A review of things you need to know before you go home on Tuesday; minor retail rate cut, used import registrations sag, household spending changes, more huge auction activity, bond rates rise, NZD stable, & more

A review of things you need to know before you go home on Tuesday; minor retail rate cut, used import registrations sag, household spending changes, more huge auction activity, bond rates rise, NZD stable, & 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
Asset Finance cut some rates today, but they remain far above bank rates.

HEADING SOUTH
Registrations of used imports in September were down -11% year-on-year, and this is only half the decline recorded for August. The fall-off in used import sales is much less than for new car sales (which has been hurt by the collapse in sales to rental car companies). The annual rate of sales is now down to under 120,000 per year, the first time it has been this low in more than six years. New car sales fell -25% in September compared with the year-ago month as we reported yesterday, and also a six year annual rate low.

THE NEW NORMAL
Kiwibank's household spending tracker shows we’re spending a lot more on fruit and veges as we eat out less, gambling and alcohol spending has elevated to a higher level, spending on online entertainment continues to surge, time at home means more spending on DIY and home furnishings, spending on transport is not back to pre-Covid levels as employers support staff working from home.

HUGE AUCTION NUMBERS
More than 200 properties were auctioned by Barfoot & Thompson last week with a sales rate of 62%. Many auction deals are being finalised prior to the properties going under the hammer, suggesting premium prices are being paid.

SR NOT POPULAR
The FMA's annual KiwiSaver Report shows that there is very little movement into (or out of) Socially Responsible (SR) funds. They account for only 3.2% of all KiwiSaver investment, and only 2768 people switched into them in 2019/20 while 1649 switch out, a tiny gain of only +1119 in a year. (see page 21)

UP BUT STILL FAR SHORT OF LAST YEAR
The level of job ads showed a further recovery in September from August, but they are still very much lower than in February, and -24% lower than this time last year.

DOWNSIDE SURPRISE
Australia’s trade surplus surprised to the downside in August. Exports were down -4.2% vs an expected -2.7% and imports rose not fell, +2% vs an expected -4.4%. That resulted in a trade surplus that fell to $2.6 bln, down from an average of +$7.5 bln in the past five months.

MAJOR AUSSIE POLICY RELEASES
The RBA will release its monetary policy and official interest rate review this afternoon at about 4:30 pm NZ Time. The Canberra Federal government releases its pandemic-delayed Budget update at 9:30 pm NZT.

RMBS ISSUE FROM AVANTI FINANCE
Avanti Finance has launched a $250 million issue of residential mortgage backed securities. The offer is being arranged and managed by Westpac with pricing expected on or before Friday, and settlement on October 15. The collateral is fully amortising New Zealand dollar floating rate loans to prime and non-conforming borrowers secured by mortgages over New Zealand residential property.

GOLD PRICE UNCHANGED
The price of gold is now at US$1912/oz in early Asian trading, and up +US$12 from yesterday's equivalent price. That is -US$1 lower than the closing price in New York earlier, and +US$2 from the London afternoon fix.

EQUITIES UPDATE
The S&P500 ended its Wall Street session up +1.8% with a late burst. Shanghai is still closed in its last day of its holiday. But Hong Kong is open and is up +0.7%. Tokyo is up 0.4% in morning trade. The ASX200 is down -0.1% in early afternoon trade, while the NZX50 Capital Index is up +0.1% in late trade.

SWAP & BOND RATES RISE
We don’t have the final data for today yet and if it is significant we will update it here. The 90 day bank bill rate is up +1 bp today to 0.28%. The Australian Govt ten year benchmark rate is up +2 bps at 0.91%. The China Govt ten year bond is unchanged at 3.16%. Meanwhile, the New Zealand Govt ten year is up +2 bps at 0.54% and matching the earlier RBNZ-recorded fix of 0.54% . And the NZGB five year is not negative anymore and is now at +0.05% pa. The US Govt ten year is up +6 bps from this time yesterday to just under 0.77% which is a strong rise.

NZD HOLDS
The Kiwi dollar is unchanged from this time yesterday at 66.5 USc. Against the Aussie we are also unchanged again at 92.5 AUc. Against the euro we are lower at 56.4 euro cents. That all means our TWI-5 is down very marginally at 69.6.

BITCOIN UNCHANGED
Bitcoin is little-changed in today's trade, now at US$10,749. The bitcoin rate is charted in the exchange rate set below.

This soil moisture chart is animated here.

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

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23 Comments

{{UP BUT STILL FAR SHORT OF LAST YEAR
The level of job ads showed a further recovery in September from August, but they are still very much lower than in February, and -24% lower than this time last year.}}

Any particular reason why you have reported Australian numbers here instead of NZ ones ?

Probably because the job ads in Aussie (not NZ) were reported today. Aussie is a good barometer for the NZ economy.

wont be a travel bubble with NSW anytime soon , our PM even quoted the same as the QLD premier they nee to make sure they have no community transmission or 28 days free
NSW has recorded no recent cases of locally transmitted COVID-19 for the 11th day in a row, but health authorities remain concerned about local spread with low testing numbers and traces of the virus appearing in sewage.
Low testing numbers and sewage detection could also affect Queensland's decision on the border, Queensland Premier Annastacia Palaszczuk said.
Queensland will reopen its border with NSW on November 1, provided the state goes 28 days without recording an instance of community transmission.

Well, bookings and planes are filling up for kiwis to NSW.
Maybe they’re staying for a while, or temp working, or retired and can afford the time and money for isolation when returning.

maybe they have the time and money, not looking promising,
NSW Premier Gladys Berejiklian said she doubted NSW would reach the 28-day mark, and borders should instead be open to all states bar Victoria with COVID-safe regulations and proper contact tracing helping to stop the spread of future outbreaks.
NSW health authorities were also worried there could be active and as yet undetected cases in the Hawkesbury and south-west Sydney regions.
Dr Selvey said NSW Health particularly wants people living in those areas to come forward for testing, after the state’s sewage surveillance system picked up fragments of the virus at the North Richmond and West Camden treatment plants.
"Virus fragments can mean that there are active cases in the catchment area, but people can continue to shed viral genetic material for some weeks after recovery," Dr Selvey said.
The most recent cases reported in the West Camden catchment area were in September, but Dr Selvey said no one living in the North Richmond area had recently tested positive.

ScoMo already promised the 16th Oct Kiwis to Sydney.

Where is this reported?

good news WA are looking to open the travel bubble with NZ and NZ will reciprocate both running elimination strategy
The West Australian government is considering interstate travel bubbles and opening the border to New Zealanders, according to the state’s Chief Health Officer.
“New Zealand is obviously being considered at this stage, or at least allowing New Zealanders into Australia, so that’s another consideration that’s being looked at at both a national and state level,” he said.
https://www.watoday.com.au/national/western-australia/wa-considering-tra...

https://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=12369939
NT & NSW open to kiwis in less than 2 weeks. Take that Wuhan Virus!

Avanti Finance has launched a $250 million issue of residential mortgage backed securities. The offer is being arranged and managed by Westpac with pricing expected on or before Friday, and settlement on October 15. The collateral is fully amortising New Zealand dollar floating rate loans to prime and non-conforming borrowers secured by mortgages over New Zealand residential property.

I am reminded:

One of the most important fraudulent elements in a mortgage transaction is the check / cheque that you write to the vendor / seller of the property. Few appreciate what it is, or its function in the larger process.Link

Who would be buying these securities Audaxes?

If history has taught us anything, it will be insurance companies, Kiwisaver funds, Aussie super funds and other banks looking for "low risk instruments" to hedge their own mortgage lending portfolio.

After all, who doesn't pay their mortgage, am I right?

What could possibly go wrong?

Could this be the straw that breaks the camel's back?

RBA boss warns low interest rates haven't done any good

https://www.afr.com/policy/economy/former-rba-boss-warns-low-rates-haven...

LOL - "Who Could Have Known?"

Former Reserve Bank of Australia governor Ian Macfarlane says cutting interest rates to near zero has not done "any good" and warned ultra-loose monetary policy will have long-term costs for pensioners and insurance companies.

In a very rare public critique of the RBA by a former governor, Mr Macfarlane said technology and globalisation were now more powerful forces than interest rates in affecting inflation, but central bankers were reluctant to admit their limitations.

If it hasn't done any good, how much harm has it done?

11
up

Plenty - the RBNZ should not have a mandate to protect Aussie bank loans to a minority of NZ residential property speculators at great cost to ACC and NZ bank depositors. I consider it a form of sovereign treason predicated on ideological nonsense. The government is aiding and abetting what amounts to financial gangsterism.

And home owners have capitalized the low interest rates, leading to the biggest bubble in our history.

They have capitalised the higher present value of discounted future asset cash flows caused by lower interest rates using highly geared bank credit only available to the already wealthy. The penalty associated with such high risk investment should not be borne by the elderly and infirm amongst us.

Thus naked and into the light steps the new incarnation of 'the strong do as they please and the weak must suffer as they must'. All under the fraudulent banner of 'Be Kind'

The NZD xccy basis swap counterparty borrowers/lenders which hedge our banks' foreign currency borrowing.

Key information, charts and contact details for 33 supranational, sovereign and agency (SSA) borrowers relevant to the Australian and New Zealand markets. Link