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
SBS Bank has trimmed its fixed rates for terms 6 to 18 months. Heartland has taken -25 bps from its reverse mortgage rate, 'down' to 10.25%. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
SBS Bank has raised its 6 month rate by +40 bps to 6.10% in a move that goes counter to the general trend. They have cut their TD offers for most terms 9 months to 3 years. All updated rates less than 1 year are here, for 1-5 years, they are here.
TOUGH FOR THE YOUNG, AND THE OLD, OK FOR MILLENIALS & GEN Xers
Following four consecutive monthly declines, the Monthly Employment Indicator based on employer DED payroll data rose by 0.2% in August from July but the number of filled jobs is down -0.4% on the same month in 2023. From a year ago, jobs in health care and social assistance were up +4.3% or +11,525 jobs. But every other sector declined. Those in the 35-45 year age groups made gains, every other age cohort suffered job shrinkage. Auckland and Wellington jobs shrank, Canterbury and Waikato were up. More here.
NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. Manawa makes bigger gains, Warehouse recovers again. Serko drops again. Infratil racks up data center gains
CHEAPER & CHEAPER
Discounted petrol prices continue to fall. In fact they are now nearly back to the levels we had when the emergency excise tax relief was in place when the cost of living crisis was in full swing in 2022/23.
TEMPORARY OVERDRAFTS AVAILABLE
There is a major public effort underway to help the people of Dunedin with the extensive storm and flood damage. Just as they did in Hawkes Bay, banks are also easing rules so that customers can access temporary overdrafts while expenses are high and incomes interrupted.
RECOVERING
Business new lending for residential property development rose by +$65 mln to $159 mln in August, up +69% from $94 mln in July and almost three times higher than in August 2023. But the latest data is still way lower than the 2021 and 2022 levels.
SHIFTING PRIORITIES?
Total agriculture new lending was just over $1.0 bln in August, a decrease of -5.7% from July. The drop was mostly due to new lending to the dairy sector at $521 mln and down almost -22%. On the other hand, new lending to horticulture businesses rose +57% in August.
STAMPEDE
The mortgage crowd who were fixing in August went crazy for the six month fixed term. Since this data was made available by the RBNZ in April 2021, the average amount of 6 month new fixing by owner-occupiers was $150 mln per month. In July 2024 it had risen six-fold to $924 mln. That apparently was just for starters. It shot up to more than $1.8 bln in August. Nothing else came close, even the one year fixed term. Now more than half of all home loans are sensitive to a rate change within the next six months, a record high at 56%. The previous high was 36%.
TIME ADJUSTMENTS
You should also note that it will be a public holiday in NSW, Queensland, South Australia and the ACT on Monday. And NSW, SA, Victoria, and Tasmania all start summer time daylight saving this weekend. That will mean Sydney and Melbourne will be back to just 2 hours behind us. Queensland will remain three hours behind. Seems about right.
SWAP RATES LOWER
Wholesale swap rates are probably little-changed today at the short end. Our chart below will record the final positions. The 90 day bank bill rate is down -1 bp at 4.79%. That is -46 bps below the OCR and its lowest level in ten months. The Australian 10 year bond yield is up +4 bps at 4.07%. The China 10 year bond rate is unchanged from yesterday at 2.16%. The NZ Government 10 year bond rate is up +1 bp at 4.33%. And the earlier RBNZ fix was at 4.30% and up +4 bps from yesterday. The UST 10yr yield is now at 3.84% and up another +5 bps from yesterday. Their 2yr is now at 3.69%, so that curve is still positive by +15 bps.
EQUITIES MIXED & MODEST
The NZX50 is little-changed in its late Friday trade. The ASX200 is down a much more noticeable -0.8% in early afternoon trade. But Tokyo is up +0.2% at its open. And Hong Kong is up +0.3% at its open. Shanghai is closed today and will be until Tuesday next week. Mid-Autumn Festival. Singapore is trading unchanged at its open. Wall Street ended its Thursday session down a minor -0.2% on the S&P500.
OIL HIGHER
The oil price is up another +US$2.50/bbl from this time time yesterday at just under US$74/bbl in the US, and now just over US$77.50/bbl for the international Brent price. But to be fair, despite all the obvious pressures, these price levels are similar to many times in 2024.
CARBON PRICE HOLDS
The carbon price is holding at $63/NZU. Volumes traded are still light. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD HOLDS
In early Asian trade, gold is unchanged from this time yesterday at US$2658/oz.
NZD SOFTER
The Kiwi dollar has fallen -30 bps from yesterday to 62.1 USc. Against the Aussie we are down -10 bps at 90.8 AUc. And against the euro we are down -30 bps at 56.3 euro cents. This all means the TWI-5 is now at 69.4 and down another -20 bps from this time yesterday.
BITCOIN HOLDS
The bitcoin price is up a mere +0.2% from this time yesterday, now at US$61,194. Volatility of the past 24 hours has been modest at just on +/- 1.3%.
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99 Comments
More than 50,000 property investors making losses
https://www.rnz.co.nz/news/business/529846/more-than-50-000-property-in…
I'm shocked its not more.
My property (mortgagee free) has rent of $40,000 per year, if that.
I paid my insurance this week. The insurance alone is a whopping $2,900. To compare that, my main home insurance is $2,300 despite the price being double that of the rental. Total overhead costs could easily be $8,000 a year. The agent takes 7%. Then add in capital costs, a new heat pump etc and its hard to see the point without another Jacinda Ardern style money pumping 40% in a year return.
Alternatively, commercial investors could seek significant insurance reductions? Surely the real insurance risk doesn't justify such excessive premiums (exceptions eg dairies in dodgy parts of Auckland).
Are the insurers just charging commercial what the (tax deductible) market will bear?
WE'RE BACK BABY! Making the moves...
"Capital gains are nice but for most people I speak to it's more about reducing the debt over time."
I call BS here after more then 3mil cap gains over a long time ..... ITS ALL ABOUT the capital gain, who wants a property after 30 years worth what you purchased it for but mortgage free????
its seems to me that only the Spruikers on here are in this for social justice and subsidising their tennents
...an investor seeking a stable secure long term inflation adjusted income stream (funded with other peoples money)?
It's not "funded with other people's money". When banks create mortgages, the money in the account is credited by keystroke. No money is transferred from 'other people.'
I think it's an issue that most "investors" don't understand these fundamentals.
I like it how "Tokyo is up 0.2%" and yet... "Bitcoin is up a mere 0.2%"
It makes sense to me. a 24-hour variation of 0.2% in ratty is mild.
You won't read about in Granny, but the SEC appealing the case against Ripple was interesting to me. And why is it interesting? Because the case reflects the war between the establishment and change. The SEC want to show who wears the trousers but most people in the crypto space are just yawning at their posturing now.
But XRP only dropped 10-12% on the news. Compare that to 2020 when the price got smashed on the announcement of the initial court case Incidentally, if you compare the price of XRP today with the price on the same date of the last cycle, XRP is up 100%, despite being one of the most despised cryptos. Compared to cash, most stock indexes, and even the mighty gold, that's a fairly decent return.
I'm bullish on XRP now, even though I don't believe it has real value. Don't be surprised if we see a 7-10x in the next cycle. Even seen blow-off top predictions of USD10-30.
Yes it is. Its still operating back in a time where the economy was booming, people were flush with money, and everyone was happy. Ah to remember the golden years of the "rockstar economy". I'm off there for the third time this year - my mood lifts as soon as I step off the plane.
Possibly something to do with its state government putting surpluses from mining royalties back into creating new economic opportunities in other sectors.
QIC has A$92 billion assets under management, one-third of which is invested in major infrastructure projects. The private equity portion puts millions into venture capital and growth initiatives across the state. Some of the companies it owns (CS Energy, Powerlink) are also trailblazers in their sector.
‘US public debt has jumped $345 billion over the last 3 days hitting another record of $35.7 trillion.
Since June 2023, federal debt has surged by a MASSIVE $4 trillion, or 14%.
Over the same time period, US GDP is up just $1.5 trillion, or ~6%.
In other words, the national debt has outpaced the economic growth by 2.7 TIMES over the last 16 months.
Outside of the pandemic crisis, US federal debt has never grown so rapidly.
What is happening here?’
https://x.com/kobeissiletter/status/1841884425723777318?s=46&t=MUwQeKa7…
They are running the budget deficit at around 7% of GDP. I mean, it's incredibly reckless - but completely unsurprising when you have morons like Biden and Harris in charge outsourcing the running of the country to the millitary industrial complex. She can hardly string a sentence together let alone understand what internal balance is.
Yeah was looking at a chart a few weeks back. In inflation adjust terms the US in the last 4 years has increased government debt by more than WW1 and WW2 combined. Would appear as a nation they have very little to show for it other than heightened political tensions, global instability, potentially another damaging housing market bubble and a crap load more debt for younger people to try and service while the boomer generation retire and sail into the sunset.
So we (or the US at least) are basically living in wartime economic settings while not officially at war. Just using poor young Ukrainian men as victims in a proxy war with Putin.
Yeah I’m with you TK - never thought the day would come when I hoped Trump would win to save America but that (to me) is how insane I think the Dems have become of late (after identifying as more centre left than centre right most of my life).
Some of the talk from the Dems recently about the constitution no longer being fit for purpose with respect to freedom of speech is completely nuts! They cannot yet see how far to the left they have moved.
Harris is already out there talking about reparations and social security determined by gender and race.
I mean, if I find this stuff confronting that tell's you someting right.
Look at the UK where Labour have effectively brought in sentencing based on your political affiliations. BLM rioters uncharged, anti-immigration posts on Facebook are 2+ years jail.
Also this time around I hope Trump delegates more to the likes of Vance and Gabbard and the rest. The question is whether his ego will let him
Yip sounds like Trump already has his transition team working to ensure there isn’t a repeat of his last time in office - he admitted that he didn’t expect to win so was caught off guard and didn’t know how to govern, didn’t know who to appoint to key positions and instead of draining the swamp he filled it with even ore swamp creatures after being misled by self interested entities/groups/individuals.
RFK Jr was saying in an interview the other day he’s (Trump) learned from that (after being open about it) and is already planning who is going where and in what position so as to not be caught off guard this time around - I like the team he is putting around him - far more so than those that Kamala is putting around herself.
Disagree. Don’t think you understand. If Trump is part of the political swamp why is it that he lives in Florida and unless he is in the presidents seat he has no official roles in Washington? He’s not part of the swamp - to be part of the swamp you’ve got to be in Washington lurking around and getting dirty in pubic office.
How about Kamala and Biden. What do they do or have they done when not in the office of president/vice president of the USA? Do the get out of the swamp or do they start swimming around with swamp creatures?
The litmus test for knowing if Trump is/was a swamp creature was Dick Cheney’s endorsement of Kamala Harris and not Donald Trump! Cheney is a Republican swamp creature and yet he didn’t endorse Republican Trump because he’s not part of the swamp- he doesn’t fit in - Democrat Kamala is. Kamala is celebrating Cheney’s endorsement regularly now likes it’s a positive but she’s just got the endorsement of the ultimate swamp creature - even if it’s a republican now supporting a Democrat.
Hey Te Kooti
I genuinely believe that if Trump (and specifically Vance/Gabbard and a few other adults) doesn't win, Harris will destroy that country. I don't think many realise just how out there she is.
People behind the curtains pulling strings and there is a dancing Harris Doll and a dancing Trump Doll.
So we went through primaries on both sides, and their was a clear winner (on each side), there is no internal debate that anyone wants to take public least they loose a chance at power. Power has trumped over almost everything, to the point where the candidates decide if their is a debate or not?
Could it boil over.... sure the hard red states could join against the hard left states... not a join like a union, but a block that ignores federal laws..... like quietly quitting. We are sort of seeing this on the left in cities like San Francisco. The right are simply moving out, to Texas.
The unsustainable nature of global debt, estimated to be around $400 trillion. Much of this debt is a "fiat contract" that is programmed to debase over time, meaning it will lose value due to inflation and poor management by governments. The U.S. alone has significant unfunded liabilities, amounting to approximately $170 trillion, which will never be fully repaid due to mathematical impossibilities in raising sufficient funds.
Fed and US Govt working in tandem - pumping $ into the ecomomy through tax breaks, interest payments on reserves, subsidies, defence spending etc. Last time I looked US deficit spending was running at over 6% of GDP all in. That's pretty similar to NZ during the C*vid period.
Now, with a current account deficit of around 2% of GDP and allowing for some onshore savings, the US are generating a domestic surplus of about (taps calculator) $1.5 trillion. Voila.. There's your GDP.
They will carry on doing this, because they can. Although as interest rates fall some of that stimulus might drop out automatically (eg interest paid).
We wont know until there is a panic and the markets do not flock to USD as a safe haven........
at this point its too late to place bets.
Markets are telling us we are slightly closer to that point, but do not provide an indication of how close.
There is no clear alternative.
Place Your Bets...
‘The Sahm Rule has triggered a warning signal
Every time this indicator crosses 0.5%, a recession unfolds
Currently, this metric is sitting at 0.57%
Indicating that a recession is almost certain if history repeats’
https://x.com/bravosresearch/status/1841502159780950189?s=46&t=MUwQeKa7…
If you’re referring to me, I’m as confused as anyone else about what is unfolding. But US 10 year has come down a small amount but not much.
I think central banks are walking a right rope between causing a severe deflationary recession if they keep rates where they are, while simultaneously risking inflation surging again if they drop too quickly (and some external shock drives oil higher again).
On this line of reasoning - I think that each time we see this extreme intervention in markets (post GFC and 2020) I think it is going to get harder and harder for central banks to hold the narrative that they have everything under control. I think more people are seeing through the myths they are trying to tell the public. People are betting/gambling with more and more leverage as to which rate rates are going - and the mistakes like they made with overstimulation post COVID and then mis-calling the inflation issue as ‘transient’ are going to get worse down track as each mistake amplifies the impact of the subsequent require market intervention.
eg this recession could really get going the next 12 months and they drop rates big time again then boom we have inflation at 10+ % a year later and we see wild swings in market sentiment - eventually this becomes completely uncontrollable.
If I was the RBNZ I just wouldn’t drop rates that much and say to Nicola Willis it’s your turn to save the economy via fiscal policy so that we can have a more steady handed approach from a monetary perspective.
(I was referring to you. You look far further forward than most here.)
Agreed. I'm confused a tad too. But we're (again!) at one of those inflection points where momentum is changing. My mind says the US Fed and the US Govt have been working together quite well - like many other economies - but that things might change and we'll repeat past behaviors. My gut feel says that the Idiocracy will play a part in what happens next.
I think the US Fed and Treasury have been increasing the rate at which the US bankrupt themselves by over committing their external commitments (eg Ukraine) while nearly completely ignoring the rising domestic problems they have (other than Covid of course which appeared to be massively overdone - see the amount of money that way being gambled into shit coins from government cheques).
US are certainly not bankrupting themselves over Ukraine commitment. Total commitment since full scale invasion Feb 22 until Sept 24 is $61.3b plus $31.2b worth of existing (ie old) stockpiles. https://www.state.gov/u-s-security-cooperation-with-ukraine/
So only about 5% of the Defense budget over this time even if donation of older weapons is fully valued in. https://www.defense.gov/Spotlights/FY2024-Defense-Budget/
Please don’t claim that supporting a country subject to an unprovoked invasion by a brutally aggressive neighbour is causing financial hardship, even bankrupting the US because that’s simply not true.
A lot of this has to do with flow. There’s a lot of hedge funds who want to go long (invest in ) NZ interest rates and they do it through the derivative market. Usually in NZ we have a good constant flow of 2 year borrowing via mortgage fixing but as this article states we have had a massive shift into shorter borrowing. Hence the supply of borrowing has diminished and the demand for investing is still increasing. Then it’s just Eco101 S/D curve
‘US Government debt is bigger than the ENTIRE US economy
In 2012, debt surpassed GDP for the first time. Ever.
There has been no looking back ever since…’
https://x.com/bravosresearch/status/1841478014800187690?s=46&t=MUwQeKa7…
If I was a shareholder of the US economy (and I guess I am via various financial exposures) I would be getting a bit nervous about the quality of the management and their ability to turn their balance sheet issues and trends around. They are currently on the path towards bankruptcy.
(Standing by for the arguments that they can just print more money…yes they can but only to a certain point - eventually the buyers of their bonds need to know for sure that they will always get their money back and each time their debts get larger than their GDP the risk of losing your investment increases).
if the us melts down so does global trade.. perhaps at some point the US decides that its debt is too big, but it can default and rebase against gold or some other commodity it could control. They will continue to print while they can IMHO to try and build out infrastructure, if that's new roads and rail bridges vs massive nuclear powered AI Datacenters is not yet clear....
I think that is a junk analogy. It is an activity-to-liabilities ratio. If it was valid, most companies would be getting your disapproval. Let's take a local one as an example. AIAL. It has a monopolist flavour like a government. It has annual revenues (GDP?) of $900 mln, and liabilities (debt) of $3.5 bln. It is considered a good business. On an comparative basis, the US Federal Government is in far better shape. But actually, it also shows this is a very superficial, junk analogy. If analysts don't track this ratio for commercial enterprises, why track it for governments? Yes, I know, you can score political points with it in the public arena. Of course you will see it debated on X/Twitter. But is is still junk. There are far better ratios to use.
Could you explain why the Dutch are no longer the world super power with reserve currency status Jfoe - I’m sure they also knew the rules of the playground of the time.
We have a name of Dutch origin (Zeeland being an area of the Netherlands, because we were found by Dutch explorers in the 1600’s at a period they ruled the world and had the gobal reserve currency) - mention that to the average person and they would have no idea. And yet what about Dutch power now? What happened to their reserve currency status? What did they do wrong?
They did exactly what the US are currently doing. Over extending globally militarily and issuing to many bonds compared to their domestic productivity. (Ie to pay the increase interest expense on these bonds requires equal increased domestic productivity that can be taxed to pay the interest expense - if not you print more money (by issuing even more bonds) and accelerate your path of financial self destruction - exactly what the Dutch did…exactly what the US are currently doing).
Are you 100% sure you know the real rules of the playground? Or just the ones that are currently in vogue in recent decades? (which from an American perspective aren’t sustainable at all unless they have some very bold leadership).
I understand where you are coming from David and it’s perhaps not the best comparison. But in terms of an underlying principle, if you think a nation (or business) can increase its debt load at a faster pace over the long term than its income generating performance (be it productivity/GDP for a nation that results in increased tax take to pay for the interest expense on large amounts of new government bonds or business revenues generated to pay for your large amount of new corporate borrowing) then you are living in lala land. Eventually that increased expense from the increased debt level has to be justified by a cash flow return. If not, you are on the path towards bankruptcy or the need for more capital (money printing or fresh cash/equity) - but eventually you run out of fools to sell the story to when cash flows don’t eventuate to justify the investment.
My local council has chosen to pay $36,000 a year to maintain some planter boxes in the middle of a CBD street, which has now been pedestrianised and turned into a 10 kmph zone. Because it would cost $230,000 to remove them. When you elect incompetent and inexperienced people to Council you get stupid outcomes like this.
Yes parks and margins now full of trees and flax. A crew of about 6 or 8 turn up to maintain it for a day or 2, previously it was 1 guy on a mower all done in 2 or 3 hours. Massive on going maintenance cost created by the council, but hey, the ratepayers will pay.
Sorry to post this here but cannot find another spot - yesterday Interest.co published an article described as "What, if any, fees should banks be allowed to charge for those accessing their customers' data?" - which seems to me to be a question relevant to customers? If so, then I would have liked to read the article - but as an ordinary subscriber I cannot see it unless I also subscribe to the banking newsletter which is described as for banking types ie not every day readers. Could the article be also published, even a day or so later, in the generally available section?
Another 250 million in illicit transactions facilitated by the financial messaging system SWIFT. They are not under any legal obligation to do KYC/AML for these transactions despite having full control over who can and cannot send messages on their network.
Fantastic work by the WSJ.
Iraqi Banks Used U.S.-Created System to Funnel Funds to Iran
New York Fed’s process to move Baghdad’s oil earnings lacked key money-laundering safeguards, resulting in illicit transfers that financed terrorist groups for years
https://www.wsj.com/politics/national-security/iraq-banks-u-s-fed-iran-…
Aotearoa New Zealand as a village of 100 people presents an overview of New Zealand's population based on 2023 Census data. It describes our population as if the country were a village of 100 people.
Stuff journo takes a big hit on Allbirds shares. Personally, I admired what they achieved, but find their shoes not to my style (or lack of it). They seemed to by Silicon Valley people and urban tech fashionistas as well as those who wanted to show their support for sustainability to the world.
To put that into context - and for the sake of transparency - I bought $348.40 worth of shares in Nov 2021. At the time of writing this, they are now worth $9.64. (I was an amateur back then, and still am but I find the share markets fascinating).
Allbirds’ performance is so bad that those who run the share market it’s on threatened to de-list it if things didn’t get better.
https://www.stuff.co.nz/business/350436223/explained-whats-going-allbir…
ELDER ABUSE!!??!!
"Heartland has taken -25 bps from its reverse mortgage rate, 'down' to 10.25%".
Compared with Fixed term interest rate in the 6's
Compared with Floating rates in the low 8's
No reason for such high interest rates on reverse mortgage as Heartland set such a low initial LVR criteria on these. Exorbitant\unfair rates would be the only reason the mortgage compounds so quickly say compared to house inflation which increases the actual security which in theory covers these loans.
Iceland has rates at 9%. Housing market still running hot.
Iceland’s central bank unexpectedly cut rates by 25 basis points, abruptly easing Western Europe’s most aggressive constriction as inflation starts to give in.
Policymakers at Sedlabanki reduced the 7-day term deposit rate to 9.0% on Wednesday after keeping it at 9.25% since August last year. The north Atlantic nation’s largest banks, Islandsbanki hf and Landsbankinn hf, had projected unchanged rates.
https://www.bloomberg.com/news/articles/2024-10-02/iceland-surprises-wi…
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