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A review of things you need to know before you go home on Thursday; ASB cuts TD rates, farmers get reprieve but also obligations, NZGB yields up, mortgage interest payments flat, swaps slip, NZD firm, & more

A review of things you need to know before you go home on Thursday; ASB cuts TD rates, farmers get reprieve but also obligations, NZGB yields up, mortgage interest payments flat, swaps slip, NZD firm, & more
24th Oct 19, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
ASB has cut term deposit rates across the board.

"IT'S ON YOU NOW"
The Government gives farmers until 2025 to come up with their own on-farm emissions pricing scheme. If they don't pull their weight, they'll end up in the ETS.

BENCHMARK YIELDS TURN UP
The latest $250 mln NZGB tender of April 2025 bonds (now 5 years), delivered a yield of 0.971% pa and was well supported, attracting bids of $639 mln. However, after sinking to a yield of just 0.841% three auctions ago, this cost has now started to rise.

OBLIGATIONS UP, INTEREST FLAT, REPAYMENTS UP
Even though the amounts we owe on mortgages grew by +6.1% to $269.4 bln as at September 2019 (C35), the amount of interest we are paying on those mortgages was virtually unchanged (down a marginal -0.1%) in dollar terms. That of course is because interest rates are falling. The same reconciliation data shows that borrower repayment volumes (those scheduled, those additional repayments, and payments-in-full) are up +5.2% in the year to September from the same period a year ago.

RESIDENTIAL INVESTORS RISE AGAIN
Investor loan growth is rising again. More here.

ON THE UP AGAIN
Real estate agency commissions are on the rise - even in Auckland. The estimated agency commissions on residential property sales in September quarter were up +7% on a year ago.

RISING PRICES
Internationally, Fitch now says that milk prices are firming worldwide because as recent adverse dry weather in the US, Australia and the EU has restrained global milk production as the global dairy herd shrinks. Weighing against that they see subdued dairy import demand from China amid outbreaks of African swine fever, heightened trade tensions and a softening global economy. But the net effect is that prices will rise +4% in the immediate future, they say.

EQUITY UPDATES
Today, Asian equity markets are firm with moderate rises. The NZX50 which took a blow to the chops yesterday hasn't fallen further today, but isn't rising much either.

SWAP RATES TURN LOWER
Wholesale swap rates have fallen back again today. The two year is down -2 bps, the five year is down -2 bps, and the ten year is down -1 bp. The 90-day bank bill rate is unchanged at 1.05%. Australian swap rates unchanged today. The Aussie Govt 10yr is down -9 bps to 1.10%. The China Govt 10yr is up +1 bps at 3.24%. The NZ Govt 10 yr is down -8 bps at 1.26%. The UST 10yr yield is down -4 bps at 1.76% and giving up all of yesterday's rise.

NZ DOLLAR FIRM
The Kiwi dollar is at 64.2 USc. Against the Aussie we are firm at 93.6 AU cents. Against the euro we are firmer at 57.6 euro cents. That means the TWI-5 is back at 69.2

BITCOIN DROPS
Bitcoin is sharply lower at US$7,422 following Mark Zuckerberg's Congressional testimony. That is a -7% dump in a day. The bitcoin price is charted in the currency set below.

This chart is animated here.

Daily exchange rates

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Source: RBNZ
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Source: CoinDesk

Daily swap rates

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Source: NZFMA
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Source: NZFMA

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22 Comments

by  bw  |  24th Oct 19, 4:16pm 1571886984

A 'technical issue' apparently. A bit like the Fed is having technical issues with liquidity?

An auction of short-term Australian government debt has failed to draw enough bids to sell all the notes on offer, a rare miss that has not happened since 2002. The Australian Office of Financial Management (AOFM), which manages the government's debt, said a regular sale of $1 billion of notes maturing on January 24 attracted bids worth just $936 million.
The auction miss was unusual enough for the AOFM to issue a statement declaring, "Today's result is in no way a default by the Commonwealth of Australia."

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by  Audaxes  |  24th Oct 19, 4:51pm 1571889087

Hi bw, I believe they are three month T bills.

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by  Fritz  |  24th Oct 19, 4:32pm 1571887960

Nothing on the big fire?
Has there been any apologies for the big disturbances? None that I have seen.
I went back into town for a couple of hours today, I was still getting irritated nose and throat

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by  youngdumbandbroke  |  25th Oct 19, 9:02am 1571947322

Wait till they pump all the polluted water into harbour. Then we will hear about it

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by  Fritz  |  24th Oct 19, 4:34pm 1571888092
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by  printer8  |  24th Oct 19, 5:11pm 1571890268

Investor activity up, increased Auckland sales commissions, along with recent information on Auckland housing shortages, continuing high immigration rates, continuing falls in mortgage interest rates, impact of loosening of LVRs, increasing FHB activity, and REINZ Auckland region September YOY increase in sales and slight increase in median prices . . . .
If I was a potential FHB I think that I would be starting to seriously start looking.
Another bull market - no RBNZ will act on LVRs to prevent that. But a firming of prices; well indicators are aligning.
There will be those who, as has continually happened for the past three years, claiming an imminent house price crash. There is no certainty that there wont be a fall in the market sometime in the future, but the short term is looking positive, and as long as one isn't over extended and pays down principal there should be little to fear.

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by  Fritz  |  24th Oct 19, 5:18pm 1571890705

Yep if you have a 30-40% deposit and buy smartly it's an ok time to buy. But if you have less than a 20% deposit (many FHBs) don't touch this market with a barge pole.

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by  printer8  |  24th Oct 19, 5:41pm 1571892073

Why is that Fritz?

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by  frazz  |  24th Oct 19, 5:57pm 1571893028

Falling knife...catch?

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by  Fritz  |  24th Oct 19, 6:14pm 1571894055

I am sure you can work that out

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by  printer8  |  24th Oct 19, 7:42pm 1571899357

Hi Fritz
So no rationale to support your view.
Does it come down to just guessing or reading the tea leaves?
Cheers

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by  Advisor  |  24th Oct 19, 5:12pm 1571890347

You've got a major miscommunication problem when the government hands tens of thousands of visas out to skilled migrants every year, only for local business to tell them off for not having local experience.
Definitely also a big problem in NZ context unless we deliberately targeted our migration programme towards qualified engineers who drive Ubers and man dairy stores.
https://theconversation.com/amp/theres-one-big-problem-with-australias-…

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by  Lapun  |  24th Oct 19, 7:00pm 1571896842

"" 44% working in a job different to what they nominated in their visa application"". Wonder what the equivalent figure is for NZ?
Having arrived as a 'skilled' migrant 17 years ago I know for certainty that INZ are attempting the impossible in 'measuring a skill' - eg I had trouble not having a certificate proving I had attended a course teaching me SQL - the fact that I written and given SQL courses was useless without a certificate. I proved I knew web design by attending a local evening class in Glenfield - about 6 or 10 hours total and I've never touched web design since but all that matered was the certificate. When will they learn that all that matters is an employer offering a big salary.

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by  streetwise  |  24th Oct 19, 5:35pm 1571891740

Breaking News! Book Review.
Yesterday I got my hands on the newly-released definitive account of the Leaky Homes Crisis: "ROTTENOMICS THE STORY OF NEW ZEALAND'S LEAKY BUILDINGS DISASTER" by Peter Dyer. Stayed up reading it until the early hours but still have a few chapters to go. It is jam-packed with confirmed facts and figures as well as unimaginable pathos in its interviews with victims. I will have to read it another couple of times at least to absorb the whole picture.
But so far I have discovered the unbelievable actions and omissions of both major parties, particularly the neo-liberal "market" policies introduced by Labour's Roger Douglas that were carried on and built upon by National.
The 'leaving it up to the industry to regulate themselves'. The throwing out the Ministry of Works baby with the bathwater leading to the demise of the proper training of tradesmen and engineers.
To date this fiasco has cost NZ $47 billion and increasing. This is man-made but has cost as much as the Christchurch earthquake.
I would expect any journalist worth his salt will be devouring this book as soon as possible or they will find themselves short on the necessary background to write authoritatively on finance or politics or society.
Some politicians should be returning their knighthoods and some prominent businessmen and company executives should be put in the stocks.
I expect to expand my review as I get to grips with the twists and turns of this ugly period in our country's history.

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by  frazz  |  24th Oct 19, 5:44pm 1571892270

Sounds like a good read..when is book 2 out as the rotten homes are still being built today as I understand it?

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by  nz-it-worker  |  24th Oct 19, 6:15pm 1571894130
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by  Andrewj  |  24th Oct 19, 6:56pm 1571896599

I had an experience with failing product. When I reroofed the farm cottage I wanted to use my farm milled Corsican Pine but the council wouldn't let me and insisted that I use approved finger jointed primed pine. Bloody stuff was rotten within 5 years, had to remove spouting take it off and do it properly like I should have done all along.
The Pine in NZ is mostly from the framing log or the top of the tree, it's only ten years old and should all be pulped. The good stuff below, the 5 metre pruned log is all exported.

I talked to a builder mate and he told me houses being built today will still fail in the future, we build from cheap, junk materials and councils are hopelessly conflicted. We should remove councils from the building industry, all houses should come with 25 year insurance policies.

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by  Lapun  |  24th Oct 19, 7:02pm 1571896923

"" We should remove councils from the building industry, all houses should come with 25 year insurance policies."" YES!

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by  Henry_Tull  |  24th Oct 19, 7:09pm 1571897349

Farm emissions, are there any?
Nobody Knows!

Follow @jamespshaw on Twitter.

Q: what happens between now and 2025?

JS: Hi Karl, we'll be building the framework that doesn't exist yet to measure on farm emissions.

Question: why has policy been determined while emissions if any have not been accurately measured?.

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by  powerdownkiwi  |  24th Oct 19, 7:22pm 1571898173

Obfuscation. On behalf of self, Henry?

Shaw fails my test too, but for diffent reasons. He seems to think you can keep on with unfettered business, just using a different energy source. Of course, you can't. But that puts agribusiness in terminal trouble too.

You read any of the list I gave you? I'm betting not. Upton Sinclair comes to mind :)

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by  Andrewj  |  24th Oct 19, 7:32pm 1571898727
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by  scarfie  |  24th Oct 19, 8:59pm 1571903955

Holy crap, you turn the army loose on a crowd like that you might lose. This sort of discontent has a cause. Because the cause isn't being addressed it will spread. We'll be a few years behind, but we'll get there.

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