What happened Wednesday

Economy / news

A review of things you need to know before you sign off on Wednesday; more retail rate cuts, Barfoot volumes up prices down, WMP up, swaps down, NZD soft, & more

2nd Oct 24, 3:59pm by David Chaston

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
ANZ has cut all fixed rates. More here. Unity Money also cut two key fixed rates. Co-operative Bank cut four of theirs. All rates are here.

TERM DEPOSIT/SAVINGS RATE CHANGES
ANZ has cut many key rates. More here. The Co-operative Bank has cut two of its TD rates. Unity Money changed most of theirs. All updated rates less than 1 year are here, for 1-5 years, they are here.

UP & DOWN
Barfoot & Thompson's September sales were up but prices were down. The September $934,500 median price was its lowest for any month over the past four years. Their drop-out rate (listings that leave unsold) was stable at 13.5% (the same as the twelve-month average), but their listing levels reduced to just under 23 weeks (at the current sales rate). For eight consecutive month, Barfoot's release headlines have claimed a rise/boost/growth/recovery.

STOCK UP, ASKING PRICES FLAT
Buyers have the upper hand in housing markets according to realestate.co.nz, with high stock levels & flat asking prices. In fact, housing stock for sale is at a 10-year high at the end of September, making it a strong buyer's market in spring

MIRAKA HOLDS IT'S HEAD HIGH
Maori-owned and Taupō low-carbon dairy company, Miraka, announced an $8.00/kgMS payout for the 2023/24 and for the 2024/25 season, a forecast payout at $9.17/kgMS. Ko Miraka te kamupene miraka waro-iti a te Maori me Taupō, he $8.00/kgMS te utu mo te tau 2023/24 me te tau 2024/25, he utu matapae $9.17/kgMS.

RISING PRICES, HIGH VOLUMES
Good rises for WMP (+3.0%) and Cheddar (+3.8%) at today's full auction, based on good demand from "North Asia" has enabled the overall auction result to come in positive (+1.2%). Volumes sold today were unusually high at 38,848 tonnes, the most since September 2019.

NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. a2 Milk, Vital Healthcare, and Freightways all made gains today. Kathmandu and Oceania extended their retreats.

LISTED BUT NEVER FILED ACCOUNTS
The FMA has filed civil proceedings against QEX Logistics and its sole director, Jingjie Xue, for failing to comply with financial reporting requirements under the Financial Markets Conduct Act. The FMA alleges that QEX, an FMC reporting entity that was listed on the NZX at the time, failed to prepare and lodge its financial statements for the years ending 31 March 2021, 2022, and 2023 with the Registrar of Companies. To date, none of these financial statements have been filed.

MORE BIG LGFA DEBT
New Zealand Local Government Funding Agency (LGFA) announced today that it will issue $800 mln of unsecured, unsubordinated, fixed rate sustainable financing bonds maturing 14 May 2032. The yield will be 4.58%.

VERY TOUGH IN AUSSIE FACTORIES
In Australia, the widely-watched local PMI by the Australian Industry Group saw its factory PMI dive to its worst level ever at -33 (April 2020 excepted). This was far worse than expected where a much smaller contraction )-13) was forecast. Low orders while inflation and labour pressures persist are making manufacturing there very tough. This AiG report pretty much mirrors the earlier S&P/Markit version.

SWAP RATES LOWER
Wholesale swap rates are probably lower yet again today. Our chart below will record the final positions. The 90 day bank bill rate is down -5 bps at 4.81%. That is -44 bps below the OCR and its lowest level in ten months. The Australian 10 year bond yield is down -2 bps at 3.98%. The China 10 year bond rate is down -4 bps from yesterday at 2.16% even though the are on holiday. The NZ Government 10 year bond rate is down -5 bps at 4.25% But the earlier RBNZ fix was at 4.20% and down -7 bps from yesterday. The UST 10yr yield is now at 3.74% and down -4 bps from yesterday. Their 2yr is now at 3.61%, so that curve is less positive, now by +14 bps.

EQUITIES MIXED
The NZX50 is little-changed, down -0.1% in its late Wednesday trade. The ASX200 is also unchanged in afternoon trade. But Tokyo has fallen -1.7% at its open. However Hong Kong is up +3.3%. Shanghai is closed today and will be until Tuesday next week. Mid-Autumn Festival. Singapore is trading up +0.3% at its open. Wall Street ended its Tuesday session down -0.9% on the S&P500.

OIL UP
The oil price is up +US$2.50/bbl from this time morning at just under US$68.50/bbl in the US, and now just over US$74.50/bbl for the international Brent price. The Middle-East tensions are now moving this price.

CARBON PRICE FIRMISH
The carbon price is marginally firmer today, now at $62.25/NZU. Volumes traded are still light. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.

GOLD RECOVERS
In early Asian trade, gold is up +US$22 from this time yesterday at US$2661/oz.

NZD LOWER
The Kiwi dollar has fallen -40 bps from yesterday to 63 USc although up from this morning. Against the Aussie we are down -20 bps at 91.3 AUc. And against the euro we are unchanged at 56.9 euro cents. This all means the TWI-5 is now at 70.2 and down another -30 bps from this time yesterday.

BITCOIN SLIPS FURTHER
The bitcoin price is down -3.0% from this time yesterday, now at US$61,493. Volatility of the past 24 hours has been high at just under +/- 3.3%.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

This soil moisture chart is animated here.

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26 Comments

by solardb | 2nd Oct 24, 4:11pm 1727838675

I would call the Vice presidential debate a draw. I would think both men came across as reasonable to the middle ground voters they need. But I would have thought Vance's brief was to make walz as a dangerous liberal, in this he failed.

Nothing enough to swing the election for either, as expected.

by Zwifter | 2nd Oct 24, 4:17pm 1727839065

Yeah watched most of it live but I drifted off towards the end. Basically its doesn't matter what lot get in, their problems over there will only get worse. Climate change and migration is going to be a massive problem for them going forward, not to mention a possible war in the middle east now thrown in for good measure.

by IT GUY | 2nd Oct 24, 7:48pm 1727851726

Their economy is very isolated from the rest of the world, domestically they can do ok.... The rest of the world, and China, our biggest trade partner, are in a lot more sh*t.

by dumbthoughts | 2nd Oct 24, 4:31pm 1727839895

Walz is the guy who becomes friends with school shooters, right? (his words, not mine)

I'll say Vance won if only because the Reddit hivemind seems concerned about the fact that he didn't perform as poorly as they were anticipating, and Walz didn't do as well as they thought he would.

Not that I think it will change the outcome either ... I'd take either of them over Harris or Trump in terms of being actual president.

by Foxglove. | 2nd Oct 24, 4:25pm 1727839511

LGFA raising $800 mill of unsecured, insubordinated etc bonds. Understand Auckland, Christchurch & some others have withdrawn their membership? There is obviously no backing collateral nor mention of what the funding is purposing . Maybe it’s just needed to be spent on themselves. ?Seems to be with such as the government financing arrangement replacing the defunct Three Waters scheme, that local government from A to Z is endlessly rolling and rolling up, in any shape or form, a monumental dung ball of debt.

by MLC | 2nd Oct 24, 4:27pm 1727839632

I think you have confused LGFA (Funding Agency - raises debt on behalf of Councils) with LGNZ (LG sector advice and advocacy group).

LGFA borrows and lends to Councils, and generally achieves better rates than individual Councils could achieve directly and without having some treasury functions duplicated across 80ish Councils in NZ. It is the Councils that would say what they are doing with the borrowing (normally financing capital expenditure).

by HughJorgan | 2nd Oct 24, 4:56pm 1727841366

LGFA = The entity that has stuffed our councils full of debt. While I appreciate the costs saving from the implicit Government guarantee, the financial covenants are too loose and is the massive underlying cause of rate increases that we are now seeing. ,

by MLC | 2nd Oct 24, 5:18pm 1727842704

What do you think prudent covenants would be, and what would be the result? Debt is the only realistic option for capital projects in the current LG funding and financing rules (which are broken but not easily fixed).

Most solutions offered are sound bites only. Infrastructure bonds = debt, value capture is similar to targeted rates etc.

by HughJorgan | 2nd Oct 24, 10:16pm 1727860583

Maybe, you know, less debt rather than different forms. I was offered cheap debt and yet I didn’t stuff myself full of it. No new cars sitting in my driveway.

Councils have had far too many passion projects in recent times. There are lists floating around adding them up.

by agnostium | 2nd Oct 24, 11:02pm 1727863355

Council's borrow money so they can fund infrastructure that will be in place for many generations, they aren't the same as a household (and even most households borrow big time to buy their infrastructure e.g homes).

Don't get sucked into the idea that they are borrowing too much, it's not true. They are not collecting enough from those that borrowed previously, the boomers who ran down infrastructure and borrowed big so they didn't have to raise rates.

by kiwikidsnz | 3rd Oct 24, 8:33am 1727897638

Remember these when the Wellington City Council claims it had no choice but to increase rates 20%

$593 million on social housing

$400 million for a sludge minimisation facility at Moa Point

$330 million on rebuilding the town hall so we have another music venue

$240 million on Civic Square

$236 million on food recycling

$189 million on Te Matapihi library

$180 million on the Takina convention centre

$160 million on cycleways

$139 million on removing cars and redeveloping the Golden Mile

$55 million to “upgrade” Thorndon Quay

$42 million on renovating St James Theatre

$32 million to Reading Cinemas (attempted but failed)

$13 million on a carpark building

https://www.kiwiblog.co.nz/2024/09/remember_these_when_the_wellington_c…;

by J.C. | 2nd Oct 24, 4:53pm 1727841215

Seems like down here in Aotearoa the potential port strike in the US is not particularly newsworthy, even though it could impact us to some degree and cause huge disruption to Asia-Pac trade.

When the Ponzi is our only focus, interest and hope economically, it suggests to me that we're already in dire straits.

https://www.foxbusiness.com/media/biden-harris-commerce-secretary-says-…

by David Chaston | 2nd Oct 24, 6:01pm 1727845268

First, its not a 'potential'. It has already started. Second, it is the ILA that is striking, not the West Coast ILWU. So it is East Coast ports and those in the Gulf that are affected. None west of the Panama Canal. It will make West Coast ports busier, and juice up the rail land-bridge traffic. But it is far less likely to affect us than the threat of a West Coast strike (that was settled in 2023).

(I had a minor role in US port operations many years ago. I recall then that the West Coast ILWU was more 'economics' focused, just wanted a share of improved productivity. The ILA on the other hand had a history of mob links. They were more into economic blackmail. Both were tough, but the ILA was dodgy as well. But their leadership could be bought, so their actions tended to be short.)

by J.C. | 2nd Oct 24, 6:19pm 1727846343

Thanks David. Those are fascinating insights and I suspect an interesting industry to be involved with. My conspiracy triggers suggested to me that the timing (election season) is intriguing but probably nothing. .

by HughJorgan | 2nd Oct 24, 5:28pm 1727843314

For those all banging on about how CGT is unfair, just remember that there are a whole bunch of people getting older that don’t own houses or any other assets.

If National want to remain in power they are going to have to start picking up some of those votes.

by kiwikidsnz | 2nd Oct 24, 5:52pm 1727844777

There's a clear gender divide in voting patterns & polls now. The majority of Child bearing age women vote left, the rest of the majority vote for the Coalition.

I don't know what the current Govt should / could do about this now, I personally think it originated in abortion rights in 2017 (Bill English refused to take it out of the crimes act, whereas Jacinda did).

Trust?

by JimboJones | 2nd Oct 24, 6:19pm 1727846386

If they want the female votes they should make Erica Stanford leader. But keep in mind she recently advocated for reduced speed limits and speed bumps in her area, so she’s a bit too “left” for the right.

by Foxglove. | 2nd Oct 24, 7:53pm 1727851991

Hard to find any other politician as articulate and definitive and the lacing of good humour is not unwelcome either. The new mp for Rangitata, James Meager is similarly impressive. National can well demonstrate here, some talent and leadership prospects.

by agnostium | 2nd Oct 24, 11:05pm 1727863547

If they want the female votes they should make Erica Stanford leader.

She would be subject to the same misogynism that Jacinda was subject to.

by MLSmith | 2nd Oct 24, 8:05pm 1727852733

Ditzy women who want to be seen to be kind is what drives their leftist tendencies

by earnedincome | 2nd Oct 24, 8:25pm 1727853956

I struggle with verbosity too.

Could I suggest "Women who want to be kind is what drives their leftist tendencies"?

by Eschaton | 2nd Oct 24, 6:02pm 1727845350

This at scale, but good luck getting national to fund anything other than roads and tax cuts.

https://www.abbeyfield.co.nz/

by powerdownkiwi | 2nd Oct 24, 7:20pm 1727850027

With this attitude, they're one-hit wonders anyway

"If we're going to criticise people for being successful, let's be clear, I'm wealthy."

What a plonker.

by Rhumline | 2nd Oct 24, 7:26pm 1727850375

Well done Miraka! An excellent example of the benefits of building relationships between suppliers and overseas partners... leads to long term success.

by J.C. | 2nd Oct 24, 7:50pm 1727851859

The Hang Seng Tech Index expanded its gains to 9%, while the Hang Seng Index surged by 6%. The FTSE China A50 Index futures rose by over 8%.

The HK-listed Science and Technology Innovation Board 50 ETF, surged dramatically, with an intraday increase of 128%. In the previous trading day, it closed with a rise of over 21%.

https://www.tradingview.com/symbols/HSI-HSTECH/

https://www.tradingview.com/symbols/SSE-000688/

by NZGecko | 2nd Oct 24, 8:51pm 1727855469

What will the China major stimulus finally cause? Booming stocks to the moon, High inflation?

Surely all the Chinese economic ills, cannot be magically ended by a Govt stimulus sugar hit?