A review of things you need to know before you go home on Friday: Kiwibank raises rates, wholesale trade droops, service costs rise fast, Synlait raises $180 mln, NSW burning, swaps up, NZD holds high, & more

A review of things you need to know before you go home on Friday: Kiwibank raises rates, wholesale trade droops, service costs rise fast, Synlait raises $180 mln, NSW burning, swaps up, NZD holds high, & more
ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
Kiwibank raised two fixed rates today. There is an ANZ consequence.

TERM DEPOSIT RATE CHANGES
No changes here.

DROOPING FAST
Growth in wholesale trade fell away in the September quarter, rising only +1.7% from a year earlier. That is the slowest growth recorded since June 2015 and is sharply lower than the recent high of +8.7% in the September 2018 quarter. In fact, over all of 2017, wholesale trade growth was +6.6%, over all of 2018 it was +6.7%, but so far in 2019 it has dipped sharply to average only +3.5% and today's data indicates it is going down fast.

THE HIGH COST OF SERVICE
If there is a silver lining in the wholesale trade data, it is that wholesale inventories are not rising much. At least traders don't have growing stocks of unsold goods, which would be a real worry. This is not to say inventory levels are at the right levels, only that they are not adding to the problem. Stocks are running at 171 days of wholesale sales overall and this is historically stable. But watch out for both the machinery and vehicle sectors; their stock levels are rising to now be at 224 and 327 days of sales. These are high overhead levels, driven in part by high customer expectations that 'things are on hand locally" and the distance from manufacturers for major items. These are sectors that have high stock costs and they are getting higher.

SOME WINNERS
Speaking of the high cost of service, more data was released today for some service pockets of the economy. Revenues in architectural and engineering service companies rose by an impressive +13.7% in the past year to September. In the year to September 2018 the rise was just +3.7%. For legal and accounting serices, they billed +7.1% more in the past year.

NON-BANK DEBT
Synlait Milk has raised $180 mln in a five year corporate bond. The rate they are paying is 3.83% 3.38% (+2.5% over the five year swap rate). The funds will be used to pay down its bank debt. As at July its had $348 mln in bank debt. This new bond debt will be listed.

BIG CATTLE CULL
In Australia, the Aussies are culling their cattle at an impressive rate. Yes, demand is strong from China, but the drought is having a major impact too. Herds are being run down.

NSW IS BURNING
No doubt you will have seen pictures of the intense smoke engulfing Sydney. It is so dense it is setting off fire alarms in the city. The cause won't be going away for a long time yet - a bush fire burning to the city's north west is so large it exceeds the size of greater Sydney itself. Climate change deniers are going silent, one-by-one. Building air conditioning units and cooling towers are under pressure. The smoke is making everything very dirty, and Sydney's water supply reservoirs are now down to under 46% capacity and it is only the beginning of their dry summer season. They are falling at the rate of more than -0.5% per week. In three months, these levels will likely be approaching two thirds empty. Their desalinization plants only supply 15% of their needs, so they can't keep up. Expect the smoke to reach here at some stage.

ENOUGH
ANZ is reported to be about to end funding of Aussie coal projects. CBA already has.

ANOTHER TEST
Get ready for another very large democracy-support march in Hong Kong over the weekend. It will be an interesting test of the continuing influence of the movement after the recent elections. China may not be happy that the Hong Kong Policy have authorised the demonstration.

EYES ON US PAYROLLS
Tomorrow we will cover the US report on employment. Analysts have been downgrading their estimates for payroll growth, now down to +183,000 in November. The result will have a big impact on equity markets, whatever happens.

LOCAL SWAP RATES RISE FURTHER
Swap rates are higher again today. They are up +2 bps for the two year tenor, and +2 bps for five years and +3 bps for ten years. The 90-day bank bill rate is down -1 bp at 1.20%. Australian swap rates are up also although not quite as much as NZ. The Aussie Govt 10yr is up +4 bps today at 1.13%. The China Govt 10yr is unchanged at 3.21%. The NZ Govt 10 yr yield is up +2 bps at 1.48%. The UST 10yr yield is up +3 bps, now up to 1.80%.

NZ DOLLAR STILL FIRM
The Kiwi dollar is holding higher, now at 65.4 USc. Against the Aussie we are still at 95.7 AUc. Against the euro we are marginally lower at 58.9 euro cents. That means the TWI-5 is at 70.5.

BITCOIN RISES
Bitcoin is now at US$7,407 and that is +2.5% higher than this time yesterday. The bitcoin price is charted in the currency set below.

This chart is animated here.

Daily exchange rates

Select chart tabs »

The 'US$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
Loading...
USD 
NZD
End of day UTC
Source: CoinDesk

Daily swap rates

Select chart tabs »

The '1 year %' chart will be drawn here.
Loading...
Opening daily rate
Source: NZFMA
The '2 years %' chart will be drawn here.
Loading...
Opening daily rate
Source: NZFMA
The '3 years %' chart will be drawn here.
Loading...
Opening daily rate
Source: NZFMA
The '4 years %' chart will be drawn here.
Loading...
Opening daily rate
Source: NZFMA
The '5 years %' chart will be drawn here.
Loading...
Opening daily rate
Source: NZFMA
The '7 years %' chart will be drawn here.
Loading...
Opening daily rate
Source: NZFMA
The '10 years %' chart will be drawn here.
Loading...
Opening daily rate
Source: NZFMA

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?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

27 Comments

Comment Filter

Highlight new comments in the last hr(s).

Growth in wholesale trade fell away in the September quarter, rising only +1.7% from a year earlier

Can't speak for the entire industry but a number of electrical appliance wholesalers had to slow down their stock replenishment rates due to a drop in NZD halfway through the September quarter. If downbeat vehicle and machinery wholesaling were to be ignored, we would see a drop in inventory days.
Hopefully, the partial resurgence in Kiwi dollar this week should be sufficient for wholesalers to restock low inventory levels and recover some of that quarterly pullback.

Hi David,

The rate on the Synlait Bonds is 3.83% not 3.38%.

Huh? Why would climate change deniers be going silent with there being bush fires?
Are you saying that there is more foliage there due to increased CO2 in the atmosphere causing more fierce fires?
Well anyway if there is a problem, the sometimes naturally initiated fires would be making things worse.

What you say is entirely logical but if these fires go on for the rest of the season the people affected will not be logical at all.
So best the politicians are silent now.

... swapping our cars for EVs ain't gonna stop climate change one iota ... the bush will burn in Australia , as it always has ...

Climate change is real ... and it's totally out of our hands .... take it up with the sun , son !

At the current rates of change in the climate, its entirely possible that Australia will be uninhabitable in 10 years time. They have had water shortages there for as long as I can remember and it only needs to stop raining there and its all over. Climate change is now faster than any models have predicted so it could be exponential in nature and worse still now irreversible. We are not going to see the full effects until its too late and its going to happen really really fast.

Oh God..dont say that...New Zealand with 25million Australians living here....no thanks

At the current population growth rate, there'll be 3 million more than the 25 mil seeking refuge in NZ.

Exactly most of the population live on the coast..surely it will rain?

Surely you jest? The foliage is tinder dry due to persistent drought.

https://www.bbc.com/news/world-australia-50581813

Plenty of good links in there for you - but this one really tells the back story;

https://www.bbc.com/news/world-australia-45043299

Policy? Police?

Japan launches USD120 bio stimulus. Quote: “Now is the time to adopt bold fiscal policy to overcome various downside risks and secure future safety while the Bank of Japan is patiently continuing powerful monetary easing.”

https://www.reuters.com/article/us-japan-economy-stimulus/japan-to-compi...

Heat Island effects frequently add 3-4° and occasionally up to 10°C to Sydney temperatures! It's exacerbated in recent decades by widespread adoption of A/C. Leaving that aside there has been about 1°C of rise in average temperature in NSW (and rest of world) since end of little ice age in 19th Century (coldest time in last 8000 years). NSW Rainfall for last 150 years has no trend down or up, so why try and invoke climate change when it is plainly a land management issue? https://austplants.com.au/resources/Pictures/Parramatta%20and%20the%20Hi...

Keep digging Foyle or better yet move to Sydney to back up your data.40 years this has to be the worst fire season I can remember...?

167 Years Ago Today : Bushfires Burn 5 Million Hectares or A Quarter Of Victoria
https://climatism.blog/2018/02/06/167-years-ago-today-bushfires-burn-5-m...

The Black Thursday bushfires were a devastating series of fires that swept through Victoria on February 6, 1851. They are considered the largest Australian bushfires in a populous region in recorded history, with approximately 5 million hectares, or a quarter of Victoria, being burnt. Twelve lives were lost, along with one million sheep and thousands of cattle.

--------------

In 1851, carbon dioxide levels were around 285 ppm. Today, carbon dioxide “pollution” levels are around 400 ppm.

CLIMATE change alarmists, like Tim Flannery and the ABC, claim Australian bush fires are unprecedented and becoming more extreme, thanks to human carbon dioxide “pollution” emissions.

THEY tell you this because the ultimate prize of the eco-activist is the control of carbon dioxide (energy). Virtually every human activity, including breathing, releases carbon dioxide. Consequently, greenhouse gases have become weaponised through the fear of “catastrophic climate change” in the “sustainability” (sic) effort to control all aspects of your life.

... poor old CO2 , it gets such a bad press ... it's only 0.4 % of our air ... millions of years ago it was proudly 5 times that , and the earth was lush and green ...

" Big Evil " , oxygen , is 21 % of our air ... poisonous to all photosynthetic life in large concentrations ... everyone lauds and loves O2 ... but , the plants know , they know it is the beast incarnate ...

Foyle is saying the situation is due to putting millions of people into the basin that is sydney, thats reasonable.
Here is the Far North of NZ the skies look strange and there is a brown sea mist...

If the hottest summer you can remember is the best you can come up with as the obvious proof for your latest religion of climate emergency, you will not have many followers. Aussie climate has changed practically zilch in the last 150 years on any measurement rational people use. I thought everyone knew about how large groups of humans gathered together, raise the temperature of the area they occupy by some amount. Best you look up some literature about this, and also some long term climate graphs, not just the carefully cropped ones your prophets used.

... there was a time when the Chicken Littles were running around flapping that the Antarctic was melting .... and their proof was videos of ice shelfs breaking off .... big bergs floating away ...

Those things always happen there ... it's just what it does... and , the annual average temperature is around minus 35 'c .... so , if we have global warming of 1 or 2 ' c , the average temp in the Antarctic remains in the minus 30's .... no net ice melt ... no meters upon meters of ocean rise around the world..

Beef in USA is interesting

The Beef
'This week, one of the largest retailers in the U.S. once again is featuring beef- this week Choice T-Bones for $5.99 per pound, sold in a family pack. Beef features have paid retailers handsomely this year and there are no signs that strategy will change. As long as the consumer continues to put beef in the cart, the supply chain will keep rolling along. Fresh ground beef is being featured at $1.88 per pound, cheaper than chicken breast at $1.99 per pound.'

That is retail Andrew,
Based on that what is NZ beef worth, farm gate, no redeeming features?

They are selling grinding beef retail for what we get on the hook. I have talked to farmers who are selling bull calves for nearly nothing in mid-west.

''Climate change deniers are going silent, one-by-one.''

You really think so Mr Chaston? The comments section of your website is infested with them, and has been for the longest time - and you have done precious little to challenge them (just look at some of the stuff posted above). Stuff.co.nz has taken action against the denialists, when are you going to? You don't allow post that are racist or inflammatory so when are you going to grasp the nettle and remove the climate change denialism? You wouldn't allow anti-vaxxer or flat earthism nonsense so why tolerate equally absurdist anti-science claptrap such as climate denialism? It's way past time you acted.

If you tolerate this, then your children will be next.

... who are you referring to ? .... which one above is denying climate change ? .... and why are you threatening Mr Chaston's children ?

BBC Australia bushfires north of Sydney 'too big to put out' A "mega blaze" raging across a 60km (37 mile) front north of the Australian city of Sydney cannot currently be put out, fire officials have warned.

The blaze across 300,000 hectares (1,150 sq m) is just an hour's drive from the nation's most-populous city.
People who cannot defend their property from approaching fires have been told they should leave immediately. Since October, bushfires have killed six people and destroyed more than 700 homes across Australia.
https://www.bbc.com/news/world-australia-50690633

The interbank markets get you 96 Aussie cents for every New Zealand Dollar you have today. It won't be long until Kiwis start heading back across The Tasman to take advantage of that freshly cleared land!

We need more people to help fight climate change, if we can double New Zealand's population we might have enough people to really make a difference.