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 (ALL CUTS)
Kiwibank has cut its fixed rates today, but only to where its main rivals have already settled to. SBS Bank also cut all its fixed rates, with their 2 year down to a market-leading 5.89%. In addition, they announced their floating rate reduction. ICBC cut all its fixed rates today All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES (ALL CUTS)
Kiwibank also cut its term deposit rates hard as well, but again, only matching the cuts from its main rivals. ICBC also cut its term deposit rates for terms 4-18 months. SBS Bank cut its TDs and savings account rates. Rabobank cut all TD rate for terms 1 year and longer. They also reduced their savings and Notice Saver rates. All updated rates less than 1 year are here, for 1-5 years, they are here.
BRIGHTER OUTLOOK FOR DAIRY INDUSTRY
Dairy prices rose +5.5% in USD terms. Even though this just takes us back to levels just a few weeks ago, it has changed the view of many analysts who now see upside potential to their farmgate payout forecasts. In fact BNZ nudged their up slightly today. The NZX's seasonal calculator is now running higher than all the analyst forecast levels. Maybe one aspect encouraging analysts is the strength of the return of Chinese demand in today's auction.
UNCHANGED
Fitch Ratings said it has affirmed New Zealand's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'AA+' with a Stable Outlook. That remains just one notch below AAA.
RBNZ CONSULTING ON DEPOSITOR STANDARDS & CRISIS MANAGEMENT
The Reserve Bank is consulting on policy proposals for a range of standards under the Deposit Takers Act, and has released an issues paper on the crisis management framework in the Act. The RBNZ notes the DTA, passed last year, modernises NZ's crisis management framework by formalising the RBNZ's role as the resolution authority, establishing a Depositor Compensation Scheme, and providing additional powers and tools to deal with entities in distress. Both consultations are open until Friday, November 22.
CREDIT CARD INDICATORS TAME
Credit card transaction and balance data for July reinforce the stunded nature of consumer demand, but also that this data isn't going backwards. And the stress indicator - the proportion of credit card debt incurring interest - isn't worsening materially either.
DOMINANCE HAS ITS REWARDS
IAG NZ's annual gross written premium surged +15% to $4 bln and their insurance profit jumped to $500 mln. in the year to June 2024. Defensively, their local CEO says insurers need to ‘balance out the bad years with the good’. IAG is a dominant general insurer. Based on ICNZ data, IAG's local; $4 bln premium income means it has at least two-thirds of the market, possibly more.
A WEALTH ADVANTAGE
The Sam Knowles-chaired Wellington fintech Adminis has signed up with BNZ to use their API on their platform, one that focuses on wealth managers, fund managers, self-directed investment platforms, and wealthy private individuals as clients. This FX dealing API allows Adminis clients 24 hours a day, 5½ days a week - from the opening of the NZ market to the close of New York - to trade currencies and manage risks even when local markets, such as those in New Zealand, are closed overnight. This access spans major FX markets across the USA, Europe, and Asia. Adminis main shareholder is Somers Ltd, a Bermuda investor in financials and one of these is Resimac.
EARNINGS SEASON UPDATES
Our NZX50 profiles have been updated today with the recent release of full year results to June 30, 2024 for EBOS (EBO, #8), SkyTV (SKT, #46), and Fletcher Building (FBU, #17).
NEW FEATURE
Check out our new quick update of how the NZX is faring today, as at 3pm. We welcome comments on that update story.
STRESS MEANS HIVING OFF THE GOOD BITS
Construction giant Fletcher Building (FBU, #17) said it is seeking 'capital partnership' options for its residential development business. It has retained Jarden to look at options for this business division as the group reports a larger-than-expected -$227 mln loss for the June financial year. FBU shares were down as much as -7.6% and one point but are now down -3.9% near the end of trade. So far in 2024 they are down -31% with most of that big fall happening by May.
SWAP RATES HOLD
Wholesale swap rates are probably little-changed today. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 5.25%. The Australian 10 year bond yield is down -4 bps at 3.92%. The China 10 year bond rate is down -3 bps at 2.13% and Beijing can't seem to halt the rally. The NZ Government 10 year bond rate is down -4 bps at 4.22% and the earlier RBNZ fix was at 4.16% and down -5 bps from yesterday. The UST 10yr yield is down -6 bps from yesterday at 3.82%. Their 2yr is now at 4.00%, so that curve is now inverted by -18 bps.
EQUITIES ALL EASE LOWER
The NZX50 is down another -0.4% in Wednesday trade. The ASX200 is also down -0.4% in afternoon trade. Tokyo has opened down -0.7%. Hong Kong is down -0.8% at its open. Shanghai is down -0.2%. Singapore is down -0.3% at its open. The S&P500 ended its Tuesday session Wall Street down -0.2%.
OIL EASES
The oil price is down -50 USc from yesterday at just under US$73/bbl in the US, and at just over US$76.50/bbl for the international Brent price.
CARBON PRICE STAYS UP
Today the carbon price is still up at $60/NZU today in reaction to the Government announcement that future NZU releases will be sharply trimmed back. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD FIRMER
In early Asian trade, gold is up +US$19 from yesterday, now at US$2518/oz and a new high.
NZD FIRMER AGAIN
The Kiwi dollar is up another +40 bps from this time yesterday, now at 61.5 USc. Against the Aussie we are up +20 bps at 91.2 AUc. Against the euro we are also up +10 bps at 55.3 euro cents. This all means the TWI-5 is up +20 bps from yesterday at 69.4.
BITCOIN SLIPS
The bitcoin price has fallen -1.8% from this time yesterday, now at US$59,408. Volatility of the past 24 hours has been moderate at just on +/- 2.3%.
USE OF AI
No articles on this news service are produced with AI. Occasionally we use AI to derive images. They are always identified in the attribution.
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72 Comments
and in the popcorn show that is the presidency, we get this ... written in all seriousness
"A quick recap of today’s proceedings: After being given a rockstar welcome, former president Barack Obama praised Joe Biden and urged decency before launching into Donald Trump’s character failings."
https://www.theage.com.au/world/north-america/democratic-national-conve…
A bit of an overview of the economy by T.A
https://www.oneroof.co.nz/news/tony-alexander-rock-star-economy-more-li…
OK in markets the sayingis
buy the rumour, sell the fact
it means that most buy the rumour but when it becomes true they sell to cash in, they where never long term holders.
Re the kiwi going up, its not the kiwi, the USD is losing against its TWI... ie everything is rising because the market is betting that the fed will cut next month, and when they do the short term bottom in in for the usd, as then kiwi cuts then fed, it becomes a range trade UNTIL
suddenly people either believe that it is the goldilocks soft landing or wake up to the nightmare that the plane has no wings and this sucker is going down...
IMHO FX trades at all times with most of the information baked in and defining the range. its the stats releases and unexpected geoploitical news that kicks a currency between range trades... seems to me right now the interest is does the US fed cut next meeting on 17/18 sept, its going to be the biggest trade going until then (or geo blows up), what ever happens on that day we probably see the short term low for USD as the next few cuts will then be priced in, then the market turns and trys to see how high it can push USD up. As macro says bad news may really be bad news here.
They are not cutting for shits and jiggles with inflation at these levels
"buy the rumour, sell the fact" I understand.
I thought "sell the rumour going on' was some new lingo.
Thanks for your reply. I am aware of what the US economy & USD is doing.
"IMHO FX trades at all times with most of the information baked in and defining the range."
I tend to agree. But their longer positions are opaque.
I saw real money sell kiwi in 3 x 600mil clips one night and it moved like 5 pips... it totally depends on positioning , options expires etc etc, its all about liquidity. the best money to be made is when everyone is on one side of the boat, but needs to get to the other side at the same time. like if the RBA hike on the 24th sept just after the fed cut.... AUDNZD go nuts
you would think that the big four trading banks in NZ should NAIL the widow maker but I have seen traders handed there ass getting kiwi aussie wrong. How hard should it be?
I find it hard to gauge how big the profits are.
BNZ made something like $1.5 billion net profit.
They have lent out $100 billion+
1.5 billion seems like a lot of money. But not a good return if you lent out $100 billion+
How much cheaper could Kiwisaver hope to be?
"not a good return if you lent out $100 billion+"
It depends on what it cost to create that lending?
"the reserve requirement does not act as a binding constraint on banks’ ability to lend and consequently, their ability to create money. ..."
https://www.investopedia.com/articles/investing/022416/why-banks-dont-n…
Honestly we’re better off paying that bit extra. When I lived in the UK the food was cheap but horrible. Coming back home was like a treat for the tastebuds. Their life expectancy is also suspiciously lower.
Most of the reason that the supermarket is so much cheaper in the UK is due to no VAT on food. So it’s 15% cheaper before you even start.
Also their banking was absolute shite and their insurance was both expensive and never paid out. Be careful what you wish for.
Your comment re: UK food is an interesting one. I've recently come back from a business trip to the UK. At first glance, supermarket food (particularly in the lower priced chains - i.e. not Waitrose or M&S) is astoundingly cheap compared to NZ. However, I agree that much of it seems totally devoid of any real nutrition or quality. It reminded me more of American-style supermarket food, which is once again cheap by our standards but everything seems so artificial and processed. You can buy very nice food in the likes of Waitrose but I didn't find it massively cheaper than NZ. I'd argue that Pak N Save, for example, sells better quality food on average than Tesco.
I think Australia is a better deal for supermarket food - when factoring in quality.
Of course if you just need calories as cheaply as possible then the UK is a better deal. Also we shouldn't excuse our rip off duopoly either.
Again no GST on many foods in Aus, so it’s very hard to compare. People always say milk is so much cheaper (I used to too), but of course it is if it’s exempt of GST.
And yes pak and save food is very high quality by international standards IMO. Do we really want processed crap but a few cents cheaper? I don’t normally shop there, but when I do it’s a big price cut from Countdown or New World with the same quality food.
Many people are lazy with their banks. The online savings account rate for the last 18 months has been Kiwibank 4.5% ANZ 2.8% ASB 2.7%. There are many millions in these call accounts. Kiwibank at 4.5% was offering a 60% better return yet most do nothing and leave their savings at the big 4. 2.8% was very poor from the big 4 at a time when their OCR funds were costing 5.5%.
> Fitch Ratings said it has affirmed New Zealand's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'AA+' with a Stable Outlook. That remains just one notch below AAA.
I don't know why anyone bothers paying attention to these rating agencies and their letters. They completely missed the trick in the GFC and more recently gave high "investment grade" ratings to SVB right before it defaulted.
In finance it doesn't matter if you get the little calls correct if you miss the big ones. And these ratings agencies consistently miss the big ones. The idea that prior to any sort of currency crisis of a major trading currency they will be steadily downgrading their rating with any relevant lead time is fanciful.
"I don't know why anyone bothers paying attention to these rating agencies and their letters. "
Consider it this way: Overseas institutional investors have $10,000 to invest. They do a scan for where to invest just 1 cent. The first part of scan is "must be of a rock solid investment grade, triple AAA".
Do you get it now?
Bloomie highlights that in gold terms, the S&P 500 is exactly where it was in August 1971 - .the year when President Richard Nixon cut the link between USD and gold.
https://www.perplexity.ai/search/in-gold-terms-the-s-p-500-is-e-TlqI7q4…
All fiat experiments historically have gone to zero. Just an empirical fact.
I think crypto will be the new money, the better money, and will enable the world to create fairer and wealthier economies. But even if crypto were to fail completely, fiat will go to zero.
I think you have summed up the way crypto holder thinks in a few lines. They think fiat will go to zero and crypto will be the new money and they will be overnight trillionaires. If you apply logic to that thinking it can never happen because a new digital currency would be created to replace fiat, fiat doesn't need current Crypto offerings. If fiat goes to zero, your Bitcoin will go to zero long before that and a new digital currency will emerge.
I think you have summed up the way crypto holder thinks in a few lines.
What's a "crypto holder" Z? What does it actually mean?
The idea that fiat trends towards zero existed long before "crypto" existed. Let me explain it you like you were an elderly relative.
While fiat currencies like USD may appear stable to the sheeple, they constant lose their purchasing power because of inflation (increased money supply) and may lose trust. If a government and central bank fail to manage monetary policy effectively, the currency can indeed approach a value of zero, illustrating the inherent risks of a system reliant on trust rather than tangible backing
Who would trust a new digital currency issued by the very same people who were in charge of the now defunct one? Currency precedes the state, it is a social technology that emerges organically amongst human societies.
People (including yourself) will be rushing to get into crypto of many kinds once the writing is on the wall. That is how money works. Look into the transition from the silver to gold standard in Imperial China and many other places to see how these things occur outside of the states ability to control it (they are often the last to accept the reality on the ground and money is a bottom up phenomenon).
The history of the bimetallic monetary standard and shift to gold standard is very informative in general for the fiat-> crypto shift occurring.
I took your advice and read the fiat money Wikipedia page.
It does not back up your assertion. It only reports a few examples, from before the creation of modern central banks as we know them now, as to how a fiat currency can fail. It does NOT support your assertion that all fiat currencies must fail. And sorry, won't be using A.I. for a subject like this where experts laugh at the nonsense A.I. comes up with.
Anything else?
Check out our new quick update of how the NZX is faring today, as at 3pm
Sorry but the link is not working.
"IAG New Zealand is the largest general insurer in the country, trading under the AMI, State, NZI, NAC, Lumley and Lantern brands, as well as providing the general insurance products sold by ASB, BNZ, Westpac and The Co-operative Bank."
Sounds like the product of a competitive market to me...
(edit: sorry, this was meant to be a standalone comment, not a reply the parent)
Christopher Luxon Speech to LGNZ SuperLocal conference today, link below
including this extract:
"First, Cabinet has agreed to streamline the purpose provisions in the Local Government Act to get councils back to basics.
For Councils, that means abolishing the four wellbeing provisions in legislation and restoring focus on local services and infrastructure.
For ratepayers, it’s simple. The central government focuses on must-haves, not nice-to-haves, and we expect local government to do the same.
Second, Cabinet has agreed to investigate performance benchmarks for local councils, similar to the approach some Australian states apply to their local authorities.
In theory, the Local Government Act establishes the accountability of local authorities to the communities they serve. But in reality, it’s difficult to get consistent, easily accessible and comparable information about how councils are actually performing.
The performance measures we’re looking to introduce are in areas councils should already be monitoring closely, such as financial performance and customer service delivery.
But sunlight is the best disinfectant – and ratepayers deserve to know exactly what they’re getting for their rates.
Third, Cabinet has agreed to investigate options to limit council expenditure on ‘nice-to-haves’.
In some Australian states, revenue caps are applied to non-core activities to control rates increases.
We’re interested in how a similar approach could work here in New Zealand, ensuring the right balance between ratepayers' interests and councils' financial positions.
Yes, councils need adequate revenue to fund core responsibilities like roads, rubbish and water, but the value-for-money proposition is more questionable in a range of other areas.
Councils need to examine those areas more closely, and I’m up for any tool – like revenue capping – that makes them do so.
Fourth, Cabinet has agreed to review the transparency and accountability rules that apply to councils.
It’s unacceptable that the rules as they stand today allow unelected officials, in many cases, to prevent elected members from accessing the information they need to represent their communities. We will review those settings.
There have been too many absurd scenarios in which ratepayers are effectively shut out of decision-making because elected members’ rights to access information are treated as a secondary consideration.
My expectation is we find a way to end those practices. "
"The federal government is poised to reveal that the US economy created as many as a million fewer jobs than previously thought in the 12-month period that stretched through the end of March."
https://nypost.com/2024/08/20/business/wall-street-banks-brace-for-down…
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