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/LOAN RATE CHANGES
Heartland Bank raised the interest rate on their reverse mortgages, from 9.75% to 9.98%.
TERM DEPOSIT/SAVINGS RATE CHANGES
General Finance changed rates today, both up and down depending on the term.
UNDERPERFORMING
Despite a small uptick in new order levels, factories contracted more in September than August and the factory PMI is now at its lowest level in two years - and apart from the pandemic interruptions, is down to levels not seen since the GFC. It has been a steady downward slide since April. Demand is softening, production levels are weak, and stocks are higher than they should be. It's an entrenched contraction now.
HOUSEHOLD BUDGETS TIGHTEN SHARPLY IN SEPTEMBER
The monthly data that tracks retail sales is cooling off quite quickly now. If we realise that immigration has raised the population by more than +2% over the past year, and that inflation has upped prices by about +6%, then knowing that the value of retail electronic card transactions rose by only +1.6% in the same period will paint a picture very tight household budgets. As Westpac analysts note, "households are splashing out more cash, but taking fewer goods home with them." From August to September, the retail data actually fell -0.8%.
TIME TO DECIDE
Don't forget to vote. The final election policy releases are done. Our policy comparison tool is getting well used. And our final campaign wrap-up is here. All polling places will be open on Saturday, October 14 until 7pm. 50% of votes are expected to be counted by 10pm, 95% counted by 11:30pm that same day.
RESPONSIBLE INTERNAL FINANCIAL MANAGEMENT
For the year to June 2023, the RBNZ's Annual Report revealed that its total assets shrank from $93.9 bln in 2022 to $88.9 bln in 2023. It earned +$4.3 bln in interest income and paid out just under -$4.0 bln interest on its liabilities. It spent $159 mln in operating expenses, up mainly due to a $14 mln rise in staff expenses. Overall, it reported a modest surplus of +$202 mln although that is not the point of it as a regulator. But at least it didn't spend more than it earned.
WESTPAC SINKS MORE MONEY INTO FINTECH AKAHU
Red Bird Ventures, Westpac NZ's venture capital fund, has made a second investment in fintech firm Akahu, leading a $1.4 million investment round alongside co-investors K1W1 and NZ7 Investments. Red Bird first invested in Akahu in late 2020 and owns about a third of the business. A Westpac NZ spokesman says Akahu is free to and encouraged to work with other banks.
ANOTHER NZ50 MEMBER TO DEPART?
SkyTV (SKT, #40) has disclosed that it has received a non-binding takeover offer.
INFLATION EVAPORATES
In China, consumer prices were unexpectedly unchanged in September from a year ago, missing market forecasts of a +0.2% gain. Meanwhile their PPI fell -2.5% in September from a year ago.
SWAPS RISE
Wholesale swap rates are probably much higher today. But the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps at 5.70% and now +20 bps above the OCR. The Australian 10 year bond yield is up +11 bps from this time yesterday to 4.48%. The China 10 year bond rate reversed yesterday's rise, down -3 bps to 2.73%. The NZ Government 10 year bond rate is up +11 bps to 5.54%, and still above the earlier RBNZ fixing of 5.41% which was up +6 bps today. The UST 10 year yield is back up +11 bps at 4.68%. The UST 2yr is up +7 bps at 5.06% as the curve inversion widens further.
EQUITIES MOSTLY HAVE A GOOD WEEK
The NZX50 is down -0.9% in late trade today and erasing all the earlier gains in the week; it is heading for a -0.8% weekly retreat. The ASX200 is down -0.3% in afternoon trade on its way to a +1.7% weekly rise. Tokyo has opened down -0.3%, however if it holds that it will record a strong +4.5% weekly gain. Hong Kong has opened .... But Shanghai is ... at their open. On Wall Street earlier today, the S&P500 ended down -0.6% in their Thursday session and up +1.0% in the first four days of this week.
GOLD SLIPS
In early Asian trade, gold is now at US$1872/oz and down -US$6 today. It closed earlier in New York at US$1869/oz and earlier still in London at US$1874/oz.
NZD SHARPLY LOWER
The Kiwi dollar has fallen -1c today to be now at 59.2 USc. Against the Aussie we have slipped slightly to 93.7 AUc and against the euro we are down -½c to 56.2 euro cents. That means the TWI-5 is down -60 bps at just under 69.5.
BITCOIN ESSENTIALY HOLDS
The bitcoin price is a bit firmer today, now at US$26,816 and up +1.0% from this time yesterday. Volatility over the past 24 hours has been low at just under +/- 0.7%.
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52 Comments
CPI will remain high in NZ for a couple more quarters at least off the backs of higher fuel, accommodation and food prices.
Ultra-high migration has achieved f-all in capping wage inflation despite all the promises.
Regardless of the election outcome tomorrow, no party has a solid plan or even the intention to improve our crammed infrastructure and broken markets.
More mighty stuff from Chis Joye unpacking what's really going on in Aussie. My money's on CJ over the govt and RBA propaganda. Chris says "The Reserve Bank of Australia likes to spin that “most” borrowers are fine, but between 15 and 20 per cent are in trouble."
Although more than 80 per cent of fixed-rate borrowers have spare savings to cover more than three months of scheduled mortgage repayments, and about two-thirds have savings to cover at least 12 months of repayments, almost one in five fixed-rate borrowers do not.
In the RBA’s sanguine words, “there is also a smaller share of fixed-rate borrowers (less than 20 per cent) who will roll off onto higher interest rates with much lower savings buffers, equivalent to less than three months of scheduled mortgage payments.
https://www.afr.com/wealth/personal-finance/one-in-five-borrowers-screw…
Ray Dalio: Another step toward international war
https://www.linkedin.com/pulse/another-step-toward-international-war-ra…
I don’t think a global war is as precarious as he suggests. Nothing to back my position other than a global war being in no one’s interests.
Some nasty regional stuff is certainly a real chance.
If he thinks a global war is a 50% chance I assume his investment positions are very defensive
The biggest difference this time is the "global south" has started to believe that the US or NATO can be beaten militarily. Israel has also had more casualties in a war than they have had for 50 years just in the opening days, mostly up against just Hamas.
I think Hamas have decided to roll the dice and see if they can get the Arabs (and most importantly Iran) into the war to defeat Israel and Hezbollah in the very least seem up for it. After the failure of air defense in Ukraine, there is good reason to believe that those aircraft carriers the US and others have brought in can be easily sunk.
How sure are you that the countries that Israel repeatedly threatens or attacks might not back down as Gaza's civilians get bombed without military justification?
“people dying in the fighting is the marker that almost certainly signifies the progression to the next and more violent civil war stage, which will continue until the winners and losers are clearly determined.”
Think of this in the context of Israel. Most people are generally unaware of the inner turmoil that country has been going through. People seem to believe that Israelis all think and believe the same thoughts. The footage of the Orthodox protesting for Palestine and against the Israeli state is telling.
Japanese Admiral Isoroku Yamamoto, who planned the attack on Pearl Harbor would reportedly write in his diary, “I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve.”
Sending a missile toward an American carrier would have far bigger implications than just damaging the ship
Yes, they would sink it and then the hot phase of WW3 would start. All those US bases in the ME with well known locations will come under attack from drones and land simultaneously as well. Russia gets dragged in through Syria and China makes sure no one runs out of weapons.
Arab states would not be taking sides like they are now unless they were confident.
That's why they get paid the big bucks. Never hit their targets and laugh all the way to the bank. Tough luck taxpayer.
The remuneration table from the RB Ann Report. 11 senior managers being paid $300-399K & another 11 getting more than $400k. All this while inflation is going to be well outside the target range for a 3rd year in succession. Accountability & restraint are simply unknown concepts"
DC is very forgiving.
"It spent $159 mln in operating expenses, up mainly due to a $14 mln rise in staff expenses. But at least it didn't spend more than it earned."
Aussie corporate insolvencies reaching their highest level since 2015 with construction leading the way -- builders have been squeezed by fixed-price contracts on existing projects and reduced demand for new work.
https://www.livewiremarkets.com/wires/corporate-insolvencies-head-higher
Much as it pains me, as a DGM Death Cultist, to admit it, when things really break I could see govts just giving up on inflation (other than lip service) and holding rates as low as they can justify. But based on life experience there is no way I'm going to trust my luck.
The extreme concentration of economic power these days makes predictions really hard (for me, anyway).
Also, thou art a heretic, be gone with thee.
Much as it pains me, as a DGM Death Cultist, to admit it, when things really break I could see govts just giving up on inflation (other than lip service) and holding rates as low as they can justify.
Destroying the power of people's purchasing power. To save their own asses and reputations.
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