A review of things you need to know before you go home on Tuesday; Westpac cuts TD rates, commodity prices rise, car sales weak, online sales strong locally, insurers warned, swaps steepen again, NZD holds, & more

A review of things you need to know before you go home on Tuesday; Westpac cuts TD rates, commodity prices rise, car sales weak, online sales strong locally, insurers warned, swaps steepen again, NZD holds, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes today so far.

TERM DEPOSIT RATE CHANGES
Westpac has trimmed TD rates today, taking -10 bps off most durations.

'BEEFED UP'
The ANZ World Commodity Price Index lifted +1.2% in October, with gains recorded in the majority of sectors. The index is currently +7.2% higher than it was a year ago, with dairy and meat being the main growth drivers. New Zealand is among those getting the benefits of China's ASF plight. There is also strong beef demand from the US and reduced competition from Australia, both due to their local drought conditions. In New Zealand dollars, this overall index is up an impressive +9.7% in a year driven by the meat component which is up a startling +21.6%

THE SLOW LANE
The October new car sales level of almost -10% lower than a year ago has taken the annualised sales rate down to almost a three year low. Sales of SUVs in October came in at an unremarkable 63%, lowish by recent standards and probably because there were strong rental car sales in the month ahead of the summer tourist season.. Commercial vehicle sales also fell sharply in October from the same month in 2018, but annualised they are still holding well above a healthy 50,000 rate.

SMALL BUT FAST GROWING
The most healthy corner of retail sales is the online shopping component. It is up +8% in September, year-on-year. And that is because local online sales are up +15% while online sales at international sites is surprisingly lower, down -1%. And that masked strong growth in media subscriptions (read Netflix). It is online hardware sales that are taking a beating. Locally, the strong gains were underpinned by using supermarket online services. Still, despite the strength, online retail only accounts for 6.3% of all core retail spending.

'BUCK UP'
General insurers have been told to be more open-booked with their pricing and to self-review on conduct and culture. The regulator (the RBNZ) says it's too early to say whether insurance capital changes will 'lead to the kind of uplift we have proposed for bank capital'.

FEELING FINANCIALLY BETTER OFF
According to results from the General Social Survey, the proportion of people who felt they had enough or more than enough money to meet everyday needs increased from 51% in 2008 to 63% in 2018, Stats NZ said today. These are big gains but not ones the current Government can claim. Even renters reported improvements. But the same survey shows they feel less healthy (even if it is a fall from very high levels).

VERY CHEAP HOUSING FINANCE
Housing NZ's upcoming $200 mln of seven year "Wellbeing bonds" offer, which are unsubordinated and unsecured obligations of HNZ has now been sold with another $200 mln of oversubscriptions. This bond has now raised $900 mln. Today's yield came in at 1.68% which is very reasonable for the borrower.

HEARTLAND BANK BEHIND KIA FINANCE
Heartland Bank is partnering with Kia Motors New Zealand to provide Kia Finance, a new vehicle finance service for people looking to buy a new or used Kia from a Kia dealership. Kia Finance’s vehicle finance options include vehicle loans, Kia Konfidence which is allowing customers to protect the minimum future value of their vehicle at the end of the loan term, and vehicle leasing for business fleets.

SEARCHING FOR THE COMMITMENT TO HOLD
The Aussie central bank is meeting in the shadow of the Melbourne Cup for its monthly rate review. Virtually no one expects them to change their 0.75% official rate this time. The real interest will be in the forward guidance and whether that changes the market expectations (reinforced by recent RBA speakers) that rates are unlikely to change there for quite some time. This is in contrast to expectations for the RBNZ review on Wednesday next week, where there is an expectation that our 1.00% OCR will be cut to the Aussie level.

NO MORE PRESSURE
Australia's Government has left its instruction to the RBA for it's inflation target unchanged at 2-3% over the long haul, and that probably helps the RBA avoid imminent rate cuts too.

EQUITY UPDATE
The overnight +0.4% gains on Wall Street haven't flowed to local or Asian markets. The NZX50 is flat so far, the ASX200 is up just +0.1% (kneecapped by bank stocks), while Shanghai and Hong Kong have also opened flat. The star so far today is Tokyo which is up a very strong +1.4% in mid-day trade and taking its signals from Europe.

LOCAL SWAP RATES STEEPEN
Wholesale swap rates are still steepening, although all the rises are at the long end today. The two-year is unchanged, the five year is up +3 bps and the ten year is up +4 bps. The 90-day bank bill is up +1% at 1.14%. Australian swap rates are little-changed ahead of their RBA cash rate review. The Aussie Govt 10yr is strongly higher at 1.21%. The China Govt 10yr is unchanged at 3.32%. The NZ Govt 10 yr yield gained +4 bps to 1.36%. The UST 10yr yield has leapt +8 bps to 1.79%.

NZ DOLLAR SETTLES BACK
The Kiwi dollar has slipped back after yesterday's strong gains, settling back to 64.1 USc now. Against the Aussie we have slipped too, now at 93 AUc although this is vulnerable to an RBA surprise. We are currently at 57.6 euro cents which takes the TWI-5 to just under 69.0.

BITCOIN SHIFTS HIGHER 
Bitcoin is now at US$9,380 and about +2% higher than this time yesterday but down from its recent peak about 6 hours ago. The bitcoin price is charted in the currency set below.

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21 Comments

Comment Filter

Highlight new comments in the last hr(s).

“October was the largest deficit the U.S. manufacturing industry has had with China in the nearly eight-year history of the Caixin survey”
Nomi Prins

Trade wars are easy to win....

This will lift the polls!

Jones had told RNZ people had "no legitimate expectations in my view to bring your whole village to New Zealand"

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12282530

I think he realises there are a lot of votes in this.

Hopefully few votes making your message sound so aggressively against another culture. Express the same idea more politely and he would get votes. NZ does have its own culture and practises found in other cultures are illegal here: FGM, child marriage, multiple wives for example.

Is this 'Indian traditional marriage' with its get settled in a foreign counrty, take a holiday home and select a virgin bride, quickly return is based on upper class British imperial life? It is what British army officiers did in India and in New Zealand in Victorian times.

The voters he is targeting do not care about PC language, in fact it is more likely a turn-on than a turn-off

If he gets votes from all those who have made a casual racist remark then he might get 95% of all votes but if he is aiming for those happy with deliberate rude comments to other cultures then he will get very few votes and NZF will be out of parliament. Kiwis may or may not be racist as hell but they certainly are not deliberately rude.

HNZ bonds issued at 1.68% for 7 years. Makes the BNZ 7 year mortgage at 5.70% look very expensive...Come on BNZ! You know you'll eventually have to drop it to 3.99% like the rest of your run.

And that is because local online sales are up +15% while online sales at international sites is surprisingly lower, down -1%.

Maybe importers are GST insensitive ahead of imminent changes signaled by YouShop today.

From 1 December 2019, all items purchased from overseas and shipped to your YouShop address will have 15% Goods & Services Tax (GST) applied. GST will be charged on the total value of the goods and YouShop services purchased.

Notice there is no easy way for people to report non-compliance?

The only place you can now get a return north of 3% is property

Had a flick through the NZX recently? You'll find plenty of companies offering more than a 3% yield. Or you could try peer to peer lending?

Both as part of a well diversified portfolio, of course.

Rubbish. I've got/had money in several places running 10%+ returns, after fees.
https://simplicitykiwi-assets.s3.us-west-2.amazonaws.com/public/Uploads/...

16.35% after fees and tax..

And before you say risk free... property is not risk free.

Those who have only stuck to property, know none the better...

The UST 10yr yield has leapt +8 bps to 1.79%.
JPMorgan Says Treasury Yields to Surge in 1995 Cycle Replay

“Assuming markets continue to follow the trajectory of the 1995 mid-cycle episode, this implies modest 5% or so upside for equities over the next six months, very big 100 basis point upside in the 10-year U.S. Treasury yield, steepening of the UST curve, and little change in the dollar or credit spreads,” strategists led by Nikolaos Panigirtzoglou wrote in a note Friday.

Make that another 8 today

I have just read in the Herald about how the SKYBUS service to Auckland airport is struggling .

Well blow me down ............... at the outrageous price of the fares , I could have told you it was going to be a cock-up the day it was launched .

They are blaming UBER and SHUTTLES , which , in the case of shuttles, were in business decades before they came along .

Did they not do market research before setting their fares ?

The cost of my wife and I getting from Greenhithe to the airport and back is equal roughly to 2 weeks worth of diesel for our household .

Why on earth anyone would use the service eludes me.

Businesses who attempt to rort the public like this, dont deserve to be in business .

Labour costs make it uneconomic, as with most public transport. Not to fear; Waymo has now started fully autonomous taxi services (no safety driver) in Phoenix Arizona. Change is coming.

What happened today.

We got a little perspective:

https://youtu.be/g_GGm-ZHJ-Q