A review of things you need to know before you go home on Thursday; more retail rates trimmed, Fonterra ups milk price, Govt bonds popular, documenting climate change, swaps under pressure, NZD stable, & more

A review of things you need to know before you go home on Thursday; more retail rates trimmed, Fonterra ups milk price, Govt bonds popular, documenting climate change, swaps under pressure, NZD stable, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
Co-op Bank cut their four and five year home loan rates both to below 3%.

TERM DEPOSIT RATE CHANGES
The Cooperative Bank trimmed rates today, as did Mutual Credit Finance.

UPPING THE $ FLOWS
Fonterra surprised markets today by announcing a +40c rise in their milk price forecast for the new season. At this new price, milk payments would exceed $10 bln to farmer-shareholders.

MORE CHEAP MONEY
Treasury held yet another bond tender today, this time for $600 mln. They were bid $2.4 bln, so $1.8 bln was ready and went unsatisfied this time. The April 2023 tranche was the most popular and achieved a negative interest rate yield of -0.01% per year. The April 2029 tranche was also over bid but at an annual yield of 0.40%. This time the April 2033 tranche was the most popular with the $100 mln on offer attracting $636 mln in bids and was won at an average annual yield of 0.69%.

HIGGINS GETS SMEATON'S JOB PERMANENTLY
Suncorp has today announced the appointment of internal candidate Jimmy Higgins to the role of chief executive in New Zealand, effective today. Higgins has a background as an auditor. He replaces Paul Smeaton who moved to the Suncorp head office after a management shakeup there that forced out the Suncorp group CEO.

DOCUMENTING CHANGE AT THE GRANULAR LEVEL
The MofE and Statistics NZ jointly reported an analysis of temperature data from 30 sites around New Zealand that shows our climate is warming. Every site recorded increasing average temperatures in winter. More extreme weather events are also starting to be seen - extreme rainfall, heatwave days, and dry spell days increased and frost days decreased at some places. Changes to seasons are becoming apparent, they say. Glacier ice volumes have also decreased and a rise in sea levels have been recorded. Significant changes to New Zealand’s climate are documented in their report, and they mirror the changes being observed around the world.

JOBS PRESSURE
The number of jobs in Australia fell in September by a bit less than -30,000 and -20,000 of that loss was full-time employment. The Victorian lockdown caused this retreat. Their national jobless rate is now up to 6.9% and their participation rate fell to 64.8%. Underemployment is now at 11.4% there. Interestingly, the unemployment rate in Victoria is still much lower than the national average, coming in at 6.7%. NSW is now at 7.2% and Queensland is now 7.7%.

LOCKED IN NOW?
The RBA has raised expectations of a November rate cut, possibly from 0.25% to 0.10%.

HIGHER INFLATION EXPECTED
Consumer inflation expectations rose in Australia in the latest survey, now up 3.4% from 3.1% last time the survey was run.

GOLD PRICE LOWER
The price of gold is now at US$1895 in early Asian trading, and down -US$5 from this time yesterday. And that is -US$6 lower than the closing New York price and -US$15 lower than the overnight London afternoon fix.

EQUITIES UPDATE
Wall Street ended its session down -0.7% for the S&P500 earlier today. Shanghai has opened up +0.2%. Hong Kong is also down another -0.6%. Tokyo is down another -0.3% and adding to yesterday's drop. The ASX200 is up +0.7% in early afternoon trade. But the NZX50 Capital Index is down -0.5% in late trade and giving up some of yesterday's good gain.

SWAP & BOND RATES UNDER PRESSURE
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 at 0.27%. The Australian Govt ten year benchmark rate is down sharply, down -9 bps at 0.76%. The China Govt ten year bond is up +1 bp at 3.23%. Meanwhile, the New Zealand Govt ten year is down -4 bps at 0.54% and -3 bps lower than the earlier RBNZ-recorded fix of 0.57% (-1 bp). The US Govt ten year is down another -2 bps at 0.72%.

NZD STABLE
The Kiwi dollar is marginally softer today at 66.5 USc and extending its flat run. Against the Aussie we are up again and now at 93.2 AUc. Against the euro we have stayed firm at 56.6 euro cents. That all means our TWI-5 has held at 69.8.

BITCOIN UNCHANGED
Bitcoin is little-changed at US$11,389. 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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24 Comments

12
up

Hi everyone,
I have just written to Adrian Orr and asked him to read David Hargreaves article "Stimulating a housing bubble" https://www.interest.co.nz/opinion/107532/much-huge-financial-stimulus-b... as well as some of the comments. I invite you all to write a similar email, simply asking him to read David's article. Maybe, if he gets enough emails from us all, he will consider some of the points raised.
His email address is: adrian.orr@rbnz.co.nz.

Please let us know if you get a reply.

It's govt.nz actually

You might have let us know in advance! That way we could have said what we really think :)
(I thought I was quite restrained. I didn't even get edited in that particular conversation)

D Chaston confirmed that the RBNZ gets all of Interest's articles but he also stated an email campaign may not be a bad idea.

Who has written the email?

I wrote to RBNZ today as well, the gist of it being if house prices in Central Auck are 12x median household income, when will they be satisfied with their asset pumping policies...20x? 30x? Are they trying to force an exodus of young people from NZ?

Double post

So the RBA is contemplating cutting its Cash Rate by 60% - from 0.25% to 0.1%. What on Earth do they expect that to do? Now if it was 60% from 10% to 4%, that's got a real bite to it! But what do they expect a 0.15% reduction in the Cash Rate to 'stimulate' that 0.25% isn't already doing?

Got to squeeze every last bit of blood out of that stone bw. As Japan and Europe have demonstrated, every little bit counts :-)

It's a cut which is more than in half

It should set off another dash to captilise the associated discounted asset cash flows, if they manage to retain current expectations. Anything less, caused by the very reason the RBA is cutting the official interest rate would be catastrophic.

"..extreme rainfall, heatwave days, and dry spell days increased and frost days decreased at some places...."
Even in this tiny comment, see how climate change people manipulate data.
I'm talking about that last comment in particular. "At some places..."
What about other places??????
Experienced a cyclone Bola recently?

Just as well we have fossil fuel lobbyists to let us know the truth!

The link is right there, if you're being honest with your objection then just follow it and report back. If you object to this website's interpretation then provide your own. I had a look through - yes the data is not fully consistent as weather patterns have changed, but the overall picture is extremely clear, especially on temperature.

Institutional buying (mainly hedge funds) of Bitcoin from Grayscale has gone nuclear. $1 bio in Q3.

https://www.financemagnates.com/cryptocurrency/news/investments-in-grays...

I’d like to know if any reserve banks are quietly accumulating. The ‘Bitcoin Standard’ predicts that as being the tipping point. The international Covid response has accelerated many of the book’s predictions, central banks are performing exactly as promised. If correct, fiat currency collapses are coming.

Look at the bigger picture: Globally falling interest rates are effectively pushing interest rates to 0% to be replaced by digital government run currencies as a reset. More control for Governments, China will be leading the way on this new control.

Baby Trump throwing his toys again. Forbs article: ‘I’m Not Happy’: Trump Noncommittal On Keeping Barr After Failure To Turn Up October Surprise. "Trump publicly expressed dissatisfaction with Attorney General William Barr and refused to say whether he would keep him if he wins a second term following Barr’s failure to make public any evidence of the widespread wrongdoing by his Democratic opponents that Trump has long alleged." https://www.forbes.com/sites/andrewsolender/2020/10/14/im-not-happy-trum...

Counting cost, there is a bit for the lockdown cost benefit analysis

https://www.rnz.co.nz/news/national/428405/covid-19-biggest-drop-in-repo...

From this morning
https://youtu.be/552u7yqT-YM
The miss making of resilience in communities.

BBC Covid reinfection: Man gets Covid twice and second hit 'more severe'. "A man in the United States has caught Covid twice, with the second infection becoming far more dangerous than the first, doctors report. The 25-year-old needed hospital treatment after his lungs could not get enough oxygen into his body." https://www.bbc.com/news/health-54512034

CJ. Both important, however not the same importance.
The well being, health and education of our young people is more important, of more value than the exame you provide.

for those arguing about we only need good contract tracing and no restrictions, only takes one to cause a big problem
COVID-positive people deliberately or unknowingly concealing information from contact tracers are compromising operations to contain outbreaks, NSW Health Minister Brad Hazzard says.
NSW recorded six new locally acquired coronavirus cases in the 24 hours to 8pm on Wednesday, including a man in south-east Sydney with no known links to any of Sydney's active outbreaks, and three linked to the growing Lakemba GP cluster – its source still a mystery.
https://www.theage.com.au/national/nsw/health-minister-urges-covid-19-pa...

Extra percentage for Green is for wealth tax but after winning will compromise / bargain it.

Wealth Tax is no good and Greens instead of bargaining it for position should bargain for some form of tax / capital gain tax on housing, as will help them to build more vote base as most not in favour of CGT for personal vested interest are not Green supporters so Greens have nothing to lose but win.

Also JA may get an opportunity to introduce some tax on housing or more measures to impliment BLT like making it mandatory for sellers to declare if they own any other property be it individually, jointly or under trust just like buyers have to sign a OIA form.

Harry Dent ranting in fine form on the DFA site today with Martin North:
https://youtu.be/wBChBchAqIE

At 12.50: "Bubbles never ever do anything but burst...There has not been one soft landing in any bubble of this magnitude in all of history...".
At 20.20: He thinks US bubble will burst first half next year. He hopes Trump wins so he gets blamed for the bubble he's inherited and inflated even more. Thinks Oz real estate will drop 40-50%.