Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).
MORTGAGE/LOAN RATE CHANGES
The Cooperative Bank cut all its fixed rates today. Unity Money did so too. More here. More details here. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
The Cooperative Bank cut its TD rates for terms nine months and longer. Heartland Bank cut its TD rates for terms 3 months to 3 years. AMP matched Heartland. More here. All updated rates less than 1 year are here, for 1-5 years, they are here.
LESS PESSIMISTIC
Although still low, the Westpac MM consumer confidence survey for September showed an easing of pessimism.
EXPECTED IMPROVEMENT DIDN'T HAPPEN
Our Q2 current account deficit failed to record the improvement expected. The deficit between what we earn overseas and what we spend has remained at -6.7% of GDP, contrary to expectations that the ratio would decrease. This key deficit remains 'unsustainably wide', and it has some observers wondering if it threatens our high AA+ sovereign credit rating.
NET DEBT HOLDS 'LOW'
Net external debt (international assets and liabilities excluding equity and financial derivatives) widened by $2.6 bln during the June 2024 quarter, to reach $204.9 bln, or now 49.6% of GDP. It has been at about this level since December 2019 (48.8%) with little change since. Prior to that, it peaked 84.1% of GDP in December 2008.
DAIRY PRICES SOLID
Conditions in the dairy sector continue to be positive. Today they were helped by a solid full GDT auction. Overall prices rose (+0.8%) driven by strongish gains from the powders while the “fats” fell. Cheese posted a decent rise and continued the recovery seen since mid-July. Chinese demand increased again - especially for SMP.
NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. Turners and Scales lead the daily gainers; Mainfreight and Kiwi Property are the biggest decliners.
WESTPAC'S $1.1B BOND ISSUE
Westpac NZ is borrowing $1.1 bln through an issue of five-year, fixed rate, senior, unsecured and unsubordinated bonds. They'll pay investors an interest rate of 4.337% per annum, after being priced at a margin of 0.85% over swap. The bonds will be unlisted.
MISLEADING?
Commerce Commission said it will file charges against Qantas-owned airline Jetstar over alleged misleading claims on compensation for flight delays and cancellations.
MORE CHEESE
Fonterra said today that it will spend $150 mln on a new cool store at its large Whareroa site in Taranaki where a fifth of Ronterra's production occurs. The 29,000 m2 site will allow it to expand cheese production.
EYES ON TOMORROW
Tomorrow will be dominated by the US Fed rate decisions. But we have an important (if late) release domestically, Q2 GDP. Consensus forecasts are that June economic activity will be up +0.3% from the same quarter a year ago. Variation from that may have wide implications.
JAPAN EXPORTS RISE AGAIN
Japanese exports rose +5.6% from a year ago in August, slowing sharply from a 10.2% rise in July and falling short of market forecasts of another 10% rise. But it was the ninth successive month of increased export shipments.
SWAP RATES AWAIT THE FED
Wholesale swap rates are probably little-changed today ahead of tomorrow's US Fed decision. Our chart below will record the final positions. The 90 day bank bill rate is holding lower at 5.01%. The Australian 10 year bond yield is up +5 bps at 3.90%. The China 10 year bond rate is down -2 bps from yesterday at 2.05% and a new record low. The NZ Government 10 year bond rate is up +4 bps at 4.17% and the earlier RBNZ fix was at 4.13% and up +6 bps from yesterday. The UST 10yr yield is little-changed at 3.65%. Their 2yr is now at 3.59%, so that curve is still positive by +6 bp.
EQUITIES MIXED
The NZX50 is down -0.3% in its late Wednesday trade. The ASX200 is also essentially unchanged in afternoon trade. Tokyo has opened its Wednesday trade up +0.7%. Hong Kong is on holiday but Shanghai back from holiday although little-changed. Singapore is down -0.2% at its open. The S&P500 ended its Tuesday session on Wall Street barely changed again.
OIL UP
The oil price is up +50 USc from this time yesterday at just under US$71/bbl in the US, and now just under US$73.50/bbl for the international Brent price.
CARBON PRICE STEADY
The carbon price is unchanged again at $61/NZU. Volumes traded are still light. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD DIPS SLIGHTLY
In early Asian trade, gold is down -US$7 at US$2573/oz but still near its record high.
NZD HOLDS
The Kiwi dollar has stayed up at 62 USc, little-changed. Against the Aussie we have dipped -10 bps to 91.7 AUc. And against the euro we have risen +10 bps to 55.8 euro cents. This all means the TWI-5 is still at 69.6.
BITCOIN UP
The bitcoin price is up +3.9% from this time yesterday, now at US$60,365. Volatility of the past 24 hours has been moderate at just on +/- 2.9%.
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45 Comments
There were cuts announced today - if you look at rates, they're already quite a lot off the peak, cutting too much risks losing money (not earning as much money) on the swap if they bounce back up. Which they may.
I think bank rates may be close to 1 for 1 with the OCR from now on, maybe a bit slower. Mostly rates from 1 - 2 years are ~100bps off the peak, swaps are slightly more. Not much more fat in it.
If only every 0.25 cut resulted in 100bps off rates huh...
MORTGAGE/LOAN RATE CHANGES
The Cooperative Bank cut all its fixed rates today. Unity Money did so too. More here. More details here. All rates are here.
Only 1% of China's steel mills are profitable now. As profitability collapses, hot metal output declines. Iron ore price below $90 now and the cheerleaders suggest it will stop at $80. Let's all join hands and pray.
WA state revenue potentially squashed.
https://www.zerohedge.com/commodities/china-steel-mill-profits-collapse…
Liking ZH consistent with crypto ownership personalities?
The correlational analyses showed that crypto ownership is associated with belief in conspiracy theories, support of political extremism, identification with non-left-right political orientations (e.g., Christian nationalism), and the "Dark Tetrad" of personality traits (narcissism, Machiavellianism, psychopathy, and sadism).
The more holistic analysis revealed which self-reported qualities are most likely to predict crypto ownership, the most strongly associated factor being a reliance on fringe social media sources for news. Other strongly associated characteristics included maleness, argumentativeness, higher income, and feelings of victimhood.
Agreed. Why isn't NZ a world leader in glulams and CRT?
I mean - modern design techniques means the entire structure for a 8 story mass timber building is specified to the millimeter, sent digitally, manufactured anywhere, and then shipped to site, and erected in days to a few weeks!
Why isn't NZ a world leader in glulams and CRT?
Because from regs, to architectural and construction knowledge and preference, to client demand, there isn't the volume being done.
We do make them, but adopting them at scale is a slow burner.
Hard to say if the cost advantage is there either, the beam itself might be cheaper but that can get cancelled by requiring more spent on supports. And you can get steel portals, tilt slabs or timber framing knocked up and shipped to site, to be erected in days or weeks also, having worked on all, there's no significant time savings. Pretty rare these days to not have your main structural elements prefabricated. The slow part is the groundworks and then completing the build.
And given the time-frames and volumetric nature, it's not as if we'd be exporting much of it.
The benefits have to be significant to ditch a status quo in favour of a new option.
We already do that, it's just that timber isn't always the best answer. Less durable, can't support as wide a span (so you need more timber supports than if you used steel), less tensile strength (so you need heavier, thicker beams), often requires more maintenance, and we've made certain timber uses prohibitive from a fire rating viewpoint - often needs expensive intumescent treatment.
This is sort of like making a case for hemp products. Yes, you can make a form of concrete out of hemp. But in many situations (like foundations or where there's significant load requirements), you'd be better using regular concrete.
We can make sustainability cases for wood being a better choice than steel or concrete, but that's not a cost that's worn up front. Although then again, steel is recyclable, glulam is not.
Get fracking if you are too squeamish for natural gas or nuclear. Doing is so much better than banning.
"GEOTHERMAL ENERGY may be approaching its Mitchell moment.
...On September 10th Fervo revealed yet more good news. Despite needing to drill much deeper at its Utah site, it was able to do so in just 21 days, slashing its drilling time by 70% relative to the Nevada site. It was also able to drill the fourth of its wells at half the cost it took to drill the first, mainly thanks to “learning by doing”. The firm has already outpaced the targets America’s Department of Energy (DOE) set for geothermal energy producers to reach by 2035.
Hot rocks might also turn out to be surprisingly effective batteries.
A paper published in January in Nature Energy, a journal, argues that EGS sites can be operated flexibly, with more water injected underground when needed to build up pressure and liquid released on demand to make power. This would in effect turn them into giant and convenient energy-storage systems, capable of replacing the output lost by solar and wind farms on cloudy or windless days. Typically, prices for electricity spike during such crunches, so the extra energy produced can both fetch a premium price and also potentially help avoid a shortfall or blackout. Combining this extra economic value with the savings expected from reductions in drilling costs, the boffins reckon over 100 gigawatts (GW) of geothermal power could be run at a profit in the American west, surpassing the output of the country’s entire nuclear fleet."
https://www.hindustantimes.com/environment/geothermal-energy-could-outp…
Perhaps read the article before giving us your hot take? It is not traditional geothermal energy. It can unlock geothermal energy on any area on the planet not just a few sweet spots like NZ and Iceland.
"It would take approximately four
years of drilling at the rate Texas currently drills for oil
and gas to produce the equivalent energy of all oil and
gas used for electricity and heat production currently
in the State from Texas’ geothermal resources.
An aggressive
geothermal drilling program at ‘home’ such as this may
serve to free up Texan natural gas for export, instead of
being required for domestic electricity production.
Source: Future of Geothermal Energy in Texas, 2023."
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