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
BNZ cut its TD and term PIE rates today, all to near lowest levels for any bank. But these 'costs' are still ~50 bps higher than what the RBNZ is offering banks for FLP money.
A SELLERS MARKET
The housing market is booming as prices and sales volumes set new records in November according to the latest REINZ report. The national median house price increased by $24,000 last month and is now at $749,000 and for Auckland it is up to $1,030,000. The only places where median prices fell in November from October were Northland, Gisborne, West Coast and Otago.
'YES', BUT ON OUR TERMS
The RBNZ has replied to the Finance Minister's 'request' to add house prices into their policy mix considerations. They have asked for debt-to-income ratio tools (again) and oppose change to the monetary policy remit.
'A STRIDE FORWARD'
New Zealand's manufacturing sector experienced a pick-up in expansion during November, according to the latest BNZ-BusinessNZ Performance of Manufacturing Index. Although new orders slipped slightly, the other measures rose strongly and the overall index shows a healthy but not excessive expansion underway. However the Wellington and Canterbury expansions are particularly positive.
FOOD PRICE DISRUPTION
Food prices increased +2.6% in the year ended November 2020, (but fell from October). But that rise is driven by fruit and vegetable prices which rose almost +10% in the same period. However, some fruit prices have collapsed recently as growers don't have the staff to harvest, and product that is overripe is rushed to local markets causing oversupply.
BNZ WON'T REPLACE DEPARTING EXECUTIVE
Gerald Mackenzie, BNZ's executive for transformation and strategy, will leave the bank on December 18 and isn't being replaced. A BNZ spokesman says with the bank's strategy set, and focus on delivery, "we can achieve our objectives more efficiently by absorbing strategy and transformation into other teams within our business."
NEW LONG WAITING LISTS
Toyota is saying that although orders for new Toyota vehicles are growing due to consumer buying confidence and new model launches, delivery times are being delayed by a range of supply issues overseas. Delivery of certain models are delayed by an average of six weeks due to production and international shipping constraints. Parts deliveries are also delayed. That means more than 70% of the vehicles that arrive have been pre-sold. Dealer have turned into order-takers so price competition has vanished.
RENTS SOFT
Rents are falling everywhere except in the lower half of the North Island. Updated data for November from Statistics NZ. Rents have fallen in Auckland for five of the past eight months. In contrast, they have fallen in only two of the past eight months, and not al all in the rest of the North Island. In fact, in regional North Island since 2016, rent increases have averaged +5.6% pa.
UGLY TRIAGE
In Sweden, after making an emergency u-turn from their disaster herd-immunity strategy, things have turned gruesome. Stockholm was reported today to be running ICUs at 99% capacity. Now, 80-89 year olds are not being admitted to ICUs any more. These folks are just denied care and are being left to fend for themselves. They have run out of options given the surge in serious cases, and the age limit is likely to be lowered progessively to ration ICU bed availability.
GOLD PRICE HOLDS
In Asian trade, the price of gold has risen +US$2 from the ending New York price and is now at US$1838/oz, the same as at this time yesterday. The New York price ended at US$1836/oz and was -US$8 lower than the afternoon London fix.
REGULATOR POINTS OUT THE OBVIOUS CASINO RISKS
In Australia, AML regulator AUSTRAC says Australian casinos have been exploited or infiltrated by criminals and even foreign agents.
EQUITIES UPDATE
Wall Street ended its session today down by -0.1% and adding to weakness earlier in the week. The ASX200 is trading down -0.3% in mid-day trade and heading for a +3.8% weekly gain. The NZX50 Capital Index is up +0.2 near the end of today's session and heading for a +2.1% gain for the week. Meanwhile, the very large Tokyo market has opened today down -0.5% in early trade. Hong Kong has opened up +0.5%, while Shanghai has opened flat in early trade today.
SWAP & BOND RATES SOFT
We don't have todays swap rate movements yet. If there are material changes when the end-of-day swap rates are available, we will update them here. The 90 day bank bill rate is unchanged today at 0.26%. The Australian Govt ten year benchmark rate is down -2 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 down -5 bps at 0.88% and marginally below the earlier RBNZ-recorded fix of 0.89% (-2 bps). And the US Govt ten year is down -2 bps today to 0.91%.
NZD RISING
Against the US Dollar, the Kiwi dollar is up sharply from this time yesterday and now at 71 USc, a gain of morte than +¾c. But on the cross rates we are down further against the Aussie to just under 94 AUc and against the euro we are a little firmer at 58.4 euro cents. That all means our TWI-5 has risen to 72.8.
BITCOIN DOWN
Bitcoin is now at US$17,972 and down -2.7% from this time yesterday. 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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57 Comments
How about a word from the young on this, who are also affected. I've a highly astute cousin once removed, in her 30's. She said to me the only way to solve Covid is for fat wrinkly grey people to change their lifesyle (with the implication they won't, and Covid won't be solved).
Spoke with a friend in Sweden last week, she informed me it wasn't a govt decision per se. The Swedish constitution or Basic Law or whatever they have does not allow the government to shut down society, regardless of what comes. It would be illegal and unenforceable. Very tragic to read this.
I'm not hearing about the price of anything going down (except rent mentioned above)
I'm hearing heaps about the price of things going up, or discounts ending.
Also hearing heaps about things that will cause prices to go up (lack of supply due to POA being useless being a key one).
We're running a factory to make the ink for the money we're printing.
I can't shake the feeling 2021 will be the year inflation kicks in, and the RBNZ is hamstrung between it's dual mandates...
Both the FED and Aus have now come out saying they are going to be flexible on their inflation targets when (if?) it arrives. Expect the RBNZ to follow suit. I expect if inflation actually arrives, they will let it run at 5-10% a year without changing interest rates for a few years to try and inflate away debt. Wages should follow. Of course if we open the flood gates on immigration to cheap labour countries, wages will not increase significantly.
On another thread I have rather perversely (for me) suggested investors may be our friend rather than our enemy.
A lot of the new townhouses in Auckland are being bought by investors and there's big supply coming on line.
Without investors as well as FHBs buying off plans these developments won't keep happening.
I mean affordability for .middle income FHBs has long since gone, so maybe the focus should be on stabilising rents and improving choice and supply.
Yes, these modern developments in Auckland where they take 1 place and turn it into 4-15 is interesting, tons in progress, feels like only the first few batches have hit market so far.
Might become a drag on the overall market, or become a soft niche like shoebox apartments. Looking forward to seeing it play out.
Check out the rise in rents in Manukau;
https://www.interest.co.nz/charts/real-estate/median-rents-auckland
From a $550 median in Oct 2019 to a $590 median in Oct 2020. That is a 7.3% increase yoy. It is the lower quartile of households that are getting hit hard and that seems to be the case nationally - i.e., as stats reports regional NZ has had the highest rental price rises.
Which is why we need #rentcontrolnow - otherwise we face much higher welfare and accommodation costs.
This is a cut and paste from what a FB friend has posted, doesn't bode well whatever the outcome. You can guess his slant:
Fireworks in the US Supreme Court!
Not only have the four defendant states (Pennsylvania, Georgia, Michigan & Wisconsin) filed their responses, 22 other states and territories have also filed briefs in support of the defendant states (Washington DC, California, Colorado, Connecticut, Delaware, Guam, Hawaii, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, New York, North Carolina, Oregon, Rhode Island, Vermont, Virginia, US Virgin Islands and Washington).
That puts these 26 states & territories up against the 18 states (including Texas) that support this case.
Meanwhile, Missouri, Arkansas, Louisiana, Mississippi, South Carolina and Utah have formally joined Texas in suit (not just as amicus briefs).
A whole bunch of other individuals and groups are also filing briefs and want to be heard on this case.
And this also:
I've read Pennsylvania's response. It has a bunch of technical arguments asserting the US Supreme Court shouldn't even look at the case. It also denies any widespread electoral fraud occurred and cites as evidence of that proposition a series of court cases In Pennsylvania.
As far as I'm aware there hasn't been any significant evidential hearings of electoral fraud in Pennsylvania. Rather cases have been thrown out on technicalities (eg standing or the plaintiffs or being too early / too late to bring claims).
To resolve this the Supreme Court may have to do what it prefers to avoid: hear evidence of fraud. They usually prefer to resolve questions of law rather than questions of fact. That isn't out of the question in cases between states.
I've also read the brief by the Defendants' 22 "friendly states".
They basically argue that:
1. individual states can run their elections as they see fit and their courts can adjudicate as they please;
2. they denied that widespread fraud occurred as a result of "common sense" changes to the electoral rules in those states.
The problem I see with the first argument is that is fine in most cases, except where their conduct affects the outcome of the Presidential Election (which affects all the other states).
The problem I see with the second argument is how are these other states in a position to assert that widespread fraud didn't occur in the Defendant States?
scarfie, interesting view.
Here is M Malice & M Cernovich.
https://youtu.be/4aI-ftsbkKU
Pragmatic stuff
2. they denied that widespread fraud occurred as a result of "common sense" changes to the electoral rules in those states.
As I understand Texas' case - the changes may have been "common sense" but the question is were they carried out lawfully - in other words did the state legislatures in question lawfully amend/change their election procedures before taking these "common sense" approaches to absentee (i.e., mail in) ballots?
It's a bit like the first of the NZ lockdowns that was challenged here - they didn't get all their ducks-in-row lawfully before taking the action.
I'm not surprised the Defendant states used the word "common sense" - I think they know they put the cart before the horse.
It will be fascinating.
The role of the media . Much has been written , almost relentlessly of the 2020 'booming' housing market. 2019 saw the third lowest sales volumes in thirty years, only surpassing 2008 and 2010 in total sales. In 2020, the total number of residential sales across New Zealand as noted by REINZ is only 4854 ahead of comparable 2019 sales, almost exclusively driven by the Auckland region. ,a portion of those sales, by necessity have been driven by Covid issues .These are unadjusted numbers for any increase in housing stock. When compared to housing stock the turnover ( sales) is historically very low.
What are you saying? that there are many houses that are not selling? or people or simply not putting their houses for sale? they are very different things. A low turn over while a very high stock for sale very strongly indicates falling prices. Fast turn over of very limited stock does the opposite.
Great contribution, thanks Cowpat. Good to point out that the booming late 2020 market is not, in context of a cycle.
Indeed in last 4 years in Auckland 17%fewer sales than in prev 4 years, despite much lower interest rates and extra 200,000 persons in the city as well as 13% more stock than in 2013.
How much do labour costs add to fruit/veg? Does anyone have any numbers?
Say if you went from paying min wage to whatever those folks that came in which was $2-$3/hr above that.
Seems to me that even if you went from paying $17.70hr to something that is quite attractive, maybe $25/hr which is a big percentage jump that that actual price of an apple isn't going to jump the same percentage.
Or am I deluded?
Don't worry, there will be inter-generational mortgages soon. Inheritance of wealth will turn into inheritance of debt. DTI over on a mortgage over 100 years will be easily serviced per generation. Penalty for having no kids to pass debt to would be euthanasia at 65!
Granny Herald does Bitcoin. Actually, it's not a bad listen.
https://www.nzherald.co.nz/business/cooking-the-books-podcast-are-alter…
The excellent Macrobusiness on China's dumb foreign policy and economic moves:
https://www.macrobusiness.com.au/2020/12/stupid-china-declares-trade-wa…
Sit123 is actually on topic, you not so much.
When I read the article I suspected the news about Sweden was overblown. Sit123's comment prompted me to search for the real news and he is quite right, the situation is not that dire. Even in NZ we didn't put very old people on ventilators.
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