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
No changes to report today. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ has dropped its one year TD rate below 5% (to 4.95%), so there are now no main banks offering a 5% rate. They also dropped their nine month rate by -10 bps. All updated rates less than 1 year are here, for 1-5 years, they are here.
LEAVING IN DROVES, ALTHOUGH BEING REPLACED FASTER
There is now a net loss of about -1000 NZ citizens a week to emigration, and a net gain of about +2000 non-NZ citizens a week. That means population growth from migration slumped to +45,000 for the year as NZ citizens leave the country in droves. But the sting went out of it a bit in this latest September month data.
RECOVERY STAGNATES
Visitors arrivals were up, but to be fair the 2024 levels are pretty stagnant from 2023 (+0.9%). And that only takes them to 87% of pre-pandemic levels so there hasn't been a full recovery, even after 4 years. Arrivals from Australia were rheir highest in six month. But the recovery from China is quite variable. One place that is seeing more than pre-pandemic tourism arrivals is Queenstown. Auckland is only 'average'. Wellington and Christchurch are well below that.
NZX EQUITY MARKET UPDATES
Check out our quick update of how the NZX is faring today, as at 3pm. Weak gains by a2 Milk, Manawa Energy, and Hallensteins were overshadowed by 53 decliners led by Fisher & Paykel Healthcare, Mercury Energy, Channel Infrastructure, and Tower.
SUCCESSFUL $1 BLN RAISING
BNZ got is $1 bln funding done. It raised $600 mln in a retail offer for a five year bond at a margin of +0.9% above the swap rate. And it raised $400 mln in a three year wholesale bond at a margin of +0.68% above the three year swap rate.
TEN BUCKS, HERE WE COME
A farmgate payout milk price of 'close to $10' is possible say BNZ economists. They have raised their forecast farmgate milk price to $9.75/kgMS on the back of buoyant global prices and a dip in the value of the NZ dollar. Overnight, the GDT Pulse SMP price rose +2.3% from the prior week's full auction to US$2,915/tonne, and the GDT Pulse WMP price rose +2.6% from the prior full auction to US$3,713/tonne.
HIGHER PRODUCER PRICES
In Japan, they reported rising producer price inflation, with PPI up +3.4% in October, the highest since August 2023, and the 44th month of PPI gains.
HIGHER WAGE COSTS
Although it is now slowing, wage cost growth in Australia in the September year was up +3.5%, a cost pressure on businesses that isn't being matched in output prices or rising productivity. It is the expected moderation, but they need it to slow much faster or there will be lingering economic issues.
SHORT SWAP RATES FIRM
Wholesale swap rates are probably a little higher at the short end today. But the long end is taking off. Our chart below will record the final positions. The 90 day bank bill rate is up +2 bps at 4.47%. The Australian 10 year bond yield is up +10 bps from this time yesterday to 4.62%. The China 10 year bond rate is down -1 bp to just under 2.10%. The NZ Government 10 year bond rate is up +6 bps at 4.81% while the earlier RBNZ fix was at 4.73% and up +6 bps from yesterday. The UST 10yr yield is now at 4.43% and up +9 bps from yesterday. Their 2yr is up at 4.34%, so that curve is now more positive, now by +9 bps.
EQUITIES ALL WEAKER
The NZX50 is down -0.9% in Wednesday trade. The ASX200 is down -1.1% in afternoon trade today. Tokyo has opened with a -1.3% retreat. Hong Kong is down -1.0% at its open. Shanghai is down -0.1%. Singapore is down -0.2%. Wall Street traded down -0.3% in Monday trade on the S&P500.
OIL HOLDS
The oil price is little-changed from this time yesterday, still just on US$68/bbl in the US, and just on US$72/bbl for the international Brent price.
CARBON PRICE LITTLE-CHANGED
The carbon price is very marginally firmer today, in modest volumes, at $63.65/NZU. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD FALLS FURTHER
In early Asian trade, gold is down another -US$16 from this time yesterday, now at US$2607/oz.
NZD SOFT
The Kiwi dollar is down -40 bps from this time yesterday, now at 59.3 USc. Against the Aussie we unchanged at 90.8 AUc. And against the euro we are down -20 bps to 55.8 euro cents. This all means the TWI-5 is now down -30 bps at 68.6.
BITCOIN TAKES A BREATHER
The bitcoin price has slipped a minor -0.3% from this time yesterday, now at US$88,367. Volatility of the past 24 hours has been moderate at just over +/- 2.8%.
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Trump selects Elon Musk to lead government efficiency department
Musk and ex-presidential candidate Vivek Ramaswamy to head up Department of Government Efficiency (Doge)
https://www.theguardian.com/us-news/2024/nov/12/trump-appoints-elon-mus…
Goodbye kumbaya Wokeness meetings
Followed by a very hawkish nomination of Peter Hegseth for Secretary of Defence. That in itself indicates a hard line if not overtly aggressive approach to the military side of affairs. The incumbent General Austin has on the whole maintained a “walk softly and carry a big stick” manner. With Rubio as Secretary of State the USA , is not then looking like softening anything much concerning Iran & Co.
A hard-line immigration team in place
Some of Trump’s newly revealed appointments suggest that the president-elect’s campaign promise to deport millions of undocumented migrants living in the US is no exaggeration.
Stephen Miller, who has been Trump’s close adviser and speechwriter since 2015, is Trump’s choice for White House deputy chief of staff for policy. He will likely shape any plans for mass deportations - and pare back both undocumented and legal immigration. During Trump's first term, Miller was involved in developing some the administration's strictest immigration policies.
Thomas Homan, acting director of the Immigration and Customs Enforcement Agency in Trump’s first term, supported the president’s policy of separating undocumented families detained at the US-Mexico border. Now he’s back with an even broader portfolio, as Trump’s “immigration tsar”.
“I will run the biggest deportation force this country has ever seen,” Homan said at a conservative conference in July.
Critics have warned that Trump’s mass deportation plan could cost upwards of $300b. In an interview with NBC News last week, however, the president-elect said cost was not an issue.
“When people have killed and murdered, when drug lords have destroyed countries, and now they’re going to go back to those countries because they’re not staying here,” he said. “There is no price tag.”
China hawks take flight
Many conservatives believe that China poses the single greatest threat to continued US global dominance, both economically and militarily. While Trump has been more circumspect, limiting most of his China critiques to the realm of trade, he is filling his foreign policy team with vocal China critics.
The president-elect picked Florida Congressman Mike Waltz, a retired Army colonel, as his national security adviser – a key foreign policy post within the White House. Waltz has said the US is in a “cold war” with China and was one of the first members of Congress to call for a US boycott of the 2022 Beijing Winter Olympics.
In October, Congresswoman Elise Stefanik, Trump’s pick for US ambassador to the UN, accused China of “blatant and malicious election interference” amid reports that China-backed hackers attempted to gather information from the former president’s phones.
While Trump has yet to officially name his choice for secretary of state, Florida Senator Marco Rubio – another China hawk – appears to be the leading contender for the top diplomatic job. In 2020, Rubio was sanctioned by the Chinese government after he pushed measures to punish the nation for its crackdown on pro-democracy protestors in Hong Kong.
US-China relations were often rocky during Trump's first term, amidst trade disputes and the Covid pandemic. The Biden administration, which kept many of Trump's China tariffs and imposed some new ones, only somewhat calmed the waters. Now it looks like the next Trump administration will pick up where the last one left off.
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Elon Musk and RFK form a shadow cabinet
While the list of Trump’s political appointees grows, there’s another group that stays small – and exceedingly influential.
Elon Musk, the wealthiest man in the world, has been a full-time presence at Trump’s Mar-a-Lago transition headquarters. According to media reports, he is advising the president-elect on cabinet nominees and even joined a conversation between Trump and Ukrainian President Volodymyr Zelensky last week.
On Tuesday night, Trump announced that he was assigning Musk to work with tech entrepreneur and former Republican presidential candidate Vivek Ramaswamy in a "department of government efficiency" tasked with identifying new budget cuts.
Musk has regularly offered his political opinions on his social media platform X, including endorsing Florida Senator Rick Scott’s bid to be the next Senate majority leader.
Musk’s political action committee spent around $200m to help Trump’s presidential campaign, and he promises to continue to fund the group’s efforts to advance the president-elect’s agenda and help Republican candidates in upcoming congressional elections.
Meanwhile, it remains to be seen where Robert F Kennedy Jr, another key figure, lands. Trump has said that he plans to give the former Democrat and vaccine sceptic, who abandoned his independent bid and endorsed the Republican, a role in making America “healthy” again.
“He wants to do some things, and we’re going to let him go to it,” Trump said in his election victory speech.
Prioritising presidential power over Congress
As Trump takes office, Republicans have control of the Senate and could still take the House, albeit by a slim margin. However, the president-elect’s early actions suggest he is more concerned with exercising his presidential power than working with the legislative branch.
Last week, he posted on social media that the Senate’s Republican leadership should smooth the way for more presidential “recess appointments” – allowing him to fill top administration jobs without Senate approval when Congress is not in session. The move would strengthen presidential power by undercutting the chamber’s constitutional role to “advise and consent” on political appointees.
Meanwhile, the president-elect keeps chipping away at those narrow congressional majorities. Senators who move to administration roles can quickly be replaced by appointment from the governor of their home state. But any House vacancies – such as ones created by Stefanik and Waltz’s departures – require special elections that can take months to schedule.
Some of Trump’s advisors, including Musk, have warned that the president-elect could be endangering his legislative agenda if he plucks too many more Republicans from the chambers.
Even in the best of circumstances, congressional legislation takes time, effort and compromise. Executive action, such as new immigration enforcement, can be done with the stroke of a presidential pen.
Trump’s actions indicate he is, at least at the moment, more focused on the latter.
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Rewarding loyalists
Trump has only just begun filling out the thousands of jobs that open up with a new presidential administration, not including the senior-level career bureaucrats he has said he will replace.
In 2016, as a political newcomer, he had to rely on more establishment Republicans for key roles. This time, he has a wealth of prospective candidates with proven track records of supporting him and after eight years, Trump loyalists are the Republican establishment.
On Tuesday, Trump named South Dakota Governor Kristi Noem as homeland security secretary, and Fox News host and conservative author Pete Hegseth as defence secretary. Both have been fierce Trump defenders from the start.
Others, like Rubio and Stefanik, were critics of Trump early in his first presidential bid, but they have now spent years demonstrating that their harsh words are a thing of the past.
Rubio, who ran for president against Trump in 2016, may still have White House ambitions, however. Trump often soured on appointees who seemed drawn to the limelight during his first term, and even the warmest of relationships could go bad.
Trump may be placing a premium on loyalty with his early staff announcements, but the pressures of governing ultimately will reveal whether his second four years in office end up different than his first.
Okay, dysfunctional then.
"Musk believes strongly in increasing the world’s population. He has even offered his own sperm to friends and acquaintances, including the former independent vice-presidential candidate Nicole Shanahan, according to two people familiar with his offer."
https://www.nytimes.com/2024/10/29/business/elon-musk-children-compound….
I wonder if Amazon stocks his man juice?
This should be hugely entertaining. Musk sacked 80% of Twitter staff, and absolutely nobody noticed. I imagine that he can do the same with Govt bureaucrats. And after he's finished with the US, do you think we could get him to come to NZ and do the same thing? This is exactly what NACTNZ need to do to clean out the unproductive idiots that Labour hired, plus a few more for good measure.
KW - they're NOT the problem. They were NEVER the problem.
The problem was a reduction in the surplus energy going into the system, coupled with entropy. If you have enough surplus energy, and not too much load, you can support - the 1970s. Reagan and Thatcher were symptoms, their arguments - let's say, lightweight (they'd have had trouble making Mensa between them, you'd have to think).
But a cohort who need not to know the real problem, will always blame someone/something else.
PDK they are most definitely the problem - with regards to non delivery of over priced state services
You keep trying to drag every issue to your end of the world is nigh view when they are not related - and no the problem here is not a reduction of surplus energy although there is a very good argument that it is related to the (mis)allocation of resources
Musk sacked 80% of Twitter staff, and absolutely nobody noticed.
🤡🤡🤡🤡
Since Musk took over Twitter it has lost something like 70% of it's value. People noticed.
It's people like KW who are the reason this country is being fucked by the coalition. Literally demonstrably wrong on almost everything they comment on but happy to have strong social media generated opinions on everything.
Yes - indeed. Banks are certainly flush with deposits whilst up against weak lending demand hence the sliding TD rates. I suggest take full advantage of the low borrowing rates whilst they last. There are several underlying reasons why inflation and interest rates could once again head north and quite quickly like they did when America borrowed big in the 70s.
IMHO they will not be able to engineer that result, lets watch and see... It would need trumps support.
Secondly higher FED rates IMHO hurts China, which Trump will welcome
the inward investment into the USA for factory build etc and with higher rates will starve China
Trump nominates a Fox News host, 44-year old, ex-National Guard Captain, Pete Hegseth, as Defense Secretary. So qualified, on so many fronts. (My read? The Orange One needs a distraction.)
Agree. But there are a few pieces you have missed. Interest deduction on new builds only. Kiwibuild (yes some got built). Urban redevelopment (the antithesis of the right). Strong economy. Spending money in the cities instead of the regions. Public transport instead of roads.
It’s hard to know how much is luck and how much is ability, but statistically we do seem to thrive under Labour. And that’s why I prefer them compared to the right that I should probably align to. I’d be more than happy for the right to win me over, but so far they haven’t done anything good. I’d give them a 3/10, could be worse.
Unfortunately the US is once again providing a great distraction to the underlying issues that are happening.
NZ Inc are dealing with issues, such as the Hikoi, that actually don’t make much of a difference to the lives on individuals or trying to make NZ a better place for our children.
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