A review of things you need to know before you go home on Friday; Kiwibank makes rate changes, PMI outlook improves, Black moves to the CTU, swaps hold, NZD dips, & more

A review of things you need to know before you go home on Friday; Kiwibank makes rate changes, PMI outlook improves, Black moves to the CTU, swaps hold, NZD dips, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
Kiwibank has trimmed its one year home loan rate -16 bps and raised its two year rate +10 bps, effective Monday. More here.

TERM DEPOSIT RATE CHANGES
Kiwibank has also raised its one year term deposit rate by +5 bps to 2.75%, also effective Monday.

FACTORY LIGHTS SHINE BRIGHTER
BNZ reports: October brought some much needed relief to the manufacturing sector with the Performance of Manufacturing Index (PMI) jumping back into expansion mode. There were widespread gains across various segments including regions, industries, and firm sizes. To be sure, at 52.6 overall, the PMI is hardly what you would call strong. But it is certainly much better than the previous three months where the index languished below 50 which indicated a sector going backwards. And it is the most expansive of the six other countries we benchmark against (US, UK, EU, AU, China, Japan).

TAX GEEK TO REPLACE ROSENBERG AT CTU
The Council of Trade Unions has appointed Andrea Black to the role of Policy Director and Economist, replacing Bill Rosenberg who is retiring. She is a Senior Associate at the Institute of Governance and Policy Studies at Victoria University. She was formerly the Independent Advisor to the Tax Working Group and before that held senior positions at Inland Revenue and the Treasury.

BENCHMARKING NZ VS AUSSIE STATES
New data out in Australia reveals their GDP by State. That allows us to put the New Zealand economy into perpsective which shows Australia's economy is seven times larger than New Zealand. NSW is 2.2 times larger, Victoria is 1.6 times larger, Queensland is 1.3 times larger and Western Australia is almost exactly the same size economically. On the other hand, New Zealand is 2.6 times larger than South Australia, more than eight times larger than Tasmania, and more than ten times larger than the Northern Territory. New Zealand's current growth is higher than all states except Tasmania and Victoria.

PEAKED
New data
out for October shows that house price growth is now falling away in most Chinese cities. Officially, they are "stabilising" but in many more cities we are noticing small declines, and that includes for Beijing.

CHINA PLAYS HARDBALL
China has extended its WTO complaint against Australian grains, and for crops like barley China is Australia's largest customer. Life is about to get even tougher for these farmers.

LOCAL SWAP RATES HOLD
Wholesale swap rates are little-changed today. The 90-day bank bill rate is down -3 bps at 1.24%. Australian swap rates are down about -2 bps across the curve. The Aussie Govt 10yr is down -3 bps at 1.16%. The China Govt 10yr is unchanged at 3.27%. The NZ Govt 10 yr yield is down -4 bps at 1.41%. The UST 10yr yield is down -5 bps from this time yesterday at 1.84%.

NZ DOLLAR IN MINOR SLIP
The Kiwi dollar has held on to its higher level although marginally lower at 63.9 USc. Against the Aussie we are still at 94 AUc. Against the euro as well and we are soft at 57.9 euro cents. That means the TWI-5 has slipped to 69.1.

BITCOIN WEAKER
Bitcoin is now at US$8,537 and that is -2.2% lower than this time yesterday. The bitcoin price is charted in the currency set below.

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We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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9 Comments

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Highlight new comments in the last hr(s).

"Australia's economy is seven times larger than New Zealand." with a polulation 5 times as large. Must be something to do with the Economy of Scale, I guess. Couldn't be anything to do with Productivity per Capita, could it...

Is that 'population' or 'pollution' - either way thumbs up

More of a sleazy hedge fund than a reputable mutual fund...

Sadly, it is likely that nobody will face criminal charges on this.

BBC article: Australia and others (Inc NZ) ask for Brexit trade compensation.
"Countries including Australia have asked for trade compensation from the UK and the EU over Brexit disruption. Fifteen countries, including the US, India and New Zealand, have been setting out Brexit concerns at a World Trade Organization (WTO) meeting in Geneva.

Australian officials said their beef and lamb exporters had already been hit after several Brexit delays.
Brazil said Brexit plans for Northern Ireland could breach WTO rules". https://www.bbc.com/news/business-50419130

Just as a matter of record, the Federal Reserve's recent actions in the US primary dealer repo (TOMO) and outright Treasury security purchase (POMO) space have resulted in a net addition of ~$250 billion of reserves since 16th September '19 up to and including 14th November '19.

The cumulative value of these transactions do not constitute anything close to the the gigantic size of the global repo market.

The importance of pristine US Treasuries securities collateral to all repo counterparties can be gauged in these three articles:
https://alhambrapartners.com/2019/11/13/how-do-you-spell-r-e-p-o-with-c-...
https://alhambrainvestments.com/2019/08/19/collateral-reserves-what-is-b...
https://alhambrapartners.com/2019/08/20/eurodollar-university-diagrammin...

New data out for October shows that house price growth is now falling away in most Chinese cities. Officially, they are "stabilising" but in many more cities we are noticing small declines, and that includes for Beijing.

To put it bluntly, there is no sign of bottom for the Chinese economy and I have to believe Xi Jinping knows this. That’s really his whole point – just as we’ve been saying ever since the 19th Party Congress was convened. Link

China is a ponzi scheme. Or should that be ponxi?