A review of things you need to know before you go home on Wednesday; no retail rate changes, sharply fewer migrants, no PPI inflation, fewer tractors, new ad standards, swap rates rise, NZD slips, & more

A review of things you need to know before you go home on Wednesday; no retail rate changes, sharply fewer migrants, no PPI inflation, fewer tractors, new ad standards, swap rates rise, NZD slips, & more
ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
No changes to report.

TERM DEPOSIT RATE CHANGES
No changes here either.

SUDDEN SHRINKAGE
There were almost 50,000 fewer migrants in NZ at the end of October compared to the end of March. That is equivalent to an almost -2% reduction in our employed labour force. These big drops of course have come since COVID-related border restrictions were introduced. Many key industries have been disadvantaged, especially horticulture.

HIGHER PRICES & HIGHER OUTPUT
Industry analysts are reviewing what today's +1.8% rise in dairy commodity prices means for their farm gate milk price forecasts. Most are impressed there was a rise, especially given the rising milk output in most dairy exporting countries. Chinese demand is the reason prices can rise as supply rises. But all of these analysts are noting that a higher Kiwi dollar will probably temper payout forecasts.

PPI RISES ALMOST VANISH
Producer output prices
rose a modest +1.0% in the September quarter from a year ago, about the same as in the June and March quarters. But producer input costs fell -0.4% over the year. However, electricity and gas prices are still rising at about +5% pa while transport costs are decreasing.

NO FARM COST INFLATION EITHER
On the farm, the rises in expenses (other than buying livestock) has almost evaporated completely.

IN DECLINE
The number of new tractors being registered continues to decline, expending the atrophy to 15 straight months, and following a 128 month string of gains. (The number of tractors registered is a subset of the number sold, because not all tractors need to be registered if they aren'tr driven on public roads.)

UPDATED AD RULES COMING
The FMA has opened consultation on proposed guidance about advertisements for financial products. Advertising is a topic that is frequently brought to the FMA’s attention and is an area of concern due to the influence it may have on investor knowledge and behaviour. They note that advertising which is likely to mislead or confuse, without actually being misleading or confusing, is sufficient to breach their fair dealing provisions. And that omitting key information can also be misleading. Essentially they want to ensure that all ads for financial products are truthful and accurate, and that fees and costs are disclosed.

LOCKDOWN
South Australia is going into a six day lockdown due to its community COVID outbreak.

WAGE GROWTH VANISHED ACROSS THE DITCH
Wage rises in Australia virtually vanished in the September quarter, up just +0.07% pa from the prior quarter. Over the full year it was up +1.4%. That's a record low. The RBA has stated that to generate CPI inflation within its target band, wages will have to grow at a pace of +3.5% to +4%. There is zero indication that is about to happen. (For comparison, in the same September quarter, New Zealand wage growth was +2.7% year-on-year.)

GOLD PRICE DOWN
The price of gold has fallen in Asian trade, now at US$1878/oz and down by another -US$10 from this time yesterday and by -US$2 from the closing New York price earlier. London closed last night at US$1889/oz.

EQUITIES UPDATE
The S&P500 ended its session this morning down -0.5%. The ASX200 is back up another +0.4% higher in mid-day trade. The NZX50 Capital Index is down -0.7% in late trade. The very large Tokyo market has opened down -0.8%, Hong Kong has opened -0.2%, and Shanghai is up +0.3% in early trade today.

EYES ON SWAPS AS BOND YIELDS MOVE UP
Swap rates rose sharply higher again yesterday. In fact, over the past two weeks, the two year swap rate has risen from 0.00% to 0.23% and the three year has risen from 0.01% to 0.27%. These are movements that will have the attention of bank pricing desks. We are awaiting today's wholesale swap rates. If there are material movements today, we will update them here later. The 90 day bank bill rate is down another -1 bp today to 0.25%. The Australian Govt ten year benchmark rate is back down -5 bps to 0.90%. The China Govt ten year bond is up +2 bps at 3.32%. And the New Zealand Govt ten year is down -3 bps at 0.87% and below the the earlier RBNZ-recorded fix of 0.89% (+1 bp). And the US Govt ten year is down -5 bps to 0.85%.

NZD SLIPS
The Kiwi dollar is a little softer today, down to 68.8 USc. Against the Aussie we are a little firmer at 94.5 AUc. Against the euro however we are a little softer at 58 euro cents. That all means our TWI-5 has dipped to 71.6.

BITCOIN RISES AGAIN
Bitcoin is very much firmer than this time yesterday, and at an increasing rate, up +US$955 or +5.7%, and now at US$17,730. The bitcoin rate is charted in the exchange rate set below.

This soil moisture chart is animated here.

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Daily exchange rates

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End of day UTC
Source: CoinDesk

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20 Comments

Producer output prices rose a modest +1.0% in the September quarter from a year ago, about the same as in the June and March quarters. But producer input costs fell -0.4% over the year. However, electricity and gas prices are still rising at about +5% pa while transport costs are decreasing..

Monopoly industry cartels never fail to make us regret laissez-faire economics.
As an aside, RBNZ LSAP operations surpassed $40.0 billion today.

Genuine question: why are NZGB yields up and prices down despite RBNZ's LSAP and bonds being in relatively high demand from the non-public sector (I could be wrong here)?

Low interest rates aren’t a central bank providing accommodation, they are instead its worst nightmare being shoved right back in their face. Well, our worst nightmare because for one thing despite repeated failures, rates that never rise testifying to that failure, central bankers are never held to account. Link

Maybe, The Times They Are A-Changin’ - but I doubt it.

So a few weeks ago a poster here (perhaps J.C.?) opined that Bitcoin was going to start taking off and have another bull run. At the same time Te Kooti was espousing the virtues of leverage in another thread. Naturally I decided to drop $100 on BTC/USD Futures @ 100x leverage. At the time BTC was around US$11,300. Anyway that night at about 2am I got a margin call and my position was liquidated. Perhaps if I hadn't been such a munter I could have actually made some money.

Well that's a real YOLO trade haha. Gotta match the leverage to the product. Housing that govt and rbnz are willing to distort the whole economy to protect you can get away with high leverage. Something like bitcoin however is a much more dangerous beast to leverage.

You managed to lose money being long bitcoin?

Where's my beer Shorething?

x100 means even a 1% move in BTC will liquidate you. It makes a dozen such moves a day, even in a bull market.
Anyway, happy 18.1k folks

Why liquidate - is it not possible to meet the margin call? What are the initial and maintenance margin percentages in this market.

You are forced to liquidate on crypto exchanges. When you enter, you get a liquidation price. Although I think you have options to drain your additional capital if you have any on the exchange.

No musical chairs for greater fools?

How much was your $100 worth before you were liquidated?

If you google search, there was a NZ guy that got up to $13M doing this in 2017 and then lost it all

Naturally I decided to drop $100 on BTC/USD Futures @ 100x leverage.

Margin trading on cryptocurrencies is extremely risky and most punters are probably losing. You should probably only be doing it with profits from BTC (if that's your thing).

RBA needs to go negative cash rate to hit CPI target instead of playing silly buggers with 0.10%. This will ensure those Aussie banks have their software in order for when we go negative this side of the ditch.

Wage rises in Australia virtually vanished in the September quarter, up just +0.07% pa from the prior quarter. Over the full year it was up +1.4%. That's a record low. The RBA has stated that to generate CPI inflation within its target band, wages will have to grow at a pace of +3.5% to +4%.

It’s called “stimulus” over and over, yet there wasn’t any discernable evidence the economy had been stimulated.Link

Graphic evidence

The Fuel Industry Bill seems to be working well in the Wellington region, where the Gull effect has finally landed.

When a small player has the ability to enter a new market and induce a market-wide price drop of 6-7%, it can only be described as being dysfunctional in its prior form.

So the drop in crude had no effect?

NZ Funds has invested in Galaxy Digital (digital asset, cryptocurrency, and blockchain technology industries). Just dipping their toes.

https://www.newswire.ca/news-releases/galaxy-digital-announces-50-millio...

The rates furore in Wellington is very interesting. People like the benfits of immigration (rising house prices, inflation etc.) but now the bill is due...