top of page

After a turbulent June for the US economy, with inflation showing signs of calming down but consumer spending declining, investors are faced with a market that is filled with both careful optimism and persistent worries. This month's update examines the most recent economic and legislative news to assist you in navigating this complex investing landscape.

American Economy

There has been news of economic concern in the United States amid signs of low unemployment and a high number of job openings. Here’s a summary of what’s going on:

  • The Good – The job market is strong, with a relatively higher proportion of job openings compared to the number of unemployed people. Wages are also rising, with average hourly earnings significantly higher than pre-pandemic.

  • The Bad – Inflation is stubborn. It’s currently moving very slowly towards the Fed’s target of 2%. On a consumer level, people believe inflation will rise, which is leading to reduced spending in areas such as retail.

  • The Ugly – Debt levels are rising, along with delinquency rates. This rise in debt could lead to less spending and borrowing, which could end in an overall economic slowdown.

Other news of note is that Nvidia has now crossed US$3 trillion in market capitalisation. It joins a club consisting of only 2 other companies that have exceeded this threshold: Apple and Microsoft. Nvidia alone has accounted for about 1/3 of the 13% that the S&P has gained so far this year.

Investors are now confident that Nvidia's stock price rise is because the company is doing well financially, not just because everyone else is buying. Nvidia has been releasing new products and their earnings keep beating expectations. Analysts are upgrading their price targets, with Bank of America predicting a 30% increase. The upcoming stock split will make the share price more attractive to everyday investors.

However, there are still some risks. The future of artificial intelligence, which is driving Nvidia's growth, is uncertain. Also, competitors like Intel are developing new chips to challenge Nvidia.

The rise of artificial intelligence (AI) is creating opportunities for companies beyond the core AI developers. Companies like Hewlett-Packard (HP) and Crowdstrike are seeing a surge in investor interest and stock price due to their involvement in AI-related services. HP's AI-optimized services revenue doubled to US$900 million, and Crowdstrike is benefiting from the increased demand for AI-powered cybersecurity solutions. This suggests that the AI boom is having a ripple effect across the tech industry.

What this means for you as an investor is that you should be happy to stay invested in the markets. While things are slowing down, overall, the American economy is doing better; the good news is better than the bad news.

Our recommendation is to stay invested. Cash is still providing a good return, especially in the short term, however, we expect interest rates to come down in the medium to long term, and that’s reflected in the 2-3 year bond market.

Yield Curve

The above graph is a yield curve, and can be used to predict interest rate changes and the resulting economic movement.

The above curve is an example of an inverted yield curve, as it has a downward slope. These types of curves usually indicate an economic recession as bond yields go down.

In terms of the situation in New Zealand, you can see that the 10-year rate is lower than the short-term rate. This puts emphasis on short term borrowing.

This curve is subject to change when interest rates change. If interest rates do fall, you can expect lending rates to also come down.


Lending update

We caught up with Adrian, our mortgage specialist, for an update based on recent events.

You can watch the full interview below:

Here are the key points he mentioned:

  • 1st of July is a key date

  • The bright-line test is being reduced to 2 years. If you bought an investment property prior to July 2022, you are no longer subject to tax on any capital gains, should you decide to sell.

  • The Reserve Bank will be implementing the new Loan to Value (LVR) and Debt to Income (DTI) rules. Starting with Debt to Income ratio, first home buyers will now be able to borrow up to 6x their income, and investors will be able to borrow up to 7x their income. In terms of Loan to Value ratio, investors will now only need a 30% deposit to invest in a rental property.

  • The scrapping of the First Home Grant is unlikely to make a difference to the overall property market.

  • Tax relief might not be enough to stimulate the economy.

  • Headline inflation is at 4%. This is composed of 1.6% tradable inflation, and 5.8% non-tradable inflation. Tradable inflation is the price increase of goods and services influenced by international markets (e.g., oil). Non-tradable inflation refers to price increases not influenced by international markets (e.g., rent, price of a haircut).

  • Property is going through the normal winter slowdown. Investors currently make up 20% of the market, the highest since March of 2021. Banks are still keen to lend to first home buyers. There can also be differences between advertised rates and the real rates banks are offering. It’s important to get in touch with a mortgage broker and mortgage adviser to ensure you’re getting the best rate.


Market update

Here's a summary of New Zealand's economic and business news for the past month:

Budget announcement:

The National lead government has announced the budget for 2024. It included a focus on infrastructure spending, social housing, and tax relief. While the housing market might see a slowdown due to scrapped first-home buyer grants, infrastructure investment could benefit construction companies. Overall economic growth is predicted to pick up in the latter half of 2024, potentially improving business conditions. However, investors should be aware of potential headwinds like rising costs and a slowdown in global trade.

Housing Market:

The housing market has stalled nationwide, with asking prices dropping and more houses on the market compared to last year. Wellington seems to be particularly affected, with prices dipping slightly.

Economic Concerns:

The rising cost of living is forcing some people to find creative solutions, like taking on flatmates or homestay students.

Lower global oil prices might provide some relief at the pump but could create a headache for the Reserve Bank of New Zealand as they manage inflation.


Company Struggles: Dairy giant Synlait Milk is facing challenges, with over half its suppliers wanting to leave and a downgraded earnings outlook. They've also scrapped an asset sale.

Business Defaults: Business defaults and liquidations are on the rise due to the challenging economic environment.


The economic news in New Zealand seems mixed. While the housing market is cooling down, some businesses are facing difficulties. Rising costs and a challenging global environment might be putting pressure on the economy.


Staff Update

Trilogy is pleased to welcome Jerome, our new paraplanner. He is highly passionate about investing and is excited to be providing excellent service to Trilogy’s clients.

Jerome brings a unique skillset to the team. He graduated from the University of Auckland with a degree in computer science and has also worked as a digital marketer and graphic designer. He has since also completed his New Zealand Certificate in Financial Services (Level 5) (Investment).

Aside from starting a new job, he’s also starting a new role as a father, with his partner having recently given birth to their beautiful daughter.


Please keep in touch

A friendly reminder to check you've made enough contributions to your KiwiSaver (at least $1,042.86) by 15th of June to ensure you get the maximum government contribution ($521.43). If there's a shortfall, please make sure you credit your KiwiSaver account accordingly. If you need any information about this, please get in touch with us.

If you have any queries or concerns about your financial, investment, and retirement planning matters, please feel free to give our office a call on 09 553 8928 or email us at

Market update

New Zealand’s inflation rose 0.6% in the March 2024 quarter. This was in line with consensus, as was the annual rate of 4.0%, which was lower than the December 2023 4.7% annual reading.

In its April policy update the RBNZ observed “near-term price pressures remain”. As expected, the RBNZ maintained the Official Cash Rate (OCR) at 5.5%. The Bank retained its guidance noting that ‘the Committee is confident that maintaining the OCR at a restrictive level for a sustained period will return consumer price inflation to within the 1 to 3 percent target range this calendar year.’ The RBNZ’s forecasts imply the OCR will be held steady for the rest of 2024 and the first interest rate cut is likely to be in the first half of 2025. After a period of stabilising, several measures of domestic economic activity have weakened in recent weeks.

Fixed income presents attractive yields with the potential for capital gains from anticipated interest rate declines. Longer-term interest rates are forecasted to decline over the next twelve months as inflation eases and central banks begin rate reductions.

The commencement of the US first quarter corporate earnings season added to market volatility, yet the results have generally surpassed forecasts. Notably, there is evidence of expanding earnings growth beyond large-cap tech stocks, with companies like General Motors, Goldman Sachs, and Colgate-Palmolive showing strong performance.

Within the dominant tech sector, known as the Magnificent Seven (Amazon, Apple, Meta Platforms, Microsoft, Alphabet, Nvidia, and Tesla), there have been varied results. Tesla and Apple struggled, while Meta's shares fell due to underwhelming revenue and high capital expenditure concerns related to its AI strategy. Conversely, Microsoft and Alphabet delivered positive surprises, with Alphabet's stock surging 10% to a record high, valuing it over $2 trillion. Amazon also exceeded expectations. Overall, US big tech is meeting market expectations.

In May, market rallies saw the Nasdaq reach an all-time high of 16,511, surpassing April's record. The S&P 500 and the Dow Jones Industrial Average approached their previous closing highs from March 28.

Today, the Dow reached 40,051.05, the culmination of a bull market that began in October 2022. The index had neared the 40,000 mark earlier this year before a slight April pullback on worries about high interest rates knocked it back down. The rally was rekindled in May on the back of strong earnings and some soft inflation readings.

The Dow’s rally toward 40,000 comes as expectations of interest rate cuts and enthusiasm around artificial intelligence boost investor sentiment. The market is expecting the first Federal Reserve rate cut in September. That expectation grew after a smaller-than-expected increase in consumer prices for April was reported earlier this week.

Meanwhile, the ongoing resilience of the US economy is supportive of US corporate earnings, and global economic activity is stabilising.

The Fed has been holding its key overnight borrowing rate in a targeted range of 5.25%-5.5%. Though the rate has been there since July, it is the highest level in some 23 years.

In the US, as the year progresses companies outside of the Magnificent Seven will make an increasing contribution to market earnings growth. This leads to the prospect of a broader group of companies supporting the market. Risks remain around the US recession and ongoing geo-political risks. These are areas for ongoing monitoring. Fixed income offers an attractive yield with the potential for capital gains from declines in interest rates.

Important tips

With the changing season, it's a great time to reassess your financial matters. Here are some tips to ensure your finances are in good shape:

  • Don’t miss out on your KiwiSaver Government Contributions (invest before 15 June) - if you are aged 18 to 64 and in KiwiSaver, the Government will contribute 50 cents for every dollar you contribute to your KiwiSaver account, up to a maximum of $521.43 each year. The Government contribution is calculated based on your employee and voluntary contributions between 1 July to 30 June each year and is paid directly into your KiwiSaver account (usually by the end of August).

  • Tax considerations – Taxes can significantly impact your investment returns. if your tax marginal tax rate is 33% or 39% it may be prudent to discuss your investment options to cap your tax rate at 28% for your investment income. 

  • Time in the market is better than trying to time the market. Attempting to time the market consistently is pointless.

  • The psychological benefits of staying invested - Investing can be an emotionally taxing experience, especially during periods of market turbulence. Staying invested helps investors overcome the common behavioural biases, such as fear and greed, that can lead to poor investment decisions. A well-structured investment strategy with a focus on long-term goals can help investors weather market storms with confidence.

  • Diversification reduces risk- We believe that diversification is a cornerstone of prudent investing. By spreading investments across various asset classes, sectors, and themes, we can reduce the risk associated with market segments. Staying invested enables the maintenance of a diversified portfolio, which acts as a protective shield during market volatility.

With interest rates still on everyone’s minds, and the government looking to reinstate full interest deductibility on residential investment properties over the next year or so, we thought it timely to have a another chat with our Lending Specialist, Adrian Dale.

In this update, Adrian offers his insights on the headwinds and tailwinds for mortgage rates and house prices.

We invite you to watch the webinar below for further insights.

As a new financial year approaches, we start to look to the end of the KiwiSaver year (which runs 1st July to 30th June).

Trilogy’s Investment Specialist Chiti is a big advocate of KiwiSaver for investors and feels it is a no-brainer investment option for all Kiwis. What other investment gives you a guaranteed 50% return on your first $1,042 contributed in a year?

Trilogy deals with seven KiwiSaver providers (Booster, Milford, Generate, ANZ, AMP, Fisher Funds and Nikko AM). The latest addition to our list is Generate.

At Trilogy, we have the knowledge, skills, capabilities and tools to provide good quality financial advice to grow your savings to meet your goals.

Given this news, Chiti sat down with our paraplanner, Cam, to discuss the benefits of KiwiSaver, why Kiwis should be enrolled and how to maximise KiwiSavers benefits, including how your own contributions can impact your future balance.

This webinar is available, for your information, below:

bottom of page