A review of things you need to know before you go home on Monday; many mortgage and TD cuts, lending standards to tighten, more corporate bond issues, big vaccine order, swaps stable, NZD firm, & more

A review of things you need to know before you go home on Monday; many mortgage and TD cuts, lending standards to tighten, more corporate bond issues, big vaccine order, swaps stable, NZD firm, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
SBS Bank led with new market-leading low fixed rates. Then Heartland Bank went even lower including a 1.99% one-year fixed rate, and even cutting their floating rate.

TERM DEPOSIT RATE CHANGES
Westpac has reduced its TD offering, but only to levels already in place from their main rivals. Kiwibank however cut theirs to levels lower than almost all their main rivals especially for terms of 1 year and longer. NZCU Firefighters cut too. And Treasury makes a third cut to its Kiwi Bond interest rates this year, taking them down to just a few basis points. And they have dropped all their distribution agent channels at the same time.

A LOWER 'TAX' ON CREDIT CARD TRANSACTIONS
ANZ is reducing their Foreign Currency Conversion Rate from 1.8% to 1.3% of the NZ dollar amount across all ANZ Visa Credit Cards, Visa Debit Cards and Maestro/Cirrus EFTPOS Cards. This change will be in effect from Wednesday, October 14.

TIGHTER LENDING STANDARDS SIGNALED
Kiwibank economists believe the RBNZ will 'give with one hand' though lower mortgage rates and take a little back with the other - through tighter lending standards.

ENVIRONMENTAL TECH ON THE FARM
Fonterra farmers have been receiving Greenhouse Gas (GHG) emissions profiles for their farms - the first time such a tool has been introduced in New Zealand at scale. The profiles form part of a Farm Environmental Report – which combines a GHG Report and a Nitrogen Risk Scorecard.

CLOSED BORDER BRINGS DEAD STOP
The net population gain from migration, including returning NZ citizens, was just +1700 in the five months to August, down from +21,500 the previous year.

I'LL HAVE SOME OF THAT I
Oceania Healthcare (OCA) has successfully raised $125 mln in 7 year secured fixed rate bonds, and they were prices at the minimum 2.30% pa. These bonds won't be rated.

I'LL HAVE SOME OF THAT II
Meanwhile Argosy Property (ARG) is now seeking $150 mln in 7 year in unrated "senior secured fixed rate green bonds". The indicative interest rate range is said to be 1.95%-2.15%".

ELECTION 2020 ACTIVE EARLY
Advanced voting has surged in this year's election with 1.15 million people have cast their votes already, including a massive 453,000 doing so over the weekend.

GETTING READY
The Government has signed an agreement to purchase 1.5 mln COVID-19 vaccines – enough for 750,000 people – from Pfizer and BioNTech, subject to the vaccine successfully completing all clinical trials and passing regulatory approvals in New Zealand. There is no indication of when that will be, nor are there decisions on who will receive access to the first available vaccines. This order will be paid for out of the $66 mln allocated for "medical supplies and infrastructure" to ensure New Zealand is ready to launch a COVID-19 Immunisation Program.

HEAVYWEIGHT PROGRESS
In Australia, their largest bank is making quick progress in getting customers off their deferred payments arrangements. In June, it was 15.4% of their home loan book, in August it was down to 13.6%. And now it is down faster to just 9.6% of all home loans which total AU$436 bln at this bank. Other banks have larger proportions on deferrals however.

GOLD PRICE MIXED
The price of gold is now at US$1928/oz in early Asian trading, and down -US$3 from the closing price in New York on Saturday, and +$US4 more than the end-of-week London afternoon fix.

EQUITIES UPDATE
The NZX50 Capital Index is up +0.4% in late afternoon trade today. The ASX200 is flat in lackluster trading early afternoon. Shanghai has opened strongly, up +1.6% at their open. Hong Kong is also up +1.6%. Tokyo has opened down -0.2%. Futures trading for the S&P500 suggests it will open flat tomorrow.

SWAP & BOND RATES STABLE
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 unchanged today to 0.28%. The Australian Govt ten year benchmark rate is down -1 bps at 0.85%. The China Govt ten year bond is up +1 bp at 3.22%. Meanwhile, the New Zealand Govt ten year is up +4 bps at 0.58% and well above the earlier RBNZ-recorded fix of 0.54% (unchanged). The US Govt ten year is also unchanged at 0.78%.

NZD BACK UP
The Kiwi dollar is up almost +½% from this time Friday at 66.6 USc but all of that came over the weekend. Against the Aussie we are little-changed at 92.2 AUc. Against the euro we are firmer at 56.4 euro cents. That all means our TWI-5 is up at 69.7.

BITCOIN UP
Bitcoin is much stronger in today's trade, now at US$11,384 and +US$500 higher than this time on Friday. But it is unchanged from this morning's opening. 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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37 Comments

I know it has been commented on in the past, but what are the options for gold exposure that are (a) cost efficient in terms of transaction costs and ongoing fees; and (b) safe in terms of not discovering the same asset has been sold multipe times or never existed.

Probably by gold online , $2900 an oz at present , don't get ripped off spinner.
https://www.trademe.co.nz/antiques-collectables/coins/europe-ex-uk/listi...

There is a ETF "Physical Gold" (see https://www.etfsecurities.com.au/product/gold). It does have slightly less than 0.5% p.a. fee. It is traded in the Australian Exchange.
Alternatively, you can always buys shares of Australian companies exposed to the gold extraction industry (which give you the added benefit of a potential dividend, but are not perfectly related to the gold spot price).

There is a ETF "Physical Gold" (see https://www.etfsecurities.com.au/product/gold). It does have slightly less than 0.5% p.a. fee. It is traded in the Australian Exchange.

JP Morgan is the custodian. Stay away from it.

Genuine question: why ? (According to the description of the fund, each physical bar is segregated, individually identified and allocated which means there is no credit risk).

Ownership of the JPM gold ETF is not proxy ownership of the metal. It is exposure to the gold price. You cannot claim the underlying gold with ownership of the ETF.

For every ounce of gold you think you own with ETFS, theres about another 250 people who think they own that same bit of gold.

Or you can go to the perth mint.
https://www.perthmint.com/

Good point. I understand that it is also AU Government Guaranteed.

Western Australian govt

I own gold tokens (PMGT) in custody of Perth Mint. Cannot be rehypothecated. Transaction and storage costs are lower than any other vehicle. PMGT can be purchased on a relevant exchange.

I purchased iShares Gold Trust (ticker IAU) and Gold Miners ETF (ticker GDX) both from NYSE a few years back. Would need to be careful with FX if heading down that path now.

GDX and GDXJ are both available on the ASX. You can also buy both on Sharesies.

Fly to Perth and go to the Perthmint

They deliver to NZ.

Gold mining stocks or ETFs (I use GDX on hatch). I would assume they are fairly closely audited to avoid re-hypothetication

You don't own gold with GDX. You own shares in miners.

The UK is going to the dog's. My daughter works in film and told me her friends in the UK are all out of work and desperate. How long can the UK go on with the nonsense that is lockdown?
https://www.telegraph.co.uk/politics/2020/10/11/boris-johnson-calls-last...

All countries need a strong consistent strategy. Ours is elimination and quickly imposed lockdowns when required.
The UK and US seem to flip between various strategies whenever it suits. They are probably both more suited to continuous containment via face masks, social distancing, etc than lockdowns. They may need to keep their pubs closed until there is a vaccine.

The stop start of lockdown will do far more health & financial damage rather than no lockdown and competent contact tracing etc.

What we know about covid 19 now is different to March.
Expect a sea change after next weekend & before New Years.
Anticipate the comms round virus fear to be replaced by live & let live "narrative".

The UK is going to the dog's. My daughter works in film and told me her friends in the UK are all out of work and desperate. How long can the UK go on with the nonsense that is lockdown?

Advertising industry is getting smashed in the UK and globally too. In Asia, the marketing industries are pretty much dominated by Indians who're hiring juniors and mid-level for a song.

Who has had a chance to watch some of the ICAC hearing from NSW into the going on in the property development 'industry' and the Premier of NSW and her past 'close relationship'? What a mess! And if we think that sort of behaviour is not going on here, we are deluding ourselves.
How Berejiklian can survive this is incomprehensible. She and Andrews in Victoria are an example of everything that is wrong with politics across the globe. And we wonder why Trump got elected!

"How Berejiklian can survive this is incomprehensible. She and Andrews in Victoria are an example of everything that is wrong with politics across the globe. And we wonder why Trump got elected!" Out of the frying pan, into the fire!

Quite. Who better to save us from dodgy real estate developers than, uhhh...

Australian politics is incorrigibly corrupt.

Agreed. As dodgy as they come.

TIGHTER LENDING STANDARDS SIGNALED
Kiwibank economists believe the RBNZ will 'give with one hand' though lower mortgage rates and take a little back with the other - through tighter lending standards.

Interest rates are falling because banks are finding it hard to attract borrowers with near pristine collateral and bullet proof incomes. The already wealthy minority might be tempted if rates reach ridiculously low levels as banks pursue liquidity preference via ownership of government bonds ahead of risky lending practices demanding higher capital commitment.

... the most important macroeconomic variable cannot be the price of money. Instead, it is its quantity. Is the quantity of money rationed by the demand or supply side? Asked differently, what is larger - the demand for money or its supply? Since money – and this includes bank money – is so useful, there is always some demand for it by someone.

As a result, the short side is always the supply of money and credit. Banks ration credit even at the best of times in order to ensure that borrowers with sensible investment projects stay among the loan applicants – if rates are raised to equilibrate demand and supply, the resulting interest rate would be so high that only speculative projects would remain and banks’ loan portfolios would be too risky. Link

Probably their best target is entrenched public servants.

How are the non-bank lenders fairing if all anyone wants is platinum borrowers?

Shanghai/Beijing: China's Qingdao city says it will conduct COVID-19 tests for the entire population of more than 9 million people over five days after new cases appeared linked to a hospital treating imported infections.
The city reported six new COVID-19 cases and six asymptomatic cases on October 11. Most of the cases were linked to the Qingdao Chest Hospital.
amazing that you can test an entire population

Australia considers travel bubble with Japan and Singapore, PM confirms
Prime Minister Scott Morrison says the government is in talks with Japan, South Korea and Singapore about future travel arrangements.
My guess will be with NSW
https://www.straitstimes.com/asia/australianz/australia-in-travel-talks-...

Looks like I'm going to SE Asia for Xmas. Thats money I would be spending in NZ over summer if it wasn't for quarantine.

Not being critical of quarantining, but more highlighting the implications of it.

singapore and taiwan are the leaders in battling covid
no 1 rule everyone wears a mask at all times
https://www.moh.gov.sg/covid-19

New Zealand's door has been opened to overseas students again - but only for 250 postgraduate students who will have to pay for their own quarantine.
https://www.nzherald.co.nz/nz/new-zealand-opens-door-for-250-graduate-st...

It's a bit murky. Foreign PHD are not all "fee paying students" Many are employed as tutors (why not New Zealanders getting the taxpayers money) and or as "research assistants" (again New Zealand taxpayers money not going to New Zealanders).
The much cited money stream in the education industry is not what it is made out to be. Lots of smoke and mirrors in the universities.
Further - a young friend at Lincoln (3rd year undergrad) has the experience of getting second rate attention to the foreign students. While the undergrads do pay fees, does it produce for us ???? Seems a nice extra for the staff but really they are selling resources effectively provided whaich have been provided by the taxpayer.