A review of things you need to know before you go home on Tuesday; no rate changes; ANZ sees trend outlook; Synlait raises payout forecast, Fitch ups LGFA outlook, swaps sink again, NZD lower, & more

A review of things you need to know before you go home on Tuesday; no rate changes; ANZ sees trend outlook; Synlait raises payout forecast, Fitch ups LGFA outlook, swaps sink again, NZD lower, & more
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Here are the key things you need to know before you leave work today.

No changes to report again today.

None here either.

The Prime Minister has announced that the 2019 election will be on Saturday, September 19, 2020.

ANZ economists have a sanguine if unexciting view of the local economy in 2020. They say economic momentum faded last year, but the drivers are in place for a gradual improvement in growth over the next two years, despite headwinds. Housing market strength, fiscal spending, high terms of trade, the tight labour market and low interest rates are expected to provide support for this lackluster economy. "We assume the coronavirus outbreak will weigh a little on our export prices and volumes in the near term, but impacts are highly uncertain at this stage", they say. GDP growth is expected to sit around trend, with inflation close to target.

Synlait has boosted its forecast base milk price by +25c for the 2019 / 2020 season to $7.25 kgMS. They said the rise was driven by its view that global dairy prices will remain around current levels for the remainder of the milk season. The new forecast puts it slightly below the Fonterra midpoint of $7.00 to $7.60/kgMS. Fonterra could make its next update as early as March. Synlait reviews its rate in late May as well. The milk price history of all dairy companies is here.

Fitch Ratings has revised the Outlook on New Zealand Local Government Funding Agency's long-term foreign-currency Issuer default rating to Positive from Stable.

Wall Street ended the day at its lowest point, with the S&P500 down -1.60%. Tokyo is down -0.9% in early trade (Hong Kong and Shanghai are closed.) The ASX200 is down -1.3% so far, the NZX50 is down another -0.9% on top of yesterday's -0.6%.

The New Zealand Financial Markets Association has chosen the Official Cash Rate to act as the risk-free fall-back benchmark interest rate for the benchmark BKBM interest rate. This change comes amid moves to improve the BKBM's reliability and robustness. Meanwhile the RBNZ says that with LIBOR to no longer be calculated and published beyond 2021, local market participants need to accelerate efforts to ensure they are prepared for LIBOR cessation by the end of 2021.

The Ministry of Business, Innovation and Employment has opened consultation on funding options and levies to enable the Financial Markets Authority to regulate the new financial advice regime and respond to cost pressures within its current remit. Details are here.

The RBNZ will give an update on their view of the impacts of the China coronavirus in a Christian Hawkesby speech at 10:30 am tomorrow (Wednesday).

After yesterday's rather steep falls, wholesale swap rates have fallen again today, and in a flattening way. The two year is down -3 bps, the five year is down -4 bps and the ten year is down -5 bps. The 90-day bank bill rate is down -1 bp at 1.27%. Australian swap rates are down a similar amount to ours. The Aussie Govt 10yr is down -11 bps today to under 0.96%. The China Govt 10yr is holding lower at 3.03%. but of course Chinese markets aren't trading this week. The NZ Govt 10 yr yield is down another -7 bps at 1.37% from this time yesterday. The UST 10yr yield slid to 1.61%, down -4 bps overnight and has stayed down.

The Kiwi dollar has slipped against the greenback since yesterday and is now back to 65.4 USc. But we have risen against the Aussie to 96.8 AUc. Against the euro we are down to 59.4 euro cents. That means the TWI-5 is back at 70.9 and under 71 for the first time in three months.

Bitcoin is higher again than where we left yesterday, up +3.2% today to US$8,967. The bitcoin price is charted in the currency set below.

This chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Our exchange rate chart is here.

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From the IMF:
Money Creation in Fiat and Digital Currency Systems

To support the understanding that banks’ debt issuance means money creation, while centralized nonbank financial institutions’ and decentralized bond market intermediary lending does not, the paper aims to convey two related points: First, the notion of money creation as a result of banks’ loan creation is compatible with the notion of liquid funding needs in a multi-bank system, in which liquid fund (reserve) transfers across banks happen naturally. Second, interest rate-based monetary policy has a bearing on macroeconomic dynamics precisely due to that multi-bank structure. It would lose its impact in the hypothetical case that only one (“singular”) commercial bank would exist. We link our discussion to the emergence and design of central bank digital currencies (CBDC), with a special focus on how loans would be granted in a CBDC world.

FIAT = fix it again Trump.

At last. Jacinda's done something good.

Pleanty of time to bring more failures into the light.

" Let's Do This " has been tweaked .... in accordance with a clean and honest campaign .... in the 2020 election contest Labour will run under the banner :

" Let's Talk About Doing This " .... sweeeeet ....

Gold price a whisker off all-time highs in NZD and AUD. Commodity stocks like BHP, RIO, and FMG getting monkey hammered on ASX.

Amusing tweet from Quoth the Raven:

The year is 2023.

The coronavirus has wiped out humankind.

A lone server in the basement of the NY Fed building continues to bid the Dow Jones to new all-time highs.

It’s funny ‘cause it’s true

Go short then turn said server off.....

Yes, over the last week I have, in various posts, warned of the underestimation of the Coronavirus; this is a case of where economists are out of their depth and historians and epidemiologists come into play.

On a more positive note my share portfolio hasn't suffered unduly today despite my expecting a savaging:

Fletcher Building down 9 cents
Z Energy down 6 cents
Trustpower up 3 cents

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