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). This is our final full 4pm update for 2024. See below. Any others will be on as-needed basis.
MORTGAGE/LOAN RATE CHANGES
Kookmin Bank has cut its floating rate -50 bps to 8.50%. (Recall it didn't move right after November 27). All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
Westpac have cut their 9 month rate by -10 bps to 4.90%. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
LESS ECONOMIC ACTIVITY, "WORST SINCE 1991"
Revised economic data shows New Zealand only entered recession in March 2024. But it was still in recession in September with GDP falling at an annual rate of -1% in that latest quarter. It is a result much worse than analysts had expected. There have been notable exchange rate (down a full -1c), equity market (down -0.9%), and bond market repercussions (up +8 bps) from the miss. See below. Following this data, BNZ economists are calling for a -50 bps OCR rate cut in February, and have lowered their expectation the OCR will eventually settle under 3% in this cycle. More here.
TOO MANY RENTAL PROPERTIES AVAILABLE
Trade Me Property says residential landlords may need to reduce their asking rents due to an oversupply of rental stock.
STARLINK'S DIRECT TO CELLPHONE SERVICE IS LAUNCHED
One NZ's Starlink satellite service has launched, but only on Samsung and Oppo phones for now. That is because Apple iPhones didn't make the launch date for One NZ's Starlink Space TXT service. And competition for Musk's Starlink service is on the way, and in a geopolitical way too.
'THANK GOODNESS'
Latest ANZ Business Outlook survey shows companies reporting a significant increase in activity - but there was a 'surprising' rise in expected costs as well.
NZX EQUITY MARKET UPDATE
Here is a summary of how the NZX equity market traded today, as at 3pm.
FARMERS GET COMPENSATION
The recent Otago bird flu outbreak has brought Government action, including compensation for farmers who lost stock in the required cull. Cabinet has approved new taxpayer funding of $20 mln to enable MPI to meet unbudgeted ongoing expenses associated with the H7N6 response including rigorous scientific testing of samples at the enhanced PC3 laboratory at Wallaceville in Wellington, ongoing surveillance, and to cover compensation costs. (It is not clear whether Act cabinet ministers raised any spending questions, but the minister who announced it is an Act MP.)
FAST WEALTH EXPANSION
In Australia, household wealth rose +AU$1.517 tln to AU$16.9 tln as at September 2024 from the same annual period a year ago. That is a +9.9% rise. Housing accounted for +AU$851 bln of the rise, Super funds +AU$443 bln, bank accounts +AU$119 bln, and shares & equity another +AU$186 bln. Household financial liabilities only rose +AU$173 bln in the same period. All this data comes from their National Accounts released today. It is also an interesting counterpoint to their Federal Government spending rise (+AU$58 bln) and deficit "blowout" (+AU$42 bln).
SWAP RATES ON HOLD
Wholesale swap rates are probably little-changed again at the short end today, but likely higher at the long end. Our chart below will record the final positions. The 90 day bank bill rate was down -1 bp yesterday at 4.25%. The Australian 10 year bond yield is up +9 bps from this time yesterday at 4.42%. The China 10 year bond rate has risen +2 bps to just under 1.75%. The NZ Government 10 year bond rate is up +2 bps at 4.63% while today's RBNZ fix was 4.54% and down -1 bps (set before the GDP result). The UST 10yr yield is now just on 4.51% and up +12 bps from this time yesterday. Their 2yr is now just under 4.34%, so that positive curve is now +17 bps.
EQUITIES RETREAT
The NZX50 has fallen -0.9% in late trade today. And the ASX200 is down -1.8% in afternoon trade. Tokyo has opened its Thursday trade down -1.1%. Hong Kong is also down -1.1% and Shanghai is down -0,6%. Singapore is down -0.2% at its open. The S&P500 fell -2.9% on Wall Street in its Wednesday trade after the Fed decision. So the NZX50 fall doesn't look too extreme in the perspective of all these other markets.
OIL SOFTISH AGAIN
The oil price is down -50 USc from this time yesterday, now at US$69.50/bbl in the US, and now just on US$73/bbl for the international Brent price.
CARBON PRICE STALLS
The carbon price has been very quiet today, still at NZ$63/NZU with little activity. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD SLIGHTLY SOFTER
In early Asian trade, gold is down -US$40 from this time yesterday, now at US$2610/oz.
NZD RETREATS FAST
The Kiwi dollar is down -130 bps from this time yesterday, now at 56.2 USc in a resounding thud post the GDP result in combination with the US "hawkish fall". Against the Aussie we are down -40 bps at 90.4 AUc. And against the euro we are down -50 bps at 54.2 euro cents. This all means the TWI-5 is now just on 66.8 and down nearly -80 bps from this time yesterday.
BITCOIN DROPS
The bitcoin price has slipped to US$99,736 and down -5.3% from where we were this time yesterday. Volatility of the past 24 hours has been moderate at just under +/- 2.9%.
SUMMER HOLIDAY SCHEDULE
Today is the final day our Auckland office is open in 2024. Of course, we will report the news all the way though the holiday break, but our offices won't re-open fully until Monday, January 20, 2025. It will be our holiday service until then. That will include a Holiday Briefing most days, and the related podcast. Our daily and weekly free email newsletters are also taking a break until January 20, 2025 but our databases and rate tables will continue to be updated as changes are reported. We wish all our readers a fun, safe, and relaxing break.
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61 Comments
Sequence of events related to Jerome Powell last night:
1. Opens his mouth
2. Lowers rates
3. Hedges his bets
4. Mentions that he can't buy rat poison
5. Mentions he doesn't want to
6. Stock market tanks 1,000 points
When will central bank lunacy come to an and when will the fiat currency clown show start getting out of hand?
The Kiwi dollar is down -130 bps from this time yesterday, now at 56.2 USc in a resounding thud post the GDP...
I dream that the Kiwi Peso was back at the levels when we where complaining about the crashing value last year. This really won't help rates fall either as we'll start importing more inflation.
The Aussies are patting themselves on the back...
https://www.abc.net.au/news/2024-12-19/nz-recession-and-fed-rate-cut-sh…
Yes, refreshing. Why isn’t anyone in NZ, including writing for this website, saying these things? It’s not like this week’s news is a surprise.
Insular, island / tiny country mentality?
She’ll be right mindset?
Vested interest?
Pathetic, and sad. A serious collective look in the mirror is urgently needed
I agree the article is refreshing. I wonder if the vested interest is in reporters wanting to keep some influence with their job. How would Willis or Orr respond in future to a NZ reporter (wanting to do an interview etc) who presented this info in the Herald. I think it's easier to write this from Australia.
Are you helping NZ Inc by focusing on short term movements in interest rates? And crowing when they move in ways you've predicted?
Do you think perhaps you, and much of NZ, are missing a bigger picture?
(Not an attack on you HM. I respect most of your posts. Just a thought on how NZ could be better.)
I think I have talked several times, today and in the past, about the criticality of moving away from this debt-fuelled housing ponzi. Of being reliant on cheap debt.
But my predictions are predicated on BAU and no one having the smarts and guts to do what is necessary
Following this data, BNZ economists are calling for a -50 bps OCR rate cut in February, and have lowered their expectation the OCR will eventually settle under 3% in this cycle.
So bank economists are calling for a continuation of the failures we've seen for the last 30+ years?
When will hear from the non-bank economists that represent the ordinary working people?
When is anyone going to call out this b.s.?
Someone has.
For years.
But your identification is wrong - it's all economists need to be called out.
They all call reality an externality. Which got us in the crap, on multiple fronts, simultaneously. Because the MSM failed to tell the truth, instead choosing to regurgitate the outpourings of these tea-leaf-reders, the populace voted for an impossibiity.
This recession - maybe a wobble but a permanent trend - was entirely predictable, and predicted. Pity some folk think they know better than others...
David, when you say, as you have for quite some time now ...
Wholesale swap rates are probably little-changed again at the short end today, but likely higher at the long end.
Might I ask why you believe the 'longer end' is going higher?
The longer end has longer term horizons. Ergo, it moves more slowly. Therefore, it must break above longer term peaks, or troughs, to have done what you're suggesting. I can't see that it has.
Cutting through all the DGM locally, Aussie media have come out and said h'holds earning $400-500K per year can no longer afford their mortgages.
Chief executive of mortgage brokerage Shore Financial Theo Chambers describes a trend among young couples with combined household incomes of $400,000 to $500,000, a $2 million-plus mortgage in affluent areas of Sydney and two children at childcare.
“They can’t afford their home and they’re moving in with parents,” he said. “They bought at 2 per cent interest rates. They would have thought ‘we can easily afford a $3 million house in Bondi’.”
https://www.smh.com.au/property/news/how-high-income-earners-are-coping…
No articles on the fast-track legislation?
FWIW, here’s some thoughts:
- won’t have much impact until 2026
- won’t do much for the construction sector. If one or two large scale developments like Winton’s Sunfield get approved, it will provide a little injection of support through 2026-2027
- the bigger question is will it’s significant powers be deployed urgently for many infrastructure projects? If yes, and the approvals are followed up with actual delivery (getting a project consented is only half the battle), significant benefits for the economy and nation-building could be accrued through 2026-2030
I think this is the Nats’ one potential ace up the sleeve. But only if they execute well and get the cheque book out
OMG !!!
TVNZ News led with everything else ... except GDP?
Methinks political interference is why.
edit: 7 minutes in and it has been Vanuatu and failing RNZAF plane. WTF!
edit: 8 minutes in and Katy Bradford, once again, fails to mention the RBNZ's fuckups, and suggests we're 'past the worst', but with ZERO evidence.
Next item? WTF! Whether Luxeys goes to Waitangi this year.
Is it any wonder Kiwi voters know nothing about the ecomony?
edit: confirmed. there was political influence.
The NZH hasn't paywalled Liam Dann's view ...
https://www.nzherald.co.nz/business/economy/gdp/massive-gdp-fall-nz-in-…
The comments are fun. They're usually very pro-National/ACT. Few seem to understand the RBNZ's roll.
But be quick. The NZH is culling many of the comments - was close to 150, now < 100.
Hell in a handcart folks. What a surprise.
I have had to do proper work today so have only just had a good look at the GDP data. Very clear that the population surge in 2023, and the rapid filling of 60,000 hard to fill jobs in (mostly) health, care, and education, kept the economy afloat through 2023. Shame that the filling of all those vacancies blew the Govt's budget out! Hey ho.
My view is that this sudden rush of eager migrants into the kind of jobs that don't fill when unemployment is low only delayed the inevitable slump. And, here we are. The question now is how do we get out of it?
History would suggest that the path we are currently on will see us losing jobs for at least another 12 months - maybe longer. And, as more young people leave for jobs abroad, are we sleepwalking into a long decline? What's the plan? Corporate jargon and hopium?
Never going to happen under this lot.
Mr F***wit in chief himself is literally legislating to ban council's from considering wellbeing in their plans. You couldn't make this shit up.
https://www.rnz.co.nz/news/political/536863/wellbeing-provisions-distra…
My view is that this sudden rush of eager migrants into the kind of jobs that don't fill when unemployment is low only delayed the inevitable slump. And, here we are. The question now is how do we get out of it?
Indeed, the tide is going out now and as I posted this morning the response has been to lower entry standards further!
Labour hire firm under migrant exploitation investigation in liquidation
An Auckland-based labour hire company at the centre of a migrant exploitation investigation is in liquidation, and 190 workers - mostly migrants on work visas - are set to lose their jobs.
Chinese workers still waiting for answers a year after investigation began | RNZ News
Zhiqiang Wan claims he paid about $18,000 for his visa, and has only had three months of full time work through Prolink NZ Ltd over the past year and a half.
What I would say to you is we had a target and that target was to sink the ship and we've sunk the ship and that's the reality, that's the situation we find ourselves in and we're working really hard, really hard to meet these ship sinking targets we've set and that's the important thing, we've achieved the target of sinking the ship, which is all we can really do, this is what we're dealing with, that's the reality. And what a great country we live in, it's a wonderful country and I am immensely proud to be leading it.
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