Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
There are no changes to report today.
TERM DEPOSIT RATE CHANGES
None here either.
ALMOST A FULL RECOVERY
Dairy prices rose +4.3% in todays dairy auction, led by a +5.0% rise in WMP prices. These are the largest gains since July, and since the start of 2020 prices are back about even (-1.2%) in USD terms. Farm gate milk price forecasts will hold based on these results.
BEST NOVEMBER EVER
Barfoot & Thompson's sales were through the roof in November - prices are now at record highs with the average now $1,056,00 and their median now $974,000 in their Auckland market. These are +9.5% and +9.3% annual rises respectively (and all tax-free of course).
LARGEST DROP IN A DECADE
Lower export prices for dairy, meat, and logs in the September 2020 quarter led to the biggest drop in terms of trade since June 2009, Stats NZ reported today. Export prices fell in the September 2020 quarter, down -8.3% from its highest ever level in June 2020. This is the third largest fall in export prices since the series began. Import prices fell -3.7%, resulting in a terms of trade fall of -4.7%.
HIGH DEMAND
Housing NZ has tendered two $50 mln bonds today.This is part of their scheduled seven monthly tenders of $100m each, out to June 2021. Total issuance over that period is expected to be around $1 bln. HNZ bonds are rated Aaa by Moody’s, and AA+ by S&P.
"EMERGENCY" DECLARED
The Government has declared a 'climate emergency' and has directed the public sector to be 'carbon neutral' by 2025. That means they are to convert to EVs, phase out coal boilers and ensure buildings meet green standards.
TRUMP-VIRUS INFECTS BEIJING 'DIPLOMATS'
China is drawing in New Zealand to its crusade against Australia, even if it is only "words" at this stage. China doesn't see the irony of Australia taking action against its troops' human rights crimes after being outed by a free press, neither things Beijing would tolerate itself. In fact, it seems to be using the "outrage' to cover its own Urghur crimes. Self-awareness or irony aren't things wolf-warriors understand.
BOUNCE BACK, BUT STILL BEHIND
The Australian economy bounced back in the Q3 quarter, up +3.3% in the quarter to leave it -3.8% lower over the past twelve months.
"NOT MODERATE OR CONSERVATIVE"
The Auditor General has panned the University of Auckland buying a $5 mln Parnell house for its Vice-Chancellor. It said: "In November 2019, the University of Auckland purchased a house in Parnell in Auckland. The University said the house would be used for accommodation by the Vice-Chancellor, business-related operations, and functions. The house cost about $5 million, and the University entered into a tenancy agreement with the incoming Vice-Chancellor from the start of her five-year term of employment. We were interested in this matter because it seemed an unusual purchase for the University to make. It raised questions about the University’s use of public resources and how it manages sensitive expenditure. The focus of our work was on the University’s actions and decision-making processes. The University did not follow its policy on sensitive expenditure nor its processes for approving capital expenditure. It also has been unable to demonstrate that it has met key principles of managing sensitive expenditure well. For example, the University has not been able to show a justifiable business purpose for purchasing the house or that the expenditure was moderate and conservative."
WARNED
The Commerce Commission has warned BNZ after deciding issues the bank self-reported 'likely breached' responsible lending and disclosure obligations under the Credit Contracts and Consumer Finance Act. A little over 2000 customers may have been affected; all received refunds in 2018. More here.
CLARK OUTLINES NEW LENDING REQUIREMENTS
New Commerce and Consumer Affairs Minister David Clark has outlined changes to lending rules, which he says are to help protect borrowers from unaffordable loans. Clark says before approving a loan, all lenders will need to: Make consistent inquiries about the borrower’s needs and objectives, to help ensure the credit product is suitable, and verify the borrower’s income and expenses to be satisfied that the repayments are unlikely to put the borrower into significant hardship. The new lending requirements come into force on October 1 next year under the Credit Contracts and Consumer Finance (Lender Inquiries into Suitability and Affordability) Amendment Regulations 2020. More information can be found here.
SHORT-TERMISTS
Now three quarters of customer deposits at banks (non-market funding) are either at call or have a term shorter than 3 months. That is the highest level recorded since the RBNZ L3 series started.
GOLD PRICE RECOVERS
The price of gold has risen back today, retracing some of yesterday's loss. In Asian trade it is now at US$1813 and +US$35 higher than yesterday. But it is -US$3 lower than the Wall Street close which was +US$5 higher than the afternoon London fix.
EQUITIES UPDATE
In a reversal of yesterday movements, the NZX50 Capital index is lower in late trade by -0.2% while the ASX200 in early afternoon trade is up +1.2%. Shanghai has opened flat Hong Kong has opened up +0.2% and the large Tokyo exchange is up +1.4% in early trade today. The S&P500 ended its Monday session down -0.6% but that caps a huge monthly gain of +10.5%, and the best month in more than 30 years.
SWAP & BOND RATES MOVE HIGHER
Yesterday swap rates held across the curve. If there are material changes today when the end-of-day swap rates are available, we will update them here. The 90 day bank bill rate is unchanged today at 0.25%. There is a bond selloff going on at the moment with consequent rises in benchmark rates. The Australian Govt ten year benchmark rate is up +7 bps at 0.99%. The China Govt ten year bond is up +2 bps at 3.32%. And the New Zealand Govt ten year is also up, up +6 bps at 0.91% and above the earlier RBNZ-recorded fix of 0.89% (+4 bps). And the US Govt ten year has firmed sharply, up +7 bps to just under 0.92%.
NZD MOVES HIGHER
Against the US Dollar, the Kiwi dollar is now at 70.7 USc and a full +½c rise since this time yesterday. On the cross rates it is up against the Aussie at 95.7 AUc and against the euro we are slightly softer at 58.6 euro cents. That all means our TWI-5 has moved up to 72.9.
BITCOIN VOLITILE BUT VERY HIGH
Bitcoin is now at US$18,845 and -3.2% lower than this time yesterday. In between, it hit US$19,920 on the top side and US$18,151 on the down side. 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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21 Comments
"Now three quarters of customer deposits at banks are either at call or have a term shorter than 3 months".
Wow, what a shocking surprise. Actually, I would like to know the percentage of maturing term deposits that are being converted into new term deposits with duration equal or longer than 1 year. Very low / close to zero, I guess.
I expect that it won't be long before close to 100% of customer deposits will be at call - the speed with which this happens being only constrained by the maturity profile of the existing stock of term deposits.
What is going to happen, once direct funding, at OCR, by the RBNZ stops? How about the future Core Funding Ratio of the commercial banks ?
I tend to agree - and if you follow Dalio's line of thinking, this is why we could be approaching the end of this long debt cycle. People are now speculating with debt. You can throw more money at the economy but we don't have the productive capacity to turn that into output to offset the additional servicing requirements for the new debt....it could become a nasty spiral of hot potato with bad debts.
https://www.nzherald.co.nz/nz/politics/jacinda-ardern-says-nz-not-takin…
Not taking sides! (in China-Australia feud) FFS!
What an incredibly weak leader.
Chinese commentary: Australian Lowlifes – American Empire’s Bitches and Foolish FONOPs
Weak indeed.
Here's more evidence that China's handling of covid was very poor from the start, contrary to the BS that some people spout about it being superior. Thanks China for your gift to the world, covid-19!!!
https://www.nzherald.co.nz/world/covid-19-coronavirus-117-page-official…
Merkel faces reality:
While addressing an online conference of legislators from across the European continent on November 30, German Chancellor Angela Merkel hit out at the concept of exceptionalism. Inevitably, Merkel’s remark has drawn much attention at a time when the Joe Biden’s presidency appears on the horizon.
Merkel came straight to the point, saying Europe must stand up for its values in its dealings with China, but given the country’s sheer population and economic importance, there will always be a trade-off between the European Union’s values and its interests.
Merkel was responding to a demand voiced by some in her audience that she push for a tougher line on human rights violations in China. Merkel said said,
“We must define our own European interests, and this also includes common ground (with China) on foreign policy, on economic policy and digital policy and many more. The challenge over the next years in relation to China lies in finding a good balance between fighting for our values and our interests.”
It is no secret that Germany has developed a robust relationship with China. The official formulation in Berlin is that “German-Chinese relations have become very close-knit and multi-faceted while acquiring ever greater political substance.” Link
Lower export prices for dairy, meat, and logs in the September 2020 quarter led to the biggest drop in terms of trade since June 2009, Stats NZ reported today. Export prices fell in the September 2020 quarter, down -8.3% from its highest ever level in June 2020. This is the third largest fall in export prices since the series began. Import prices fell -3.7%, resulting in a terms of trade fall of -4.7%.
Where are central banks when you need them most?
Meet the Same New Boss
ECB Secretly Made "Dozens" Of Private Calls To Select Investors After Lagarde Announcement Debacles
My own bank is paying me 0.5% on my fast saver or something like that. I don't think anyone puts their money in banks anymore, let alone in a term deposit. The banks get literally all the money they need overseas at practically zero interest rate, so do not have to look after their depositors.
I don't think anyone puts their money in banks anymore, let alone in a term deposit.
Banks: Balance sheet ($m) - S10 - Line 10
by Audaxes | 31st Mar 20, 6:39pm
Low retail interest rates aren't shifting balances out of this type of saving.
Mainly because those swapping savings for another investment vehicle find their way back via the vendor of said investment.
That's why the RBNZ considers bank retail deposits "sticky" in terms of CFR:
The CFR addresses their longer-term funding position by forcing them to hold a certain amount of more ‘sticky’ core funding, e.g., long-term wholesale debt with maturities of more than one year, or retail deposits.
We are trying to put together a special treat for the homeless for Christmas in addition to some great X-mas food. Each will receive a small back pack with toothbrush, toothpaste, deodorant, socks underwear and more. If you want to help search the "Ladies who Cook" page on Facebook.
Thanks
Why is it so hard to help others on the comments section?
https://m.facebook.com/story.php?story_fbid=4139794969381312&id=6305010…
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