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
The Cooperative Bank cut its 6 month fixed rate to 5.99% today (matching BNZ) and raised its 4 and 5 year fixed rates. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
The Cooperative Bank cut its 6, 9 and 12 month TD rates by either -10 bps or -15 bps. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
BETTER JOBS OUTLOOK
The Westpac-McDermott Miller Employment Confidence Index rose in the December quarter off a recent low, mainly because of worker's perceptions about the availability of jobs. It was the first improvement in over two years. This metric joins a handful of indicators that suggest the jobs market is starting to stabilise. More here.
MILK POWDER PRICES HOLD
The overnight GDT dairy Pulse auction brought the expected changes. The SMP price extended its recent rises, and the WMP price essentially held its full auction recovery. This event didn't signal any changes or concerns.
THEY'RE BACK
There were almost 190,000 overseas workers and 59,000 overseas students in this country at the end of 2024, levels that have returned to pre-pandemic numbers.
BAD IDEA SPREADS
Good ideas have to be true. Good ideas have to work, they have to achieve their goals. Good ideas usually come with unpleasant implications. But bad ideas are not bound by any of those limitations. Bad ideas can appeal to what you want now, not what you need in the longer term. Saving for retirement is a good idea. KiwiSaver is a good idea that works. But allowing savers to raid their retirement savings to buy a house is a thoroughly bad idea. Retirement balances are always lower when you allow this. But it is 'popular' so the flaw is embedded. Now Australia is about to adopt the Kiwi bad idea of raiding superannuation balances to prop up their housing markets, because that is the new Liberal Party policy, and they are ahead in the federal election polls. Bad ideas are becoming mainstream. No need to be rigorous. Just appeal to the lowest common denominator now, for short-term gain. Aussie real estate industry people are overjoyed.
MORE PRESSURE FOR MORE SHORT-TERM THINKING
Federated Farmers today doubled down on its culture war attack on the sustainability policies of lenders, mirroring the hard-right shift of the US Republican Party. Apparently it is 'collusion' for banks to want clients who have climate-sustainable business models. Fed Farmers seem to want to avoid having to address this. (But we all know they will be first to complain when banks refuse to roll over debt facilities because their businesses are no longer profitable because "the weather changed". Just another short-term, self-centered and 'lazy' stance.)
NOT HALFWAY YET, AND ONLY 11 MONTHS TO GO
On December 7, 2020, the RBNZ opened its Funding for Lending pandemic support facility. Four days later. the Co-operative Bank was first in for a $40 mln loan, at the OCR interest rate (then 0.25%). The program was taken up by most banks and reached its zenith at $19 bln in November 2022 (the OCR was 4.25% then). Banks had up to three years to pay this funding back, and the interest rate mirrored the OCR as it changed and rose. It is now 4.25%. At the start of 2025 almost $12.3 bln is still outstanding, so banks have repaid less than half so far. The three year term applies for each drawdown. There will be a lot repaid this year when the final amounts due end the program in December 2025. Banks need to find alterative funding sources for this money that went into long-term mortgages. They will be paying much more than the OCR rate for the replacement funds. Since the start of the Funding for Lending program, banks have paid $1.5 bln in interest to the RBNZ so far. and it will probably exceed $1.7 bln by the end of the program.
PLAYING WITH FIRE
Reuters is reporting that Beijing is moving to cut the pay of employees at their central bank and two other financial regulators. The aim is to bring it into line with other public sector managers. The adjustments will be painful for those involved and basically mean senior manager pay will go from about NZ$95,000 to about NZ$50,000 per year. But they could either end up with an exodus of managers into the private sector leaving them with a much less skilled workforce, or those that remain could be very susceptible to corruption offers from institutions that are regulated. Or both. When regulators feel undervalued compared to the institutions they regulate, all sorts of distortions can occur. And it is not only a Chinese issue. There will certainly be a flood of people looking for jobs in these agencies. A record 3.4 million people flocked to the Chinese civil service exam last year, lured by the prospect of lifetime job security and perks including subsidised housing and social insurance, a major attraction for graduates disillusioned by the paucity of private sector job opportunities. But they won't come with any knowledge about the sector.
EYES ON AMERICAN INFLATION
Global financial markets are in the shadow of tomorrow's US CPI release. Markets expect an annual 2.9% rate, up from 2.7% in November. The expected month-on-month rate is 0.3%, the same as November, but this will mean the more recent pace is higher than the annual pace.
SWAP RATES ON THE MOVE
Wholesale swap rates rose unexpectedly sharply yesterday and for today, keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was up +2 bps on Tuesday at 4.11%. The Australian 10 year bond yield is up +1 bp at 4.69%. The China 10 year bond rate has dipped -2 bps to just on 1.64%. The NZ Government 10 year bond rate is up another +5 bps at 4.92% while today's RBNZ fix was 4.84% and up +9 bps. The UST 10yr yield is now just on 4.79% and up +2 bps from yesterday. Their 2yr is down -1 bp to just on 4.37%, so that positive curve has pushed out to +42 bps.
EQUITIES ALL ON HOLD, WAITING FOR THE US CPI
The NZX50 has risen another +0.3% in late trade today. And the ASX200 is up +0.2% in afternoon trade. However, Tokyo has opened its Wednesday trade down -0.1%. Hong Kong is up +0.1% and Shanghai is also up just +0.1%. Singapore is down -0.1% at its open. Wall Street ended its Tuesday session up a minor +0.1% on the S&P500 .
OIL DOWN
The oil price is down -US$1 from yesterday, now just over US$77.50/bbl in the US, and now just under US$80/bbl for the international Brent price.
CARBON PRICE FIRMS
The carbon price has risen today by +25c to NZ$63.60/NZU and a new five week high. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD HOLDS
In early Asian trade, gold is up a minor +US$2 from this time yesterday, now at US$2670/oz.
NZD SETTLES
The Kiwi dollar is down -10 bps from this time yesterday, now at 56 USc. Against the Aussie we are also down -10 bps at 90.5 AUc. And against the euro we are down -30 bps at 54.4 euro cents. This all means the TWI-5 is now just on 67 and down -10 bps from where we were this time yesterday.
BITCOIN UP AGAIN
The bitcoin price has inched up to US$97,153 and up +2.5% from where we were this time yesterday. Volatility of the past 24 hours has been modest however at just on +/- 1.4%.
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76 Comments
Saving for retirement is a good idea. KiwiSaver is a good idea that works.
Actually, not in debnt-issued money terms it isn't, and no, it won't for much longer. Sheesh.
DC - 'savings' are digital feet-in-the-door for a portion of future energy, and future resources (don't say you haven't heard this). They are no guarantee that either will be there physically, and the yet-to-be-born who will be competing have conveniently not been handed equivalent proxy. One long generation (ours) took it all now and they booked it all tomorrow. Only by reading tea-leaves (business confidence????) can the charade be continued.
The only valid investment in the future, is to identify and obtain a portion of the energy/resources you know you will require in the future. Store PV panels in the dark; establish a garden/orchard, accumulate tools/hardware. I don't think the US sharemarket qualifies; it worked until it didn't, like all Ponzis.
Yeah, I’m nine years retired and comfortable with no financial issues (couple of overseas trips each year etc). I put that down to sound financial decisions - not a high income or inheritance. I pulled out of a superannuation scheme to buy my first house; best decision I made. Got back into superannuation a few years later when able to contribute at a higher rate and still able to live a comfortable family lifestyle. Got rid of the mortgage by the time I was 50 and children left home gave me plenty of time and disposal income to enable to invest for retirement. I am a supporter of FH withdrawals - homeownership is critical for financial security in retirement so it’s an effective way of preparing for retirement (as well as the advantages of homeownership for a young family). From what I see amongst my peers; retiring without a home or an outstanding a mortgage doesn’t make for a comfortable retirement.
Seeing as retirement in the country only really works if you have an owner occupied house, then moving some of your KiwiSaver from investing in shares to investing in property (i.e. your own house) doesn't seem too stupid.
The alternative is fixing a whole lot of societal issues, but that doesn't seem very realisic at the moment
It wouldnt be so bad if the money had to be repaid to KiwiSaver upon sale of the property. Currently its a bit of a scam, you take [almost] 100% of your Kiwisaver out to buy a house, which you then sell 6-12 months later, and you are free to take the full sale proceeds and blow it on whatever you like. This has become a neat trick for those looking to get the cash to move to Australia for instance.
Federated Farmers today doubled down on its culture war attack on the sustainability policies of lenders, mirroring the hard-right shift of the US Republican Party. Apparently it is 'collusion' for banks to want clients who have climate-sustainable business models.
The U.S. Securities and Exchange Commission (SEC) adopted new rules requiring companies to provide comprehensive climate-related information in their annual reports and registration statements. While some view these regulations as a significant step towards enhancing transparency and accountability, others see them as potentially burdensome, requiring additional compliance and legal resources.
SEC Chair Gary Gensler is a controversial figure and known as a puppet for the Dems and their vested interests - many consider Gensler a 'rat' for what he has been doing over the past 4 years (has never fully disclosed his relationship with FTX and the Bankman Fried family).
However, since the election he has resigned and his proposed rules are facing legal challenges consolidated in the U.S. Court of Appeals for the Eighth Circuit. Everything up in the air.
Up in the air.
Touche...
The problem is that the banks are perhaps sincere, but ignorant/misguided. Human-induced CC is indeed a thing; you cannot consume 100,000,000 barrels of oil a day, and an equivalent in coal and gas, without altering the very thin gaseous layer surrounding our planet. But the fossil stock is finite, and we're half-way through it, and the stuff we built with that half, is decaying. We will end up on rebuildable technologies harnessing solar energy - plus nuclear until it dies.
But we won't underwrite a growth-requiring fiat/debt issuance of tokens, dropping from fossil to rebuildable - the EROEI drop is too big, the reduction in work-done too much. So society can virtue-signal (green this, sustainable that) but not go there without collapsing. So it recoils, every time. Until, of course, it can't. At which point a growing number of bets are off... Which is where we are now...
I hear you Power. BTW, I think the TV series Landman might be up your alley. The series focuses in on the US oil industry and portrays the complex relationships between various factions, including oil companies, local communities, and even drug cartels, emphasizing the need for coexistence in a challenging environment. By weaving different themes together, Landman offers a nuanced look at the oil industry and its impact on individuals, communities, and the broader world.
I just really enjoyed that story about the UKs anti-corruption minister resigning after being explicitly named in a corruption probe. This is like something out of an episode of "Yes, Minister."
Holier than thou politicians seem to often get caught with their pants down don’t they. Find that neither unfunny nor unsurprising. In NZ one such identity an MP, ended up in jail and another leading contender ended up with affairs spread up and down the courthouse. Who shall cast the first stone then. Especially from inside of the glasshouse.
On the farmers opposing the climate stance of banks I'd say when we see Insurance companies the other arm of the financial business cover farmers for weather related events well then I may agree David. It seems to me you have a lens which is too narrowed down. I recall in the seventies grazing stock on the roadside to keep them alive.
DC really needs to look at it through a financial lens rather than fighting the culture wars. Banks profit from carbon credits if they reduce their clients carbon footprints. It is purely financial yet DC seems to believe it is about caring banks saving the planet. Can one really be that naive?
Is it ok for farmers, and the rest of us, to bail out GFC banks dogshit wrapped in gold foil CDS's but farmers pointing out banks going of piste (again) is "hard right".
"Bankers will soon be able to claim credit for emissions they say their financing has helped avoid, as the world’s largest voluntary carbon accounting framework for the finance industry works on broadening standards."
https://www.bloomberg.com/news/articles/2024-12-03/bankers-to-start-inc…
David - you may think ‘raiding Kiwisaver’ to help get a deposit together for a first home is a bad idea, yet for me and many, many others it was fundamental to actually being able to buy a first home.
given this, what would you do, policy wise, to help make home ownership more accessible for FHBs, if KiwiSaver withdrawals weren’t possible?
I am a big fan of Kiwisaver including making it large contribution and compulsory.
That said I think withdrawal for first home buyers should be the only allowable withdrawal. The only one. Because home ownership at retirement is the best security we can offer people.
Currently we are building a tidal wave of renters who will retire as renters. A disaster about to break on us.
Would you rather get to retirement renting and hope that 3% a year you saved until 30 is enough to pay your rent for the rest of your life?
The boomers need the younger demogs to pay the highest prices in history for their stocks and houses. Good luck with that.
Only solution is more money printing.
Agree though, if / when the population starts to peak, prices of assets, especially housing, will fall through the floor. In theory that should apply to gold and Bitcoin too as less demand for everything.
All about timing and opportunity. Gold has largely outperformed stock indices and house prices relative to money supply. As for Bitcoin, say no more.
Funny days in the crypto space though. Many of the younger degenerates being absolutely wrecked at the moment betting on AI coins and protocols. And the ol' rat poison getting crushed in speculation by the most hated of cryptos - XRP aka the bankers' coin. Up 392% over past 12 months vs BTC's 128%.
Jimbo there are 79 million unoccupied houses in China about 80% are actually finished (why would you count an unbuilt houses as a house, let along issue a mortgage on one... anyway).
No one needs these there are too many houses already, Chinese are only having 1.2 kids per marriage. No one is getting married mainly because a woman will not marry a guy if he does not have a house (not a good husband), and young guys cannot afford a house.
can you see a possible problem here.... and they are our biggest export market.
its so bad people are swapping debts for unfinished houses as its better to get something rather then nothing...
most in NZ have no idea how bad it is right now.
Germany? Although "wealthy" is more "slightly better off middle class"
Big difference between attitudes of the Anglosphere and Germany P. The latter believes in producing things as a foundation for their economy as opposed to bidding up house prices and living beyond your means / spending like drunken sailors.
Depends what metrics you want P. As of September 2024, Germany's NIIP reached approximately €3.69 trillion (around $3.69 trillion), indicating a positive balance where external assets exceed liabilities.
Arguing that this is no better than the Aotearoa Ponzi is not a strong argument.
Depends what metrics you want P.
The current state of the economy and it's future outlook.
Arguing that this is no better than the Aotearoa Ponzi is not a strong argument.
I'm not defending NZ, it's just there's few places you can say are doing that well, and have a rosy outlook.
I'm not defending NZ, it's just there's few places you can say are doing that well, and have a rosy outlook.
Sure. But that doesn't mean you shouldn't think a bit deeper and wider. I understand the inferiority complex our nation has and the need to feel like we're punching above our weight. But it's repetitive, boring, and quite superficial.
Maybe it's you that needs to think a bit deeper. You're trying to argue with a stereotype and looking too hard for an adversary.
I've been to most (all) of the countries you try to define as superior using whatever arbitrary metrics you can find. I've even lived and worked in some of them for extended periods. Life for the average person in some of them is worse, in some it's the same, in some places it might be marginally better.
I choose to live in NZ, because while not exceptional in many areas, it's good enough at most of the ones that count to me. Im kinda stunned you're still here, for all your talk. There's lots of other watercoolers out there.
I've been to most (all) of the countries you try to define as superior using whatever arbitrary metrics you can find.
No P. I'm just pointing out that you may think Germany is a basket case, but you have to define your rationale for saying so and explain its relevance you mean in relative and comparative terms. Just because you're a patriotic Aotearoan is irrelevant.
I'm just pointing out that you may think Germany is a basket case, but you have to define your rationale for saying so and explain its relevance you mean in relative and comparative terms
The German economic story is changing. Flat growth. Mercantallists who've failed to innovate and develop, being supplanted by those that have, and/or are able to be much more competitive. And a green energy policy that's a basket case.
None of that's crossed your radar?
Sure. And before the Ukraine War, Germany's productive economy was much stronger. Russia was a strong complement to the Germany economy and the European Union in general.
I see that you pay no attention to the NIIP of Germany. But I'm not surprised. Most Anglosphere people don't know what it is or why it can represent economic strength.
No, it's also problematic. Actually much of what are expected lifestyles, are perilous positions in a global economy such as this.
Never really come across Ashley Church outside of mentions on this website.
Question for you then. You seem to fancy yourself as a cultivator of valuable information the common schmuck is oblivious to. These water coolers you're eavesdropping on, they're owned by you, frequented by your staff?
its bad but on paper they are more productive then us here in NZ, it don't really care NZ Trades more with China and they are proper F.,;&^d.
Same with Aussie who is our second biggest export market (not just people, actually products two)
IMHO things are still oval shaped not pear shaped, thats 2025/6
Extremely interesting nation. Particularly Berlin where the deep dark history literally weighs on your shoulder but at the same time the resilience, intellect and culture is something else, all on its own. But yes can only agree German beer, from all points of the compass, is tops.
You are looking backwards not forwards with that comment...big changes coming. We are selling our only rental and cruising for a while..our bags are packed so to speak.
Sounds like me, but with capitalism in general.
Not necessarily because I think the systems gonna change, but because it's not the most worthwhile use of my time.
Enjoy
Everyone's got the option, just maybe not in the configuration they'd like.
Easy to say? Very. Getting to that point? Not so easy. Well, not for me anyway, I'm not smart enough to make lots of money quickly, and we enter this world to be shunted on a treadmill which can take a while to work out it's maybe not worth getting on.
I was living in the USA at the time. The images on such as CNN of pyres of burning carcasses were shocking. So much so that in our neighbourhood folk stopped eating beef even though of course it was domestic on sale. Typifies how immeasurably the media there influences and how shallow the reception is in terms of ability to think.
The same nutbar who did the fabulously overblown covid death models, used in NZ and globally, was the same lockdown philander who did the bullshit foot and mouth models in the UK.
"Quiz of the week, and your starter for 10: Identify the pandemic from the following information: Professor Neil Ferguson of Imperial College computer-models apocalyptic mortality rates, the Government bungles containment of the disease, movement (and civil rights) are restricted, a miracle-cure vaccine is preferred, the economy takes a hit of billions.
Covid-19? Those of us who live in the countryside might answer differently. We might reply, “The foot-and-mouth epidemic of 2001”, the 20th anniversary of which we commemorate this month.
I do mean commemorate, as you do with disasters."
https://unherd.com/2021/02/foot-and-mouth-taught-us-nothing/
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