Here are the key things you need to know before you leave work today:
MORTGAGE RATE CHANGES
Westpac has reduced its one year fixed 'special' by -15 bps to 4.45%.
TERM DEPOSIT RATE CHANGES
Westpac has reduced four TD rates for one month, six and eight months, and two years. The reductions range from -5 to -25 bps.
A DECADE LOW
At 4.5% s.a. (4.4% actual), New Zealand’s unemployment rate is at its lowest since December 2008 and there are some promising signs wage inflation, now at +3.4% p.a. is beginning to pick up some steam. That is the highest in more than six years. And let's not forget our participation rate which inched up again to 71.3%, which is not only a New Zealand record, but about the highest in the developed world.
A STRONG PILLAR
ASB has posted another very strong profit result and is inching up to being material for parent CBA.
PREFERRED BY 50% MORE BUYERS
There were 13,179 new "used imported cars" registered in January 2018, the highest level ever for a January. That makes the annual used imports level a new record as well at 166,400. For reference, in the same period 109,300 new vehicles were registered. We buy used imports at the rate of 3:2 used:new.
A BOOST FOR FONTERRA SUPPLIERS
Somewhat surprisingly WMP prices at today's dairy auction were up +7.6% above the previous auction two weeks ago. This is in line with what the derivatives market signaled. Analysts are suggesting there may be upside to farm-gate milk prices. Offers on today's derivatives market have firmed their expectations.
'FALSE ALARM'
After yesterday's deep dive, equity markets around the world are staging recoveries. (How lucky were we to have scheduled a public holiday to avoid the carnage? Amazing what a new Government with Winston in it can achieve.) The ASX200 is up +1.2%, the Nikkei225 is up +3.1%, Shanghai is up +1.5%. Our own NZX50 is down just -0.6% having not suffered any Tuesday falls. "False alarm" is the message equity markets seem to be giving. We'll see. Don't forget the US needs to pass a 2017 Budget resolution to authorise the funding of the Federal Government by Friday NZT. The President isn't helping smooth the path.
THE REAL NEWS
This is actually the really big news today.
BENCHMARK INTEREST RATES SLIP
After opening sharply lower, local swap rate changes have mellowed during the day. The two year is now unchanged, the five year is down only -2 bps and the ten year is down another -3 bps. Meanwhile the UST 10 yr, which got up as high as 2.88 on Monday then crashed to 2.70% yesterday in the Wall Street wobble. But today it has now risen back to 2.80%. The trend of falling bond prices seems to be holding. The Aussie 10 yr is at 2.86%, down -3 bps bps since Monday. The Chinese 10 yr is at 3.94% (unchanged), and the Kiwi 10 yr bond is 3.00% (unchanged). The 90 day bank bill rate is unchanged.
CBL UNDER THE SPOTLIGHT
Specialist insurer, CBL, has revealed details of a RBNZ review into it. With confidentiality orders lifted, the company has told the market the RBNZ in July set its minimum solvency at 170% and in November directed it to consult on any non-business as usual transactions greater than $5 million. The review follows the collapse of large Gibraltar-based insurer Elite Insurance, which wrote policies for CBL until July last year. A.M. Best has today also downgraded CBL’s credit rating.
BITCOIN IN HEAVY VOLATILITY
Bitcoin is now at US$7,627 a mere -4.6% drop since Monday. In the meantime it did get down to US$5,975 at one point but has been firm for most of today. The central banker's banker has panned the risks related to cryptocurrencies, encouraging its members to stay well clear of them in their economies, using unusually strong language.
NZ DOLLAR FIRM
The Kiwi dollar is stronger today, helped by very good employment and wage growth data. It is currently at 73.3 USc, at 92.9 AUc and 59.2 euro cents. This puts the TWI-5 at 74.4.
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21 Comments
Somewhat surprisingly WMP prices at today's dairy auction were up +7.6% above the previous auction two weeks ago. This is in line with what the derivatives market signaled. Analysts are suggesting there may be upside to farm-gate milk prices. Offers on today's derivatives market have firmed their expectations.
Russia looking to compete in China's milk products market. Read more
What Happened Today ?
... a momentous event for the Gummster ... I received my first spam message inviting me to join " Next Crypto " ... the newest and best next thing in cr*ptocurrencies ... apparently ... move over Buttcoin & the other 1300 wannabees ... the real deal is in my Junk Box ...
I feel proud , a little flush of joy ... no more spammers and scammers from Nigeria for me ... no need to hide the Prince's $ millions from his rogue government in my bank account .... no sirrrreeeeee Jim-Bob ... the Gummster is now on the cr*ptocurrency gravy chain to easy wealth ...
... what could possibly go wrong ... hmmmmmmmmmm ?
ASB has posted another very strong profit result and is inching up to being material for parent CBA.
Hmmm....
Advances to customers increased $2.27 million, or 3%, in the six months from June to December, reaching $80.37 billion. Over the same period, deposits and other borrowings increased $2.64 billion, or 4.5%, to $60.833 billion.
How does that work - unmatched book or X-CCY swapped foreign off-balance sheet borrowing?
Figures released by CBA show ASB's home lending grew at 4.8% during 2017 versus system growth of 5.7%, and business and rural lending grew at 7.5% versus system growth of 4.6%.
Is ASB cutting back residential mortgage issuance?
Property Party Over in Australia as Biggest Bank Curbs Lending
A lot of worrisome news in David’s update this afternoon – from employment numbers and wage growth all the way through to car imports and even WMP pricing.
Until we see some sort of encouraging signs in the economy any consideration of a change in the OCR should be deferred until at least early 2020.
False Alarm
Yeah I'm not too confident about the "bounce" - it was managed - by the specialists - I suggest the market-makers were leant on to absorb any early negativity
NY Dow Jones Opening Print was -260 then down to Day Session Low for a drop of -567, recovered back to zero for most of the remainder of the session until 1 hour to go when the professionals kicked in and lifted +601, then eased back to close +567. nb: the closing end-of-session lift of +567 exactly offsets (recovers) the -567 drop in the opening minutes. That's classic managed uniformity in the market to allow the pro's out breaking even on the day having done their job. Total range for the day 1168 points.
Early days?
While they do take their time, things can look so good in general, normal even. But we still have to remember that these markets and the whole global economy are all living right over top the biggest monetary faultline, the eurodollar system, there is. No matter what the Fed says, what it always says, it hasn’t been quiet. Read more
Volatility is here to stay.
"The lack of fundamental value in either bonds or stocks is the greatest risk,” Diggle said. “All markets must eventually come back to attractive value and this is a very, very long way down for both stocks and bonds. The broad economy and corporate profitability are both strong, and that’s important, but value is what provides the best support and it’s nowhere to be seen."
https://www.bloomberg.com/news/articles/2018-02-07/hedge-fund-veteran-d…
And then you wonder – is the RB actually looking to inflate out of this debt-laden mire - surely not.
It’s an answer, not particularly elegant and not particularly constructive, but it’s a possible “solution” that’s been thrown around a bit lately.
Once again, create a future mess, to solve a current mess.
This is actually the really big news today.
Hmmmm...
The rocket carried a playful payload: Mr. Musk’s red Roadster, an electric sports car built by his other company, Tesla. Strapped inside the car is a mannequin wearing one of SpaceX’s spacesuits. They are expected to orbit the sun for hundreds of millions of years.
Space junk!!!!!!!!!!!!!!!
But what an incredible buzz – I was around for the 60’s Apollo launches – kept a scrap book of all the news clippings – how did they do it, the mystical whispered answer – “computers” – whatever they really were.
At the time I was simply a little kid fit to burst.
This has brought the magic back – goose bumps!!
Yes, maybe it’s space junk, commercial and tacky – but the power of the human mind, the ability to ignore the limit, to push technology until it screams, demanding to fail – all that “stuff”.
Today I’m just happy to be here, and again be awestruck with what I've seen.
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