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
Although they only trimmed them yesterday, Kiwibank made two further reductions again today after finding that yesterday's cuts weren't enough to be competitive. All rates are here.
'NATURAL' LIMITS
Banks are set to be 'constrained' in how much they can cut mortgage rates. Reserve Bank Assistant Governor Karen Silk says reversion to pre-covid funding conditions is under way and this will limit how far lending rates fall as banks seek to preserve their net interest margin.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ, ICBC and Rabobank all cut TD rates today. We have a review of the updated status here. All updated rates less than 1 year are here, for 1-5 years, they are here.
CPI BACK IN TARGET BAND
Q3-2024 headline inflation lands on the Reserve Bank’s 1-3% target bank, coming it at 2.2% despite the largest local government rate hikes since 1990. Tradable inflation was deflating at -1.6% while non-tradable inflation was at 4.1%.
DAIRY UPDATE
Dairy prices changed little at today's GlobalDairyTrade full auction event. They were down a minor -0.3% overall. WMP was essentially unchanged. But some of the foodservice commodities like SMP, butter, and especially mozzarella were much lower, while cheddar was sharply higher (+4.2%). China isn't showing stimulus effects yet. The next thing to watch is milk production levels. North America, South America, and Europe are seeing flat volumes produced. China might be lower due to cutbacks die to unprofitability. New Zealand milk production is likely to be up based on excellent weather conditions here. And there is this.
NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. Gentrack surges, Tourism holdings gains more. But a2 Milk and Kathmandu lead the drop-backs.
TOWER TO ENTER NZX50
General insurer Tower will be joining the NZX50 Index from October 22, as long as aged-care provider Arvida Group is successfully delisted. The insurer announced the news to the NZX on Wednesday, with the company’s Chair Michael Stiassny describing Tower’s inclusion to the NZX50 index as a “positive milestone and proud day” for the insurer. The NZX50 is made up of the 50 largest companies by float-adjusted market capitalisation on the NZX. “It is symbolic of the significant work undertaken over many years to successfully reposition Tower,” Stiassny said. The news follows Tower updating its earnings guidance for the insurer’s 2024 financial year last week. Tower now expects net profit after tax (NPAT) to be around $83 million – an 84% increase from the $45 million that was previously advised.
SWAP RATES FALL
Wholesale swap rates are probably sharply lower today after the CPI result. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 4.65%. The Australian 10 year bond yield is down -4 bps at 4.24%. The China 10 year bond rate is down -2 bps at 2.14%. The NZ Government 10 year bond rate is down -3 bps from this time yesterday at 4.45%. And the earlier RBNZ fix was at also at 4.45% and up an insignificant +1 bps from yesterday. The UST 10yr yield is now at 4.03% and down -6 bps from yesterday. Their 2yr is at 3.94%, so that curve is now positive by just +9 bps.
EQUITIES MIXED
The NZX50 is now down -0.9% in late Wednesday trade. The ASX200 is down -0.3% in afternoon trade. Tokyo is down -1.8% at its Wednesday open. Hong Kong is up +0.5% at its open. Shanghai started +0.3% firmer at its open. Singapore is trading also up +0.3%. Wall Street ended its Tuesday session down -0.8% on the S&P500.
OIL DIPS
The oil price is down -50 USc from this time yesterday at just under US$71/bbl in the US, and just over US$74.50/bbl for the international Brent price.
CARBON PRICE LITTLE-CHANGED
The carbon price slipped marginally today to $62.50/NZU. 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$17 from this time yesterday, now at US$2666/oz and back nearer its all-time high.
NZD DIPS
The Kiwi dollar is down -30 bps from this time yesterday at 60.6 USc. Against the Aussie we are up +10 bps at 90.6 AUc. And against the euro we are down -10 bps at 55.7 euro cents. This all means the TWI-5 is also down -20 bps from this time yesterday at 69.1.
BITCOIN RISES AGAIN
The bitcoin price is up another +2.1% from this time yesterday, now at US$67,275. Volatility of the past 24 hours has been moderate at just on +/- 2.4%.
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70 Comments
Not only local authorities..."ACC is proposing to increase the levies"
- ACC records $7.2 billion deficit, compared to last year's $911 million surplus
- The deficit was largely driven by an $8.7b increase in the expected future costs of injury claims on ACC's books
- ACC blames court decisions, higher costs and volumes and declining rehabilitation performance
- It recently proposed to increase levies
https://www.rnz.co.nz/news/business/530961/acc-announces-7-point-2-bill…
As rude as it sounds, have you also seen the condition of so many people out on the street? If you're unfit, carrying a lot of excess weight on the frame etc then it can be harder to recover from injury (I'd know as I used to be overweight and unfit and bouncing back from any injury seemed much more challenging than it is now). I appreciate maintaining a healthy weight is made more challenging by issues such as financial difficulties limiting food options, but at a macro level you've got to wonder just how much burden or healthcare and recovery systems e.g. ACC face from those for whom many problems may be 'self-inflicted'.
Combine that with an ageing population and you've got a recipe for disaster. Or some enterprising politician to float the idea of a totally not mandatory (but there's consequences if you say no) Ozempic passport ... in fact I see they are already talking about that in the UK to help the overweight who are unable to work to be able to get back into the workforce.
This is the also about 30% of the health system's cost/demand problem.
We waste so much time and money on drug prohibtion, yet 50% of the population are addicted to unhealthy, ultra-processed food and are half way to diabetes , yet no policy action in sight, minimal funding for prevention and intervention for overweight/obesity issues.
The biggest costs to ACC in an injury are the earnings-related compensation i.e. income protection insurance which could be expected to track changes in wage growth. The amount that ACC pays to rehabilitation providers (Physios, chiropractors etc.) has failed to keep up with inflation for the last 20 years and has certainly failed to anticipate the Te Whatu Ora pay equity agreements that went through over the last couple of years. Private rehabilitation providers (those are the people at the coalface) are struggling to attract staff as they cannot match what the hospital system is offering for salaries.
For example: Media Release: “Insulting” service pricing increase : PNZ
Why is rehabilitation performance declining? has that got to do with our aging population as well?
Pretty common now for oldies to have a whoopsie, which you're more prone to as you age, go on ACC and never come off. And get in home care, meals, etc.
Which isn't inherently a bad thing, it's just that it seems abundantly clear no one has provisioned for so many people to get so old, and for the wonders of science to keep them alive as long as possible.
With a declining number of levy contributors.
There's no easy answer. There's either less coverage, or higher levies. Or some form of debt.
The biggest predictors of an individual failing to rehabilitate after an injury are actually psychosocial (mental health, job dissatisfaction, etc.) rather than physical or injury related. Therefore, one could improve rehabilitation outcomes by resolving a host of social problems, have equitable employment laws, improving the education system, and promoting healthy living generally (cycling, sugar taxes etc.). Unfortunately, all of those solutions take longer than three years to show results, and require behavioural and lifestyle changes on the part of individuals so it seems fairly unlikely to happen.
Age is not modifiable. Yes, older people do take longer to recover than younger ones on average. I guess if we just kill off everyone over the age of about 70 that might help but I'm not sure we're ready to implement such a ruthless eugenics program. The closer I get to 70, the less that idea appeals to me.
Folksie wisdom aside (and ignored)
If you had to mention it, then you definitely didn't ignore it.
The solution is one of the things I mentioned above. Potentially it'll be a mixture of all 3. I guess another option is we could move away from a no fault accident insurance scheme to a litigious one.
If I had to take a bet, I'd say a lot of the problem will resolve itself before we're able to devise a decent work around.
"Why is rehabilitation performance declining"
Actually I am impressed that ACC know. Congratulations to them.
I worked in the public health for many years and they would not have a clue about such things. Nor interested in developing it.
The place is full of narrow focus doctors who are only interested in what they do.
Across the ditch, some Labor MPs sharing their frustration about Albo's $4 million+ latest property purchase to enjoy with his new wife in the midst of a cost of living crisis and while migration is off the hook. Amusingly, the house is in an area is called 'Copacabana'.
It seems that Albo has little self-awareness. Somewhat similar to our Great Dame Ardern.
I'm guessing that Albo has more or less checked out.
"I can’t think of a greater act of self-sabotage in my life."
"Some people [within Labor] were aware and tried to stop it. My instinct is this is f---ing terrible."
https://www.smh.com.au/politics/federal/anthony-albanese-buys-4-3-milli…
Ozzies calling a spade a spade
https://www.abc.net.au/news/2024-10-16/the-politics-of-prime-minister-a…
That's well written and expressed. This gave me a chuckle:
His name was Albo, he was a battler
Grew up with public housing blues
Now he's gone for ocean views
Maybe he'll rent it, and do the cha-cha
Look it won't be all that weird
If it's negatively geared
(chorus: Aaaat the Copa… Copacabana
Take it up with my financial planner)
ACC is proposing to increase the levies it collects from vehicle owners to cover the costs of injuries that involve moving vehicles on public roads by up to 7.8% a year over the next three years.
You can expect these levies on vehicle owners to continue to increase even more over the next few years as Simeon Brown's policies which roll back evidence based safety interventions result in more frequent and more severe crashes. Absolute Buffon. This is the worse National Government in living memory, they are not only failing, they are actively making things worse for ideological reasons.
Alternatively we could make the speed limits so fast, and the roads so dangerous, that nobody survives a crash in the first place, ensuring less ACC claims.
For more excellent cost saving measures please email me at Simeon.Brown@parliament.govt.nz
I see they are talking of making the motorway between Rolleston (Town Of The Future & The Highly Indebted) and Christchurch 110 km/h, for a grand total saving of like 30 seconds off your journey or something.
I've got a very fast car, so to paraphrase Lord Farquad from Shrek "some of you may die, but that's a sacrifice I'm willing to make to be able to max out 2nd gear on the motorway on-ramp".
Increasing to 110kmh on well separated and designed motorways is bad but not super bad, the safety benefits are fairly marginal compared to the other things he's doing. Increasing the speed limit to 110 is more of a pointless energy waste.
The big safety rollbacks Simeon is progressing are:
- increasing speeds around schools back up to 50kmh,
- increasing speeds in urban areas and town centres back up to 50kmh,
- refusing to fund interventions that are proven to reduce risk and actively fund the removal of those interventions,
- reinstating the speed limit on poorly designed rural roads back up to 100.
There is clear and unambiguous evidence that these actions will increase the number of deaths and serious injuries on our roads and there is no evidence that they will increase productivity, they will also cost a shit load to implement.
Bright colours don’t necessarily assist. Some years back and admittedly in another field, but not altogether so as far as some driving on display here, hunters in the USA were obliged to wear high visibility tunics. Numbers of hunters getting shot increased markedly.
Australia’s government spending splurge (in eight charts):
"Australia’s federal and state governments are in the middle of a once-in-a-generation spending surge that Westpac has likened to the mining investment boom of the 2000s in terms of scale and impact... By 2028, S&P forecasts that Victoria’s non-financial public sector debt will hit $260 billion, or 372 per cent above pre-pandemic levels. NSW’s debt is expected to be 295 per cent higher than pre-pandemic levels in 2028 at $250 billion, and South Australia’s debt is projected to be 259 per cent higher at $59 billion."
https://www.afr.com/policy/economy/australia-s-government-spending-splu…
Yes, little known fact that Aus households are increasingly wealthy in aggregate because govt and business sectors are deficit spending away. Aus Govt sector (central + states) have not run a surplus for decades. Aus Govt spending during COVID was way above NZ as % of GDP.
But this is state-level debt Jfoe. Surely this has to be approached differently. The NSW government utilizes the revenue generated from stamp duties primarily to fund essential public services and infrastructure. Stamp duties and payroll taxes are necessary and the most important sources for the NSW govt to operate.
https://www.smh.com.au/national/nsw/the-state-budget-in-seven-charts-20…
Yes, but the states go into debt (like businesses do), right? That creates new cash. Here's the data...
Right. I guess so. But remember, Detroit went bankrupt and filed for Chapter 9 bankruptcy, marking it as the largest municipal bankruptcy in U.S. history, with debts estimated between $18 billion and $20 billion. This filing was a result of decades of financial decline exacerbated by a shrinking tax base, population loss, and significant underfunded pension obligations.
Alternatively, their governments could tax mining companies harder and not burden future generations with public debt.
Australia exported as much gas as Qatar in 2023 but earned one-fifth in taxes and royalties. That's about tens of billions left on the table each year.
60% of gas produced in Australia goes untaxed due to major loopholes that both major political parties choose to ignore.
...because...reasons
Juice Media: caution NSFW or young children
Honest Government Ad | How to rig elections
https://youtu.be/N3WTlyuhDs0?si=1Dw3cZhZ1-X2k2E3
"Aus households are increasingly wealthy in aggregate". Yes. But only if they cash-in today. The notional value of that wealth tomorrow could be anything. But the Debt that created it, no matter by whom, remains. How wealthy will most of those Australian households be if property price halve, for instance? "Won't happen" It has before and it can again
As long as we don't get a re-run long the lines of global 1929. We have more Debt than we can collectively shake a stick at, and at some stage that will end. You'll know there are quite a few possibilities as to what happens when it does. Many of us will likely not be here to see it, but our descendants, (if we can afford to have any!), will. And that's the thing - do we leave it to others to resolve the Debt problems that we have created today? By the look of it ....we are going to try to.
As long as we don't get a re-run long the lines of global 1929. We have more Debt than we can collectively shake a stick at, and at some stage that will end.
Our capacity to bail out everyone is far greater now. Central banks can prevent stock markets from failing (including buying stocks) and bank runs from happening.
I think it would take a black swan from the derivatives markets that somehow spirals out of control causing chaos. But I'm just guessing.
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