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
No changes today. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
None here either. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
SNAKES ON THE HOUSING LADDER
QV says 2025 will be 'an intriguing year' for the housing market. It is seeing some small value increases creeping into the housing market.
ACTION NEEDED TO AVOID CALIFORNIA-STYLE INSURANCE CRISIS
Tower Insurance warns the Government it needs to clarify climate adaptation funding to avoid California-style insurance crisis amid rising natural disaster risks.
BUYING MORE, PAYING LESS
NZ Post reports that online shoppers are buying less expensive items more often. They spent $1.7 bln online in the October to December quarter according to their Q4 Review. That meant +14% more items were bought online in Q4-2024 than Q4-2023, but buyers only spent +9% more in $ terms. Online had good growth, but in-store had none. The average spend-per-transaction fell -4% to $95.
BOND OFFER TSUNAMI
As we reported yesterday, the Treasury Debt Management Office sought $3 bln in a syndicated tap of the May 2023 NZGB. They got offered $21.5 bln in the book build. They decided to take $5.5 bln, priced at a YTM of 4.65%.
PAYOUT FORECAST HIGHER & MAY STAY HIGH
Westpac analysts have been reviewing their farmgate milk payout price estimates. They have revised the 2024/25 season estimate up +30 bps to $10.30/kgMS, which makes it the highest estimate of any main analysts. They have also launched an estimate for their 2025/269 season at $10/kgMS. We have more on this change here. You can compare all current analysts positions here (at the bottom of that page).
NZX UPDATE
The NZX50 is up +0.2% in 3pm trade, but not quite making back yesterday's dip. There are 40 gainers today, led by Tower (+4.0%), Oceania (+2.6%, and Vulcan Steel (+2.0%). Market heavyweight F&P Healthcare is up +0.7%. There are 27 decliners today and they are led by Gentrack (again)(-3.2%), SkyTV (-1.9%), Rakon (-1.6%) and Spark (-1.7%).
'FINAL GENERATION' THREAT REAL
The social-media-recorded pushback during the Covid lockdowns in China that "we are the final generation" is continuing to echo, and echo loudly there. After rising slightly in 2023, marriages fell sharply in 2024 and to their lowest since China's public records began in 1986. This means the public efforts to stop the sharp fall in births are not working. (And yes, if you try to follow the link to the data, you may well find yourself blocked. But it is the source data for this item.)
MIXED SENTIMENT
In Australia, the Westpac-Melbourne Institute consumer sentiment survey reported no improvement in January from the flat levels that have been around for the two prior months. But the NAB Business Sentiment survey is reporting that their responders are finding a more positive mood.
SWAP RATES HOLD FIRM
Wholesale swap rates may be slightly higher 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 down -1 bps on Monday at 3.87%. The Australian 10 year bond yield is unchanged at 4.43%. The China 10 year bond rate has also held at 1.63%. The NZ Government 10 year bond rate is up +1 bp at 4.67% while today's RBNZ fix was 4.63% and also up +1 bp. The UST 10yr yield is now just on 4.49% and up +1 bps from this time yesterday. Their 2yr is down -1 bp at 4.28%, so that positive curve is slightly steeper at +21 bps.
EQUITIES MIXED AGAIN
The NZX50 is up +0.2% in late Monday trade. The ASX200 is also uo +0.2% in afternoon trade. Tokyo is unchanged in early Tuesday trade. Hong Kong is down -0.3%, as is Shanghai at its open. Singapore has opened down -0.4%. Wall Street closed its Monday trade with the S&P500 up +0.7%, pretty much as the weekend futures market signaled.
OIL FIRMS AGAIN
The oil price is up +US$1 from this time yesterday, now just under US$72.50/bbl in the US, and 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 UP
In early Asian trade, gold is up +US$68 from this time yesterday, now at US$2936/oz and a new ATH. Chatter about $3000 is growing.
NZD SLIPS AGAINST THE AUD
The Kiwi dollar has hel from this time yesterday, still at 56.4 USc. Against the Aussie we are down -30 bps at 89.9 AUc. Against the euro we are down -10 bps at 54.7 euro cents. This all means the TWI-5 is now just under 67.1 and down -10 bps.
BITCOIN FIRMS
The bitcoin price is up +2.6% from this time yesterday, now at US$98,121. Volatility of the past 24 hours has been modest at just under +/- 1.5%.
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60 Comments
NZ Electricity Spot price has gone through the roof the last couple of weeks, currently $300mw/h around the country.
Sounds Inflationary.
https://www.rnz.co.nz/news/business/540613/real-risk-of-double-digit-in…
Any thoughts on why? The lake levels don't look bad
https://www.transpower.co.nz/system-operator/notices-and-reporting/week…
Same. Holding back before deciding to switch till late February as in New Plymouth Powerco is the lines company and their annual increase is from 1April. Don't know if they've already given a heads up to the retailers on the increase. I'll be checking Powerco's website end Feb as well.
In early Asian trade, gold is up +US$68 from this time yesterday, now at US$2936/oz and a new ATH. Chatter about $3000 is growing.
Water cooler bros smell bubble and reckon Jamie Dimon will restore order and smash it down with his paper. Probably right.
Hard to keep away from the conspiracy theories though because the gold has nearly doubled since WSJ declared that the metal had lost its reserve status in September 2022.
https://www.wsj.com/articles/this-should-have-been-a-great-year-for-gol…
The timing is perfect for gold to rise during a recession when most people can't afford it.
Why would IFAs and the media be promoting gold to the hoi polloi? They don't make a commission off it nor are their customers (advertisers) selling gold. In many ways, gold is a difficult subject for them.
Central bank buying and abandonment of US Treasuries seems to be a key narrative. Lord Orr wouldn't touch gold with a barge pole though. Bar the US, the Anglosphere has little interest in gold (consistent with the respective Ponzis being the be-all-and-end-all). Unlike Asia, emerging economies, Russia, Central / East Europe.
I found it interesting that you believed negative interest rates were more likely than mortgage rates hitting 10%. Wouldn't a gold revaluation be easier in a deflationary environment like China’s, rather than an inflationary one like Argentina’s?
Edit: I shouldn’t have brought up China and Argentina. My main point was that in a deflationary environment, where asset prices drop and interest rates rise (which is what happens when treasuries sell off), gold wouldn’t need to be revalued as much.
The social-media-recorded pushback during the Covid lockdowns in China that "we are the final generation" is continuing to echo, and echo loudly there. After rising slightly in 2023, marriages fell sharply in 2024 and to their lowest since China's public records began in 1986. This means the public efforts to stop the sharp fall in births are not working.
China's youth revolution is getting very interesting. As for demography you can already see that the next generation is going to be less than half the size of previous ones. A number of countries are in real demographic trouble now but seems unable to take any steps to pull out of it.
In terms of trading opportunity though I look at debt and have to ask who is going to pay it given there will be far fewer taxpayers in future to shoulder that burden. Chinese 30 year should be junk unless you believe in miracles.
Over in Aussie,
A new study reveals that university students in degrees such as arts, history, economics, business and teaching face total costs of more than $160,000 to graduate when living expenses such as accommodation, food and transport are included.
No idea why people are not gravitating towards trades, train driver qualifications, or lollipop gigs.
https://www.afr.com/work-and-careers/education/an-80-000-debt-is-only-p…
Ms O’Brien, from Lorne on the NSW Mid North Coast, lives in Basser College, for which she pays over $550 a week.
Is it really excessive lifestyle choices? I mean, excessive is a word that certainly does come to mind.
https://www.unsw.edu.au/accommodation/colleges/basser-college
- Room Type: Single $566.00 p/w
- Meals: Catered (Breakfast, lunch, dinner)
- Bathroom: Shared (an extra $53 per week for your own bathroom).
- Cleaning: Yes
- Average room size 10 to 12 square metres
Is it really excessive lifestyle choices?
University used to be a lifestyle choice in Aotearoa. Not anymore. Not anywhere in the Anglosphere. In fact, it's morphed into something potentially damaging if you don't want to take on debt at an early age.
And the boomers believe the same people are going to be paying a premium for their assets?
Absurd if you think about it.
University aside.. paying for a fully-catered dorm is a choice. Paying a premium for location is a choice.
Perhaps the students taking on debt to live in these locations are not the universities target demographic - perhaps they want rich kids whose parents/grandparents are paying for it, and oh well if you're dumb enough to take on 10s of thousands of dollars of debt a year too, guess you'll do in a pinch? Let alone the internationals on work oops I mean student visas.
The cause of high fees is steering us in the face...and we can't see it.
It's the access to free and then very low credit.
If it were market rates, fees would be forced down.
The Universities etc have no need to cut costs, their customers need no money to access their services.
What party has the balls? None.
For many years I help support a very strong NZ woman who ran orphanages for abandoned female babies in China. These babies would miraculously appear at her doorstep in the very early hours of the morning. If my memory serves me she had about ten or so of these homes/places in southern China . When she couldn't keep going due to age & health issues, she had helped raise over 550 young Chinese women, one of whom she adopted. She was one great women, in my eyes. I understand most of the homes are still operating in one form or another, however, it's been a decade or longer since I last saw her, in rented accommodation in one of our better provincial cities.
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