A review of things you need to know before you go home Friday; no rate changes, rental housing gains, FMT downgrades commercial lending, eyes on final vote tally, swaps rise, NZD falls

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report again today.

DEPOSIT RATE CHANGES
No rate changes here either.

RENTALS DOMINATE HOUSING STOCK GROWTH
Statistics NZ released household and dwelling data as at September 2017 today. That shows that 62.9% of private dwellings are owner occupied now, the lowest level ever. Ten years ago, that ratio was 66.4%. In the past year there were 9,300 private dwellings added, but up from a low of just 2,500 in 2012. The story is the inverse for rental housing. At 33.4% of all houses, this is the highest level ever. In the past year another 16,500 houses were added to the rental stock. But that is not a record; there were 18,500 renters added in 2000. This data is currently not available by city or region, only nationally.

ALL IN FOR HOUSES
The large non-bank mortgage lender, First Mortgage Trust has said it has made a "conscious move" to lending more for residential lending. At the same they say they have changed their investment objectives, pulling back in a significant way from the commercial property sector. This is a business heavily expose to the Auckland market (63.5%), Waikato (6.5%) and the Bay of Plenty (13.5%) with more than 50% of all their investments in residential property. Commercial property accounts for only 16% of their investments. Their declared shift away from exposure to commercial property is interesting in this context.

ON THE CHIN
The derivatives market for dairy products, mainly WMP, is accepted its losses, with prices now back to those achieved at the auction earlier this week.

THE FINAL TALLY
Don't forget to check in tomorrow after 2 pm when the Election Commission will announce its 'final' vote tally from the September 23 general election. Many observers are expecting National to lose up to two seats, those being gained by Labour or Labour and the Greens. No-one is suggesting NZ First will gain anything in this final tally. Alex Tarrant will be at the lockup briefing and will report these upated results.

WHOLESALE RATES RECOVER
Local swap rates reversed all yesterdays declines by rising +2 and +3 bps across the board. This follows the Wall Street changes earlier in the day. The 90 day bank bill rate rose +2 bps to 1.95%.

NZ DOLLAR HOLDS
The NZ dollar continues its relentless slow slide and is today at 71.1 USc. On the cross rates we are at 91.2 AUc and at 60.7 euro cents. The TWI-5 is now at 74.1. The bitcoin price is -up +2% at US$4,322.

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5 Comments

Ahead of tomorrow’s payroll report the narrative is being set that it will be weak because of Harvey and Irma. Historically, major storms have had a negative effect on the labor market. Just as auto sales were up sharply in September very likely because of the hurricane(s) and could remain that way for several months, payrolls could be weak for the same reasons and the same timeframe.

That said, we can’t pretend as if the economy was cooking before Mother Nature interfered. It wasn’t. If one thing has become absolutely clear about the economy in 2017, it is that it has fallen off dramatically when compared to the last half of 2016.

This is the opposite of what was supposed to happen, what most people and all Economists were expecting. The rebound off the early 2016 trough was only the first part of bigger things, or so it may have seemed. For reasons beyond the mainstream grasp, however, the farther into 2017 we go the farther away that dream seems to get.

The latest data to confirm the pre-storm contradiction is from the Census Bureau. Both US exports as well as US imports continue to underwhelm not just in comparison to last year but with respect symmetry. The economy falls off around the world at each of these downturns and it just doesn’t come back, at least not like it used to. Read more

some nice charts there. So far the market has defied all expectations and grinds higher but if the growth in the 500 doesnt not reach 10% for 2018 what next. Prehaps someone with in depth knowledge of the interest rate hikes on the the high yield market could comment. Recent comments that china is run by a group of very corrupt officials would be all it takes to blow a hole in the china paper thin wall of nothing much to see here. No big tax deal in the US and this market will turn from hold to sell faster then 2008. I dont expect the same result of course but the finger is on the button.

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Haha. Classic!

"Many observers are expecting National to lose up to...."
By parroting this, are you an observer with that same view?
Me? I have a completely open mind about what the special votes will do.