Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
None to report so far. Banks will be waiting the RBNZ OCR signals tomorrow to lock in their thinking.
TERM DEPOSIT RATE CHANGES
Liberty Financial raised rates today. This investment grade finco now offers 3.75% for a six month term, and 4.65% for one year. Higher rates apply for
CREDIT CARD FEES
Kiwibank has advised its customers that it will be changing fees for its popular AirNZ Airpoints credit cards, effective November 1, 2022. The "Low Fee" card will go from $25/year to $50/year. Their Standard card will fall from $65/year to $50/year. And their Platinum card will go from $170/year to $180/year. Currently you need to spend $160 to earn one Airpoints dollar. After November 1, you will need to spend $200 to earn one Airpoints dollar. These changes are all as a consequence of the Retail Payments Systems Act which is driving down merchant service fees. Also, see this explainer.
INFLATIONARY PRESSURES STARTING TO EASE
The latest NZIER Quarterly Survey of Business Opinion suggests that shortages for both skilled and unskilled labour are easing from the historically high levels of the past year. This is a trend the RBNZ will be pleased to see.
ALSO DRAGGING THE CHAIN
Yesterday we reported on September passenger car sales activity (down almost -11%, but very much twisted to high-cost NEVs and SUVs). Today we can note that commercial vehicle sales eased almost -8% in September from the same month a year ago.
ANOTHER POSITIVE DAIRY AUCTION?
At the last dairy auction on September 21, the WMP price was US$3,733/MT. At the Pulse event on September 28 it slipped to US$3,610/MT and a -3.3% fall. Tomorrow there is another full auction and there will be intense interest in this price - if for no other reason than this is the key driver of overall dairy prices. The WMP futures suggests that prices might actually rise to US$3,847 and a +3.1% gain since the last full auction. SMP futures suggest a smaller +2.0% rise is likely. On top of these, the NZD exchange rate could give a +3% currency boost as well.
NZ's TRADE LEADERSHIP IN THE CROSSHAIRS
In 2023, New Zealand will become the Chairman of the CPTPP again, the eleven nation trade group set up by the US, which Trump walked away from. Then China and Taiwan both applied to join, among others (like the UK). Progressing these applications comes with a huge dose of realpolitik. Australia and Japan are wary of China's application. China doesn't want the group to admit Taiwan. The UK can't seem to offer any good concessions making it worth having them in. All these issues come with intense lobbying and will come to a head during the (second) New Zealand chairmanship/leadership period. There will be a lot at stake.
MORE POSITIVE
Xero's Small Business Insight report for August reveals that wage pressures are easing and that jobs growth remains high. They also report that there is 'real' (inflation-adjusted) sales growth occurring again.
RBA TAKES THE SOFT OPTION
Update: The Reserve Bank of Australia wimped out, raising its cash rate target by +25 bps to 2.60% and half of market expectations of a +50 bps rise. More here.
SWAP RATES RETREAT FAST
Wholesale swap rates are probably down double-digits today on a widespread global shift led by the US Treasuries. But the key real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 3.87% settling in as we are now less than 24 hours away from the RBNZ OCR review. The Australian 10 year bond yield is now at 3.73% and down -18 bps from yesterday just ahead of their RBA announcement. The China 10 year bond rate is up +1 bp from Friday at 2.77%. The NZ Government 10 year bond rate is now at 4.15%, and down -15 bpd and well below the earlier RBNZ fix for this bond at 4.20% which was down -9 bps from this time yesterday. The UST 10 year is now at 3.64% and down -15 bps from this time yesterday.
EQUITIES SURGE HIGHER
Wall Street took off today in its first October session after the end of Q3. The S&P500 ended its Monday session up +2.6%. Tokyo has started its Tuesday session one better, up +2.7% in early trade. Hong Kong and Shanghai are missing out because both are on holiday today. The ASX200 is up +2.4% in early afternoon trade. Update: now up +3.5% after the RBA move. The NZX50 is only getting a quarter share, up barely +0.7% near the close.
GOLD RISES
In early Asian trade, gold is at US$1697/oz and a rise of +US$30 from this time yesterday. It closed in New York earlier at US$1701/oz.
NZD IN FURTHER STRONGER FIRMING
The Kiwi dollar has firmed from this time yesterday to be just over 57.1 USc and a gain of more than +¾c. Against the AUD we are up +30 bps at 87.9 AUc. After the RBA move we have risen further as the AUD is falling away. Against the euro we are now at 58.2 euro cents and up +¾c. That all means our TWI-5 is at 67.3 and up +70 bps from this time yesterday.
BITCOIN FIRM
Bitcoin is firmer today and is now at US$19,553 and a +2.1% rise.. Volatility over the past 24 hours has remained modest at just on +/- 1.7%.
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47 Comments
''Adjusted for inflation, Ian may be the second-most-costly storm to ever strike Florida, after 1992’s Andrew. A research firm, Corelogic, has estimated that the storm will incur as much as $47bn in insured losses – $22bn to $32bn in wind damage and $6bn to $15bn in flood damage.
“Hurricane Ian will forever change the real estate industry and city infrastructure,” an associate vice-president at the firm, Tom Larsen, asserted in a news release. “Insurers will go into bankruptcy, homeowners will be forced into delinquency, and insurance will become less accessible.”
And yet bizarrely sages on here often rant against the RBNZ now having climate change in its remit. I guess the obvious isn't obvious to those who cannot see..........
Frequency maybe not, but strength is increasing and expected to continue to do so.
https://www.epa.gov/climate-indicators/climate-change-indicators-tropic…
https://www.c2es.org/content/hurricanes-and-climate-change/
I'm a firm believer in man-made climate change and I believe we should do something. But you are right hurricanes are not a good proof. As he said there was a worse one in Florida 30 years ago and there would have been fewer inhabitants in 1992. Even if hurricanes were more frequent and stronger it would be far cheaper to build better houses than closing all fossil fuel electricity generation. Note the worst storms are near the Antarctic and Artic while the tropical Pacific Ocean is pacific. A 1 degree increase in average temperature is not a 1% increase in atmospheric thermal energy - you have to start from absolute zero so using the Kelvin scale it is under 0.3% not 1%. Please argue the case for global warming with the number of days you scrape ice of your car windows in the morning (in my case from over 20 a year to none this year) but stop mentioning hurricanes and forest fires because that evidence is very debateable. And the debate gets in the way of talking about solutions.
"the obvious" is that people should not have built in these areas in the first place and having the first disaster never be permitted to rebuild. Australia's suburbs built on known flood plains are another example.
It isn't the RBNZs job to be distracted from their primary task, we've seen how that ends over the last couple of years.
Nor is it any part of NZs local councils job to "declare a climate emergency", that's central Govts job.
CO2 makes people flee to Florida to escape the runaway global warming?
"In 1950 there were 445,397 homes in all of Florida. By 2019 there were 9,077,380 ...Think about that the next time you hear about the increase in “billion-dollar” disasters.
...At >$70 billion Ian would be a top-10 storm, but far off the incredible $260+ billion in losses were the 1926 Great Miami hurricane to occur today."
https://www.nature.com/articles/s41893-018-0165-2
https://rogerpielkejr.substack.com/p/series-making-sense-of-trends-in
Interesting link. It does seem telling that 10/25 (40%) of the costliest hurricanes using their normalised data have happened since 2000, i.e. in 23/123 (19%) of the years analysed
There does seem to be an increase of major tropical cyclones of around 8% per decade over the last 40 years: https://www.pnas.org/doi/10.1073/pnas.1920849117
"We conclude that the historical Atlantic hurricane data at this stage do not provide compelling evidence for a substantial greenhouse warming-induced century-scale increase in: frequency of tropical storms, hurricanes, or major hurricanes, or in the proportion of hurricanes that become major hurricanes."
Interesting news out of Australia this afternoon - with the RBA only moving the cash rate by 0.25% as the effect of interest rates starts to bite.
This is off the back of rapidly declining house prices and inflation starting to moderate in Aussie
https://www.smh.com.au/national/australia-news-live-optus-reveals-150-0…
The ball is in the RBNZ's court but id be genuinely surprised if they go .75% as was been predicted last week by a number of economists
Given most mortgages in Aus are floating it’s hardly a surprise that tightening monetary policy has flowed through to impact their economy quicker than here.
I suspect we will experience a massive delayed effect in the first half of next year. The RBNZ’s approach is not able to be as responsive as the approach in Aus.
Yep!
so if we think about responsiveness to monetary policy tightening, it would go like this:
Most responsive: Australia
in between: NZ
Least responsive: USA
which is suggestive that, all things being equal, Aus might stop tightening first, followed by NZ, then the USA.
of course it’s not quite that simple :)
Agree, time to get rid of those cards. Not worth it. Already wrote to Kiwibank. Other banks will follow I guess ...
What kind of regulation is that, when the fees go up, the benefits go down, and the surcharge we pay remains the same? Is that supposed to protect the consumer? Someone thinks we are stupid ...?
I would hope the surcharges merchants charge to allegedly cover their costs (they dont charge for cash, which costs to handle securely) drop as drastically as the interchange fees are legislated to drop, otherwise, there should be uproar and class action right?
"Everyone" knows, or should know, that rewards are paid for by merchant fees. Merchants benefit from higher spend when people use cards (not debating whether this is moral or not, but it is the case). Add in fraud and all that sort of stuff and the fact that large swathes of customers (rightly) repay in full each month, and I guess something has to give - rewards or fees or a little from both camps.
yeah fees added to purchase prices are coming down, lots of place now just add like 70 cents if you pay with paywave.
On a related note, any know why eftpos have not come out with a contactless option? They are just abandoning the debit card market to visa and mastercard.
What was behind big drop in German 2s yield? Same thing as Tbills in US. Collateral scarcity. Funny that stocks jump all over Fed pivot back in play without then taking too much account for why that is. Maybe they should check out SOFR. Link
It’s not just that this SOFR-LIBOR business offers definitive evidence for everything we’ve been saying this year (it has nothing to do with rate hikes!), SOFR goes way beyond representing a fundamental error. Fed was warned about SOFR. It's poison. Link
Currently you need to spend $160 to earn one Airpoints dollar. After November 1, you will need to spend $200 to earn one Airpoints dollar
I think you might have that wrong. Their email says platinum is going oin from 1 point per$80 to 1 per $125 and charge going from 150 to 170
Platinum card annual fee is now $180, comes with travel insurance, but I'm not going anywhere, so yes its getting more and more marginal, when you take into account the surcharges air nz charge when you pay with card,
Koru longe going going gone, its been harder and harder to earn enough points to get in there, the writing was on the wall, but its also a situation now where there is no advantage flying air nz, and there was, who is the looser Air NZ or Kiwibank?
Today’s Roy Morgan New Zealand Poll shows a potential National/Act NZ coalition has increased its lead over the governing Labour/Greens coalition in September to the largest margin for four months since May 2022.
https://www.roymorgan.com/findings/the-potential-national-act-nz-48-5-c…
Labour now <30%
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