A review of things you need to know before you go home on Friday; TD rates fall to record lows, PMI rises, rents fall in Auckland apartment market, swaps unchanged, NZD soft, & more

A review of things you need to know before you go home on Friday; TD rates fall to record lows, PMI rises, rents fall in Auckland apartment market, swaps unchanged, NZD soft, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
ASB cut its 18 month home loan rate by -16 bps to 2.49%.

TERM DEPOSIT RATE CHANGES
ASB cut their TD rate offers to under 1%, the first time any retail bank has fallen this low. More analysis here. TSB also cut TD rates, but not as hard.

IN THE RIGHT DIRECTION
New Zealand's manufacturing sector experienced a pick-up in expansion during September, according to the latest BNZ-BusinessNZ Performance of Manufacturing Index (PMI). New order growth was good and for the first time in 2020, employment wasn't a drag. The expansion is moderate in the perspective of the past few years, and probably no longer just 'bounce-back' related. It is not evidence of a full recovery, but is better than many thought it would be a few months ago.

FOR RATIONAL UNDECIDED VOTERS
With the election tomorrow (and if you haven't advance voted yet) don't forget to check out our popular policy comparisons here before you vote. That way, your research will make your choice a reasoned one. Voting opens at 9am tomorrow and closes at 7pm.

FALLING RENTS
Rents for central Auckland apartments are down by $60 a week over the last four months, as demand falls undermine landlord's positions.

REGIONAL FOCUS
Crown Infrastructure Partners has announced $4.4 bln of "shovel ready" projects. However, they are only currently funded to the tune of $2.6 bln. 44% of the funding is for projects in Auckland (27%), Wellington (5%) and Christchurch (11%), with the regions getting the other 56% of the funding (with 47% of the population).

"WORSE THAN ASBESTOS"
Workers constructing the City Rail Link tunnels may be exposed to erionite, present in sulpha-rich volcanic rock, that is a major health hazard and "worse than asbestos". Health claims far into the future may render the cost of the project much higher than the current vast over-budget project.

A FULL RAISING AT MINIMUM COST
Another corporate got the maximum it was seeking in bond finance, and at the minimum interest rate. Argosy Property raised $125 mln in 'senior secured fixed rate green bonds' at an interest rate of 2.20%.

SCREWED SCRUM
The total value of NZ Government bonds on issue has risen to $132.0 bln as at the end of September. That is up from $82.8 bln a year ago and $88.0 bln in March of this year. So year on year this is up +60%. But because of RBNZ policies (of buying in the secondary market), less than 30% of them are held by foreigners, the lowest proportion since 2002.

VIVIER COMPANIES SET FOR REMOVAL FROM NZ COMPANIES REGISTER
The Registrar of Companies is seeking to remove sister companies Vivier and Company Ltd, Vivier Investments Ltd and Vivier Capital Ltd from the Companies Register. A spokesman for the Ministry of Business, Innovation and Employment, which includes the Companies Office, says this is because the companies no longer have at least one director who lives in New Zealand or Australia, which is required under the Companies Act. The Vivier companies are under investigation by the Ministry of Business, Innovation & Employment's Integrity and Enforcement Team. The spokesman declined to provide an update on this probe, however.

BANK CUSTOMERS GET $1M THROUGH BANKING OMBUDSMAN
The Banking Ombudsman Scheme received 4,582 cases in the June year, down 4.5% year-on-year. A total of 144 disputes were received, down 21%. Banking Ombudsman Nicola Sladden said lending-related complaints again dominated, followed by bank accounts and payment systems. Complaints relating to COVID-19 numbered 225, with most questioning how banks responded to customers’ financial hardship. Annual payments to bank customers topped $1 million, with nine disputes resulting in compensation of more than $30,000. Of this most related to fraud and scams.

THE COSTS OF CHALLENGING BEIJING
After barley, wine, beef and coal, the next trade China is punishing Australia with is apparently going to be cotton, as farmers brace for a Chinese announcement of a 40% tariff imposed by Beijing. The screw is tightening and Canberra has become much more circumspect very recently. Two thirds of all Aussie cotton is exported to China.

THE 'NEW' POLICY CRITERIA
In a speech today, RBA Governor Lowe signalled that their policy responses going forward will be shaped by how Australia responds to COVID-19 more than inflation or employment.

DOESN'T WORK?
Remdesivir, the only antiviral drug authorised for treatment of COVID-19 in the United States, fails to prevent deaths among patients according to a WHO-funded study of more than 11,000 people in 30 countries.

GOLD PRICE UP
The price of gold is now at US$1908 in early Asian trading, and up +US$13 from this time yesterday. And that is -US$2 lower than the closing New York price and +US$16 more than the overnight London afternoon fix.

EQUITIES UPDATE
Wall Street ended its session down -0.2% for the S&P500 earlier today with its earlier decline wound back as the session progressed. Shanghai has opened up +0.1%. Hong Kong is up +0.8%. Tokyo has opened flat. The ASX200 is down -0.2% in early afternoon trade and heading for a weekly +1.6% gain. But the NZX50 Capital Index is down -0.3% in late trade and heading for a weekly +1.4% gain.

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 back up +1 bp at 0.28%. The Australian Govt ten year benchmark rate is unchanged at 0.76%. The China Govt ten year bond is up +3 bps at 3.26%. Meanwhile, the New Zealand Govt ten year is unchanged at 0.54% and the same as the earlier RBNZ-recorded fix of 0.54% (-3 bps). The US Govt ten year is up +1 bp at 0.73%.

NZD SOFT
The Kiwi dollar is marginally softer today at 66 USc and down -½c since this time yesterday. Against the Aussie we are unchanged at 93.1 AUc. Against the euro we have a little softer at 56.3 euro cents. That all means our TWI-5 has slipped -40 bps to 69.4.

BITCOIN FIRM
Bitcoin is up +1.2% today at US$11,520. 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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27 Comments

16
up

The top Aussie imports from China are electrical equipment, machinery, furniture, plastics and metallurgical articles, and exports are almost entirely mining and agricultural commodities.

Who would've thought shifting all your value-added processing operations to a country with such little regard for freedom and human rights, and further increasing your reliance on them to keep buying unprocessed commodities from you would have such repercussions.

A la globalisation!

10
up

....and I reckon Tourism and Education ( Foreign Students - The People Trade, that can be turned off like a tap) will be high up on the Australian Exports list.
So how different are we to Australia? Oh, that right. Just as vulnerable, except we don't have Mining....We'd better be on our best behaviour then.

According to stats nz, we're actually in a much better position - 23% of our exports are to China, vs 48% for Australia.

48% is a staggering statistic.

Indeed. Although at least they are making noises about taking some control back.

https://www.rnz.co.nz/news/world/427333/australian-government-wants-to-b...

Haven’t heard boo about a similar strategy on this side of the ditch.

This is an interesting article about the pushback from Australian citizens. Only 15% have a positive view of China, down from 64% just three years ago. NZ gets a mention also.

https://foreignpolicy.com/2020/10/14/china-australia-money-influence/

What a drop away.
Some of us have been skeptical about China for a number of years...

Alas, a number of our senior politicians of both hews have been captured.... have for years....

Haven't seen as many Labour polis on Chinese boards however. National is truly captured, from the top to the forgotten.

If our Reserve Bank can directly fund the banks to lend, could it help fund the level of return to fixed income earners' at those banks?

Actually the Reserve Bank lending is designed to reduce yields and cost of funds... so point the finger at them. They want people to borrow borrow borrow, so obviously the savers are penalised by this.

Raoul Pal sticks his neck out and says Bitcoin will be worth USD1 mio within 5 years based on the inflows of institutional money.

And just as importantly, he talks about the insolvency phase. I believe this is potentially around the corner for much of NZ.

https://markets.businessinsider.com/currencies/news/bitcoin-hit-million-...

The central bank digital currency activation ('test market') has begun in China. Everyone else will be playing catch up.

https://techcrunch.com/2020/10/11/china-digital-yuan-shenzhen/?guccounter=1

Re falling apartment rents, I think there is two sides to the current housing market, freehold houses on land are in big demand and prices up about 10%, crazy auction bidding again. But the apartment market especially studio and 1 bed is quite weak and not rising,

Run to the hills
Run for your lives

Its going to be great to see how accurate, or not the polls have been.

https://www.rnz.co.nz/news/political/428429/poll-labour-on-46-percent-na...

More Labour sliding, this wasn't part of the narrative out of Stuff for example.

Opportunity lost by Labour.

yes but on those numbers they could still govern alone, because of the wasted votes when it reallocates they will have 61
its a shame national still have no idea about MMP, they are now attacking ACT to steal those votes back, not much point to that

People are getting fed up with promises made and then ignored. Many National voters including myself won't vote for National ever again after the Key years. National need a clean out. I voted for Labour locally because I would rather have a local Mp than a list Mp and it was only my disposable vote and I suspect Labour will win.

Andrew! OMG I agree with you for once. I also won't vote for National ever again after the John Key Look at Me years. I've given Labour one more chance this election. Hope they find some common sense and a bit of steel.

Is Biden in trouble?
https://www.youtube.com/watch?v=87SpFo9qzno

How are the democrats going to handle this?

https://www.youtube.com/watch?v=_fg-q3i4oT4

one way travel bubble opened today, interesting how both sides are reporting this ,
aussie PM is calling them tourists even though 90% of the tickets are one way, and returning aussie from watching the bedisloe?
"We have a few Australians in New Zealand at the moment for the Bledisloe (Cup) on the weekend. There'll be a few Kiwis headed this way for the Bledisloe return matches here in Australia in a few weeks time."
The PM said the arrival of our first international tourists in six months was a "real turning point".
our side looks like a lot of kiwis trying to get back into australia for family or work
https://www.stuff.co.nz/travel/news/300133867/transtasman-bubble-lovers-...

already problems with the travel bubble, kiwis getting caught out by the internal borders
Fourteen New Zealanders have been detained in Melbourne, Australia, after crossing state borders.
The Kiwis arrived in Sydney on Friday as part of the trans-Tasman travel bubble arrangement covering New South Wales and the Northern Territory, according to a report from the Australian Broadcasting Corporation.
The Kiwis then boarded a flight to Melbourne, Victoria, where they were intercepted and detained, according to the Herald Sun.

U.S. Fails To Find Allies For Waging War On China

China cannot be beaten since, unlike the USSR, it is part of the same global society as the US. Look at the sheer spread of the US-China battlefields — global governance, geoeconomics, trade, investment, finance, currency usage, supply chain management, technology standards and systems, scientific collaboration and so on. It speaks of China’s vast global reach. This wasn’t the case with USSR.

Above all, China has no messianic ideology to export and prefers to set a model by virtue of its performance. It is not in the business of instigating regime change in other countries, and actually gets along rather well with democracies.
...
The US created the ASEAN but today no Asian security partner wants to choose between America and China. The ASEAN cannot be repurposed to form a coalition to counter China. Thus, no claimant against China in the South China Sea is prepared to join the US in its naval fracas with China.

China has resources, including money, to offer its partners, whereas, the US budget is in chronic deficit and even routine government operations must now be funded with debt. It needs to find resources needed to keep its human and physical infrastructure at levels competitive with those of China and other great economic powers.

Why on earth should India get entangled in this messy affair whose climax is a foregone conclusion?

...
China has no need to fight wars when it is already winning.

Yip just sit back and watch America self destruct.

Question becomes will America become more aggressive externally if/when they realise they’re losing their dominant position? Or will they just become more and more aggressive with one another internally.

Shout out to the poor old part time minister of health looks like he covered in his own sauce of truth, full of it.

https://www.newshub.co.nz/home/new-zealand/2020/10/coronavirus-nurses-sa...

But Health Minister Chris Hipkins told Newshub he's been advised that "all shifts are sufficiently and safely staffed".

"That is not true," the nurse said. "I spoke to three different friends last night, and they are still telling there are severe staffing shortages."

- and he's got them a pay cut.
From $55 to $ 38 an hour.
The guys a genius.

its because the DHB's has now taken over the running of the isolation hotels from the ministry of health, so the nurses went from contractors earning extra to full time employees same as any workforce
i personally think the idea of a border force and using army bases away from major centers is a much better way, i see australia are now taking up that idea
https://www.abc.net.au/news/2020-10-14/nt-howard-springs-australian-repa...
https://www.abc.net.au/news/2020-10-16/nt-howard-springs-international-c...

You missed that the BNZ increased its TD rates from 1% to 1.05% today.
Can't have been getting in any new money in at 1%.