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
Heartland Bank announced its -50 bps floating rate change to match the OCR cut. It new rate becomes 6.99% on December 13. They also cut their reverse mortgage rate by -50 bps too, to 9.39%. NBS also cut their floating rates by 50 bps. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
Heartland bank also cut its savings account offers, effective today. Their notice savers and Digital Saver account fell -50 bps, but the Direct Call account only went down -40 bps. UnityMoney cut almost all its term deposit rates today. General Finance reduced all rates effective December 1, by between -10 bps and -55 bps. All updated rates less than 1 year are here, for 1-5 years, they are here.
NEGATIVE CASHFLOW + NO CAPITAL GAIN = PAIN
Some residential property investors are likely still burning cash, but at least the fire is getting smaller, according to our latest quarterly Rental Yield Report for Q3-2024. These negative cash flows come even though interest rates are falling.
NOT SO GLUM. IN FACT LOOKING AHEAD WITH OPTIMISM
Yesterday we noted a somewhat surprising rise in business sentiment despite the tough track the local economy is on. Today, surveyed consumers are increasingly optimistic as well with sentiment level almost back "to par". Both the current and future conditions indexes lifted markedly.
BETTING ON A THIRD ONE
However, ANZ economists has changed their tune. Previously they expected a -25 bps OCR rate cut on February 19, 2025. Now they think it will be another (third) -50 bps cut. That would take the OCR to 3.75% and very near the 3.50% level they now think it will settle at.
NZX EQUITY MARKET UPDATE
Check out our quick update of how the NZX is faring today, as at 3pm. NZX flat to end the month even though there were 50 gainers and only 28 decliners today. But the market is subdued with no big movers
2DEGREES MAKES PROGRESS
Privately owned telco and fixed connections provider 2degrees saw revenue and earnings before tax growth for its 2024 financial year, on the back of gains across broadband, mobile and energy sales. Total revenue climbed +7% year-on-year to $1.34 bln, with broadband revenue increasing by +12% to $415.9 mln, mobile rising +9% to $555 mln, and energy up +12% to $122.7 mln. This growth reflected 2degrees’ continued expansion in consumer and business markets. Underlying statutory EBITDA rose +16% to $339 mln, which excludes the $620 mln generated by the sale of 70% of its passive tower assets in the previous financial year. Operating cash flow increased +$59 mln to $169 mln, providing support for continued investment in the network and customer experience initiatives, they said.
UP, BUT THERE ARE RISKS
Rabobank has settled on a 2024/25 farmgate payout forecast of $9.70/kgMS, conservative compared to other analysts. It provided a full analysis of why, here.
VERY AVERAGE
In its November log market report, PF Olsen says export log prices have risen slightly but only because the NZD has fallen. China & India demand remains soft, domestic demand is weak and mills are shutting for longer than usual ovr the holiday break/
MODEST RISES, BUT TO NEW RECORD HIGH LEVELS
Even though the October lending data was relative cold coffee (H/T DH), with changes that are unremarkable, there are some resulting points to note. Bank lending for home loans rose $1.6 bln in the month, not too different to recent months, but still it was the most of any month since December 2021. The debt due by borrowers are at new highs for homeowners, businesses and almost a new high for rural borrowers. Again, noit be much, but still new benchmarks. Total bank and non-bank sector debt is now at $579.4 bln with households accounting for $380.8 bln as at the end of October.
MOST HOUSEHOLD BANK BALANCES ARE IN TDs
Total deposits at banks are now $460.7 bln, of which household hold $254.5 bln (55%) and that is the highest share in a long time, certainly since 2016 when the modern series started. Household transaction account balances are still trending lower, savings account balances are not changing much, but term deposit balances rose to a record $140 blon in October even though the rise from September was less than a third of what it was in July. Term deposit balances now represent 55% of all household bank balances.and that makes them the highest share since late 2019.
JUDGMENT TIME
Tomorrow is the final day of November, so the real estate trading data is now locked in. Time to mark your estimate/guess as to sales volumes and median prices for the month. The buying/selling for 2024 isn't over yet of course, but the 'season' nearly is.
HOUSEHOLD WEALTH MAKEUP
It is probably now only of academic interest, but the March 2023 National Accounts by sector were released today and they told an interesting story. Household 'investment' in housing fell -8.6% in 2023 from the prior year, after rising +9%, +23% and +14% in the prior three years (during the pandemic). That fall was the latest in at least 20 years, the last one of this magnitude being in 2009. At the same time household financial assets kept on rising. These now represent 57% of all household wealth (after deducting household liabilities). The 57% level is back to the 20 year average. As at 2023, total household housing assets were worth $1.16 tln, household financial assets were worth $1.57 tln, and household financial liabilities were $288 bln. No-one is suggesting these assets (or liabilities) are evenly spread. Stages in life will be a key factor.
SWAP RATES FALL
Wholesale swap rates are probably little-changed today as markets are subdued with Wall Street closed. Our chart below will record the final positions. Yesterday the 90 day bank bill rate was little-changed again. The Australian 10 year bond yield is unchanged from this time yesterday to 4.42%. The China 10 year bond rate is down more than -2 bps at 2.04%. We make that its lowest ever. The NZ Government 10 year bond rate is down -3 bps at 4.52% while today's RBNZ fix was 4.50% and unchanged. The UST 10yr yield is now at 4.24% and down another -2 bps. Their 2yr is down at 4.22%, so that positive curve is now only to +2 bps.
EQUITIES MIXED
The NZX50 has risen +0.4% near the end of the week. The ASX200 is down -0.4% in afternoon trade. Tokyo is down -0.7% at their open. Hong Kong is little-changed at its open and Shanghai is up +0.2%. Singapore is starting down -0.5%. Wall Street is on holiday today (Thanksgiving).
OIL LITTLE-CHANGED
The oil price is up +50 USc from this time yesterday, now at US$69/bbl in the US, but unchanged at just over US$72.50/bbl for the international Brent price.
CARBON PRICE STILL ON HOLD
The carbon price is unchanged today at US$63.80/NZU today. 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$2644/oz.
NZD HOLDS
The Kiwi dollar is unchanged from this time yesterday, now at 59 USc. Against the Aussie we are slightly firmer at 90.8 AUc. And against the euro we are still at 55.9 euro cents. This all means the TWI-5 is now at 68.3 and unchanged.
BITCOIN HOLDS
The bitcoin price has slipped a minor -0.4% from this time yesterday, now at US$95,960. Volatility of the past 24 hours has been low at just under +/- 1%.
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69 Comments
NZDF manpower is so critically low and has been for years. This accident is the chickens coming home to roost. I expect it was mostly pimply 18 year olds on the bridge, no doubt capable kids but severely under trained, under supervised, and inexperienced. It's possible the CO did not make it to the bridge until after the fact. Its also possible that those who ultimately face a courts martial weren't even on the ship, but rather were responsible for negligent training and supervision. I actually won't be surprised if the Chief of Navy "resigns" over this.
You might like last year's film adaptation of Wouk's play of the trial segment which is available on streaming. Stars Kiefer Sutherland as Queeg.
https://www.flicks.co.nz/movie/the-caine-mutiny-court-martial/
You would think someone would have noticed this basic error in the media statement on the NZDF website:
"The ship then travelled around 635 metres (400 yards) before becoming stranded..."
Also no clear answer as to why the $100m ship actually sank. They did say the ship wasn't flooding after the groundings. Was it because of the fires that broke out after everyone abandoned ship?
We're not having much luck with the auto pilot systems these days are we.
Given the size and capital tied up in these vessels, it might be more cost effective to employ someone to steer full time.
Cook Strait ferry grounding began with autopilot mistake - report | Star News
HMNZS Manawanui sinking inquiry: Defence Minister Judith Collins, Navy Chief reveal initial findings
https://www.barfoot.co.nz/auctions-live/completed
maybe just, mainly low value homes selling... mid level and higher seems to have given up.
The US govt’s net interest expense has more than doubled from $345 billion in 2020 to $882 billion in 2024.
It's now the 3rd largest federal expense, below Social Security and Federal Health, but above Medicare and Defense.
With rates still high and growing deficits - and $6.74 trillion of debt maturing in 2025 - interest expense will easily rise to #2.
https://www.crfb.org/blogs/interest-costs-have-nearly-tripled-2020
$140B sitting in bank deposits. If only we had a decent stock market to invest in. That is such a waste of capital employed in low yield returns. The NZX needs to merge with the ASX, and franking/imputation credits aligned, and the FIF tax on all ASX shares needs to be dropped. Maybe then more New Zealanders would employ their savings more effectively, and there would be less reliance on buying houses as the only means of retirement preparation.
It's not that long ago we bought houses not as a means of retirement preparation.
As if employing savings in the stock market actually solves anything. It creates nothing.
It's only as the financial propaganda machine has wound up that everyone fears not having enough tokens in the future.
We're only borrowing from the future and our children.
so we have trained to many nurses... but not enough teachers...
Some regions are declaring a teacher supply crisis, as schools once again struggle to find enough teachers for the coming year.
Principals told RNZ they needed more staff than ever thanks to the arrival of nearly 40,000 children of foreign workers over the past two financial years and, for primary schools, increases in classroom release time for teachers next year.
They said they were getting more applications from overseas-trained teachers, but what they really wanted were locally trained graduates.
Primary schools had been told to expect an oversupply of teachers as enrolments dropped.
The nurses should have no trouble getting work in Australia.
https://www.seek.com.au/new-graduate-registered-nurse-jobs
3323 jobs advertised.
Nobody wants to be a teacher these days. We should be asking why.
https://www.nzherald.co.nz/nz/education-crisis-changes-to-standards-and…
The Teaching Council of Aotearoa New Zealand says half as many Kiwis are signing up to become teachers than they were in 2010, and the number of students graduating as teachers has dropped by more than a third.
On the other hand, with so many overseas kids coming in, shouldnt we be hiring teachers from those countries? They can then teach the kids in their own language and culture.
Obviously the adults of our society are incapable of teaching the children of our society respect. Fear of authority is not the equivalent of respect for a fellow human being.
The do as I say, not as I do example has lasting effects.
Basic human relationship stuff and society is found pretty wanting.
TEC are part of the problem. They have been taken over by the polytechs who are trying to shovel people back into their courses by denying re-registration because experienced teachers 'need to retrain'.
A note re: the 2010 reference: in 2010 Auckland University alone graduated twice as many teachers as positions available, as the elderly teachers were not retiring because they couldn't afford to.
Meanwhile, in Australia, a fresh graduate teacher will have full registration after 100 days teaching, and start on near 100k (102k in 2026).
No. The teachers are about as they were. The problem is short attention-spans (shortened by swipe-phones and algorithms) and entitlement - sense thereof. Add in a lack of books in homes... I can always pick the problem-at-school kids - the parent's houses won't have a bookshelf. Sure, you could argue there might be a common cause one stage further away; but the correlation is 100%.
Therein a telling truth as simple and basic as you could ever wish for.For instance our four grandchildren. One has sought, consumed and questioned just about every book we had that survived the EQs. Knowledge, perception and comprehension is wonderfully rewarding and now entering last year of high school with flying colours. The other three good but nowhere near that good. Mind you, think probably Catch 22 is a bit more of a mystery than has been let on.
"Total deposits at banks are now $460.7 bln, of which household hold $254.5 bln (55%) and that is the highest share in a long time, certainly since 2016 when the modern series started."
Hmmm ... So households aren't savvy investors? Quelle surprise.
Our education system needs work! In the US, every water cooler conversation includes what people have done with their 401k. (A 401k is a share portfolio that the holder can manage.)
I remember walking away from the 8th race at Randwick, one long ago Saturday. Discarded betting-slips littering the grass, the pathways, the road.
My mate turned to me and said: Evidently there were some inadequately-informed punters.
Given where we are on the trajectory, I'd change 'some' to 'most'. Going to be very interesting when it reconciles.
Which it inevitably will.
Such a burst of nostalgia from that 8th at Randwick comment. Anyone remember horses like Sir Dapper, Emancipation etc. Bred from the tough Star Kingdom sireline which has all but vanished. Not to mention the old time trainers like Theo Green and Neville Begg. Bookies wrote their tickets by hand and Roger Rogerson was on the loose.
I was in Bondi when Rogerson shot (or did he get shot?) Warren Lanfranchi - just up the road.
Yep. I remember a Harold Park night - Locarno had been brought over for the Sydney Cup, 3rd race, not known in Aus. No off-course doubles, but on-course ones. A flatmate had a family neighbour (inland) who had Leisure Boy in the last race. Owner was going to put a grand on the nose - that was how he made a living. I was working night-shift - but the others went trackside and got us some doubles. Locarno (Roger someone up?) stormed home and won. For 5 races, we had the only live doubles tickets anywhere and I'd written out my resignation at work.
Leisuure Boy got boxed in on the rails, came home 5th full of running. Tore up the resignation, kept on working. He won the next week - $5 the win and no wild-card double to match him with. So it goes.
Never forgot the moment, and my second-last time betting, ever. Tanqueray, List of Songs, Timber Tycoon, I'm Margaret, Yir Tiz, are names that come to mind...
Just saw the replay of Locarno. What could beat a night at the trots back then? Sydney in the eighties was something to experience. Even David Bowie said as much, owned an apartment in Elizabeth Bay or nearby for a while. Sorry that double didn’t come through. If it was with the on course boys they probably arranged to have the second leg closed out
Chuckle - is it online? That would have been 1979 or1980. That last bit from the turn was a fair sprint, from memory.
Yeah, I was in for 20 thou, if it had. Was going to buy an RX7 and tour the country. Biked home after work instead :)
I did some years in Ramsgate Ave - squillionaires' row now. Picked up the assistant producer for Apocalypse Now, in the Bondi surf one day. Those were the days...
My comment was made on the basis that the 'family home' wasn't included, (this puts renters and OOs on the same footing as both are essentially paying for a place to live), so the comment was about where people invest their 'surplus cash', i.e. the actual 'investment decision'. And that's when it all gets exceedingly murky. For example, the 'family home' can be an investment in that a $8+ million house in Auckland's Herne Bay is likely to have been purchased for the capital gain rather than just 'a nice place to live'. Another example is the 'investment horizon'. There is always going to be a certain amount of money sitting in short term interest bearing accounts/TDs as it is planned to be used sometime in the near future. But how big is this pool? Should it be subtracted from the analysis? How can it be split by 'investment horizon' given many just rollover again and again?
So to answer your questions, jo147, can I say that without quite a bit of qualification that I didn't provide, my comment was a dumb one.
"Seems much like the US to me."
... Which got me digging into the data. (An interesting exercise to keep me busy this weekend.)
Oddly, data isn't that easy to come by as different measures get used, e.g. per capita, per household, per taxpayer, etc. Further, wealth distribution plays a part, e.g. if 50% have no investments at all, i.e. are living hand to mouth, should they be included in that stats as they make no investment decisions at all? And compulsory / government subsidized schemes, are they an investment decision by the owner? And were we able to identify those with spare cash, making investments with a horizon of greater than 3 years, where do they put their surplus cash?
Anyway ....
Some user friendly data from NZ's FMA ... Attitudes towards New Zealand’s financial markets - Investor confidence research - June 2020
And a teaser for the USA ... Charted: American Stock Ownership Back at All-Time Highs
I remember reading a research paper done for a multi-national banking / insurance conglomerate's marketing department some 10+ years ago that looked at how those with disposable incomes made 'investment decisions' between asset classes, and whether the decision was made / guided by the beneficial owner or done by a 3rd party. (Probably covered by an NDA but the underlying data may not be.)
It happens. Unfortunate but it happens despite all the dedicated, specific and concentrated training that any of the military rely on. Can’t quite remember but a volume I no longer have, gave a percentage of casualties in WW2 attributable to accidents as opposed to combat. Unless it had been written down as proof, you wouldn’t likely believe it.
Aye. Point taken. My father was RNZAF in 1939 put into training. Squadron Leader at 33, OIC four or five stations before he was posted overseas. The fatalities in NZ of aircrew in training was horrendous. Oxford Airspeed was a notorious death sentence.He witnessed at that young age too many broken and burned bodies of young men. Then had to sit down and write it all down to the family involved and if required, respond as best able. It affected. Didn’t understand that myself until too late,sadly.
https://shop.armymuseum.co.nz/product/voices-of-gallipoli-by-maurice-sh…
Can't remember who I loaned my copy to, or you could have had/borrowed it. You would appreciate the sentiment.
Consumer gripe. Pulled a pak n save deli item out of the freezer. Written on it , see dept for ingredients. No problem I thought the info will be on their website. Found the product on website, only info, see dept for ingredients.
Don't think this is an adequate level of consumer info.
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