A review of things you need to know before you go home on Tuesday; no rate changes, business confidence sinks, Barfoots sales volumes low, building consents jump, RBA cuts again, swap rates soft, NZD holds

A review of things you need to know before you go home on Tuesday; no rate changes, business confidence sinks, Barfoots sales volumes low, building consents jump, RBA cuts again, swap rates soft, NZD holds
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report today, so far

TERM DEPOSIT RATE CHANGES
None here either.

A TEN YEAR LOW
The NZIER's Quarterly Survey of Business Opinion shows a net 31% of businesses see deteriorating conditions over the next 12 months. These are survey results that are likely to put more downward pressure on outlook for interest rates. Firms are reporting they are now struggling with cost pressures.

CIVIL ACTION
The Commerce Commission has taken legal action against Wellington-based Real Finance over unreasonable fees and charges.

NINE YEAR LOW
Barfoot & Thompson's June sales volumes were at a nine year low in June, but prices held steady. Low volumes have been a feature of their trading in the past four consecutive months.

CATCHING UP, FINALLY
Residential construction shows no sign of slowing down as new building consents hit a forty five year high, pushed up by a strong rise in consents for townhouses in Auckland. In fact 62% of all consents in the Queen City were for either apartments or townhouses. Only a unique one-month Auckland student shoebox deluge in October 2002 was higher. May consents numbers outside Auckland were also strong, growing at a more than 8% pa. pace. The Waikato activity was also notable.

OTHER CONSTRUCTION CONSENTING STILL STRONG
Building consent values for all other construction other than housing wasn't so strong, although this comes after a banner April. But looked at with a slightly longer perspective, on a rolling quarterly basis, it is still running more than +14% ahead of the same period a year ago.

WATCHING YOU MORE CLOSELY
The IRD now has greater insight into the status of taxpayers, in real time, throughout the year, with their new fancy computer system. They are being given new powers, under cover of being able to alert savings providers if a KiwiSaver investor is on the wrong tax rate.introduced to Parliament.

GOVT PAYS MORE ATTENTION TO CYBER SECURITY
The Government has refreshed its Cyber Security Strategy. Its new strategy highlights four fundamentals for cyber security, that “partnerships are crucial; people are secure and human rights are respected online; economic growth is enhanced, and national security is protected”. As a part of Budget 2019, $8 million was allocated to help implement the strategy over four years. This was on top of $9.3 million of increased funding to the Computer Emergency Response Team. Incidents reported to CERT increased by 205% in 2018. The National Cyber Security Centre recorded 347 incidents, largely affecting organisations of national significance in the 2017 financial year with 39% of those incidents linked to state sponsored actors.

DAIRY PRICES ON TENTERHOOKS
Early tomorrow morning there is another dairy auction. the futures market still expects a -4% fall in the WMP price.

CHECK BACK AT 4:30 PM TODAY
The Reserve Bank of Australia is due to announce the result of their official interest rate review. That rate is currently 1.25% after having dropped from 1.50% at their June meeting. Analysts are expecting another cut today to take it to 1.00%. Update: The RBA went ahead with another -25 bps rate cut today, as markets expected. Now the flow-through will be watched closely.

STRONG BOUNCEBACK
In Australia, sales of newly constructed houses are picking up again after a long decline. They were up +28% year-on-year nationally, and in NSW, the bounceback was an impressive +54%. In both Victoria and Queensland they recovered +24% on the same basis. This data comes after CoreLogic reported yesterday that the used house sales market is picking back up in Australia as well.

RICHER
According to market research house Roy Morgan, the value of assets held by Australians has almost doubled from 2007 to 2019 (up +96%). This is faster than the increase in debt of +79% over the same period. As a result net wealth is now +98% higher in 2019 than it was in 2007. Even after allowing for population growth and inflation the average Australian is better off.

SWAP RATES SOFT
Local swap rates are slipping back today, unwinding yesterday's small rise. The UST 10yr yield is soft too, down -2 bps from this morning to 2.01%. Their 2-10 curve is a 'positive' +24 bps while their negative 1-5 curve is suddenly wider at -21 bps. The Aussie Govt 10yr is unchanged at 1.34%. The China Govt 10yr is up +1 bp at 3.26%, while the NZ Govt 10 yr is down -4 bps at 1.59%. The 90 day bank bill rate is unchanged at 1.62%.

NZ DOLLAR HOLDS
The Kiwi dollar is marginally softer from this time yesterday at 66.8 USc although that is a little firmer from where we opened this morning. On the cross rates we've dipped slightly to 95.7 AUc. Against the euro we are up to 59.2 euro cents. That has all moved the TWI-5 very little at 71.6.

BITCOIN VOLATILITY LINGERS
Bitcoin is still very volatile. It is now at US$10,318, down from US$11,004 this time yesterday. At one point in the past 24 hours it fell below US$10,000, bottoming out for the day at US$9,986. Today's volatility is +/- 6%. This price is charted in the currency set below.

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NZD
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Source: CoinDesk

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25 Comments

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Highlight new comments in the last hr(s).

"Even after allowing for population growth and inflation the average Australian is better off"

How many planetary parts per Australian in 2009, David? How many now? How much fossil energy per Australian in 2009? How much now? How much CO2 ppm cushion per Australian in 2009? How much now?

By every real measure, they're backwards. In spades.

If you add in security of water supply , we are better off by far. And they don't seem to be making any real progress in any of these areas , whereas we have at least started .

Australia has abundant annual rainfall ...

... it's just that much of it falls in tropical northern regions ... not where the majority of Australians actually live ...

Yes , and there has been some interesting schemes to harness it. I find it fascinating but it appears there geology does not support dams , canals etc.

PDK, David talks about assets, he makes that quite clear when he states: "the value of assets held by Australians has almost doubled from 2007 to 2019"

Yep - so do I. I'm happy to include the federation house they own - which existed in 2009 and is now ten years closer to entropic demise. You call owning that house now, versus owning it ten years younger, 'better off'? If you do, we have to disagree at a very basic level.

Bitcoin breaks 10k. I have lots sold into cash / stable coins and my tax refund just arrived. Time to watch for panic and maybe get a good discount. Might be a red July.

12
up

YAWN ! . . whatever , dude .

The latest from Dr Doom;

Other quotes from Nouriel re BTC: The emotional quotient appears strong.

Indeed the crypto space is full of criminals, con men, carnival barkers, conflicted insiders talking their book 24/7, whales screwing retail suckers, fraudsters, snake oil peddlers, price manipulators. 100X the amount of fraud and criminality that you find in traditional banks

Indeed the Flintstones had a more sophisticated monetary system than tokenized crypto: they used shells as a single numeraire to avoid barter. While tokenization is a return to barter, ie going back to before the Stone Age to the times where there was only barter among apes!

Hold on a second. Is this the Nouriel that told everybody it was going to zero when it was thirty bucks??? And now apparently it is going to sub zero? Ha. If you believe that do a leverage short and you'll be rich

Yes Wolf. He's leading a apirited attack.

Lonewolfnz, did you take my advice on Friday
by lonewolfnz | 28th Jun 19, 6:00pm

Yes I should start taking profits you are correct :) I should start doing that indeed. Will do next swing up :)
When do think it will swing up ?

Should we take a foreign currency mortgage in Australian pesos to purchase NZ real estate. 1.0 percent , its a lucky country.

"The United States has gone 121 months without a recession, making it the longest period of uninterrupted growth since at least 1945."
https://www.thetimes.co.uk/edition/business/america-enjoys-longest-perio...

Uninterrupted resource draw-down, is what it was. Uninterrupted extension of suburban, car-centric sprawl, mostly over food-production land. Uninterrupted population increase. Uninterrupted entropic excretion (CO2 being a biggie). And how much debt increase, avoided from the count?

I suggest the US has been on life-support for 11 years, and can't live without the tubes. And the body in the bed is 11 years older.....

US CO2 was a lessie not a biggie. Thank goodness for market forces. "the amount of carbon dioxide being released into the atmosphere in the U.S. has fallen dramatically to its lowest level in 20 years, and government officials say the biggest reason is that cheap and plentiful natural gas has led many power plant operators to switch from dirtier-burning coal.

Many of the world's leading climate scientists didn't see the drop coming, in large part because it happened as a result of market forces rather than direct government action against carbon dioxide, a greenhouse gas that traps heat in the atmosphere."

RBA cuts the cash rate. An extra happy meal per week from the debt servicing repayments.

Comments from Michele Levine, CEO of Roy Morgan:

A more detailed understanding of how debt and personal wealth are distributed can help dispel some of the more simplistic fears over debt, and give a more balanced view of its relationship to wealth creation in Australia over the long term.

What a load of rot. A monkey could have grown its wealth since the GFC courtesy of the oceans of money being sloshed around globally. Roy Morgan crows about the value of assets held by Australians doubling from 2007 to 2019. So what? The Smartshares NZX50 ETF is up 176% post-GFC. This has been the new normal.

“These are survey results that are likely to put more downward pressure on outlook for interest rates. Firms are reporting they are now struggling with cost pressures.”

This post-GFC shambles just keeps on giving – one the reasons oft quoted for Central Bank lowering of OCR’s is “inflation below target” – but in the meantime firms are now struggling with cost pressures.

The economic system just simply wants to cleanse itself – and the central authorities insist on continually blocking what is otherwise a market normalizing event.

The cash rate in Aussie is 1%. The rhetoric is "at least we're better that other countries", which is a coded why of trying to communicate "she'll be right." Quite similar here.

Good catch custard, I missed that. You are right, there is so much evidence of wage driven inflation and yet the central bank thinks the answer is more cheap money.

The crypto coins, are in general not pure currencies. The majority are technology enterprises based on the use of blockchain. The coins are the equivalent of shares in companies. For example ethereum and EOS are protocols that allow the use of decentralised apps, and to run an app on their protocol you need to purchase the underlying coin. Basic attention token (BAT)is a enterprise based around the brave browser, the aim is to cut out middle men in advertising. You can elect to watch 0,1,3 or 5 adds while surfing the net. For each add watched you receive some BAT paid for by the advertiser, with the rest of the BAT going to the website owner that you were browsing when adds initiated. The BAT can be cashed out or tipped to content providers on youtube etc. Other than privacy coins eg monero, there is a time stamped transaction on the blockchain that can be used to track criminal activity. For this reason criminals prefer cash, particularly large denomination Euro and US dollars.

Yes sir I did :) Lots of cash on the sidelines now