100040

Here here!

And most people here in Auckland are sick and tired of it. The government seems to hate Auckland, or at the very least deeply misunderstand it.

My 13 old daughter is just about going crazy, and she was pretty pissed off that there will be a delay in getting back to school and seeing her mates and doing all the activities that she loves.

Really over it, and this government.

by oldbloke1 | 13th Oct 21, 6:12pm 1634101942

That's right - it's being done out of spite, and there isn't a nasty virus about in the community - oh wait...

by HouseMouse | 13th Oct 21, 6:23pm 1634102632

And livelihoods are being destroyed every day.

And futures.

Such a devastating virus, it's like the plague! Wiping us out! All of 3 deaths!

Wow.

by nktokyo | 13th Oct 21, 6:31pm 1634103105

It's funny to hear people complaining about lockdowns in terms of how few deaths have occurred as a result of the lockdown.

That's the point.

by HouseMouse | 13th Oct 21, 6:40pm 1634103640

No that's not the point.

OBVIOUSLY I understand there would be many more deaths if we moved out of lockdown.

My point is the % of people who catch covid and die is extremely low.

I supported lockdowns up to a point, but that point has passed.

by Hardly | 13th Oct 21, 7:03pm 1634105039

An extremely low % multiplied by an extremely large number equals a very large number of deaths.

by Foxglove. | 13th Oct 21, 7:39pm 1634107161

In the last eight weeks what percentage of the hospital admissions were vaccinated? That is the question and that is the answer. By now that consideration must have been able to be analysed, a curve that will confirm that vaccination is actually reducing the potential of Delta collapsing our hospital system. If so it should have been published by now, the fact that it hasn’t, is worrying to say the least.

by custard | 13th Oct 21, 8:00pm 1634108416

https://www.health.govt.nz/our-work/diseases-and-conditions/covid-19-novel-coronavirus/covid-19-data-and-statistics/covid-19-case-demographics

The stats per the above are quite revealing, including:

Current outbreak hospitalised cases = 158

Number completely unvaccinated = 124

Number not eligible due to under 12 = 5

Number 1 dose to varying extent = 25

Number fully vaccinated to varying extent = 4

by Foxglove. | 13th Oct 21, 8:20pm 1634109653

Thanks, revealing certainly. Perhaps too, the 4 double jabbed had underlying conditions? But as a rule of the thumb, and feeding in overseas similar data, it is hard to see why the government is not accentuating this detail more specifically. As well, but appreciate you can’t change history, if only the vaccination push had commenced six months earlier.

by custard | 13th Oct 21, 9:38pm 1634114293

I thought this was interesting – this young age group make up around 60% of cases in the current outbreak – but make up only around 15% of those hospitalised.

Age Group Number of cases Percentage of Total

0 to 9 299 17.4%

10 to 19 346 20.1%

20 to 29 382 22.2%

Total hospitalised out of that age group is 48 out of a total 309 hospitalised.

Big scary daily case numbers need a little more analysing – in themselves they aren’t necessarily the end of the world.

by Galloleous | 13th Oct 21, 11:30pm 1634121038

Singapore is our best example.

https://www.moh.gov.sg/news-highlights/details/update-on-local-covid-19…-(12-oct-2021)

LOOK AT THE CHARTS. basically anyone under the 40-60 age group is unaffected.

by Uncle Bulgaria | 13th Oct 21, 6:34pm 1634103258

It is utterly amazing that you don't link low deaths to lockdown effectiveness.

by MortgageBelt | 13th Oct 21, 6:41pm 1634103672

Regardless of the anti or pro lockdown position, does anyone actually know the number of closing or closed or insolvent businesses over the last few months?

by HouseMouse | 13th Oct 21, 6:49pm 1634104191

Frankly, many here don't seem to care, probably because they are investors, or have cushy and safe jobs, or are comfortably retired. Nor do many seem to care about growing mental health issues. Who knows how many suicides have been triggered in the past couple of months, bet more than a handful.

by RandomKiwi | 13th Oct 21, 6:46pm 1634104014

They could have told teachers a few months ago they needed to get the vaccine. Rather than a week before Term 4. It's only our childrens education, no biggie.

by HouseMouse | 13th Oct 21, 6:50pm 1634104245

Yeah who cares about our kids and their mental wellbeing and futures!!!

by Albert2020 | 13th Oct 21, 10:14pm 1634116459

I would have thought that if teachers actually cared about their tamariki then they would have already got vaccinated without having to be mandated to do so.

by Hardly | 13th Oct 21, 7:02pm 1634104979

It’s tough the things we ask kids to deal with these days. In the olden days they might have starved to death or become orphans. Now days the trial is to stay at home every day with endless electronic devices, virtual communication with anyone in the world, and the entire internet at your disposal. Which generation had is harder? Nobody can say.

by HouseMouse | 13th Oct 21, 8:23pm 1634109822

Piss off. Total trivialization of the issues at hand. And a disingenuous comparison.

Humans are social beings, apart from very introverted people most humans need human contact.

by C_T_20 | 13th Oct 21, 9:36pm 1634114166

it’s tough we ask the people who should naturally expect to come towards the end of their natural life, live a few years longer, please, we insist, you must! At any cost…

by Becnz | 13th Oct 21, 6:31pm 1634103070

If we are not careful we are going to further cement big business structures like our supermarket duo which will further increase cost of living.

Just look at Z energy takeover and Sealord being told we don't need your products in our supermarkets.

We are gifting big business everything on a plate and they are going to want more assets now while debt is cheap.

On a side note from an investment point of view who donyou think will be next on NZX for a takeover target.

by nktokyo | 13th Oct 21, 6:32pm 1634103150

I think the ComCom hammer is yet to drop on the supermarkets

by Becnz | 13th Oct 21, 6:48pm 1634104103

The hammer will never drop we are more likely to get a new competition once our prices become so high that a new chain can open up a bit like what happened when Ansett Australia faced a lean Virgin Australia and could no lower costs quick enough.

I am starting to wonder if some of the major malls will start asking the likes of Aldi or the likes to move in to boost foot traffic as I have noticed a shift lately from malls back to stand a lone stores which may prompt malls to rethink their own survival.

by J.C. | 13th Oct 21, 7:24pm 1634106285

I very much doubt Aldi will enter the NZ market because of scale. Aldi and Lidl are already under threat in the UK from Siberian retailer Mere, which is offering products up to 30% cheaper.

by Becnz | 13th Oct 21, 7:46pm 1634107569

Any competition would be great may Costco will help in some areas like Gull has helped keep fuel in check.

by Becnz | 13th Oct 21, 6:36pm 1634103397

In my view I am starting to think this government finds small businesses annoying and has shown us during level 4 that your small butchers and green grocer's did not deserve the same as major supermarket's.

by HouseMouse | 13th Oct 21, 6:57pm 1634104669

Labour by name, but not by attitude and policy.

It's very obvious they care little for 'the small guys'.

by Squishy | 4th Nov 21, 1:46am 1635943592

I don't much think government cares at this point.

Interestingly my daughter, who now lives overseas, keeps getting letters about being vaccinated. I wonder how many of the "unvaccinated" no longer reside in New Zealand? It night be worth government cross-checking their database against border entry/exit records as they'll be waiting a long time for people to come back to be vaccinated.

by Rosenstein | 13th Oct 21, 5:41pm 1634100061

Looking forward to this round of election promises. What could they possibly drag out to get the huddled and weary masses out to vote for more beatings.

by HouseMouse | 13th Oct 21, 5:58pm 1634101111

More BS no doubt.

I've just become so jaded of politics and the parties, my plan is to escape the country in the lead up to the next election.

by MortgageBelt | 13th Oct 21, 6:26pm 1634102790

Stamp duty of $20k on private motor vehicle purchases. Regional travel restrictions.

Nationalisation & unification of all universities, schools, local councils, ECE etc - to join the hospitals, polytechs, water systems etc.

Farmers forced off their land. Full decolonisation.

UBI for all. SMEs issued with impossible compliance. All energy sources closed down.

That should incentivise the voters.

by MLSmith1 | 13th Oct 21, 8:19pm 1634109558

Love it… succinct summary of Labours policy

by C_T_20 | 13th Oct 21, 9:41pm 1634114510

Sounds just as appealing as mandatory vaccination and loss of a basic human right.

by J.C. | 13th Oct 21, 5:52pm 1634100768

Yen carry trade possibly back on the perennial favorites--the Aussie and the Kiwi. Mentioned about the carry trade to the MMT ultra-orthodox commentators here y'day. This is occuring partly because of the Antipodean bubble success.

https://tradersummit.net/focus-on-the-jpy-its-been-swift-and-fairly-bru…;

by custard | 13th Oct 21, 6:06pm 1634101565

“Auckland's water reservoirs are now 90% full, which is average for this time of year.”

Yet another pluvial miracle – as Auckland once again successfully navigates its way out of one of the wettest droughts in history.

by sharetrader | 13th Oct 21, 7:49pm 1634107756

two things

they now take a LOT of water from the waikato river,

and the west dams have been full and spilling water for months because they are on the west coast so as the clouds come in they dump the water when the hit the hills its the dams in the hunua's that are the problem, they are in the wrong place to get the best of NZ weather,

by Uninterested | 13th Oct 21, 7:55pm 1634108128

Nah. Not the wrong place. Just depends what angle the fronts come to Auckland at. Lows tracking below Ak vs lows tracking above Ak. Sure westerlies are the prevailing wind but they do not necessarily always bring the big downpours. Nor Easterly rainfalls. They can be absolutely massive.

by Mollie | 13th Oct 21, 6:44pm 1634103849

Just now. This is sad to see.

Here is Rob Fyfe lamenting the lost opportunities, the inaction of Government. How our lovely country is being left behind. Noting the extra $$ Billions this is costing us all and all our children.

https://youtu.be/pj9RC6Wxpp0

So sad this great voice is within government, but clearly unheard, or ignored.

by Nifty1 | 13th Oct 21, 7:29pm 1634106594

So when's an actual decision going to be made on covid.... Are Labour going to make any 'bold' moves or are they just keep us in this weird space where things slowly get worse...

by Becnz | 13th Oct 21, 7:52pm 1634107977

No doubt we will need many working groups and highly paid consultant's to tell them in August next year that we will follow Australia and have to live with it now and we should invest more in our healthcare systems but we spent it all on wage subsidies and will have to use motels\hotels instead.

Sounds just like how they have handled housing market😭

by Nifty1 | 13th Oct 21, 8:07pm 1634108873

At least we have journalist holding the government to account. This was a prime example, sounded like a herd of kids... https://i.stuff.co.nz/national/health/coronavirus/300429446/covid19-gov…

The consistent laughing and blazzee attitude is unreal...

by HouseMouse | 13th Oct 21, 8:31pm 1634110283

I have a certain fondness for my hometown, but that fondness doesn't extend to the weird, cliquey bureaucratic / press bubble that exists down there...

by HouseMouse | 13th Oct 21, 8:41pm 1634110894

Not too stressed down there, with level 2 they have relative freedom

by HouseMouse | 13th Oct 21, 8:30pm 1634110202

In property, the big news today is release of Wellington's new District Plan - where's the coverage?

I hope those investors listened to me and bought up in the 'right places' in Wellington, where huge new development rights are being enabled. That will boost the Wellington property market.

Then Auckland will get the boost around middle of next year as well. Savvy and informed investors would have already bought.

by northman46 | 14th Oct 21, 6:49am 1634147353

Wellington's a moldy dump. You can keep it.

by Squishy | 4th Nov 21, 1:22am 1635942134

It is not so happy if you want to move however (flow). Rents for these properties jumped +7.8% pa nationally...

I think it's been pretty well signalled that rents would rise substantially over the next few years due to recent government intervention and a very tight rental market.