What happened Thursday

A review of things you need to know before you go home on Thursday; no rate changes, house prices up, wallets open, inflation risk rises, job ads more part-time, swaps hold, NZD firms, & more

16th Jan 20, 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
None here either.

HOUSE PRICES ARE UP
The December REINZ data shows housing markets are shifting to an optimism phase. Important gains were recorded in the Auckland market where prices and activity has been muted for more than three years. National median house prices rose +12.3% in 2019 helped by the fact that sales volumes were down -2.2% on low supply of listings. Sellers seem to have out-waited buyers in most of the country. In Auckland, prices are only up +3.4% for the full year but December volumes jumped +31% where it seems that buyers are sensing now is the time to act before the national trends arrive there.

WALLETS ARE OPEN
Retail sales (as measured by electronic card purchase activity) rose +3.9% year-on-year in December. This was far better than the equivalent 2018 December rise of just +1.7%. Further, November 2019 data which was strong, was revised higher, and is now recorded as a +5.1% year-on-year rise. Spending on long-lasting durable goods (like furnishings) was particularly strong. Spending on hospitality also starred, up . Analysts were impressed, noting "a very positive picture for spending by New Zealanders" (Westpac). ASB said "Consumers are heeding the RBNZ’s advice to go out and spend, and signs for retail in 2020 are looking good." But a lot of this optimism is only following the perspective of the poor 2018 period. Prior to that (2015/16/17) we were used to core retail spending rising by about +6%, regularly. Of course, this spending may be a manifestation of the wealth effect of rising house prices.

UPSIDE RISK
The ANZ Monthly Inflation Gauge in December is stable but running at 3.4% above the same month a year ago and up sharply from +3.0% in November year-on-year. This is twice what Stats NZ and the RBNZ say they see. Housing-related prices remain a persistent driver of the ANZ monitoring, and today rise suggests that will continue. ANZ see an upside risk to the RBNZ's policy positioning. In fact, on the release, the NZD took a small turn higher.

NZGB BOND POPULAR, BUT YIELD RISING
Treasury launched a bond tender today, a nominal 15-May 2031 offer for $250 mln with a coupon of 1.50%. It got 62 bids worth $645 mln and the average successful yield was 1.672%. (The previous $250 nominal tender for the 20-Apr-2029 issue, while not strictly comparable, had a yield of 1.499%.)

JOBS DECLINE EXTENDS
BNZ is reporting that their SEEK employment report analysis saw a soft end to 2019. Canterbury is taking another turn lower, they say, and construction is falling further. Worryingly, demand for part-timers is rising, but for full-timers it is weakening.

LOCAL SWAP RATES HOLD
Wholesale swap rates are little-changed today. The 90-day bank bill rate is up another +1 bp however, now at 1.29%. Australian swap rates are also lower, down -2 bps across the board. The Aussie Govt 10yr is down -3 bps from this time yesterday to 1.18%. The China Govt 10yr is unchanged at 3.15%. The NZ Govt 10 yr yield is also little-changed, up +1 bps to 1.52%. But the UST 10yr yield is down -2 bps to 1.79%.

NZ DOLLAR FIRM
The Kiwi dollar firmed on the ANZ inflation data, up to 66.3 USc. Against the Aussie we are firmish too at 95.9 AUc. Against the euro we are back up at 59.4 euro cents. That means the TWI-5 is now at 71.4..

BITCOIN HOLDS HIGH
Bitcoin is now at US$8,725, and little-changed from this time this morning. The bitcoin price is charted in the currency set below.

This chart is animated here.

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

Daily swap rates

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Source: NZFMA

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15 Comments

by waymad | 16th Jan 20, 4:03pm 1579143805

The FT/PT job tilt may be the preparation for yet another Minimum Wage rise in April. Far easier to juggle a PT's hours than to disestablish an FT......

by Foyle | 16th Jan 20, 4:04pm 1579143855

Canterbury farming is in the doldrums due to threatened water regulations. Expect it to show up in GDP figures soon

by Andrewj | 16th Jan 20, 5:51pm 1579150302

Ecan are a bit of a nightmare, now poor old farmers get the stress while the Govt appointed board made off with the money.

by Audaxes | 16th Jan 20, 6:03pm 1579151009

Has the state of Lake Ellesmere improved for the citizen's wellbeing?

by middleman1 | 16th Jan 20, 7:33pm 1579156436

Nearby lake Forsyth has seen worthwhile improvement in water quality since local Hapu agreed to the creation of a canal to the sea but the Ellesmere/Te Waihora runanga won't agree to a similar concept, larger canal from their lake that would join the Forsyth canal, reportedly because of the loss of mana to the Forsyth group and alleged poor communication with them by the scheme proponents.

by Henry_Tull | 16th Jan 20, 9:59pm 1579165159

The NZ Weekly News, June 8, 1970. Lead article has "Lake Ellesmere could become putrid waste". Dr Elizabeth Flint, an aigaoloist with fresh water research unit of the DSIR believes that the lake could become as poisonous to all living things as it's much smaller neighbour, Lake Forsyth.

"Lake Forsyth is completely ruined" said Dr Flint....

Mind you in 1966, the acclimatisation society collected 1,856 dozen black swan eggs for the egg pulp industry.

by Audaxes | 16th Jan 20, 4:47pm 1579146431

Treasury launched a new bond maturity today, a nominal 15-May 2031 offer for $250 mln with a coupon of 1.50%.
Today's tender was a tap sale - prior issuance is recorded at $2.150 billion. Syndication date 18/09/19.

by Davo36 | 16th Jan 20, 4:46pm 1579146416

JOBS DECLINE EXTENDS

Who here knows that if you took 1 person working 40 hours a week and split that into 2 people working 20 hours a week, you have 1 less unemployed person - in terms of the measured stats?

And if you further split it into 4x10 hour a week jobs, then you have 3 less...

So they way the unemployment is measured, the more part time the nature of the work is, the better. This how you get figures like 4 or 5% unemployment.

Don't believe me? Read here: https://duganotherhole.home.blog/2019/07/15/unemployment-stats-are-a-my…

by Fritz | 16th Jan 20, 7:31pm 1579156280

I had lunch today with an old family friend who was a professor of politics in the UK.
It was nice to see him, but his thoughts have left me quite depressed.
His central theory is the growing inequality and economic issues through much of the world will not lead to a move to the left and more redistributive policies, but rather push things to the right and increasing nationalism.
He pointed, fairly convincingly, to the UK and USA and countries in Europe. As well as India and China.
I countered with the suggestion that when the policies of Boris, Trump et al fail, there will be shift back left.
He wasn't so sure.
He also said that it is very noticeable over the last 15 years how politically apathetic and conservative students have become. He attributes this to neoliberalism and the way it has pervaded as the one true way to prosperity.
Concerning times if you are of a 'Centre-Left' persuasion.

by Davo36 | 16th Jan 20, 8:47pm 1579160858

I agree with that last part. But it's also that students are now completely focussed on climate change. There used to be anti-war marches for instance. You don't see that at all now, just you know, anti climate change marches and protests of all kind.

If it was a conspiracy (and I'm not really saying it is) for the neoliberals to have pushed climate change as the defining issue, while they do whatever they like, it will have been a total success on their part.

by Fritz | 17th Jan 20, 8:11am 1579201893

Yeah I don't think it's a conspiracy but it sure as hell is a great distraction from the steady downhill socio-economic slide, as you suggest

by printer8 | 16th Jan 20, 9:17pm 1579162669

Really valuable opportunity to have had such a discussion.
His views were probably not intended to be taken verbatim and depress you, rather one with his background would most likely intended to challenge you and get you thinking critically.

by powerdownkiwi | 16th Jan 20, 10:15pm 1579166139

The problem is that Climate Change is merely the entropic exhaust-gases of our energy-use. And that can't be sustained. Nobody seems to graps that if the exhaust if global-impacting, there might bee teensy ramifications for the overshot species using the energy to increase it's popualtion and resource consumption.

But looking at the collection of little-minded self-interest-serving commenters here (and paid spin-doctors, unless I miss my guess) we aren't going to have that conversation. And it is too late now - we're into feed-back-loop territory, which puts events somewhat out of our control.

by Henry_Tull | 17th Jan 20, 7:29am 1579199351

The problem is your definition of Climate Change.
It's not what everyone else uses. You need label your definition as something else. Because it's not the science definition of climate change.
No wonder the confusion.

by Lapun | 17th Jan 20, 9:34am 1579206851

I'm not convinced by your energy is wealth argument although I can see the correlation. In the 1890's you could have postulated wealth is horses and they did predict London roads being 2m deep in horse poo. So I dream of a break in that relationship of wealth and energy - a future with greater human wellbeing with minimal use of fossil fuels. Admittedly a dream based on a hope for technological breakthroughs.
Unfortunately I cannot see a solution to the rest of your argument: as a species we have overshot both population and resource consumption. And have done so in my own life time. When I was born large wild animals roughly matched the domesticated animals on earth - now it is a five wild rhino to 1.5 billion cows. It is like that story of two flies in a large jar; they double their population every 30 minutes until the jar is full at noon. I was born about 11:30am and it is now 11:57. I can see no solution mainly because I cannot persuade my children to sort their garbage into recycling and non-recycling - in other words you and I and many others may agree but most people will not control their waste until starvation or war stops them.