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
No changes to report. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
No changes today here either, so far. All rates less than 1 year are here, for 1-5 years, they are here.
TURNING LOWER FAST
Residential sales commissions were savaged in June and the outlook for July is not much better. But because April & May were ok, overall Q2 commission levels held their own.
KIWIBANK SENTENCING IN OCTOBER IN COMCOM CASE
Kiwibank is set to be sentenced on October 17 after pleading guilty to criminal charges brought by the Commerce Commission under the Fair Trading Act. The charges came after Kiwibank self-reported to the consumer watchdog. The bank is undertaking a remediation program after overcharging some 36,000 customers more than $7 million for fees and interest rates in relation to home loans, credit cards and overdrafts between 2019 and this year. The 21 charges each have a maximum potential penalty of $600,000.
DAIRY PRICES ON THE BACK FOOT?
There is another dairy auction tomorrow morning and it promises to be another tough one. The June 18 event fell -0.5%, the July 2 event fell -6.9% and the signals from the dairy futures market point to lower prices again. This signals suggest SMP could be down another -2% and WMP could be -6% lower tomorrow. If that is the case it will bring the string of lower prices for SMP and WMP to seven consecutive events (full and Pulse). It is unlikely the analysts who monitor these prices for their farmgate payout forecasts can overlook this trend. Still, tomorrow's auction hasn't happened yet, so it may not turn out to reinforce the recent trend.
OCR CUTS ON THE FRONT FOOT?
Tomorrow we also get the key Q2-2024 CPI result. Join us at 10:45am for full coverage. This may well indicate how likely OCR rate cuts are in 2024. Financial markets have a 50/50 chance the first -25 bps one will come on August 14 (ie in a month), and a full chance of the first one by October 9, then another (or even -50 bps) on November 27, and in fact maybe a further -50 bps on February 19, 2025. So these markets have priced in an OCR shifting down to 4.50% by mid February. Tomorrow's CPI data is keenly awaited. More here.
INSURANCE PREMIUM RISK RISES
The Insurance Council has told Parliament’s Finance and Expenditure Committee that natural hazard events and risks are affecting global reinsurers’ view of NZ. There are coverage capacity limit and premium cost implications here.
COMCOM STILL WORRIED ABOUT FOODSTUFFS MERGER
The Commerce Commission says it’s still not satisfied that the proposed merger of the two Foodstuffs co-ops won’t have the effect of “substantially lessening” New Zealand's grocery competition. ComCom released its Statement of Unresolved Issues (SOUI) on Tuesday where it again outlined concerns with the proposed merger. ComCom says if the Foodstuffs merger is cleared, it will create the largest acquirer of groceries in New Zealand which means many suppliers will be selling most of their output to just two major grocery retailer customers – the merged entity and Woolworths – rather than the existing three. ComCom is concerned that this will increase buyer power, worsen the bargaining imbalance between suppliers and the Parties, and significantly reduce competition in the grocery markets. ComCom is set to make a decision on if it will clear or decline the proposed merger by the 1st October but says this date may change as its investigation progresses.
RABOBANK FILLS ITS BOOTS
Rabobank NZ (Branch) originally launched a 5 year NZD bond issue seeking $175 mln. Then it offered over subscriptions of another $75 mln. And now it has raised that again to a total issue of $350 mln. The offer was filled with a yield of 5.31% pa being +85 bps over the 5 year swap rate.
SWAP RATES SETTLE LOWER
Wholesale swap rates are likely to be marginally softer again today with downside risk. Our chart below will record the final positions. The 90 day bank bill rate was little-changed at 5.55%. The Australian 10 year bond yield is down -7 bps from this time yesterday at 4.30%. The China 10 year bond rate is little-changed at 2.26%. The NZ Government 10 year bond rate is down another -5 bps at 4.46% and the earlier RBNZ fix was at 4.41% and down another -8 bps from yesterday. The UST 10yr yield is down -2 bps at 4.22%. Their 2yr is now at 4.45%, so that curve is now a bit more inverted, by -24 bps.
EQUITIES MIXED
The NZX50 is little-changed today from yesterday in late trade. The ASX200 is down a minor -0.1% in afternoon trade. Tokyo has opened its Tuesday trade up +0.5%. Hong Kong is down -1.2% however is a sharpish retreat. Shanghai is down -0.3%, as is Singapore. Earlier, Wall Street rose +0.3% on the S&P500. That remains high but is not an ATH. But the Dow did hit an ATH, and the Nasdaq touched that benchmark too.
OIL LOWER
The oil price is down a bit more than -50 USc at just under US$81/bbl in the US, and now just on US$84/bbl for the international Brent price.
GOLD FIRM
In early Asian trade, gold is virtually up +US$16 from this time yesterday at US$2426/oz.
NZD EASES FURTHER
The Kiwi dollar is down -½c from this time yesterday, now at 60.5 USc. Against the Aussie we are down -20 bps at 89.8 AUc. Against the euro we are down another -40 bps at 55.6 euro cents. This all means the TWI-5 is now just on 69.3 and down -40 bps.
BITCOIN RISES STRONGLY AGAIN
The bitcoin price is up +3.6% from this time yesterday at US$68,649. Volatility of the past 24 hours has been moderate at just on +/- 2.6%.
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111 Comments
Building and Housing Minister Chris Penk wants to roll back insulation standards that save a new home an estimated 40 percent on heating.
Ideological madness.
Seriously, both words. Ideological - and madness.
Firstly, his cost claims are b/s. Secondly, we are heading into an era of permanent energy reduction; insulation is b hard to retro-fit. On behalf of ALL future generations, I suggest the Minister matures. Or resigns.
A builder I used on my last couple of homes told me about a multimillion dollar passive house he built in wgtn around 5 years ago (triple glazed euro windows, insulated foundations, compliant +ve pressure & #airchanges/hr etc). House couldn't breathe, opening a window breached passive & aircon on continuously to cool to livable temp.
Edit: he built a home for me at the time & I had insulated slab with hydronic UFH (heat pump), increased external wall framing to 140mm & added 50% extra insulation, double glazing with thermal break. Plenty comfortable and energy efficient.
You can build a house with excellent thermal performance and comfort, without it being a branded "Passive House". That seems to be a company selling that badge. The problem with them is that if you open a window the system don't work.
Our house is built wide and to catch natural sun. With good thermal mass. Masses of insulation. In summer we have a great grapevine to keep the sun out. Leaf fall comes then at the exact right time you want the sun in. (Or you can use shade sails). Wide and narrow lets you open windows and the breeze blows through. Rural Central Otago.
After good insulation the best thing you can do is wise window placement.
Two stories?
If so, keep a few windows open upstairs (bathrooms are ideal). Hot air rises and will be drawn up from the lower stories keeping it cooler. Open the windows in the downstairs rooms you're using and outside air will be sucked in. If you want to get really clever, open southern windows downstairs to get the coolest air. You may be surpised how effective this is.
My place is better than most in the development as it is at the end of a row of terraces and therefore has three external walls. But it’s still not great. But the homes with only two external faces are diabolically hot in summer. And especially the three storey ones.
HM: "These things make minimal if any difference, especially during summer in Auckland when ambient temperatures are warm and humidity is high."
So you're saying that for the few weeks in the summer when it's hot and humid in Auckland then the design, shape and size of the dwelling makes little difference?
So ... nothing to do with terraced houses in particular then? Just Auckland weather? As an Aucklander, I'd agree. Close all the windows, switch the heat pump to cool (or dehumidify) and enjoy. Or go to the beach. In a few days it'll be back to Auckland's normal.
Thanks for the reply.
I wanted to draw you into the fact that hot air goes up. ;-)
This is where 6+ storey buildings really work. They draw hot air up. A lot. So much so, that designers have to be careful at lower levels a draft is not created.
"Sausage houses" - what Auckland is developing now? Saddening. Short sighted. Only good for a generation.
After 19 years our ducted multi-split heat pump system packed up. Because the current R410A refigerant no longer meets Global Warming Potential regulations its a complete new install at an estimated $25k. It gets used about 100 days a year. In the interim we bought a couple of oil heaters for $150 each and they do a better job to be honest, 4 hours a day until the sun takes over. At $25k its unlikely we will do the new install and If we do the refigerent will again be obsolete in 8 years time as the GWP limits are further lowered. We will miss the summer cooling though. Windows open and screens on the windows or mosquito nets will be the fix.
Maybe you should read the articles you put up, rather than quickly searching for self-reinforcing words.
Cost. As you should be aware, this is irrelevant; we are entering a period where energy will be at a premium - to the point where the 'economy' probably falls over via unassuageable debt. None of those articles address that point.
Secondly, Passivehaus is indeed over the top, but that's not what we are talking about here. Passive solar, for the record, is quite different.
Thirdly, we aren't at 4-5 inches; we have a schedule of R-values per location, don't we?
And for the person claiming 'too hot' - open an effing window. How many days would that apply, compared to marginal days? Nonsense.
The ceiling & wall increase is good, thermally broken windows is good, those are probably worth the cost…the additional foundation insulation/slab edge is pretty average for what it costs. The fact we insulate the hell out of houses but then don’t ventilate them well is also a bit dumb. I’m torn on this one.
Yes indeed.
On a personal level we were very irked with our new build we were not offered triple glaze windows, no solar panels and battery.
Building off the plan, may simplify if one's moving from down south to the big smoke but the sundried brick homestead on the farm was better insulated than what we live in now.
We may have a water tank, but we do not have enough public transport in the area, no access to trains and I just got the no for a renewal of my drivers licence on the upcoming 75.
Thirdly, we aren't at 4-5 inches; we have a schedule of R-values per location, don't we?
Not anymore. R6.6 in all ceilings. Thats like 300mm thick. More than double the prior standard. Can’t fit that in a standard roof framing detail.
We can’t really afford the building code anymore.
A contaminated cooking oil scandal in China has provoked outrage and raised fears over safety.
Dr Matheson commended China's national government for recognising the need to invest significant resources in tracing contaminated products and stopping similar incidents from happening again.
"The question now has to be: 'How long has it been going on for, and how much of it's been exported already that could be in the Australian market?'" he said.
https://www.abc.net.au/news/2024-07-13/cooking-oil-contaminated-china-s…
It's very hard to tell as a layman how much of what the insurance industry is saying is the truth. How much is just that there has been intense consolidation permitted in insurance after the Christchurch Earthquakes so they now have consumers over a barrel when it comes to taking profits and how much is genuinely increasing risk?
None, whatsoever. As long as property prices rise (which isn't Inflationary, by the way), that's all that matters. I mean, we'll all be able to afford $4 per litre petrol if we can borrow so much more against the increased collateral. And the running cost of all that new Debt will be so much easier with lower rates.
Cat, meet pigeons.
Treaty of Waitangi is inappropriate, Seymour tells Pharmac
https://www.rnz.co.nz/news/political/522294/watch-considering-treaty-of…
"Pharmac's role should focus on delivering improved health outcomes underpinned by robust data and evidence, in accordance with its statutory responsibilities," he wrote.
"This should serve all New Zealanders based on actual need, without assigning their background as a proxy of need."
Fair and equitable, whats the issue
Congratulations Mr Seymour. Sense at last.
Working in health the nominated ethnicity of a person is the least useful thing you need to know before dealing with them. The idea that folk of some declared ethnicity are all the same (Maori? Brazilian? whatever) It's quite racist to make such assumptions, and worse is quite misleading about how the person is.
What you need to do is deal with each person as they are. Each is quite different and yes you need to adapt.
If you need to think in groups, think of our nation as five million groups, all quite different, with each a membership of one.
Yesterday I saw an ad for some yoga classes, but they specifically barred white people from attending (everyone else was welcome). Reverse racism has now been completely normalised in this country. It wont be long before South African style farm murders start, and white people start fleeing to Australia.
Perhaps someone(s) who misinterpreted this?
"The cultural appropriation of yoga has been going on for decades, and as a yoga teacher and Indian immigrant living in the United States, there has been no escaping it. For many years, I didn’t say much about what it feels like to have one’s heritage stolen and misused in yoga spaces...To fully understand the cultural appropriation of yoga, we first need to know what yoga is. Yoga is a spiritual practice...In the case of India, specifically (the birthplace of yoga), it’s helpful to consider that it was colonized for centuries by everyone from the Portuguese to the Dutch, the French, and, finally, the British, who initially came on the pretext of trade and ruled for nearly 300 years. ..."
https://yogainternational.com/article/view/how-we-can-work-together-to-…
“The feedback we’re getting from retailers here, and also elsewhere [in Auckland], is it’s some of the toughest trading conditions that people have ever experienced. And we’re talking people who have been trading for something like 30, 40 years, so that says a lot really"
“I think the biggest problem really is [the] cost of living crisis right now off the back of what we’ve been through for the last few years."
“A lot of businesses are doing it so tough, cashflow is so tight if not non-existent.”
- Newmarket Business Association chief executive Mark Knoff-Thomas
https://www.nzherald.co.nz/business/popular-newmarket-auckland-retailer…
Had lunch with a mate today who does a bit of small scale residential property development. He has a site in a low-medium value Auckland location. The plan is to build 7 x two bed townhouses on the site. Pretty compact - about 70 square metres each.
Chatting it through he will need to sell them for circa 800K each to make a reasonable profit with risk contingency built in.
He will need pre-sales. We agreed that retail interest rates will need to be no more than 5-5.25% before there will be interest in these homes. That means an OCR circa 3%.
he will advance designs and seek consent. But knowing that it may not be till late 2025 / early 2026 that interest rates will start getting low enough to secure pre-sales. And even then there’s no guarantees.
Just an anecdote highlighting that residential construction is likely to be pretty sickly until early-mid 2026 at the earliest. But also that there may be some light at the end of the tunnel.
Why?
Assuming, in addition to land cost:
- sq m build costs of $4500
- services build and installation, landscaping etc
- connections and development contributions circa 30-35k per dwelling
- professional service fees
- profit margin 25%
- GST 15%
- agents / legal fees
yeah 750k might be doable, but he has some contingency built in too
disagree with any of these costs?
What I have laid out are pretty standard cost assumptions for fairly typical suburban sections, without big challenges around slope, services etc. Obviously they can vary site by site. But these are the assumptions for this site. I should have mentioned that there is a bit of slope, adding some costs in terms of retaining.
Perhaps you could tell me what you think is fundamentally wrong with these numbers? Since you have said you do some development.
Look forward to your views. Hey, if you think build cost of $3500 is becoming the norm, then that’s good intel
Usually if someone makes a claim the burden of proof is on them. But it's pretty simple.
Wearing head protection is better than not wearing head protection
Head protection is not an invincibility shield.
In summary, while headgear and helmets may not reduce the risk of concussion, there are still good reasons to use them. In collision sports, they reduce the risk of soft tissue injuries and do not appear to create any adverse effects. In sports where a hard-shelled helmet is used, for example, cycling, snow-sports and in equestrian, they reduce the risk of other types of head and face trauma.
the American Academy of Neurology states that football helmets reduce the risk of skull fracture by 60 to 70 percent and reduce focal brain tissue bruising by 70 to 80 percent.
Maccy B with some DGM on NZ (and some nice graphs+ data):
https://www.macrobusiness.com.au/2024/07/reserve-banks-recession-steepe…
It is still amusing though how many people and media assume declines in GDP per Capita and consumer spending is somehow the RBNZ's failure.
They want to crush inflation by crushing the population's desire and ability to spend. So from their perspective, they're being highly effective.
The economy managed to survive in spite of a sudden shutdown and then gradual re-establishment of commerce.
They don't really have a model for something like that so they threw the kitchen sink at it.
Now they have a model to refer to next time.
Maybe the question to consider should be, if the RBNZ and the government both went hands off and let COVID era economics run on their own, how much worse off would we be? I'm thinking quite a bit, but maybe we'd be into recovery mode now.
Didn’t think I would ever see a joint statement from Aunty Helen and Uncle Don!
https://www.stuff.co.nz/politics/350342468/live-politics-old-political-…
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