A review of things you need to know before you go home on Tuesday; another very hot mortgage rate; quiet start to Spring housing market, another bad business confidence survey, swaps steepen, NZD soft, & more

A review of things you need to know before you go home on Tuesday; another very hot mortgage rate; quiet start to Spring housing market, another bad business confidence survey, swaps steepen, NZD soft, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
Chinese bank ICBC has dropped its key home loan rates to 3.18%, about where Bank of China and China Construction Bank have pitched their offers. HSBC is a little above, and all are way lower than the main NZ banks.

TERM DEPOSIT RATE CHANGES
ICBC also cut many term deposit rates between -10 pbs and -30 bps. ASB has cut its bonus saver so the no-withdrawal potential bonus rate is down -50 bps to 1.5%. (If you make one withdrawal, its down to 0.2%.)

A QUIET SPRING START
Low listing numbers and low numbers of new listings on Realestate.co.nz suggest a subdued Spring for the housing market but prices appear to be holding their own. The national number of listings is now 17 weeks of sales, up one week from August. For Auckland, the inventory is unchanged at 21 weeks at the current sales rate.

ANOTHER BAD BUSINESS CONFIDENCE SURVEY
The latest NZIER Quarterly Survey of Business Opinion suggests GDP could fall below 1% later this year. Business confidence is now at a ten year low. The RBNZ is likely to be forced to cut interest rates further, say many analysts.

PEER SUPPORT
The RBNZ has released the reports from three peer reviewers of its Capital Proposals. All three gave the RBNZ proposals and its process the thumbs-up. None supported the banking industry pushback.

SHARP TURNAROUND
In Australia, the September review of their housing markets shows a sharp rise in prices, especially in the state capitals and especially in Sydney and Melbourne. Nationally, prices are up +0.9% in a month and +1.7% in the two icon cities. These rises pared back the annual declines to -4.8% and -3.9% respectively in those two cities. It marks the fourth consecutive month of price gains in the two capital cities where the downturn had been concentrated. Gloomster predictions haven't happened - yet.

MASSIVE DROP
The number of building consents in Australia are still worryingly declining. They were down -23% in August from a year ago, and for the full year to August, they are down -22% compared to the same period a year ago. These are massive declines, exceeding -50,000 dwellings in a year. Two-thirds of the drop is apartments, but just for houses, the fall is -15,000.

RBA WATCH
Update: As expected, the RBA has cut its policy rate by -25 bps to 0.75%, a record low. The NZD has risen on the decision, back to 92.9 AUc. 

EQUITY MARKET WATCH
Global equity markets are in a holding pattern this week so far, with Wall Street up a modest +0.5% earlier today, European markets up about the same overnight, and Asian markets are also similar - except for Shanghai which is closed and doesn't reopen until October 8. It ended yesterday's session with a sharp -1% selloff. Today neither the ASX200 or the NZX50 are showing any direction.

SWAP RATES STEEPEN
Wholesale swap rates are a little steeper today wit the short end down -2 bps and -1 bp, and the long end up +1 bps and +2 bps. The 90-day bank bill rate is down -2 bps at 1.13%. Australian swap rates are little-changed in early trade. The Aussie Govt 10yr is up +4 bps to 1.01%. The China Govt 10yr is down -2 bps to 3.16% in holiday trade, while the NZ Govt 10 yr is back up +2 bps at 1.13%. The UST 10yr yield is unchanged at 1.68%.

NZ DOLLAR LITTLE-CHANGED BUT LOW
The Kiwi dollar is marginally softer today at 62.6 USc and heading back to ten year lows. Against the Aussie we are softer still at 92.6 AU cents. Against the euro we are at 57.4 euro cents. That leaves the TWI-5 at just on 68.2.

BITCOIN BOUNCES BACK
Bitcoin is back up today, now at US$8,264, a rise of +3.5% since this time yesterday. The bitcoin price is charted in the currency set below.

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Let me get this straight: in the midst of a construction slowdown and negative price growth, WA and South Australia managed to issue more dwelling consents in August combined than dwellings approved across all of New Zealand in August (don't get me started on Victoria or NSW).

Also, the population of the 2 states combined is 1.2m less than NZ's.

There's a bit of history to it. Ever since leaky building syndrome the Government implemented equally and severably liability for all parties involved in construction of a building. So when all the companies fold the last man standing is the Council. So for all the leaky buildings the Councils and their insurers have been bailing out mistakes made by Central Government.

As a result the Councils have all become "risk adverse". They ask endless questions and try to run every building consent into the ground. This does not eliminate any risk as the Council staff have no idea how to avoid claims or how to identify anything but the most straightforward design or construction issues. So the Councils (which charge hourly rates) gouge everyone for money while not eliminating any risk. What this means is that the entire building consent process is excessive and unnecessarily onerous and intentionally costs as much money as they possibly can. Which means that the building consent process is mostly fraudulent, and all to help pay for the costs of the past two Governments failing to have a competent Minister of Building and Construction.

The opposite is true in Australia where the consent process is completely outsourced and is mostly broken as there is little in the way of checking anything.

The Aussies are a bit more independently minded than us. They push back harder against the dead hand of the political bureaucracy. We seem to tamely submit to Those Who Think They Know Best.

The trouble is Those What Think They Know Best are fooling themselves as well as us, thinking that what they think is good for them, is good for all. Meanwhile Them What Really Does Know What's Best (for themselves) do very nicely by selling more debt to all of us, helped in good measure by the incompetence of the political bureaucracy.

How do we restore a civilising balance of power between the following:
1 The politicians and everyone on the government payroll, national and local
2 Them what does the actual work in the private sector
3 Those who are best at allocating capital, the capitalists
4 Banking and Finance

Unfortunately, the parasitical finance class is slowly destroying the private sector innovative capitalist class and sucking in rest of society at same time.

Cash rate cut to 0.75% in Aussie today. Party on.

I have gone all giddy as if unexpectedly taken with a Roger Kerr malady.

I guess it will impart as much economic "stimulus" as the rate cuts that preceded it failed to deliver.
Nonetheless, wealthy leveraged financial asset speculators will be cheering the RBA on.

Oddly, you don't read too much about Sydney property here anymore now it's booming again. Auction clearance rates +25% and house prices +4% in 3 Months (prime suburbs more). I wonder why?

Because those benefiting are few, and are sycophants feasting on the dividends paid by the majority in society. Could sovereign bonds sport negative yields if the legacy coupon payments weren't positive?

Actually, there was a fair amount of gloating about it if I recall. Having reread your comment on bond yields, I will repost without the facetiousness. Bond coupons don't need to be negative for the YTM (yield to maturity) to be negative. A 5 year bond with a 2% coupon will have a negative effective coupon if you pay a high enough capital price for the bond.

Have you been over there recently? I have ( 2 weeks ago) and I can tell you, regardless of the headlines, there's was unease in the community re "where are property prices headed?" and in general the view wasn't "up "

Not me, I own one house and remain indifferent to it's valuation, but I have certainly stumped up the $1,000,000 entry barrier to bid at NZ government bond tenders in the past - equally I am not silly enough to try it today, with my own money. Nonetheless, all my gains were underwritten by all the taxpayers. And the losses? - well, they were mine.

see my edited comment

Is that not my claim? - Could sovereign bonds sport negative yields if the legacy coupon payments weren't positive?

Your dreaming mate..... that’s why. But delude yourself if you must.

I notice you are giving legitimation to pejorative use of term "gloomster" to anyone who is not a cheer leader for house price growth prospects or facts, in Australia or NZ

Please could you let readers know what is the pejorative term you would legitimate for those who ARE such cheerleaders?

Australia's recent volte face reversing all the bank royal commission said was needed (which will not be done) seems to be applauded by the tone of your remarks. Australian indebtedness leads the world. When "doomsayers" point out the risks attendant on this (a la GFC) then you seem to regard them as spoiling the party. This is highly disappointing side taking on your part.

You could call the cheerleaders : Junkies. They're debt junkies. This whole fiasco is a debt junkie smorgasbord thinly veiled as a legitimate economic model.

I notice that you are not reporting that credit growth in Australia is now (in August) down to 2.9%, from 4.3% last August. This is because all the nice banks got people in over their heads by ignoring their REAL expenses on loan application process, and now, due to anaemic wage growth , they are pulling their horns in.

So, lo, here comes the rescue squad with lower rates and more imploring on daft populace to take on more debt.

Check out UBS's coverage on 'liar loans' in Australia: https://mobile.abc.net.au/news/2019-09-30/liar-loans-record-high-mortgag...

37 percent of approved applicants have overstated some part of their profile to secure a mortgage.

Aussie and NZ house prices have been bailed out by weak economies. They aren’t recovering because of fundamentals but low interest rates that inflate asset prices.