Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
There were no changes to report today.
TODAY'S DEPOSIT RATE CHANGES
Westpac today sliced -10 to -15 bps off its term deposit offers across the board and setting new low benchmarks for these offers among banks. They also cut their term PIE rates.
LAGGING INDICATOR?
Ratings agency S&P has affirmed all its New Zealand sovereign ratings at AA+ and keeps a 'stable' outlook on the basis that "fiscal performance will continue to improve", even as "external debt will remain high".
BIG BUSINESS
The "Auckland Council Group" reported to the NZX today (because it has debt on issue) saying its operating surplus before gains and losses was $80 mln. Total group debt (net of cash on hand) was $7 bln and the total value of their Assets was $42.2 bln, an increase of +$2.3 billion from the prior year.
INDEPENDENT?
Auckland Council has contracted with Cameron Partners and EY, as independent advisory firms, for advice on assessing alternative sources of financing available to council. They are paying $245,000 for the advice. (Obviously they are not paying their own staff enough to be able to make such assessments.)
'ROUTINE REBALANCING'
The RBNZ bought NZ$191 mln of currency on the fx markets (which would have had the effect of adding to demand for the Kiwi dollar) in the month of July. But they say these purchases were "routine portfolio rebalancing", and "do not signal any view on exchange rate". In June the average NZD/USD rate was 0.6990 whereas the average in July was 0.6652, so the buy-back did not raise the exchange rate.
BIG PROJECT
Construction has now started on the Huntly section of the $2.1 bln Waikato Expressway. The 102 km project is one of the Government’s seven Roads of National Significance and is being built in seven sections. The Huntly section is the fifth section to start and will connect to the already completed Ohinewai section in the north and to the Ngaruawahia section at Taupiri in the south. The 15 km Huntly project will involve four million cubic metres of earthworks, including an 80 metre cutting through the Taupiri Range, and has nine bridges.
DAIRY FIRST, NOW BEEF
China's PengXin Group is bidding for two huge Australian cattle properties which together could cost more than A$1 bln and would make them the biggest owner of farmland in that country. This is the same company that bought up the Crafar Farms, and Lochinvar Station in New Zealand.
WHOLESALE RATES FIRM
Swap rates were up across the curve again today with a small steepening bias. Two and three year terms are up +1 bp, four, five and seven up +2 bps, and ten years up +3 bps. The 90 day bank bill rate was also higher +2 bps at 2.90%.
NZ DOLLAR HOLDS
The NZ dollar held its level today. It is at 64.8 USc, 90.3 AUc, and the Trade Weighted Index (TWI-5) was at 69.4. Check our real-time charts here.
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Daily exchange rates
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20 Comments
Rather than just take the word of some breathless reporters who actually haven't lived through variation, you will be able to track what actually happens and compare it with long-run 'normal' and the past three years, here
http://www.interest.co.nz/rural-news/soil-moisture-animation
like most professional farmers do.
Sounds like yet more climate denial David. Sure we will see "variation" but the averages are clearly up.
a) living through it is too late for a farmer.
b) the academic levels of reports suggest the biggest El Nino on record is now probable. This means for NZ an exceptional drought for some parts of NZ and some extreme events ie severe rain/floods as also possible.
c) check 1997 / 1998 effects, ie experience.
d) I'd suggest as per a) some consideration is taken on acting early to reduce / prevent losses.
PS,
"Climate scientists are warning farmers" so then do some research to see if the breathless reporters are accurate or not, they are.
fair enough. But I am always sceptical about anyone who is 'certain' about the future ('scientists' included). I will mark my calendar to check back at this time next year to see what happened to NZ regional soil moisture levels. It is that I recall the Australian BOM called a major El Nino this time last year. NZ ended up with a year with normal variation.
For most of the first half of 2015 you were fixating on any report you could possibly find that an El Nino event was not coming (despite the mounting evidence from a variety of learned organizations).........
Now even you have had to concede to the science that the predicted El Nino is here you are now trying your hardest to downplay any potential impact.
Very odd.
Not really very odd or maybe the word is un-usual, at all but a behaviour I have seen repeatedly, sometimes to my cost. ie some ppl will gamble an event will not occur because doing something to prevent it is a 100% certain cost on them, better they feel to gamble then they will have to do zilch even if they or usually someone else pays 200~300% if it goes wrong.
Citigroup are calling for Helicopter money in China.
http://www.telegraph.co.uk/finance/economics/11831426/Citigroup-braces-…
Willem Buiter, the bank’s chief economist, said the country needs a major blast of fiscal spending financed by outright "helicopter" money from the bank to avert a deepening crisis. Speaking on a panel at the Council of Foreign Relations in New York, Mr Buiter said the dollar will “go through the roof” if the US Federal Reserve lifts interest rates this year, compounding the crisis for emerging markets.
There is a loose parallel with Japan, where the economy slid into a deflationary quagmire and lost its economic dynamism but never suffered a full-blown financial crash. In Japan’s case the denouement was averted by keeping "zombie banks" on life-support.
In the bigger picture, that is as much a damning indictment as a tale of orthodox resilience. It shows that monetary redistribution is nothing but a trap, an incredibly narrow and locked economic existence that can and will be permitted by any sustained apathy. It is a cautionary tale that “markets” can become comfortable with perpetual dysfunction and disaster over time; distract investors enough with monetary magic and they will apparently forget all about more basic functions like impoverishment and general, sustained degeneration. Read more
The fix ie lower interest rates is however a sound ir not the only strategy for a this sort of event. However when we see mass greed and maybe even short selling hoping for or trying to encourage such an event just to make even more "money" you have to wonder if any action bar jail would work.
The Federal Reserve did a national cash drop of $700 to every taxpayer and beneficiary, then followed that up with TARP, all of that being a safety-net under the high-trapeze which was intended as a 6-month program until things settled down and stabilised.
Those two "fixes" didn't work, so began the QE series I and II and III
And it still hasn't worked, and that 6-month safety net is still there 7 years later
Did they work? Not in my opinion. Instead, the FED Reserve now has a $4.5 trillion Balance Sheet problem - how does it get out of that - more importantly when and at whose cost
Will New Zealand feel it - yes - you betcha
woo. $700 big deal. won't even get me one university course. maybe a 6 weeks of groceries.
the problem that arises is that the _money_ (tradeables) is paid from debt (or foregoing income for servicing debt). That debt must sooner or later be repaid or the continual cost will continue to need to be meet - day after day - generation after generation.
If the government "gives" currency money to pay the proles a pittance off what the proles already have to pay them, and the government isn't paying its own credit card bills, it isn't fixing anything. the constant drain on resources will still be there, with interest, next month, and the month after that, and the month after that. Create jobs through bureaucracy, and the payment for that, just costs more interest, month after month after month.
That is the debt trap and -governments- which are the most insolvent of all bodies are the worst as their collective projects and defined inability to add value* constantly make then vulnerable to such economic disaster. Government operates on a constant "too big to fail" attitude on a permanent bankruptcy position behaving like the biggest bully in the playground to get what it wants. Until the government, and its parasitic bankers, get beyond that model disaster and failure are constants. This is directly because governments use debt to do their works, yet never have the time to fully pay off their wants - thus there is no economic value from the ownership of such works, only ever mounting debt to rollover, as project after project, fat salary after salary adds to the burden to be serviced - who else but government or economists would expect a burden to get lighter by adding to it??
* because government can do work that private sector does - but if the government profits it pushes out the private economy development, as the private sector can't compete with the bullys funding model or ability to invent obstacles. So government profiting is not healthy.
If government takes on large projects that are breakeven, then it blocks private profits and development from growing.
If government limits itself to social unprofitable projects, it creates a constant never-repayable burden for the private economy to have to carry.
It therefore lies to government to chose if it is going to allow freer markets, or attempt to fake a free market which is difficulty because they must properly understand the whole market dynamics AND well enough to simulate desirable behaviour in the pseudo-market - or if it is going to use its force to crush the market openly and oppress people into what government wants.
All while getting normally bad, self-interest advice from banking interests
To start with we could argue that the drop worked as we didnt enter a Greater Depression, just stagnated. There is also comment by Paul Krugman that the size of the drop was 50~100% too small and diluted too boot. On top of that the Republican Congress stood in the way of Obama fixing the problem because they wanted him to fail, indeed destroy him. So we have to consider the all else being equal factor. QE's fail? well we didnt enter a Greater depression for 6 odd years so Im not so sure its a failure. Can it be fixed? 6 years ago by cleaning out the banks maybe, that was politically impossible. In any event that would have been a short term fix until the effects of peak oil become overwelming.
The RBNZ bought NZ$191 mln of currency on the fx markets (which would have had the effect of adding to demand for the Kiwi dollar) in the month of July. But they say these purchases were "routine portfolio rebalancing", and "do not signal any view on exchange rate"
How about a collateral call upon the falling value of the NZDs supplied (printed) at a higher value to the counterparties to this trade - section 10, line FX Swaps and Basis Swaps?
No. I believe It is a genuine swap related collateral call - but the RBNZ act of selling USD reserves received through the ccy swaps and thus buying NZD is a withdrawal of domestic liquidity and hence a tightening action.
What they (RBNZ) are really up to in this ccy swap market defeats me, beyond financing the local banks' settlement cash requirements and lending out crown deposits on a collateralised basis. See Memorandum items (bottom of page)
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