Here's our summary of key economic events overnight that affect New Zealand with news consumers may be anxious about their political future, but they are spending like they are in healthy financial shape.
In the US, their economy expanded an annualised +2.8% in Q3-2024, below the 3% in the previous quarter and forecasts of 3%. Holding it back was essentially no growth of inventories and slow expansion of capital investment. But personal spending rose at its fastest pace in more than a year. The US economy is running at a nominal pace of US$29.35 tln of annual economic activity. That is +US$1.4 tln more in a year, or +4.9% more, in nominal terms. (Their increase is about five times New Zealand's total activity, three-quarters of Australia's total annual pace.)
The ADP employment report for October delivered a very positive signal, adding +233,000 paid private-sector jobs, when only +115,000 were expected. This will have analysts raising their forecasts for US non-farm payrolls.
US pending home sales - a forward-looking indicator of home sales based on contract signings - rose an outsized +7.4% in September and the rise was broad-based, across the nation. But last week's mortgage applications were little-changed, but that level is +10% higher than year-ago levels (which to be fair were weak). Higher benchmark mortgage rates inhibited recent activity.
In China, eyes are on the level of interest payments that local government is paying, as they borrow much more, replacing the 'revenue' that has dried up from land sales.
Pushed by an unexpectedly positive German result, the EU Q3-2024 GDP rose much faster than expected (even if it is still low).
EU sentiment is broadly stable, although there was a small rise in inflation expectations in these surveys.
In Australia, their Q3-2024 CPI rate was expected to come in at 2.9%, and their September monthly inflation indicator was expected at 2.4%. They actually came in at 2.8% and 2.1% respectively (a 3 year low), so that eases the pressure on the RBA, although only slightly. Next week, the RBA will be reviewing its 4.35% policy rate, and these results are likely to be seen as an unexpected faster cooling, but largely resulting from the impact of the Canberra's government's Energy Bill Relief Fund rebate. It seems unlikely this distortion will prove enough for the RBA to cut rates.
The UST 10yr yield is now at just on 4.25% and down -4 bps from this time yesterday. The key 2-10 yield curve is less positive at +12 bps. Their 1-5 curve inversion is also more inverted, now by -17 bps. And their 3 mth-10yr curve inversion is more inverted by -51 bps. The Australian 10 year bond yield starts today at 4.52% and down -4 bps. The China 10 year bond rate is little-changed at 2.15%. The NZ Government 10 year bond rate is just on 4.48% and up +1 bp.
Wall Street has started its Wednesday with the S&P500 up +0.2%. Overnight, European markets were lower, all by about -1%. Tokyo ended yesterday up +1.0%. Hong Kong was down -1.5%. Shanghai fell -0.6% yesterday. Singapore was down -0.9%. The ASX200 ended its Wednesday session down -0.8%. And the NZX50 ended its session down -0.7%.
The price of gold will start today at US$2786/oz and up +US$21 from yesterday and a new high.
Oil prices are up +US$1 US$68.50/bbl in the US while the international Brent price is up to US$72.50/bbl.
The Kiwi dollar starts today at 59.8 USc and back up +20 bps from this time yesterday. Against the Aussie we are up +10 bps at 91 AUc. Against the euro we are down -10 bps at 55.1 euro cents. That all means our TWI-5 starts today at just on 68.8, and up +10 bps from yesterday at this time.
The bitcoin price starts today at US$72,121 and down -0.7% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.5%.
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The easiest place to stay up with event risk is by following our Economic Calendar here ».
99 Comments
Commenting on yesterday's 4pm story descended into farce, bullied by extreme views, and pushing the value of reader comments into the gutter. I have hidden it. (Apologies to those who in fact did contribute sensibly.)
Until the US election season calms down, off-topic comments on both this morning review, and our 4pm review stories will be heavily moderated to allow sensible debate to take place. But it will have to be on the topics raised in the story. (Hopefully, more open commenting on off-topic matters will return when the partisan pressures recede. Lets hope that is still an option.)
By the way, the use of the smear 'woke' (a term only now used as a dismissive insult), will be an almost certain trigger for comment deletion.
Please stay away if you want to promote Tommy Robinson / Tony Hinchcliffe / Ryan Girdusky talking points. We just don't need that sort of bile. There are plenty of other comment destinations that allow a sewer stream to run. Try Facebook or Reddit.
Nek minut people will be called ‘doom gloom merchants’ (DGMs) for wanting affordable housing in NZ - and others spruikers for wanting capital gains but this will continue without censorship. Use the term ‘woke’ though, well that’s a different story! Not on this site!
Not a balanced approach to censorship in my humble opinion. You are allowed to ridicule your opponents with lazy derogatory language but only using terms approved by interest.co.nz
I’m not attempting to stir things up David - but I think you need to be very careful about how you go about censoring terms if that is your new approach on this site. I’ve been saying for at least a year that DGM/spruiker should be removed - as when used they simply trigger the comments section into pointless chaos. Admittedly I wasn’t in the platform after about 5pm last night so have no idea what happened but if the term woke isn’t ok how the hell is it ok to consistently call you fellow Kiwis doom merchants?
I suspect that's because "DGM" and "spruiker" pertain to differing economic perspectives, while "woke" is political, in much the same vein as commie/Nazi. There is obviously some crossover between politics and economics, but given this site is finance-focused it would be more tolerant of economic rants than political ones.
OR...everyone could just grow up a bit and learn how to debate their position without resorting to childish taunts.
I can see the distinction but it has the same outcome - both cause the comments section to turn hostile and not at all constructive.
Housing has also become extremely political so the distinction is also fine/blurred. And yet if you want prives to fall you are ridiculed as a DGM, if you want it to go up a spruiker.
Consistency from the moderators would be good - although I think the use of the terms DGM/Spruiker probably increases clicks on the website as parties attack one another hence they remain uncensored.
We get so enamoured with our thoughts they become intertwined with one's sense of identity.
Having these thoughts tested becomes a personal affront for some, so rather than seriously contemplating contrary views, we get ad hominem, and solidification of one's views.
Introspection is key to personal development, and it's a crying shame that the polarisation caused by both social media algorithms and usage, and COVID times that has caused more and more to simply project without reviewing and reflecting on their own views, backgrounds and opinions. Luckily there are many on this site that give varying different interesting and analytical perspectives and I appreciate the discussion :-)
There is a pressing need to quell the ever increasing readiness to bash the commenter personally rather than address the comment itself.
I agree with that, however, how does moving the date forward help? It reduces comments to police I guess, but it doesn't force those still commenting to address the comment itself.
Yes that is a fair point. My notion is that those that put up a stake in the proceeding are more likely to be more considerate and/or circumspect than those that just come in because the ability is available open slather and let loose because they can. That remains to be seen certainly. Figuratively is the wheat to be no different from the chaff in other words.
DC I was offline late yesterday and didn't see the story and commentary you talk about.
Can you put it back up and lock the commentary? I need some entertainment.
But in all that I am all for healthy discussion. The limitation of only discussing points raised in the article will raise the risk of killing the site as the commentary thread often wanders off into some very interesting and valuable topics. They also provides some interesting insights into human psychology.......
I didn't comment on yesterday's story, but the response was inevitable. If a media outlet publishes a story with strong political views, then the comments will naturally react to that. To avoid this, keep the reporting more balanced and neutral, then you won't stir up such strong emotions.
Up until now, interest.co.nz has remained unique in permitting readers to express their views, whether or not those views are palatable to everybody. It is a shame that you are now making moves to restrict, moderate, and censor comments because they disagree with a particular mindset. What you consider "bile" depends heavily on your own opinions, views, and biases.
So interest.co.nz is about to join the unfortunate global trend of shutting down debate; basically acting as moral arbitrators of "correct thinking" and censors of "wrong views". A terrible shame for such a superb website.
That's a shame, I might have started that but also didn't check back in to see it decend into being inappropriate. Apologies.
However, I find it somewhat concerning that the US election and the term "woke" are Interests line in the sand in moderation, yet have been comfortable facilitating ongoing bigotry and intolerance toward Maori - including multiple references to a stoneage culture, derogatory comments about Maori science, language etc etc etc.
Their platform, their rules.
My point is, this is not a "safe place" for Maori to come and participate. There are a few who have tried and left (Whakahokia mai?). Any Maori related article attracts comments at best ignorant and periodically very ugly. All unmoderated.
Te Kooti, I have significantly appreciated your contributions in the past, but this comment of yours stretches credibility. I have found this site to be a safe place for reasoned balanced discussion and even argument on a variety of topics, all directly or indirectly linked to economics. The learning is amazing! But what is not tolerated is people who think themselves 'special', entitled or privileged and not prepared to be challenged if they cannot support their views. You will know that you have to accept that people will not always agree with you.
In my experience, and as an old fart I mostly speak of older attitudes, that most people in NZ are not racist. They are intolerant of attitudes which seek to claim entitlement and privilege, however that may be. People do recognise that the colonial history of NZ has resulted in Maori having a rough deal. But we cannot change that, instead we look forward. What most of us also recognise is that in every culture when you go into their past you will find that what has happened to Maori is not different to what happened to the Scots, the Irish, the Welsh and yes even the English. And don't forget the French, Dutch, Belgium, Germans and so on. It is not history that binds us, but a collective will to find a way forward for everyone, not just a few.
David, just a thought on some alternative measures (on top of limiting commenting to paid subscribers only) that could be tried out before you go as far as outright censorship:
1. People tend to be more extreme in their comments under the mask of anonymity. So when people register to comment on your site, require that they use their real name in comments instead of a pseudonym. Your system would have to verify them using a valid ID, say driving licence.
2. Have a time limit on comment sections (say midnight on the day of publishing), after which articles are closed for further comment. Then there's an automatic limit as to how long comment sections can spin off out of control.
Less work too than heavy moderation, and less of a blunt instrument than scanning for key words such as "woke" (people will quickly find alternative terms to express such things).
Re 1. That's why I use my real name, I'm happy to be held accountable for each and every utterance - including the jokes I try and make that no one else gets. However, being post caring about career and indifferent to being outspoken probably helps - I can see others may not feel comfortable. It would certainly tidy things up better than paying to comment though.
I think limiting comments per article\per day might be a better way. If you only get say 3, then are you really going to make throw away comments or think before you type?
If you are really ruffled by someone else on here you can just permanently mute them with this...
https://chromewebstore.google.com/detail/interestconz-commenter-bl/kbfa…
partisan pressures recede
I didn't see what you're referring to but accept something did at face value. However, more generally you're guilty of partisanship when it suits you or have you forgotten the likes of Brock Landers calling you out on 'orange man bad'? The lack of independence is fine by me, the claim to be independent is the reason I don't subscribe.
Tommy Robinson / Tony Hinchcliffe / Ryan Girdusky
I've stumbled across the first one a couple of times. Shoot the message down rather than the messenger might be a better way.
'woke'
Doesn't Winston Peter's regularly use this term? I don't because I don't really know what it means, but it seems extreme to start 'banning' words without consideration of context - but it's your show.
The site is long established. The regular authors and staff here are hardly short of research and analytical ability therefore cannot imagine this is an unreasoned introduction. The homework will have been done. Like any concern, the executive and staff here manage the business and are accountable for the resultant outcomes, and therefore this decision, is no departure from that responsibility as would be normal.
It will significantly reduce reader engagement. While the authors may be great journalists, they are clearly lacking in online marketing skills. Lower engagement will mean less site traffic, which means less advertising revenue. Along with lower subscription revenue as subcribers engage less with the site due to lack of comments, and who then feel they are getting less value from their subscription so they will drop off.
No one is going to come to interest.co.nz multiple times a day to reread the articles. They come several times a day to keep up with the comments and conversation.
Macrobusiness in Australia did the same thing, and it ruined it. From hundreds of comments a day per article down to 2-3 comments, always from the same 2-3 people. I cancelled my subscription simply because the site became boring, and most of the news can be obtained elsewhere. I predict the same will happen to interest.co.nz
Perhaps part of it is that the executive have determined that it would be far better to pay staff for more productive and positive work other than having to wade their way through an increasing layer of comment being submitted, that is neither productive nor positive and in reality little more than subjective insults and this therefore is an understandable initiative to try and reduce that element?
This is an important paper.
It goes with a poster yesterday failing to answer a question and puts much dissing in perspective.
DC - in reply to your above (I don't disagree with most of it) you have to be very careful you don't slide into censorship - which is, of course, not journalism by quite some measure. You could claim that the link I've put up, has nothing to do with your offering; I'd say it overrides.
Off topic. Please note: temporary new rules, above. Only comment on issues raised in the story. This one isn't. Otherwise would have been moderated out. I let this one slide to make the point. (Hopefully we will get back to open commenting when the pressure passes.) Thank you
"Hopefully we will get back to open commenting when the pressure passes"
With respect, the (economic) pressure is increasing society wide. The current election is but one sideshow.
And people do what people have always done when the pressure comes on - they become more tribal and look to project blame on to someone or somewhere which "explains" their rising stress / the rising misalignment of the world to their views.
So comment streams descending into borderline areas is kind of a reflection of the times.
So comment streams descending into borderline areas is kind of a reflection of the times.
There's a little bit of this, but also some of it's part and parcel of how anonymous remote conversations differ from much of human interaction.
You'd think the ability for all humans to be connected like this would lead to better societies and discourse. Instead everyone seems to be increasingly occupying their own head space/thought streams.
Is it really that cheap here in NZ though?
In the wonderful Whangavegas it is close to 20c dearer than just a few weeks ago. And tax makes up too big a portion of it. Besides if they bought all that petrol would they still be able to eat, pay rent or what ever?
All this is part of the bigger myth about resources, their costs and the overall workings of the economy.
UK Budget and their Interest Rates look like they might set a tone for the rest of us. If this keeps up, the enthusiasm for non-cash alternatives e.g. Gold, Shares, Property etc might wane. But we do have the Santa Rally to come, of course - maybe.
"Bond markets took fright to the Chancellor’s proposed debt-fuelled spending binge by pushing up the yield on the main type of Government debt ....Meanwhile, two-year debt surged....after the Budget....The move was prompted by a larger-than-expected bond sale plan by the Government, with the Treasury planning to increase sales by £19 billion more than expected." (Telegraph. This morning).
And that's from 'just' an extra £19 billion, to £297 billion.
(Tax as % of GDP) set to hit 38% by 2030, a new record. (NZ ~33%)
"Employers will bear the brunt of the £40bn in tax rises unveiled earlier by Reeves - the biggest increase in a generation"
I don't see the problem with the word "woke". Seems to usefully describe a group of views. And yes, abusively at times.That said if I have used it I don't recall.
Then we hear "Old White Men". (OWMs) (You and me David) much worse because it does not describe a view but attributes them to a group. Often erroneous. And abusive. Thus ageist, racist and sexist. Much worse than 'woke'
"Left" and "Right" get thrown about a bit as well. What do we do with that?
David, overall I agree with your limits on the daily updates.
It should just mean "politically and socially aware" and as such, a compliment. The opposite of "reactionary" and "close minded", so it's something we should all aspire to, to some degree. When next tempted to use it, replace it with "politically and socially aware" and if that doesn't suit, maybe use something more precise..
"In China, eyes are on the level of interest payments that local government is paying, as they borrow much more, replacing the 'revenue' that has dried up from land sales."
Replacing income with more Debt.
Doesnt sound like inflation is tamed.
Economic news from US is looking pretty good, China injecting mega stimulus, Europe is looking stable, Australia seems to have OK inflation rates without destroying their economy through government cuts and huge interest rates.
Meanwhile in NZ... large government cuts, subsidies for landlords, building infrastructure we don't need (how's that mega Wellington tunnel investigation going Simeon? How about that iRex replacement?), a clueless RBNZ who thinks its amazing... prepare for the next wave of migration of the young and the government being forced to open up the immigration flood gates again to "get back on track".
Quite a bit of lag time for that to happen. Many landlords are just breaking even due to the triple whammy of high interest rates, healthy homes edicts and previous tax changes. You will need to check back in a few years to really ascertain if this has helped reduce rents. It could hardly happen overnight.
Rent is charged just like anything else - the maximum that the buyer (tenant) will pay. (And, yes. It can fall overnight, as it did in parts of Australia when Negative Gearing was unexpectedly scrapped in the mid 80's, and those properties that weren't occupied scrambled to get any income, and those that had tenants dropped their rents to keep their tenant in situ.)
Rents will fall when demand for the product (property) falls, and it sits empty. Devoid of Income and only costs remain. They will rise as long as the capacity to pay rent remains.
Amongst that of course the basic tenet of supply and demand. Should the supply of leases available outstrip the supply of tenants to put it simply. Perhaps that is already becoming a factor if the quantity of the so called land house banking thingys start coming to the market would be a consideration? Is there though any hard evidence of the percentage of these in NZ? Our neighbours split their time between here and Canada to avoid winters but if they leave their property they’re unoccupied for over 6 months I think, then they pay some sort of penalty tax.
And that is the root of the parasitic attitude of landlords and why regulation is required (Charging what the market will bear).
But to be fair most business owners are similar if not the same. In another age I was R&D Manager for a local manufacturing firm and was shocked to learn the owners attitude towards charging what he thought the customer was prepared to pay. He had no idea how much it cost to produce the products we made. He had even gone through a period of selling product at below cost. And he was an accountant!
Yip and if your customers can’t afford your prices the government step in with welfare (accommodation supplements) so that you can keep jacking up your weekly income.
I see it more as a rort funded by the taxpayer than a legitimate business practise.
I personally think we should abolish the accommodation allowance and let the free market determine what the real economy thinks fair rental prices are - and most of the complaints won’t come from renters, but the landlords with oversized mortgages as rents are forced downwards.
You can try but most will just ride out the hard times until things get better then make up for lost revenue by not lowering prices just because they are finally making a profit. You have to look at the big picture. Those older landlords likely went through years or poor or even negative returns in order to build up their portfolios.
Those older landlords likely went through years or poor or even negative returns in order to build up their portfolios.
True in many ways, however it would put their statement of being out to "provide someone necessary shelter" to the test if we had a mass round of evictions from scrapping the AS. Out to provide a service but not willing to drop rents to meet the market and house a family? Oh my the emperor really would have no clothes
"their statement of being out to "provide someone necessary shelter"" That is one of the rationales provided to justify their business, but for two reasons it is just rubbish, in fact utter BS! First they are not charging an affordable rent, that is 25 - 30% of the average take home pay, but rather a "market rent", and they are not building new houses to put into the market, but taking existing ones out of the market for FHBs.
The Landlords will squeal about the prices they pay for their houses etc, and the need to generate a positive return, but those are business decisions they're making of their own volition. Renters on the other hand don't have much if any choice. So LLs really are not providing a social service.
Rarely, if ever, would a landlord claim he is in the game to "provide someone necessary shelter". I think that is what is called a strawman? They may have said that life would be grim for many if there were no houses to rent, that there is a need in our society for such services to be available. Landlords are filling a need which, while it sounds similar, is not really the same.
It's well established that market rents are primarily determined by tenants ability to pay, not landlords costs - which include eg the original removal of the tax deduction, increases in rates, insurance.
as indicated by the generally straight line graph here New Zealand: rent price index 2024 | Statista
rents generally aligned with the LCI which has increased substantially since 2021
Labour market statistics: June 2024 quarter | Stats NZ
Labour Cost Index (YoY) - New Zealand - 2024 Calendar Forecast
The US growth appears to be five times what we are achieving. For us to turn around, the challenge is incredibly high. We have a Government who appears to be only looking at the short term we need to see investment in Science and research to propel us forward. I acknowledge there are no easy options, with a lower dollar and the focus of the currency with a high US dollar. As a group instead of talking housing lets talk about the risks of whoever wins the election in the US. How is the demand for data centres going to impact our energy security? I could go on but AI plays into this for us. US stocks are at an incredibly high valuation in respect to their bonds. Can't quite see the same here! Any shocks and our frail recovery could rapidly go into reverse?
Wow for a minute I though they were powering ahead over there. Its less than a week to the US Election, western media is in full spin mode. The very best that Americans can hope for post election is they do not have a civil war. If Trump fails to win it could be carnage because he will be too old or dead to get another shot, no pun intended.
Whilst we are hand-wringing over any kinds of tax on capital, the UK is increasing its CGT rates from 10%/20% to 18%/24% and increasing the scope of inheritance tax to include more assets, notably farms and pension inheritances.
How long can NZ continue to penalise income earners at the expense of capital gains earners?
Fresh of the press from the RBNZ.
Home buyers remain cautious in subdued housing market
Don't forget to click through to the additional info.
Lol... that article basically says "we don't know".
"People capacity to take on debt is improving, yet unaffordability is restricting them from qualifying for loans"
This is from the Reserve Bank!! Let that sink in... The Reserve Bank!! In a nutshell, what they've said there is that the housing market IS the economy and now because we overcooked it, we are stuck.
For those too lazy to do a few clicks to the report itself ...
RBNZ: Update on the housing market
There are many nuggets - some are gold - e.g. graph of NZ's slump compared to other countries' slump / crashes. A must read.
The Left never learn. Imagine falling for the "no more tax" line, again!
UK government delivers a brutal budget hitting taxpayers with $80bn in tax rises
After promising no tax rises for working people, the Starmer government has just inflicted them with the highest tax burden in the UK’s history, hitting businesses and pensioners hard.
Until you realise that its going to cost a business an extra 1600 pounds a year in payroll tax for every employee they have, plus a 6% increase in the minimum wage, and a reduction in the size of the business that will be subject to the tax so many small businesses will be subject to the tax for the first time. Wont be long before unemployment is through the roof.
The rich are busy leaving, taking all of their taxes with them. Cant tax people who no longer live there.
https://www.telegraph.co.uk/money/tax/young-wealthy-people-leaving-uk-1…
No they won't. Watched a program on Aljazeera and the problem with Nuclear is the massive expense and huge amount of time to build them. By the time anything you start building tomorrow comes online it will be too late. The best and fastest returns now come from renewables. Governments should be incentivising people to start putting up solar panels.
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