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
ASB trimmed its fixed rates today to match ANZ. More here. Note we are tracking banking app discounts now too. And there were many floating rate changes. See details here. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
ASB cut many term deposit rates too. Plus, banks cut savings account rates when they cut their floating lending rates. Details here. The only non-bank to cut rates today was NBS (Nelson Building Society). All updated rates less than 1 year are here, for 1-5 years, they are here.
THE RBNZ CUT THE OCR BY -50 BPS, DECLARES VICTORY
It is the only story today. See all the details here. Equity markets rose. The NZD fell. And wholesale interest rates fell across the board. Retailers are hoping this will bring 'Christmas cheer'.
STILL LOOKING FOR GREEN SHOOTS
Will vendor optimism be matched by buyer enthusiasm in the spring housing market? More homes are flooding onto an already crowded housing market making potential buyers cautious on price, according to TradeMe Property.
NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. Vulcan Steel & Heartland lead a charge higher. SkyCity and Hallensteins among those who aren't feeling the love
DAIRY PRICES DIP MARGINALLY
We should also note that the overnight Pulse dairy auction for just WMP and SMP came in less robust than the minor gains expected. The dips were small and most for SMP, but essentially both products are retaining their recent higher levels even if they are slipping slightly.
POLLUTION PROGRESS
StatsNZ and the Ministry for the Environment released an updated report on air pollution in 2024. If found overall improvements. Despite more cars and more distance travelled, vehicle pollution is reducing. But they note that monitoring is only being done comprehensively by Councils in areas they know they have problems. So the actual pollution levels may be lower overall. Looking ahead. areas with drier conditions could experience worsening air quality due to higher fire risks and more windblown dust they say. And warmer temperatures and higher carbon dioxide concentrations could increase the suitable growing areas of major pollen-producing species and enable plants to produce more pollen for longer. “Hay fever affects more than a third of people aged 20-44 years and the number of people affected is increasing," they say,
SWAP RATES DROP
Wholesale swap rates are probably lower today after the MPR, maybe -7 bps at the short end. Our chart below will record the final positions. The 90 day bank bill rate is down another -2 bps to 4.75% but that was a rate set before the MPR. The Australian 10 year bond yield is down -2 bps at 4.21%. The China 10 year bond rate is up +3 bps at 2.19%. The NZ Government 10 year bond rate is down -3 bps from this time yesterday at 4.33%. And the earlier RBNZ fix was at 4.29% and down -3 bps from yesterday, but that too was before the MPR. The UST 10yr yield is now at 4.02% and unchanged from yesterday. Their 2yr is now at 3.95%, so that curve is now only positive by +7 bps.
EQUITIES UP EVERYWHERE, EXCEPT SHANGHAI
The NZX50 is up +1.6% in its late Wednesday trade after the MPR. The ASX200 is up +0.3% in afternoon trade. And Tokyo is back up +1.0% at its open. Hong Kong is up +0.9% at its open. Shanghai has started with a -2.5% retreat. Singapore is trading up +0.5% at its open. Wall Street ended its Tuesday trade with the S&P500 back up +1.0%.
OIL DROPS
The oil price is down -US$3 from this time yesterday at just on US$73.50/bbl in the US, and now just under US$77.50/bbl for the international Brent price.
CARBON PRICE DIPS
The carbon price dipped slightly to $61.50/NZU. Volumes traded are still light and bidding is soft. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD LOWER
In early Asian trade, gold is down -US$26 from this time yesterday, now at US$2621/oz.
NZD FALLS
The Kiwi dollar has fallen -30 bps from yesterday, now at 61.1 USc. Against the Aussie we are down -20 bps at 90.6 AUc. And against the euro we are down -30 bps at 55.6 euro cents. This all means the TWI-5 is down to 69.1 from this time yesterday.
BITCOIN LITTLE-CHANGED
The bitcoin price is down -0.1% from this time yesterday, now at US$62,389. Volatility of the past 24 hours has been modest at just on +/- 1.1%.
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59 Comments
"The contrast is jarring.
While economists, strategists and investors on both sides of the Pacific fret about timing and size of the next cuts to interest rates, two of the most famous names in global markets, JPMorgan boss Jamie Dimon and hedge fund titan Ray Dalio, continue to predict that rates may actually need to move higher, as long-term inflationary forces continue to build."
Via the AFR this arvo. And the reason they think inflationary forces are building? Debt. Or more precisely, the size of global Debt and the probability that it is going to get much larger.
The green economy is inflationary. The remilitarization the world’s inflationary. The restructuring of global trade is inflationary. Demographic is inflationary. I don’t see the massive offsets to that
Hard to disagree with Jamie Dimon on that. A guy that sells debt for a living (sorry for the oversimplication) being spooked by there being too much debt is intriguing and alarming.
Via the AFR this arvo. And the reason they think inflationary forces are building? Debt. Or more precisely, the size of global Debt and the probability that it is going to get much larger.
The global debt has to increase...exponentially. People need to accept this.
Vampire Squid was clever to suggest China stimulus could send inflation ripping across the globe. Aotearoans should listen, instead of just fixating on the local Ponzi.
A better (and highly unlikely) alternative is we reign in the financial sector from shoveling new credit. Basically, force people to live within their means by consuming only what we can afford instead of borrowing from our future selves.
This could even allow us humans to enjoy this planet for a bit longer.
You have too much faith in human psychology. The world has come a long way from cavemen through increased energy usage. The psychological barrier to change will be that nobody ever wants to think of themselves going backwards in any way possible. Not in salary, not in living standards, not in resource consumption, because they have seen the world change around them and progress eternally, and been raised from a bub with the mantra of hard work now means more comfort and luxury later. This ingrained mantra is incredibly difficult to break, as it requires true introspection and reflection plus the direction and will power (learned skills) to enact personal change in the face of adversity, be it by others or by one's self. This, and this alone is the biggest human fallacy that will be the downfall of our species unless somehow it is addressed en masse, and that friends, is the ultimate long game that if achieved, would be the human races biggest ever accomplishment.
Anyone who believes Peter Schiff probably believes in the tooth fairy.
He's been banging on about US$20,000 gold for years. Schiff makes money from his gullible subscribers. Didn't he tell his naive followers to move to Puerto Rico to avoid US taxes....just before Hurricane Maria levelled the place?
He's been banging on about US$20,000 gold for years.
Fair prediction. Under certain economic conditions, gold prices could soar to between $42,000 and $44,000 per ounce by 2030. In a dollar crisis, gold would have to go up approx 15x+ to match the price level it was at in 1980 relative to foreign treasuries outstanding. More conservatively, 3x to 6x to get back to long-term average.
https://www.cryptoglobe.com/latest/2024/07/gold-becoming-leading-reserv…
Over the past 10 years, gold has experienced significant growth relative to USD, with a CAGR of approximately 8.8%. This rate reflects a total increase of around 132.5% in gold prices during that period.
People don't believe it but seem to be incapable of researching basic information.
Yes 2025/26 are going to be interesting. The RBNZ has been totally predictable for the last 18 months with 8% inflation demanding an OCR of 5.5%, and then the long hold. And now we have the predictable cuts. Next year the data and cash rate announcements will be less predictable for the first time in a while. The long end bounce back is interesting.
The NZX50 is up +1.6% in its late Wednesday trade after the MPR
Happy days for the equity owning boomers. Smart NZ Dividend ETF up a stonking 2.45%. Not so much for the Gen Zers I guess. Whatever equities they have likely been cashed in while Lord Orr has crushed their finances, hopes, and dreams.
TradeMe Property - More homes are flooding onto an already crowded housing market"
This should not be interpreted as a revelation - OCR cuts were anticipated. It's more a revelation where all those financially qualified and confident buyers are going to suddenly appear from to support a sustained high sales volume price floor, followed by a price recovery over the coming Spruikers dream FOMO summer.
You forgot cashed up. Much like the cashed up cooks and Uber drivers that were coming from overseas over the last 2 years.
There was also going to be a huge uptick in housebuying from 150k people being awarded PRs by Jacinda in 2021 and 2022.
Yet all we heard in auction rooms were crickets chirping.
Pent-up demand met its demise around when the population Ponzi doubled down on it so hard that we began bringing in more economic refugees instead of importing proper skills somewhere around a decade ago.
Many recent arrivals live in crowded homes and won't be able to afford expensive houses close to any population centre.
Reminds me of those old Lilos; you were on top of inflation only briefly.
Bystander? Good description; 'out of his depth' is another.
But they all are up against inexorable physics. And ecology. And the math of exponential growth.
So they were doomed to 'fail' well before they started.
The ACT party ... completely silent previously ... now picks up my position.
It is a lie because they said NO SUCH THING back in November 2023. Or as far as I can recollect, until now!
But hey ... Nice to know Seymour is such a charlatan he's not even remotely embarrassed to use my words.
50bp cut "a multi-billion dollar mea culpa," ACT leader says
ACT leader David Seymour has labelled the 50bp cut "a multi-billion dollar mea culpa" on the part of the Reserve Bank.
"Lower interest rates mean real relief for Kiwis with mortgages, also relieving pressure on rents, and freeing up spending cash to quench thirsty local businesses.
“However, on the Reserve Bank’s part, a 50 basis-point cut is a multi-billion dollar mea culpa, and the latest twist of a nauseating three-year fiscal and monetary roller coaster," he said.
“Today’s cut bookends a series of excesses. The too-easy money of COVID times spiked house prices and inflation. Then, interest rates shot up, house prices crashed back down.
"Today, Kiwis are finally getting off a three-year fiscal and monetary rollercoaster, feeling nauseous for their troubles."
My 'mea culpa' words here:
https://www.interest.co.nz/economy/130158/reserve-bank-delivers-double-…
Can't find any similar words from Act nor Seymour.
Wow. I am so, so sorry to everyone if Act gain any traction whatsoever from my phasing.
look at at the size of Carla. https://en.wikipedia.org/wiki/Hurricane_Carla#/media/File:Hurricane_Car… . No denialism
No. The area makes a difference. The larger storm will do more damage than a smaller storm in size. Take a corolla hitting a house doing a 100k compared to a large truck doing say 70 hitting the same house. The truck will do more damage than the corolla because of the size difference even though it is going faster. The truck has more energy even at a slower speed. Same as comparing a large storm to a smaller storm in size even if the wind speed is faster.
Area is not pressure - Milton is setting new records.
As for Cat6? Milton must be near the physical limits of the energy a body of water like that, can produce when heated thus. So not yet.
But as to future heating - quite right, the limit will become higher; physics of a heating pot, as per 3rd Form science.
But, silly me, raise the interest-rate and lower the tax, and there will be no more hurricanes...
Edit - But we have to remember that there have been two, in quick succession. So a re-heating, then. I guess that says that a single event could be a tad more powerful?
Yip 1990 out household debt to GDP was around 50%.
In 2008 it’s hit a ceiling around 160% of GDP.
This is the problem…not an OCR at 4.75%.
https://tradingeconomics.com/new-zealand/households-debt-to-income
All our policies of the past 20 years appear to be al about trying to keep a private debt bubble inflated.
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