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 RATE CHANGES
Kiwibank made some changes today. Details here. And they were followed by a rather spectacular rate cut by Westpac. Those details are here. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
Westpac made some small but broad cuts to popular TD rates today. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
JOBLESS JUMP
The unemployment rate rose to 5.1% as at December 2024 as 32,000 workers droped out of the labour force. And that is now a four year high.
CAR SALES SOFT FOR A JANUARY
There were a touch over 8050 new cars sold in January, similar ro January 2023, but -1000 less than the average over the prior five years. There were 7340 used import cars sold, and that was far lower than the 9000 average for a January. Interestingly, of the new cars sold, 560 were EVs and 3250 were hybrids, a noticeably lower share than usual. There were 170 used EVs imported & sold, plus 3274 used hybrids and these levels were eighteen month lows as the share of NEVs for used imports.
VERY CONSTRAINED
Worldline/Paymark is noting that consumer spending through their payments network in January was only up +0.4% from the same month a year ago, a gain far less than can be accounted for by inflation. Consumer spending growth lifted in smaller regions on the summer travel impulse, but the larger regions continued to lag, especially over the two Anniversary long weekends.
FARMING LEADS THE WAY ON EMISSIONS REDUCTIONS - AGAIN
Stats NZ updated its greenhouse gas emissions data to September 2024, noting that emissions are falling. They made the point that decreasing economic growth is probably behind the reductions. Households didn't reduce their emissions on a year-on-year basis (although they didn't increase them either. But as usual it was industry that did the heavy lifting for emissions reduction. Agriculture reduced their emission -2.1% on that year-on-year basis, manufacturing was down -7.2% and services were down -4.9%. These trends are similar to earlier trends. In the 2024 year, households increased their emissions by a small +2 kilotonnes of carbon dioxide equivalents, whereas the largest reductions were from agriculture, down -924 kilotonnes.
THE GAINS GROW
The ANZ World Commodity Price Index rose +1.8% in January from December and taking the year-on-year gain to almost +15%. In NZD terms that gain at a remarkable +25%. All sectors except forestry managed to lift during the month, but the largest gains were made by meat and wool. The easing NZD bolsters these gains.
HIGHER PRICES
The overnight dairy auction brought a healthy +3.7% rise in prices overall, uop +4.0% in NZD terms. Pre-Ramadan buying was a feature, but lower volumes offered and background lower production in the US and Australia also helped lift prices.
BOND RUSH
Investors absolutely rushed today's $500 mln NZ Govt bond tender. 128 bids were received totaling $2.35 bln. We make that the most bid in one of these tender events since the early days of the pandemic in 2020. Only 26 bids were accepted across all three maturities. So a handful of big bidders took away most of it (by bidding low yields).
NZX50 WEAK, DRAGGED DOWN BY FPH
Here are the key changes to know about in the New Zealand equity market. As at 3pm, the NZX50 is down -0.5%, led by pullbacks from F&P Healthcare's -3.8%, Ryman's -1.4% and Auckland Airport's -1.1%. They are among the 43 decliners. Going the other way are rises by 41 listed companies, led by Tower's +5.4%, Synlait's +3.6% and Genesis's +2.8%.
GLOBAL SERVICES STILL EXPANDING BUT SLOWER
The Caixin China General Services PMI unexpectedly declined in January from December’s seven-month high, and below market expectations. This is the softest expansion in their services sector since September as new business growth eased to a four-month low, employment fell the most since April 2024, and selling price inflation slowed. Meanwhile, the services PMI in Australia posted a marginal gain for a minor expansion in January. In Japan, their services expansion was much better, but they are noticing much higher prices.
SWAP RATES SOFT
Wholesale swap rates are probably lower today so keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was unchanged on Tuesday at 3.89%. The Australian 10 year bond yield is down -3 bps at 4.44%. The China 10 year bond rate has dipped -1 bps to 1.63% after their CNY holiday, a tiny net move. The NZ Government 10 year bond rate is down -3 bps at 4.59% while today's RBNZ fix was 4.57% and up +1 bp. The UST 10yr yield is now just on 4.52% and down -4 bps from this time yesterday. Their 2yr is now at 4.22%, so that positive curve is little-changed at +30 bps.
EQUITIES MIXED
The NZX50 is down -0.5% in late Wednesday trade. F&P Healthcare has led the drop. (See above.) The ASX200 is up +0.6% in afternoon trade. Tokyo is little-changed, up +0.1% in early Wednesday trade. Hong Kong is down -1.5%, but Shanghai returned with a net -0.6% easing. Singapore has opened little-changed. Wall Street ended today's trade higher with the S&P500 up +0.7%.
OIL ON HOLD
The oil price is little-changed from this time yesterday now just over US$72.50/bbl in the US, and up +50 USc at US$76/bbl for the international Brent price.
CARBON PRICE STAYS IN RANGE
The carbon price is still within its tight range, today still at NZ$63/NZU. The next release of units at the official auction is on March 19, 2025. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD RISES TO ANOTHER ALL-TIME HIGH
In early Asian trade, gold is up +US$27 from this time yesterday, now at US$2847/oz and a new record high.
NZD RISES WITH OTHERS
The Kiwi dollar has risen +30 bps from this time yesterday, now at 55.5 USc on a rising USD. Against the Aussie we are little-changed at 90.5 AUc. But against the euro we are also little-changed at 54.4 euro cents. This all means the TWI-5 is now just under 66.6 and up almost +20 bps from where we were yesterday.
BITCOIN FALLS BACK
The bitcoin price has fallen -3.4% today from this time yesterday, now at US$97,839. Volatility of the past 24 hours has been moderate at just over +/- 2.8%.
WAITANGI DAY
Please note that Thursday, February 6, 2025 is a full public holiday in New Zealand, Waitangi Day. This report will not be published tomorrow, but we will have many news and article releases.
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79 Comments
Note - EV sales are tracking up around the world...NZ can keep its head in the sand but we all know the writing is on the wall (as do the legacy ICE manufacturers)
17.1 million units
Electric vehicle (EV) sales reached an all-time high in 2024, with 17.1 million units sold globally, according to data released by EV research house Rho Motion. December alone saw more than 1.9 million EVs sold, marking a 5% increase over the previous month and setting a fourth consecutive monthly sales record
I think that it is a good thing that they are not selling many at the moment because in the long run they will take over. But there is no rush.
To buy one now is a gamble in terms of technology (early adopting is fraught in my view) and whether the selected car company will survive in the future leaving the punters with an orphan.
I might've agreed when I was in the US in 2012 and everyone in sight was buying the Tesla Model S, at that point a brand new, untested car from a relatively obscure new company. Entire parking lots at Apple and Google were filled with them, with chargers at every space.
But here we are 13 years later and some would still say to buy an EV is to be an early adopter? My dad's in his 80s and drives a Leaf. The deputy president of the USA builds EVs in his limited spare time!
Whatever..
During the election campaign, National pledged $257m over 4 years to deliver those chargers, but this year's budget only allocated $95m over the same time period.
"Their entire climate policy in transport is hinging on investment in EV chargers," said Green Party transport spokesperson, Julie Anne Genter.
"At the budget they demonstrated they can't even keep their promise." (or any promise)
For most of the time petrol stations have been around, they were run by state-owned oil companies like BP. Even getting the oil industry stood up took state-level involvement and taxpayer funding. Once set up, of course it all looks after itself.
But there will come a point where there's more to be made selling the land under a petrol station than operating one, as volumes dwindle. And at that point you'll likely see state intervention once more to prop them up until they're no longer required. We're already seeing the PM going in to bat to stop them getting debanked before their time comes.
I don't fear the government supporting EV adoption on the expectation the charger network is self-sustaining, or even pays back the investment to the state later. I don't even own an EV, but when I do, I'd like to be able to charge it.
Taxpayers should not be subsidising pollution either. Pollution clean-up costs should be user-pays with the market then free to decide.
(I currently drive a petrol car.)
As an aside, when taxes are taken from the consolidated fund and put into roading projects taxpayers are already funding car travel.
I'm not sure many green-conscious voters are the ones that can afford and are buying EVs? Certainly the most recent Tesla buyer in my social circle is so far up Seymour's fan list that I suspect there's barely a correlation.
Cars like the Jaguar i-Pace and Porsche Macan EV are not for the types of greenies we have in NZ.
If you attended high school and actually paid attention, you would know "free market" is just a concept and the reality is far from it requiring government incentives and regulations to work.
Ironically, there are trillions of dollars in subsidies from various governments across the world supporting fossil fuel extraction, processing and consumption. US$ 7 trillion in 2023 to be precise as per IMF stats.
The last of the great interventionists. Muldoon liked and admired Arnold Nordmeyer of Nash’s second Labour government. He was the architect of the “black budget” government which was fairly interventionist too. Instant coffee disappeared instantly. Ironic in a sense that it took a Labour government under Lange & Douglas to knock all that down and then, the next Labour lot under Clark & Cullen were reverting to that old hat type.
There appears to be no end to the ongoing brain drain out of NZ with a recent employment survey (Robert Walters) showing 67% of sample planning to move overseas, with 43% citing low wages in NZ as the central reason. Others are blaming their move on lack of economic prospects to move up the ladder, buy a house, etc.
The lack of acknowledgement (let alone implementing of a sound action plan) of this crises from the political classes is making me really nervous.
And fewer and fewer tax payers to pay for the super and health care of our retired... My son is offshore this year, full stack dev ops Developer / SME. Way more jobs offshore as most of our bigger corporates etc are just branches of the offshore parent and do not really do innovation out here.
Not sure, but the pakeha over there are probably an upgrade as well.
90 minutes Janet, 90 minutes. https://www.nzherald.co.nz/nz/janet-dickson-case-requirement-to-make-ma…
I think she just engineered a 5y ban for herself? Darwinian of her.
Aotearoa as one big retirement village. And a handful of competent rugby players.
Don't get me wrong, I love New Zealand, love it enough to leave friends and family back in Europe and bring my kids up here, but it has become a bit like your grandparents house over the last few years, with that sort of mouldy old stale smell.
Visiting Melbourne and Gold Coast the main thing that struck me was young people, everywhere. Then I realised this is just a normal amount of young people, New Zealand has just lost them.
Out of interest, Ag, what do you love about NZ?
There’s elements I like still, but I fell out of love with my country a long time ago.
It’s still a moderately ok country terms of liveability, although it is sliding.
The people are generally quite nice and decent. We generally don’t have the big cultural tensions that Europe has. That’s a real pro
It has nice scenery, but so do many countries.
The cost of living is atrocious, healthcare pretty poor, and education hit and miss.
And as a small country options and opportunities can be quite narrow.
We are far from the rest of the world. Some see that as an advantage. I see it more as a disadvantage.
Good question. I love living in Auckland, I love the Harbour, the beaches, the Maunga, the Domain, Cornwall Park, Albert Park, the walk from the Ferry terminal to Wynyard, Brownie's pool, the Tepids, the Parnell Pools, Freyburgh Place, the good coffee everywhere, the variety of Asian eateries, the Pohutukawa on Devonport waterfront, the GI to Tamaki shared path, the quality of the playgrounds and libraries, the ferries, Britomart Station (that whole area really), walks in the Waitakere's, the Maori stories that are starting to be told through the built environment, the West Coast Beaches on a breezy autumn day, Diwali Festival, the Lantern festival (although I liked it more when it was in the City), all the sports fields and opportunities to take part in sport at any age and ability, surfing (or trying and failing to surf) at te Arai, mooching along Ponsonby road and getting some awesome grub at Ponsonby Central, innumerable other eateries that in any other city you'd have to get on a waiting list to get into, beers at Wynyard in the sun, Galbraith's, Hallertau brewery after a day's mtbiking in Woodhill, Auckland FC, the Irish playing the All Blacks at Eden Park, the Pacifica influence peppered throughout, snorkelling at Goat Island, camping at Tawharanui, Parakai Springs slides (even though I know objectively they are pretty shit), the cheap gyms everywhere, how parents do all the coaching for the school sports, paddleboarding on a calm day, snowplanet, Kauri Glen reserve, fish and chips on the beach in St Heliers, the Vic cinema, the weather (maybe not Jul-Aug so much but compared to the UK, I'd take it any day of the year) the luscious greenery, feijoas and Whittaker's ...
I mean that's just Auckland and I like other areas of the country even more to visit when I get a chance - kayak/camping Abel Tasman, Tongariro, chilling at Mt Maunganui, Coromandel for the soul, take your pick of Northland, Kaikoura, Lewis Pass, Queenstown/Arrowtown, Wanaka, Alexandra, Mt Cook, Picton/the Marlborough Sounds, Rotorua, Mangawhai, Christchurch central, I could easily spend a week in any of those places and it would be world class holiday.
I live a privileged life and realise not everyone can do all those things (I don't do them all every year obviously), but there are lot of things that are still either free or pretty cheap to do.
But the thing I like the most is probably how happy my kids are here, they absolutely love it. I wish that the roads were made safer so that they had a little more freedom to roam more widely but they get access to so many things so easily that it hasn't caused me to leave yet. I think the New Zealand schooling system is geared towards kids happiness, a love of learning and teaching the skills that they will need in an increasingly uncertain future (critical thinking, communication, collaboration and creativity) rather than the UK style of academic box-ticking and acquisition of facts and figures.
If it weren't for the kids we would have probably gone back to Australia and Europe for a bit (may still do that). The housing Ponzi has caused massive harm to social fabric in the time that I've been here and eroded some of that more egalitarian side that I liked. The entitlement mentality of the old rich people is coming through more strongly, I think it was always there but as the young people leave their voices get louder, amplified by Facebook and social media. Overall though, kiwis are pretty chilled and generally good people and I'm proud to be a NZ citizen.
It's probably why I get so pissed when I see the things that are great about NZ being attacked. Well that was longer than I expected 🤣🤣🤣
I agree with much of that, and I am probably more down on Auckland than is justified. It’s got a lot going for it, for sure.
we also lived in Devonport once, before Meadowbank. There’s no way we could buy there. Not even close. So we bought in a much less desirable area, but not too bad.
I enjoy Auckland less since we moved to buy. The walks aren’t as nice. The area isn’t quite as safe. The commute is longer (but not too bad).
But I also see the benefits in having bought. But it has involved trade offs.
I wonder- you aren’t willing to make the trade offs to buy? You often complain about housing costs, which is totally justified. I am not criticising. But maybe buying involves a trade off?
I see a lot of myself in you (including a somewhat strong sense of social justice, and getting a bit fired up sometimes). I came late to it in deciding I would rather buy in a lesser area than renting forever in a better area.
but there’s no right or wrong, it’s a personal decision
And there we are, a sub 5% interest rate ! Despite several articles on Interest, one of which today, "It is hard to see banks willingly cutting rates much from here" justifying why interest rates will NOT drop significantly, I commented against the grain: "This article won't age well".
If you look at the rate curve of all the banks, Westpac is the only bank with the curve dipping like this at any point across the curve, I wonder why they are doing this? The rest of there rates are broadly in line with the others (maybe 5-10bps lower, but the others will likely follow due to the expected cut coming).
Its either
A) A marketing gimmick
B) They have a cheap source of 3 year funding or reason to skew the book at the 3y point
C) They will move the other points to make a more normal curve at next RBNZ release
Here is my answer to your question, written BEFORE the Westpac announcement:
by Yvil | 5th Feb 25, 2:25pm
Bank retail interest rates will continue to drop, not because of the upcoming OCR cut, but because of the bank's need to write mortgages. Depositors will pay the price with lower deposit interest rates.
"When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you've got to get up and dance. We're still dancing."
Chuck Prince, July 10th, 2007 (Former Citigroup CEO)
I predict that Bank staff numbers in NZ will decline in 2025.
I reckon it's simply a gimmick designed to capitalise on recent FOMO triggered by news bubbling about Trump's tariff impact. If early in the week you're told interest rates are going to stop dropping, and maybe tick up again, then a bank comes up with a really low-sounding 3 year rate, you might align that in your head with roughly when Trump's influence on the world will be waning...
The U.S. Postal Service says it’s no longer accepting packages from China and Hong Kong, effective until further notice. The USPS also stated that letters and flats from China and Hong Kong will not be affected by this.
Bad for Temu, AliExpress and other Chinese discounted retailers, which count on USPS to deliver their goods to American customers.
And a boost for Amazon, WalMart, and any other US-based retailer which uses a network of distribution centers and imports goods from China with bulk shipping.
https://about.usps.com/newsroom/service-alerts/international/suspension…
Trying to prevent skirting of de minimis probably.
In NZ it's been years since China sent parcels straight into the country using the UPU rules. They now just bulk-ship air cargo into Auckland Airport and get 3PL companies to package it up and drop it into the domestic network. I imagine much the same is possible and happening in the US, with the main impediment being the air cargo bulk shipments will carry a relatively high value and be declared (and tariff paid).
OK. This is just too cool for a case study snap shot using Aussie.
Here is the accumulative growth rate for each:
Australian Wages: Up 882% since 1976
Australian Real Estate: Up 3,733% since 1976
Australian M1 (M3 data not available): Up 20,703% since 1976
https://tradingeconomics.com/australia/money-supply-m1
https://www.abs.gov.au/statistics/economy/price-indexes-and-inflation/w…
Who remembers "don't be evil"?
This won't end well:
"Alphabet, the parent company of technology giant Google, is no longer promising that it will never use artificial intelligence (AI) for purposes such as developing weapons and surveillance tools"
https://www.bbc.com/news/articles/cy081nqx2zjo
Things definitely heating up.
Global bullion banks are flying gold into the United States from trading hubs catering to Asian consumers, including Dubai and Hong Kong, to capitalize on the unusually high premium that U.S. gold futures are enjoying over spot prices.
"The U.S. is like a gold magnet right now, pulling in gold from all over the world,"
https://www.reuters.com/markets/commodities/us-gold-magnet-banks-fly-bu…
Workers in Japan are enjoying the biggest wage hikes in a generation.
1: Earnings +5% Y/Y, best bump since 1997
2. Pay bumps outpacing inflation
https://www.reuters.com/world/japan/japan-inflation-adjusted-wages-rise…
Aussie ruling elite taking the pis. The newly appointed US Secretary of Defense runs a department with a larger annual budget than the entire Australian Govt. He’s paid AUD$403K.
Aussie Secretary of Defence is paid AUD$961K.
I doubt that Robbo gives a rats about being questioned his golden parachute. Aoteraroans, media, and ruling elite are too apathetic.
Today in Parliament, Senator Lambie will introduce two bills aimed not just at academic salaries but at what she calls “the obscene entitlement” at the top of our federal bureaucracy. “I’m still fuming that someone like Catherine Campbell got a nearly million-dollar gig after she presided over Robodebt,” Lambie told MWM.
https://michaelwest.com.au/lambie-fat-cat-bill-to-cap-university-bureau…
Robert MacCulloch is now back at work...
"Private Domestic Savings + Foreign Savings = Investment + Government Deficit"
"All told, a Minister of Economic Growth is as silly as Monty Python's Ministry of Silly Walks. It denies personal responsibility. It sends a confusing message that somehow our country’s production depends on Ministry officials and Aunty Nicola. It promotes the idea that a weakly growing economy run by government cronies and poorly managed firms is more preferable than change, upheaval and a temporary deep recession, even though it would herald a brighter long-term future driven by a new group sweeping away the broken old system, turning it into something better."
...so is Michael Reddell...
"We can choose to continue to drift, with just incremental reforms, as successive governments have done for 30 years even amid the fine talk. But if we do, more and more New Zealanders are likely to conclude rationally that there are better opportunities abroad, and for those who stay aspirations to first world living standards and public services will increasingly become a pipe dream. "
I found a comment more articulate (though agreed entirely, its all been said here before)
And you can see that as soon as interest rates rise the entire economy tanks, because that is all there is. The NZ economy is like a heavy drinker who is dying from drinking, but also will die if they go cold turkey. It has reached a stage of impasse at the democratic level – neither of the big parties wants to do anything meaningful because to do so guarantees a recession which the other party will exploit. The only solution would be a grand coalition or agreement between National and Labour where both commit to winding down large scale migration (but it isn’t like that has been highly successful in Germany, leading here also to 15-20 years of lost opportunity to reform).
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