Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
There are no changes to report today.
DEPOSIT RATE CHANGES
No changes to these either.
'A VARIABLE SPEED ZONE'
ANZ released its December Truckometer series today. The availability of credit and labour are starting to constrain growth. Given the economy is now attempting to grow faster than it sustainably can, ANZ says it expects to see growth moderate over the course of 2017 "from a gallop to a canter". Both the Heavy Truck, and Light Truck indexes are growing around +3% year-on-year. However, looking at the December levels, the Heavy Traffic Index continues to trend upward, while the upward trend in the Light Traffic Index flattened out, suggesting a moderation in growth as we approach the middle of 2017.
A COMEBACK BY DAIRY HIDES OTHER SLIPPAGE
The ANZ Commodity Price Index rose +0.7% month-on-month in December, largely due to the continuing comeback story of dairy prices over the second half of 2016. The December rise in the index was the eighth in a row, driving it +19% higher over the course of 2016. In NZD, the Index posted a +2.0% lift in December from the prior month. This was the fifth month-on-month rise in a row and the fourth monthly gain above +2%. Non-dairy commodity prices were the disappointment, falling -1.9% month-on-month. Only 3 of the 12 non-dairy commodities in the index rose in December, with falls centred mainly in the meat and fibre group. However, many sectors saw price improvement throughout the course of 2016, though NZD moves continued to weigh on local returns in many cases.
A GROWING FLEET
Sales of used imports rose strongly in December to 13,181 and taking the annual level to 149,526. This annual level is the highest since 2006. The December level is a record high for that month. These high import levels are in addition to the sales of new cars, which themselves totaled 102,647 in 2016. So all up, we added a remarkable 252,173 additional cars to the roads in 2016, plus another 60,000 plus commercial vehicles. No wonder some roads get crowded. There are 3.6 mln cars on New Zealand roads, and we scrap only about 115,000 of them each year.
ARRESTS AND FINES FOR VW
And speaking of cars, Volkswagen today agreed to plead guilty to three criminal counts and pay a US$2.8 bln criminal penalty as a result of the company’s long-running scheme to sell approximately 590,000 diesel vehicles in the US by using a defeat device to cheat on emissions tests mandated by the Environmental Protection Agency and the California Air Resources Board, and lying and obstructing justice to further the scheme, the US Justice Department announced today. Six people are to be arrest, one is already in custody. In addition, they have agreed to pay another US$1.5 bln to settle related civil cases.
WHOLESALE RATES LOWER
NZ swap rates are lower by -4 to -5 bps across the board today. The 90 day bank bill is down -1 bp and now at 1.98%. This follows the slip on Wall Street overnight where the benchmark UST 10yr fell and is now at 2.35%.
NZ DOLLAR FIRMER
The currency market has marked down the USD today following a news conference by Donald Trump. The NZD is at 70.6 USc. On the cross rates, it is at 94.8 AUc, and at 66.7 euro cents. The TWI-5 index is at 76.2. Check our real-time charts here.
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6 Comments
Same in NZ?
The Bank of England figures made it look like UK consumers were partying like it was 2007 as credit card borrowing reached a record £66.7bn in the year to November. The Bank said that consumer credit, which means all credit cards and car loans, had risen at its fastest rate in 11 years, up 10.8% over the last 12 months period to reach £192bn. To put that in context, when Lehman Brothers imploded in September 2008 and the banking crash triggered a worldwide recession, the figure peaked at £208bn. The average household in the UK now owes a record £12,887, before mortgages are taken into account, according to the TUC. Read more
The Federal Reserve reported this week that consumer credit increased by $24.5 billion in November, the largest expansion since August and one of the biggest monthly changes in the data series. Non-revolving credit was actually subdued at least as compared to what has become typical. Revolving credit, on the other hand, surged by $11 billion. That was nearly as much as the increase in March 2016, which was the third highest on record. Overall, US consumers have been using credit cards again in a way that they haven’t since the pre-crisis era.
The numbers are staggering; in the 38 months from the start of 2012 (and the arrival of the slowdown) thru February 2015, consumers added just over $48 billion to their debt balances. In just the 21 months March 2015 thru November 2016, balances ballooned by an astounding $103 billion. During that time, retail sales decelerated toward some of the worst growth rates in the entire data series. Though retail sales in 2016 were better than in 2015, that really isn’t much of a comparison or change. Read more
Thought I posted response on this one.
Household debt in the US and UK is nowhere near as bad as here. Their unemployment rates look good as well. However there is something wrong that doesn't show in the graphs. A recent statistic from the US says that 39% of households are spending more than they earn. That type of spending behaviour, in my experience, rarely changes. It seems reasonable to think that the same spending patterns are going on in the UK given the similar conditions. Thing is that can go on for years, and with some of the people I've helped out it's not unusual to carry on for 5-10 years in the US clocking up credit card debt until breaking point. By that point minimum payments are the size of a mortgage payment for a large house.
I don't think they're at breaking point yet unless there's a new subprime equivalent disaster brewing.
Maybe, the failure of rising yields post 15 Dec 2016 FOMC rate hike has negatively impacted the USD index and hence inversely the price of gold?
Bill Gross is calling the US T10yr recent high yield @ 2.60%, struck on 15 Dec 2016 pivotal. Read more
I was wondering whether anyone is seeing any cracks appearing in the Construction and property development sector in New Zealand .
I cant say too much , but there seems to be an awful lot of debt about on some balance sheets , and an ever increasing number of unprofitable or mis-priced projects being canned or running into brick walls .
In light of likely interest rate rises , one is left wondering if a trend is going to emerge
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