What happened Wednesday

A review of things you need to know before you go home on Wednesday; ANZ makes many cuts, public sector hiring jumps, Treasury has wildly popular syndication, swaps low, NZD firmer, & more

28th Oct 20, 3:59pm by David Chaston

ID 22702269 © Daniaphoto | Dreamstime.com

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
ANZ has trimmed some fixed mortgage rates to match their main rivals. Update: The Cooperative Bank has trimmed its 6 month and one year fixed rates.

TERM DEPOSIT RATE CHANGES
ANZ has cut all its term deposit rates and now all offers from them are now below 1.00%. Update: The Cooperative Bank has cut many rates, mainly 1yr and longer.

PUBLIC SECTOR HIRING JUMPS
Our labour market is holding up better than analysts anticipated. Infometrics says: "Filled job numbers continued to strengthen in September, with a 0.9% pa rise. Public sector jobs drove this gain, with public administration and safety roles up 8.2% pa. This rise equates to just over 11,000 additional jobs during the last year, with more than 4,500 additional roles in the last month!"

HUGE DEMAND
The Treasury has today announced that NZ$4.0 bln of nominal 15 May 2028 New Zealand Government Bonds have been issued via syndication. The bonds, which carry a coupon of 0.25%, were issued at a spread of 13 basis points over the 15 April 2027 nominal bond, at a yield to maturity of 0.305%. More than $18 bln was offered for this event, a coverage ratio exceeding 4.5x and leaving $14 bln unsatisfied. More here.

OPPORTUNISM
In Australia, their CPI inflation was up +0.7% in the year to September. This quarter it rose +1.6% not quite cancelling out Q2's -1.9% drop. Interestingly, retailers took advantage of strong consumer demand increasing prices for "furnishings, household equipment and services" by a massive +12% in the quarter and recovering their competitive cuts in prior quarters - the "Harvey Norman surge" building back margins by taking advantage of consumer stress. The ending of free childcare over the pandemic onset also raised the CPI rate.

MORE BIG WRITEDOWNS
In case you have missed them, ANZ has joined Westpac and NAB in announcing more very large "notable items" that will eat into group profit results. Between the three, that adds up to -AU$2.2 bln as an after-tax profit hit, being -AU$528 mln for ANZ, -AU$450 mln for NAB and -AU$1.22 bln for Westpac. Notably, CBA has not yet made such an advance declaration, but they are on a June balance date. The other three report soon with ANZ to do so Thursday.

REGIONAL BANKING HUB TRIAL STARTING IN NOVEMBER
The New Zealand Bankers' Association says a Covid-19 delayed trial of regional banking hubs, testing the demand for basic banking services in regional communities, launches in November. The trial includes ANZ, ASB, BNZ, Kiwibank, TSB and Westpac. It will run in four regional centres being Twizel, Martinborough, Stoke and Opunake, based around a Smart ATM that provides for deposits and withdrawals. Other basic transactions will be available on tablets and phones, with staff to assist. As previously reported by interest.co.nz, the year-long trial was set to begin in May but was delayed by Covid-19.

11/11 STARTS
In China, the online frenzy that is "Singles Day" (Nov 11, or "double 11") has started already with hugely popular and aggressive pre-sales. It is a retailing event that will show up in their Q4 GDP results. It is a sales frenzy that will be joined by 100s of millions of people, clog their distribution and logistics networks, and involve vast spending surges. Black Friday is but a shadow of Double-11. It is covered here because it is an economic event of global significance.

LOOKING FORWARD TO THE FUTURE
In South Korea, consumer confidence jumped the most since the GFC in a very positive sign for their economy as it makes its pandemic recovery.

GOLD PRICE STABLE
The price of gold is now at US$1,905 in early Asian trading, and unchanged from this time yesterday. It is also -US$3 lower than the closing New York price earlier today, and unchanged from the afternoon fix in London.

EQUITIES UPDATE
Wall Street ended its trading session today down -0.3%, with a small decline building late in the day. Going its own way, the NZX50 Capital Index is up +0.5% in late trade today while the ASX200 is flat in early afternoon trade. Shanghai has opened flat, Hong Kong is down -0.3% and Tokyo is also down -0.3%, all in early trade.

SWAPS VERY LOW, BONDS UNCHANGED
Yesterday, the two year swap rate fell to +0.0025% equaling its record low. If there is significant movement today, we will update this when the data is available. The 90 day bank bill rate is unchanged at 0.27%. The Australian Govt ten year benchmark rate is down -3 bps at 0.78%. The China Govt ten year bond is also down -3 bps at 3.19%. And the New Zealand Govt ten year is down -5 bps at 0.51% and well below the earlier RBNZ-recorded fix of 0.55% (-2 bps). The US Govt ten year is down another -3 bps from this time yesterday at just under 0.77%.

NZD FIRMER
The Kiwi dollar is holding firm at 67 USc and up slightly from when we checked this time yesterday. Against the Aussie we are firm at 94 AUc. Against the euro we are up strongly at 56.9 euro cents. That all means our TWI-5 is now just above 70.2.

BITCOIN UP YET AGAIN
Bitcoin is up +4.7% from this time yesterday at US$13,696. 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 ».

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

28 Comments

by J.C. | 28th Oct 20, 4:20pm 1603855217

Rat poison now up 27% in past month in AUD. Past 3 months, 34%. Past 6 months, 58%. YTD, 90%. And past 12 months, 40%.

It's like a good streak on the pokies.

by lonewolfnz | 28th Oct 20, 4:32pm 1603855943

We are very close to the ATH for 2019. And even then we never closed a day above 13k. Hold above 13.2k or so for 3 more days, and it will be the highest monthly close in history.

Meanwhile, Microstrategy has made more money from putting some of their cash reserves in btc ($100M) than their actual operating net profits in 3 years ($83M)

by JimboJones | 28th Oct 20, 5:56pm 1603861007

It’s a good year if it’s worth as much as last year?

by frazz | 28th Oct 20, 4:49pm 1603856969

Demand growing for BTC as negative interest rates approach..looks like the naysayers on this site are getting nervous.

by JimboJones | 28th Oct 20, 6:00pm 1603861224

Must admit I’m a Bitcoin naysayer but if I had money to park somewhere I’d be tempted right now. Even if it’s just a diversification. There has to be a chance of hyperinflation in fiat currency at some stage doesn’t there? If not may as well keep the printers on and splash it around forever.

by Ezy | 28th Oct 20, 6:42pm 1603863734

You're in good company. JP Morgan, the world's largest investment bank went from recommending holding btc as a hedge in Feb, to outright bullishness in Oct. You can guarantee they're buying it direct from miners OTC outside of exchanges.

by JimboJones | 28th Oct 20, 7:35pm 1603866939

The more people see the need to diversify the more it will go up, potentially exponentially. It seems like a sure thing right now (although it will probably crash back down at some stage)

by Ezy | 28th Oct 20, 8:05pm 1603868746

Indeed it will. It is a fractal after all, and follows the golden mean. The most natural thing in world.

The saying goes - if you can't handle Bitcoin fluctuating at 1k, you definitely can't handle it fluctuating at 10k.

Hodl.

by Ezy | 28th Oct 20, 5:18pm 1603858715

"Bitcoin is the best-performing mainstream asset in 2020, next to stocks, gold, and anything else. But according to new data, owning the top crypto asset by market cap at any point in nearly 99% of its existence would have resulted in profitability."

https://bitcoinist.com/nearly-99-of-bitcoin-ownership-has-been-profitab…

Hodl.

by Clementé | 28th Oct 20, 5:34pm 1603859676

I really hope the connection of rat testing and movement to human trials prove false as im consuming rat poison like crazy at the moment.
If youre a millennial where else would you put your money ?
Cant buy a house, stock markets at ATH, bonds at 0.5%, term deposits @ 0.9%, money getting printed to infinity - what else have you got left?
This is the changing of the guard from one generation to another.

by brisket | 28th Oct 20, 9:16pm 1603872967

I see (and feel!) the temptation; but none of those things actually raise the value of crypto, they just make it look better by comparison. I believe that Bitcoin will increase in value; I also believe that its value will reach 0 in ten weeks , or ten months, or ten years... There’s money to be made before then, but it will take great timing or a lot of luck.

by Clementé | 28th Oct 20, 9:41pm 1603874465

Investment funds will invest into bitcoin in a big way in the future.
There is a limited amount - 21 million and that cannot change.
You know how many existed yesterday, you know how many exist today and you have a pretty accurate to a very small decimal place how many will exist tomorrow... at times of turmoil like we are experiencing right now that is a very attractive proposition for institutes whose business it is to preserve their clients wealth. There is a massive change of attitude by the investment banks right now, and thats not you or I throwing in a couple of grand, this will be a purchase of a billion at a time. They are also not buying them to hold for a week, they will sit as a small percentage of portfolios for a long time driving down volatility.
It will become a trillion dollar market and thats when the rest will pile in, 300 million new potential customers added in the last week because you can buy bitcoin with your paypal account direct in the application.
reddit/bitcoin has risen from 1million subscribers in jan this year to 1.7million subscribers today... in percentage terms thats how many more people are getting interested...
Its all getting very interesting.

by Andrewj | 28th Oct 20, 4:23pm 1603855383

interview with Bobulinski
https://www.youtube.com/watch?v=2zLfBRgeFFo

by bw | 28th Oct 20, 5:13pm 1603858408

Regional Banking Hub. I know, it's just the Banks sharing an ATM outlet, isn't it? Or will the banks end up as one retail face of the Whole (aren't they already?!) and just hand the keys into the RBNZ at some stage. After all, Adrians' Boys are going to own the whole market eventually, as their counterparts do elsewhere. Maybe it will start off being called a Bad Bank after the next 'unforeseen' circumstance....sounds familiar!

by StuckAtHome | 28th Oct 20, 5:38pm 1603859902

Thank god the public sector are hiring. Oh hang on, they don't produce anything!

by DIYman | 28th Oct 20, 6:05pm 1603861555

They produce a lot of hot air, and keep the average income in the capital the highest in the country, Look at the numbers, 1100 jobs a week, no wonder wellington real estate is going silly

by J.C. | 28th Oct 20, 6:24pm 1603862645

Many of the public sector top brass think they could command high remuneration in the private sector. I think they overestimate their self worth.

by DIYman | 28th Oct 20, 6:39pm 1603863588

Those that are worth more transition to the private sector very easily, but most hang around and around and around, and somehow keep their jobs. The old "Gliding on" days are back '

by J.C. | 28th Oct 20, 7:00pm 1603864824

Those that are worth more transition to the private sector very easily

Any specific examples? At the highest level, Lord Key and Bill English don't count. Tremain heads up Bank of China.

by labcoat | 28th Oct 20, 6:36pm 1603863404

They also produce various impediments to actual production...

by Uninterested | 28th Oct 20, 7:18pm 1603865920

Yep and with Winnie not grabbing the helm when the ship veers off course, wokeness will run us aground...
Although to be fair, he wasn't on deck much of the time....

by JimboJones | 28th Oct 20, 7:31pm 1603866718

And not enough impediments at times. Companies allowed to screw the local or global environment to make something almost worthless, allowed to produce crap food and advertise it to children, allowed to pack everything in plastic because it’s a bit cheaper, allowed to give stupid interest loans to people who can’t pay it back. But if you want to do something like build a house, boy do they have rules about that!

by redcows1 | 28th Oct 20, 8:14pm 1603869249

Oh come on jumbo that's not how the message goes. Everyone knows that only those in the private sector work hard and produce stuff. Next you'll be saying corporate lawyers and accountants and middle managers are superfluous and add absolutely nothing to the productive economy. Shame on you.
Reality is big corporate absolutely love regulation and those they can lobby about it because it weeds out the SME who can't afford to play their game.

by JimboJones | 28th Oct 20, 8:20pm 1603869634

Jumbo? That’s what the missus calls me!

by Ezy | 28th Oct 20, 8:09pm 1603868952

Democracy has always been an expensive pursuit. 20% of the populace suck up 80% of the resource, and it's compulsory to cater to 100%. The real test is whether your government is democratic or not though.

by powerdownkiwi | 28th Oct 20, 9:34pm 1603874041

Capitalism was the expensive pursuit.

What voting regime it was run under, doesn't matter a damn.

What it did was spent-down the planet. You know, the one we die without, sort of thing. And capitalism did that all on it's own, in one 200-year frenzy. Which silly people called 'normal'. But the growth part is over, th debt-ijection just blew silly bubbles and the distortions are now grotesque.

What is really sad, is to see the number of comments here, after all this time, not aware at all. Still thinking ? about 'return' and 'investment' this late in the trajectory. Do zero interest-rates not tell these folk anything?

by Ezy | 29th Oct 20, 6:41am 1603906895

Capitalism is a great idea about letting free markets naturally select winners, but put humans into it and it leads to neo-liberalism. Socialism is a great idea about sharing the wealth equally, but put humans in it and it leads to communism. As long as you've got family, shelter and food, money is just a tool for outworking whatever ideology you subscribe to.

Don’t hoard treasure down here where it gets eaten by moths and corroded by rust or—worse!—stolen by burglars. Stockpile treasure in heaven, where it’s safe from moth and rust and burglars. It’s obvious, isn’t it? The place where your treasure is, is the place you will most want to be, and end up being.

by Galloleous | 29th Oct 20, 7:03am 1603908234

https://medium.com/original-crypto-guy/as-bitcoins-price-hits-a-new-all…

Bitcoins is close to or above it's all time highs for almost a dozen counties due to the failing of their fiat currencies including Argentina and Turkey.
"It means that 13.8% of the world’s currencies have performed worse than bitcoin (or are just about to) and 953,321,799 people (or 12.20% of the entire population of the planet) would have been able to better preserve their wealth even if they had bought bitcoin at, or very close to, the top in dollar terms "