A review of things you need to know before you go home on Monday; TD rates settle back, looking for whistleblowers, China inflation rises, equities start the week weak; swaps fall, NZD holds, & more

A review of things you need to know before you go home on Monday; TD rates settle back, looking for whistleblowers, China inflation rises, equities start the week weak; swaps fall, 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 to report today.

TERM DEPOSIT RATE CHANGES
BNZ has ended its one year 2.88% Chinese New Year 'special', reverting to 2.60%. Kiwibank has ended its 200 day 2.80% 'special', shifting it to a six month offer for 2.80%.

LOOKING FOR WHISTLEBLOWERS
The Reserve Bank wants to hear from whistleblowers. Individuals currently or formerly employed by insurers, banks or non-bank deposit takers regulated by the Reserve Bank, who have witnessed or become aware of misconduct within their organisation, can now report this directly to the Reserve Bank via a designated email address and phone number. Contact them by email: whistleblowing@rbnz.govt.nz or phone (04) 471 3657.

AN OIO FIRST
An overseas investor, Dr Won Joo Hur pleaded guilty to a criminal charge of misleading the Overseas Investment Office during an investigation into a property transaction. This is the first time a person has been convicted of an offence under the Overseas Investment Act 2005. He has been fined $100,000. His lawyer plead guilty to the same charge. There are civil proceedings still to be decided but they will be clearer now with these guilty pleas.

IT'S EXPENSIVE TO EAT IN CHINA
Consumer inflation in China is jumping, up +5.4% in January 2020 from the same month in 2019. In December it rose at the rate of +4.5% pa. Food prices are up +15.2% in a year as the ASF impacts linger. Beef prices are up +20% and lamb prices are up +10%. Fresh vegetables are up +17% in a year. How the coronavirus impacts February is unclear from this data. Producer prices are rising too, but only taking them back to the tiniest gain year-on-year. It's inflation for households, deflation for businesses. Today's China CPI data means that inflation is now rising in the three largest countries that are important to New Zealand.

JAPAN STILL VERY IMPORTANT
We often overlook Japan's economic performance and that is a mistake because it is a major trading partner with New Zealand and still one of the world's largest economies. Both their December 2019 trade balance and December current account was reported today, and both came in very positive and both were better than analysts were expecting. New Zealand's merchandise trade with Japan was in deficit (to us) in 2019 to the tune of almost -NZ$700 mln. But that was less than the 2018 deficit of more than -NZ$900 mln. Japan is our fourth largest export market (and stable) and our fourth largest import supplier (and declining). (We do two-way trade with Japan at more than twice the level we do with the UK, and the UK trade is shrinking quickly.)

POLL TRACKING
As its election year, we are tracking the Curia Public Poll Averages again and charting them here (with permission). This update is because the first 2020 poll was out over the weekend.

SINKING TO START THE WEEK
Equity markets have opened lower today everywhere except Shanghai where the 'home team' is out supporting the boss (+0.1%). Hong Kong is down -0.5% in early trade. Tokyo is down -0.2%. The ASX200 is also -0.2% lower while the NZX50 Capital Index is down -1.0% in late trade.

LOCAL SWAP RATES LOWER
Wholesale swap rates have turned lower aggressively again. They are down -5 bps for the two year tenor, down -8 bps for five years, and down -9 bps for ten years. The 90-day bank bill rate is down -2 bps at 1.24%. Australian swap rates are down across the board but only by -2 bps in early trade. The Aussie Govt 10yr is down -1 bp to 1.04%. The China Govt 10yr is now at 2.83% and down -5 bps from Friday. The NZ Govt 10 yr yield is down -8 bps at 1.28%. The UST 10yr yield is down to 1.60%.

NZ DOLLAR HOLDS
The Kiwi dollar is unchanged since this morning, still at 64.0 USc after Friday's -½c drop. Against the Aussie and still at 95.9 AUc. Against the euro we holding at 58.5 euro cents. That means the TWI-5 is just under 69.8 and also unchanged since this morning.

BITCOIN HIGHER
Bitcoin is holding higher at US$10,184 and that is little-changed from where we opened this morning. 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.

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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25 Comments

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The virus is causing inflation! Well blow me down. Just what the banksters want! Mr Orr must be stoked.

Just wait until all those asset bubbles pop and the pumped in cash flows out....inflation for everyone.... and no ability to raise inters rates. Yipppeeeeee

Not so fast.

Mr Orr can point to the RBNZ commitment in “supporting maximum sustainable employment”.

The virus may present a threat to that goal – history shows he’s very quick to lower the OCR and look through volatile food and energy costs if need be.

Given the poor state of Germany's and Japan's economies, official rate cuts are not persuasive remedies for our forecast potential GDP setback.

Agreed, I’m certainly not saying their actions are correct or sound– I actually think its complete madness in some respects.

I thought the last 50 basis point cut was quite irresponsible – and various financial commentators seriously questioned it at the time.

However that doesn’t appear to stop them from time after time carrying on down the same worn out path with the same worn out statements– go figure?

Never very keen to "look through" low inflation though are they.

Central bankers are state sponsored fraudsters.

We often overlook Japan's economic performance and that is a mistake because it is a major trading partner with New Zealand and still one of the world's largest economies.

Exports slow, IP decelerates, and consumer spending (retail sales) began to fall way off trend long before October’s rising VAT rate.

This was not how it was supposed to go after the tax hike. It had been expected that Japanese consumers and industry would rebound quickly because the government, on the advice and consent of its central bank, had declared Japan’s economy more than strong enough to withstand the adjustment. Link

Will struggle to keep up with social housing demand. "Habitas co-founder Oliver Ripley explained that the company builds its own hotel rooms in Mexico using 3D-printing technology. It flat-packs the basic structures of its rooms and ships them to the location and assembled like Lego, where they can be customised to fit the local environment.

Using this process, the start-up can manufacture 100 rooms per month means and Habitas’ hotels can be constructed within six to nine months. The company can earn a return on investment within two years — far faster than most traditional hotels."
https://www.traveldailymedia.com/ubers-former-ceo-travis-kalanick-financ...

Whether its corona, the bird flu variants , a little bit of RBNZ , or whatever else can be thrown into the cauldron, Barfoots scheduled auctions for this summer week will be fewer than last years corresponding period . Unless auctions ramp up, Auckland house prices and sales are going nowhere., well not up.

"our trade with UK is declining"

I'm not surprised. The last thing we want is a free trade agreement with the UK now that they have Brexit, not unless they buy huge quantities of butter and lamb from us. What on earth would we want to buy from the UK.
Hillman Hunter and Austin Princess cars were the bane of my youth...always blowing head gaskets, thermostats needed regular replacement,etc,etc. Left a bad taste in my mouth as weekends were wasted attending to repairs. I don't believe UK car quality could have improved that much over the years.....look at Ford results on the latest Consumer survey.

BREAKING NEWS !!!
BREAKING NEWS !!!
The Chinese have revealed that Coronavirus is now transmissible by air . Just heard on TV3 6pm news.
If this is so then we have a full-blown plague more serious than any in human history (earlier plagues were transmissible by fleas on rats, and the like.)
Also the same newscast revealed Sky City employed a person who they knew had been in Wahun, China.
It seems we never learn.

streetwise,

Are you being serious or ironic? We already knew that the virus is spread by air-people coughing and sneezing-just like the 'flu, though as far as we know, much less virulent. As I understand it, what we don't yet know is whether simple contact can also spread it.

I wonder whether the OIO prosecution will be the first of many.

And what happens to the illegally obtained property? I assume it is required to be on-sold?

To act as a real deterrent they will need to prosecute many.
Otherwise there will always be people willing to take the risk.

For Dr Joo Hur I imagine the $100,000 is just fluff – as you say, was any property actually confiscated because that's what will actually hurt.

Who brings the civil proceedings – and what penalties ultimately can come with that.

Risk/Reward prosecution and punishment needs to be a very clear and present deterrent I would have thought.

Property should be seized by the crown and on sold, lawyer disbarred, and if applicable, last 10 year citzenship revoked and deported. Otherwise WOFTAM.

WTF is going on at Auckland airport ?

Apparently there are potholes ( yes potholes .........those things we associate with third - world tinpot country roads )............ on or in the runway.

And the airport cant cope , so its diverting planes , or delaying them

SMFH !

Instead of trying to build more shops and the most expensive car parks in the county , why the F .......... are they not maintaining the single most important thing that makes it an airport ?

It's NZ, maaaate.
The land of sloppiness and strange priorities.

Monopolies breed incompetence. Last CEO exited on good profits. Deferred maintenance anyone?

Our reported profit after taxation for the 2019 financial year was $523.5 million – a decrease of 19.5% on the prior year's reported profit of $650.1 million. Excluding the gain arising from the sale of our investment in North Queensland Airports in the prior year and fair value changes, our underlying profit after taxation for the 2019 financial year was $274.7 million, an increase of 4.4% on the prior year's underlying profit of $263.1 million.

https://report.aucklandairport.co.nz/financial-summary

Whenuapai as a domestic airport..oh wait the nimbys would revolt!

Boatman,

I don't often agree with you, but on this, absolutely. This is a disgrace. I have been a shareholder for many years and have done well, but a decent runway should take precedence over anything else.
I have already expressed my view to the company.

What do you expect when we're led by bleeders not leaders.

LJM - apples with apples, thankée kindly.

That will have been a commercial decision, and more and more you're going to see commercial decisions involving infrastructure triage. I've been pointing this out for years.

Don't blame it on people you didn't vote for because they didn't give you as much in your hip-pocket. Bigger issues are afoot. .

I see that Stephen Town (CEO, AC) has exited stage left to go head up the brand-new all-embracing Polytechnic of NZ or whatever they decide to christen the behemoth. ST was a polytechnic sector CEO in a past life, and it's a logical career move, and given AC's looming infrastructure debacles, a timely one......and timing, as the actress said to the bishop, is everything.

The last government was the party of property speculators and financiers. Either way it's bleeders.