A review of things you need to know before you go home on Thursday; no retail rate changes, higher inflation expected, longer lives, fewer tractors, NZ Super Fund super returns, swaps hold, NZD soft, & more

A review of things you need to know before you go home on Thursday; no retail rate changes, higher inflation expected, longer lives, fewer tractors, NZ Super Fund super returns, swaps hold, NZD soft, & 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
None here either.

LOW BUT PRESSURE EASES OFF
Producer prices in Q4-2019 rose at a very modest level. Input prices were up just +0.3% while output prices were up +1.0%. That means margins were improved slightly and reverses the margin tightening in Q3-2019. You can also check the prices for a number of business admin services here. The lawyers are still raising prices fast, up +6.7% in 2019. Not everyone else has been able to do that.

LOWER YIELD
The bond tender for nominal April 2037 Government bonds raised the full $200 mln offered after bids of almost twice that were received. The average accepted yield was 1.75% and that reverses the trend of rising yields. The previous tender in January yielded 1.93%.

MORE INFLATION EXPECTED
An RBNZ survey of household inflation expectations shows rises for one year rates but only back to levels prior to the last survey. The same survey also shows rising house price expectations.

HOW LONG WILL YOU LIVE?
Stats NZ today published its Life Table update for 2017-209 and that shows life expectancy at birth for a male is now 80 years while for females is now 83½ years. If you are aged 40 and male you can expect to live (on average) to 81½ years and if female to 84½ years. At aged 65 you should expect a retirement will take you out at age 84½ years if you are male and 84½ years if you are female. This data might help you think about how much you may need in retirement. But a word of warning: the data is based on people who have already died. As lifespans rise it is almost certain that by the time you reach these age benchmarks, you life expectancy will be even longer. The biggest financial project in your life is now unlikely to be buying your first house, it will be preparing to live comfortably in retirement.

LESS PRODUCTIVITY INVESTMENT
Farmers registered 3,100 new tractors in 2019 and that was more than -10% fewer than in 2018. The fall off from August was quite pronounced (and we hear that the units being registered were more lifestyle machines rather than professional machines). The 2019 total was the first year of decline since 2015.

"DON'T EXPECT AS MUCH IF WE HAVE TO INVEST IN INFRASTRUCTURE"
The NZ Super Fund posted a 21.1% return for 2019, and is eyeing a range of potential investments in New Zealand and overseas, especially in infrastructure and real estate. That will mean, they say, that future returns will be depressed from 2019 levels.

HOUSEHOLD STRETCHING
New Reserve Bank figures show that household debt to income ratios are blowing out again after reducing during 2018.

COMCOM SEEKS FEEDBACK ON ITS 'FIT & PROPER' LENDER PLANS
The Commerce Commission wants feedback on the proposed criteria it will use to assess whether a lender is ‘fit and proper’. This is part of a new certification regime being introduced under changes to the Credit Contracts and Consumer Finance Act. From April 2021 the Commission must be satisfied that all directors and senior managers of lenders and mobile traders are ‘fit and proper’. These individuals must be certified as ‘fit and proper’ by the Commission before they can be registered on the Financial Service Providers Register. The Commission proposes to focus on whether the individual is competent, financially sound, honest, reputable, reliable and competent to do the job. Submissions are sought by 5pm on March 18. More detail is here.

COVID-19 UPDATE
Coronavirus deaths are now up to 2126 and infections to 75,700. A week ago these levels were 1368 and 60,300.

NO WORRIES
Local equity markets are rising sharply today. The ASX200 is up +0.7% while the NZX50 Capital Index is booking a similar gain. Early signs also have Tokyo and Shanghai up but Hong Kong lower.

JOBLESS RATE RISES
Australia's unemployment rate rose from 4.9% in December to 5.7% in January, although on a smoothed seasonally adjusted basis the rise is recorded as only 5.3%. The deterioration is because their participation rate turned down (to 65.6%) and the number of full time jobs fell by -114,000 while the number of part time jobs fell by -147,000 from the prior month. Again, seasonal adjustment smooths the actual changes so most other media reports will show much more benign changes.

LOCAL SWAP RATES HOLD
Wholesale swap rates are unchanged today across the whole curve. The 90-day bank bill rate is down another -1 bp at 1.16%. But in Australia, their swap rates are -3 bps lower across their curve. The Aussie Govt 10yr is down -1 bp to 1.02%. The China Govt 10yr is up +1 bp at 2.93%. The NZ Govt 10 yr yield is also up +1 bp at 1.34%. And the UST 10yr yield is up +1 bp at 1.57%.

NZ DOLLAR SOFT ON RISK-OFF TURN
The Kiwi dollar has slid in late afternoon trade, lower against the greenback at 63.6 USc. Against the Aussie we are holding at 95.7 AUc. Against the euro we have also turned lower suddenly at 58.9 euro cents. That means the TWI-5 is now at 69.7. Because the change is underway now, you should check our live rates here to see where they land.

BITCOIN DROPS SUDDENLY
Bitcoin has dipped back below the psychological area of support near the $10,000 level amid a 20-minute bearish sell-off that took the markets by surprise. It is now at US$9,614 after hitting US$10,274 earlier. Since this time yesterday the fall is -5.1%. The bitcoin price is charted in the currency set below.

This chart is animated here.

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Our exchange rate chart is here.

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39 Comments

Comment Filter

Highlight new comments in the last hr(s).

"Regional Economic Development Minister Shane Jones said the impact of coronavirus on New Zealand businesses, particularly smaller operations, would be significant.
He described the situation as "disappointing" and said organisations needed to move to ensure they were not so reliant on China".

Mr Jones completely overlooking that this is going to be a global problem - not just a China problem!

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=123...

"Going to be" a global problem should be in the present tense. The regional (Asia) indicators are already there.

12
up

Just in time inventory must have shifted to the never on time.

I'm trying to bring some stock up from the Sth Island and having no luck. Works on a go-slow and everyone else taking a wait and see approach. Cannot go on forever, things need to move or it gets complicated.

..crickey...you have feed up here?

I have some heavy silt country down by the river that is all red clover. This is a deal i'm trying to do yearly with a mate.

It looked like rain here last night but it blew out to sea. How is it with you? I hear Taihape region is very dry, even Eketahuna is drying out.

The hooplah about the gold price y'day was missing today, even though the magnitude in movements in the gold price have been even better today (using AUD as the fiat benchmark). And important to note, the silver price has trounced that of gold for the 2nd day in a row. Silver now up 8.5% YTD in AUD.

Gold mining stocks prices all very strong today after a stellar day on Tues. So the PM sector looks to be moving to its own beat (you would expect to see everything fall on a 'risk on' day like today).

yep. And with the decline in nz$ dollar the gains are looking strong. At some point very soon I'm picking investors at large develop the fomo bug and then we will see far more significant moves. Only a fraction of investors are presently in gold.

Dalio has been talking it up, repeatedly, for quite a while now.

I think we're still some distance from fomo.

Wuhan Mother Speaks Out "No Beds, No Medicine, All Lies"

https://moneymaven.io/mishtalk/economics/wuhan-mother-speaks-out-no-beds...

Do watch that youtube clip, poor Chinese.
It's not going to get better in a hurry.

19
up

Harrowing. And yet our own political class fawns over the duplicitous local agents of this tyrannous regime, corrupting our democracy to the CCP's ends. It is disgusting listening to the cowardly pretences, evasions and lies of our own deeply compromised politicians and party officials. Here is the truth they will not face, here in the bravery of this desperate woman. This is the only way the truth will out. And it will out.

Wise and salient words. Thank you.

I don't see a lot of upside in this for the National party.

The possible upside for our country as a whole is that our political class faces facts and comes to its senses. Simply, the CCP has no place in our political system. If this means National goes to the cleaners for another term or two, well and good. If there were any honour in Bridges or the party, there would have been resignations, dismissals and funding exits post Professor Brady's research, but poll failure will force consequences on them. Labour too has dirty laundry to deal with. But National needs to do considerable work to re-earn trust. You gain that through trustworthiness.

As a right winger I used to be against taxpayer funding of political parties, figuring that influences of Unions, Estates of well meaning zealots, Businesses and NGO lobby groups had a place - giving them a voice and influence they don't otherwise have in our democracy and ensuring that their interests would be taken care of too. But with the corrupting patronage of PRC's soft power programs I now think it is better to end all donations and other contributions in kind and simple hand over $5 per vote gained.

i realised that as well. To keep corruption out you have to keep money out. The old love of money is the root of all evil and behind every rich man is almost always a bad man stuff.

$5 per vote gained... And no external funding, so totally locking in the duopoly we have now, and banishing the prospect of any new party ever being able to afford to buy airtime, or even decent social media exposure. No thanks.

candidates can still spend $28k of their own money in an election, could give candidates $5 for ever supporter they can sign up pre-election taken off money after election, and volunteers can still door knock. Entry barriers are no worse than now - TOP and ACT and Colin's crazy concervatives don't get far with their bucks anyway.

Foyle, I am a conservative, a businessman with NZ and international interests, no supporter of either the authoritarian left or a privileged neo-liberalism. I'm against taxpayer funding of political parties (Pragmatist makes a good point above). And I'm against the deployment of foreign, non-citizen, money - which is difficult to avoid in the intricate cross-border links of globalism, let alone in contest with the strategies of the PRC. I suggest it comes down to a willingness to resource the rigorous policing of party-political funding in a national democracy. (I don't have any other answer.) That is, placing a truly significant value on a functioning national democracy. We don't seem to do this.

$5 multiplied by the number of voters is a bargain. Less than the flag debacle. Less than a few Km of motorway. Easy to avoid Pragmatists objections. I reckon they spend more than $5 just trying to get the public registered as voters so make it $10 and let the voter keep half of it. If it persuades all the lazy good for nothings who can't be bothered to actually get out and vote then we may have some odd politics but at least they will be our own mistakes.

The USSR collapsed quite rapidly and few people saw it coming (Notably, William Ress-Mogg, editor of The Times, when it was a real newspaper, before Murdoch turned it into a middle brow version of The News of the World). Same for the Japanese stockmarket/property bubble. These things can snowball rapidly. As they say, crises happen slowly and then all at once.
https://en.wikipedia.org/wiki/William_Rees-Mogg

Carona virus could be China's Chernobyl. Gorbachev said that was the beginning of the end of the Soviet Union.

Kyle Bass on Japan?

10 day ago saw anonymous chinese reports of 500k infected and 40k dead, 2 months after start of outbreak. By May it will be most of China's population and 30million dead (hospitals will soon be overwhelmed and death rate will climb). Hard to even process the scale of such a tragedy - more dead than WW1 in a month. The world has to quarantine China for next year or two to save 100million more. How does Xi survive that? Japan, Singapore, Korea all starting to see unchecked exponential growth, doubling weekly - in 2-3months that will be another few million deaths. Strict bulletproof quarantining and super paranoid testing/checking procedures need to start yesterday.

Rubbish

Whew, Fritz says it's nothing, so that's all good then. Amazing that anyone in this day and age can still believe Chinese propaganda. Anyway, we will know in another month wont we? A couple more doublings will make it impossible to pretend anymore.
Meanwhile outside of china in a more honest world, this is what an exponential curve looks like:
https://www.worldometers.info/coronavirus/coronavirus-cases/

Foyle,

What interests me about your post, is not so much whether the 'anonymous Chinese reports' are at all accurate-god help us if they are-but your apparent willingness to just accept them as gospel. You cannot have any means of checking them, so why not admit that?
I am really intrigued by the psychology of this. What makes someone want to uncritically accept stuff like this? If you really believe these reports, then by now you will be in the process of selling all your assets,including your home, and preparing for a dystopian future. Are you? Somehow I doubt it.

The bond tender for nominal April 2037 Government bonds raised the full $200 mln offered after bids of almost twice that were received. The average accepted yield was 1.75%...

The interpolated swap yield at 1.7520% surely over rates the credit quality of the institutions quoting these derivatives or is it a case of no will or desire to commit balance sheet capacity to arbitrage the discrepancy?

"...As lifespans rise it is almost certain that by the time you reach these age benchmarks, you life expectancy will be even longer."
What about obesity? This is completely missing from the comment above.

I see Iran is locking down Qom.

'BREAKING: Citizens are reporting military is shutting down major highways and roads as Qom goes into quarantine and lockdown. This is developing situation and is happening right now.'

Dr. Alavi works at the Kamkar hospital in Qom and reports that over 20 patients have died from clinically diagnosed cases of #COVID19 at his hospital. Only in Tehran can samples be tested, so it might be a while to get full picture of numbers. #iran #SARSCoV2

Just scratching the surface in Iran, based on the CFR and lag from infection to death there would have been 100 cases two weeks ago - best case scenario there's 400 infected running round Iran undetected right now...

Korea, Japan and Singapore have growing numbers of un-traced infections - I think it's time to recognise that this cat isn't getting back in it's bag...

Men go 5x daily to mosques, breathing the air of 100's of others, spread will be lightening quick. Qom is centre of Shia worship and had biggest festival of year a few weeks back.
http://itwitter.co/hectorology This guy says the authorities knew about it weeks back, suspected cases spread over the country.

Two dead had not travelled anywhere, they had picked it up from some anonymous carrier in local population. Likely means 100's already infected. No chance of reining that in, Middle east is likely done for too.

At this point it's really hard to know what of the news you're seeing is true and what is not.

Agreed – but what a ridiculous state of affairs considering the implications.

I will be very angry if our government loosen the current travel restrictions before there is total and absolute certainty regarding my safety and other New Zealander’s safety being compromised in any way.

As of China’s concerns and protestations I care not one iota – their diplomatic posturing is a manipulative embarrassment and disgrace and simply provides further evidence to distance ourselves from this inhumane and corrupt regime.

Exactly – then we shouldn’t re-open our country to them either – the Chinese protestations regarding our actions become more patently mindless and idiotic each and every passing day.

We need to stay strong.

“China’s Hubei province has asked firms not to resume work before March 11 due to the outbreak, although those involved in epidemic prevention and control and public utilities are exempt. The suspension of work for many firms was due to end on February 21.In a statement on its official Weibo account, the province said schools are not to re-open until further notice.”

https://www.cnbc.com/2020/02/20/coronavirus-latest-updates-hubei-china-d...

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