A review of things you need to know before you go home on Tuesday; no response to Westpac yet, more MIQ testing, milk price forecast raised, swaps firm, NZD soft, & more

A review of things you need to know before you go home on Tuesday; no response to Westpac yet, more MIQ testing, milk price forecast raised, swaps firm, NZD soft, & more
ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
No other bank has yet responded to the Westpac one year fixed rate 'special' of 2.29% yet.

TERM DEPOSIT RATE CHANGES
No changes today.

MORE TESTING
The Govt plans to require more travelers to present negative Covid-19 test results before coming to NZ, and commits to introducing an additional day 0/1 test for those in managed isolation. Calls are growing to suspend outright all travelers from the UK and South Africa given their out-of-control pandemic situations with raging variants.

FARMGATE MILK PRICE FORECAST UP
ANZ have revised up their farmgate milk price forecast for the 2020-21 season by 50c to $7.20/kg MS. Their forecast for the 2021-22 season remains unchanged at $6.40/kg MS. Other forecasts and payout histories are here. They see higher demand matching higher global supply, and upside coming in 2021 auctions. But they are cautious after this current season which ends in July.

WATER WATCH
Our national hydro lakes are starting the year lower than this time last year and lower than the long-term average. It's not serious yet but it is worth watching. It helps that soil moisture is pretty normal still for this time of year. In Auckland, water storage lakes are 67% full and this is very much better than what had been feared, even if it is still light for this time of year (normal is 87%). The Waikato River is providing the city with 36% of its daily requirements now. Auckland will get through till the rainy season fine now.

EQUITIES UPDATE
Wall Street ended today down -0.7% (S&P500) with losses growing in their afternoon session. The ASX200 is up +0.2% in early afternoon trade. The NZX50 Capital Index is still falling, down another -0.9% in late trade and this is on top of yesterday's -2.0% profit-taking drop. Meridian (-5.5%) and Contact (-2.7%) are still taking outsized losses today on top of yesterday's out-sized falls. Shanghai has opened down -1.1%, Hong Kong has opened flat, while the very large Tokyo exchange is back trading today after a holiday with a +0.3% gain.

SWAP & BOND RATES FIRM
We don't have todays swap rate movements yet. They were little-changed across the curve yesterday. If there are material changes when the end-of-day swap rates are available today, we will update them here. The 90 day bank bill rate is unchanged at 0.27%. The Australian Govt ten year benchmark rate is back up +2 bps at 1.10%. The China Govt ten year bond is down -2 bps at 3.18%. The New Zealand Govt ten year is up +2 bps at 1.08% and above the earlier RBNZ fix at 1.08%. The US Govt ten year is up +3 bps at 1.15%.

NZD SLIPS
The Kiwi dollar is down a bit more at 71.7 USc today. On the cross rates we are also a little lower against the Aussie at 93.1 AUc. Against the euro we have dipped to 59 euro cents. That all means our TWI-5 is now at 73.2 and another relatively small slip.

BITCOIN ALL OVER THE PLACE
The bitcoin price is sliding lower again, now at US$34,691 and down -7.5% from this time yesterday. But in between things have been wilder. It has ranged down to US$30,305 and up to US$37,281 and range of US6976 and volatility of +/-10%, and that is only in the past 24 hours. The FMA released a Statement to the Herald saying: "New Zealanders considering purchasing cryptocurrencies, such as Bitcoin, should be aware that these are high risk and highly volatile assets. Cryptocurrencies are not regulated in New Zealand and are often exploited by scammers and hackers."

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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End of day UTC
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33 Comments

Is the RBNZ adopting a tightening bias?
It has issued $600 million RB Bills since 16-12-20 and has refrained from new LSAP actions - graphic evidence.

Tempted to clip the statement that Auckland will be fine for water to the rainy season. Seems like a jinx.

Depends what he means by fine I guess. We got by last summer but only with some extreme restrictions.

The bitcoin price is sliding lower again......

From my desktop TradingView, the price has been trending upwards for the past 12 hours. Up approx 10%.

Anyway, the FMA have spoken. Don't get scammed. That means doing your homework. Buying BTC is not like playing the pokies. And understand that the price could go to zero.

Y'day, the daily sales of Bitcoin through PayPal in the U.S. hit an all-time high of USD240 mio. Chickenfeed in the scale of things but interesting to note.

Yesterday was my worst 24 hours in crypto in NZD terms. By a LONG way. Today was my best :)

340 million total PayPal users incoming in Q2 when international accounts can purchase BTC.

Correct. In every possible time frame on my trading view Bitcoin is up.
People need to stop looking at individual trees, and start to see the massive forest that is growing.

1hr +2%
24hrs +11%
1W +16%
1M +97%
3M +217%
6M +290%
1YR +347%
2YR +901%
5YR +9037%
10YR +You don't want to know.

exponential growth?

hyperinflationary collapse of fiat against the hardest money ever designed by human hands

Correct. BTC isn't going up. It's fiat currency's that are devaluing against harder money. 1 BTC will always equal 1 BTC.

China, Taiwan and other countries require a double negative COVID test (blood & nosetests) before boarding any plane destined for China etc. So about time NZ caught up to this requirement. These countries know full well how infectious these SARS diseases are.
Although it must be difficult to verify authentic negative tests from some origins - corrupt countries.

Mortgagebelt...yeah, bet I could buy one for $100 in many Asian countries.

I have an interesting story. Today I applied for an extension for loan by $20k (mortgage so interest is 2.3% or so). I was honest with the reasons, being a combination of debt consolidation, some personal expenses, house maintenance and I noted four shares /ETFs I will be purchasing with the money.

Having disclosed my assets and income I was interested as to whether there would be some probing. In particular regarding a certain asset I hold. Nope, loan approved in three hours, and they gave me $50k instead of $20k without me asking.

Betya the bank is ANZ

Haha! Nope :) Its a nice bank I think.

For a mere 20k easier to setup a CC balance transfer at 1.9 or 0%

Do you think you fit the category of a marginal bank borrower pushed to this by the following set of circumstances?

RBNZ has cut OCR in half five times since July 2008, which prompts the already asset rich to capitalise rising discounted present values of future residential property asset cash flows.

Furthermore, in the past, if one had a recurring annual $10,000.00 liability in need of funding, one could deposit $100,000.00 in a one year bank deposit account paying 10% annually.

If annual interest rates were cut in half to 5% during the deposit term, how much does one have to deposit for one year next year to be in receipt of $10,000 to liquidate the same value annual liability?

Yes, $200,000.00, hence the adjusted PV discount factor for the original $10,000 cash flow @ 10% for the cut in half 5% rate is 0.95 x 2 = 1.9 x $100,000 = $190,000.00.

Repeat cutting that interest rate in half again and again etc and before you know it one needs more than a one million dollar cash deposit to fund a $10,000.00 liability.

For the capital deficient, but asset rich it is more affordable to add annual liabilities to a mortgage or captilise the equity in a mortgage free residential property and buy another with a mortgage from those who are already poor and hence impoverished by the costs of rates, insurance and maintenance etc levied on their existing mortgaged or not.residential property.

I am loathe to say it but this has all the characteristics of a ponzi scheme.

Bingo Audaxes.

"The government is the ponzi scheme"- Bernie Madoff

No, but certainly a ponzi scheme engraved with the imprimatur of government.

How much equity do you have in your house? Anything over say 30% why would they care?
I did similar recently and they asked me a million questions I found it quite ridiculous. Unless house prices went down 60% they were not going to lose so why bother?

Because my equity is largely in bitcoin that is why I find it very interesting :)

I found it a bit of a chore topping up my mortgage recently, so much so that I ended up involving our mortgage broker. I sort of expected them just to take one look at our accounts, see regular pay coming in and go yup no worries.

@lonewolf Banker: less questions, less problems = computer says yes.

Stephen Joyce pretending to know what blockchain is over at Granny Herald. It would be better to admit he doesn't know rather than making it up.

https://www.nzherald.co.nz/business/nz-regulator-issues-bitcoin-warning-...

It's not even that funny. Blockchain is clearly a medieval weapon.

Just earning his chicken wing

Ah yes. RIP bitcoin complete with a grave. What's the price now? Oh.... 36.5k, recovered 8.5k in less than 24 hours. I think that is its largest green candle in history.

Rain has been very patchy in the North, We got 30 mm , 20 k.m away nothing . But i think we are in for a cyclone or 2.

Maybe if Meridian and Contact didn't dump water out of the lakes to keep electricity prices up we wouldn't have low lake levels... They totally rig the system, make tonnes of money when lake levels are low. Time the gubbmint stepped in with actual penalties, not the delayed wrist slap they currently get.

Should've thought of that before we let John Keys government privatise them.

Yep, such practices are good for shareholders and they should do more of it. It’s very efficient because it will drive customers to use other dams and entrepreneurs to build them. Roger Douglas was a very clever man.

entrepreneurs don't build dams, they buy them off the govt for 10% of the cost of building them.