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A review of things you need to know before you go home on Tuesday; housing hot in parts, migration tumbles, no new cases, tweaked pandemic support, bonds in reflation trade, NZD stable, & more

A review of things you need to know before you go home on Tuesday; housing hot in parts, migration tumbles, no new cases, tweaked pandemic support, bonds in reflation trade, NZD stable, & more
ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
There are no changes to report here.

TERM DEPOSIT RATE CHANGES
We have updated our rate table to show the reduced Mutual Credit Finance TD rates that became effective on February 1.

HOT & NOT & GUESSING
The REINZ figures for January reveal big regional differences in the housing market at the start of the year. The Auckland housing market had best January in 14 years while the Wellington market had its worst January ever. Some analysts see a cooling ahead, others see a spread of the frenzy. Everyone is guessing, especially after this latest L2/L3 imposition.

HUGE DECREASES
Annual net migration gain drops 40% in 2020 to +44,126 from +73,097 in 2019 which meant our annual net migration gain in calendar 2020 fell to its lowest level in seven years. The same data shows that visitor arrives have virtually vanished.

TWEAKED
The Government has changed the eligibility criteria of the COVID Resurgence Support Payment and undated other support available to businesses hurt by the pandemic.

FUNDING AT HIGHER THAN FLP
Westpac is seeking funds via a NZ$ 5 year Fixed Rate Medium Term Note offer of at least $100 mln. It is a bond raising that will allow them to take "unlimited oversubscriptions". They say the indicative price is a 0.50-0.55% margin pa over the five year swap rate which is currently about 0.85% pa, so 1.35% to 1.40% is what they expect to pay. (Westpac is most likely the bank that drew the $1 bln from the RBNZ FLP prior to Christmas at 0.25% pa, so it is interesting that they are seeking this higher cost funding when the FLP is still available to them.)

GEOTHERMAL PROJECT FUNDING
Contact Energy (CEN) has announced an equity raise of up to $400 mln, the proceeds of which will be used to initially reduce net debt and provide financial flexibility to fund the 150MW Tauhara Project "and other future growth projects". The Tauhara Project is a major geothermal power investment near Taupo, a project said to cost $1 bln when the full project is completed to generate 250 MW. It is being developed with the Tauhara Moana Trust.

NO NEW CASES
There are no new cases of COVID-19 in the community today; 33 of the 109 close contacts of the infected South Auckland family have returned negative results. The rest of these results will come in quickly from here. The Government will provide an update on alert levels on Wednesday. The time of the update is yet to be confirmed.

DAIRY PRICES IN SPOTLIGHT
There is another dairy auction tomorrow. The futures market is suggesting that WMP prices will rise by about +1% and SMP prices might fall. Both indications are well within the margin of error, so anything could happen.

TOO DODGY TO RUN A CASINO
In Australia, James Packer and his Crown casino company have been told formally they are not "suitable persons" to run the Sydney Barangaroo casino they developed. It is rare for a billionaire to be called out over unacceptable behaviour, especially in Australia.

GOLD PRICE LITTLE-CHANGED
Gold is trading in Australia, and soon in Asian markets. So far today it is at US$1822, down -US$2 from this time yesterday, but up +US$5 from here it closed in London last night.

EQUITIES UPDATES
The New York markets were closed earlier for President's Day and will reopen tomorrow. The S&P500 futures suggest it will open +0.7% higher and another new all-time record. The NZX50 Capital Index has gained all day and is closing in on a session rise of +0.9%. The ASX200 is up +0.5% in early afternoon trade. Tokyo is up +1.2% in opening trade. Shanghai is still closed for the week-long holiday, but Hong Kong returns today and in very early trade is up a strong +1.7%.

SWAP & BOND REFLECT GROWING REFLATION TRADE
Yesterday the long swap rates resumed their sharp climb again, with the 10-year now its highest since February 2020. If there are movements again today, we will note them here later when we get the data. Today the 90 day bank bill rate is down -1 bp at 0.29%. The Australian Govt ten year benchmark rate is up another +4 bps to 1.33%. The China Govt ten year bond is unchanged at 3.26%. And the New Zealand Govt ten year is up to 1.43% (+7 bps) and above where the earlier RBNZ fix was, at 1.42% (+8 bps). The US Govt ten year is up another +4 bps from this time yesterday to 1.25%.

NZD HOLDING FIRM
The Kiwi dollar is marginally firmer and now at 72.4 USc. On the cross rates we are unchanged at 93 AUc. Against the euro we are a touch firmer at 59.7 euro cents. That all means our TWI-5 is just over 73.7.

BITCOIN STILL UNDECIDED ON NEXT DIRECTION
The bitcoin price has made a third run at US$50,000 and pulled back each time, this time with less conviction. It is now at US$48,515 and +2.5% higher than at this time yesterday. It's record high is still US$49,716. Volatility over the past 24 hours has been +/- 3.1%.

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
Source: CoinDesk

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24 Comments

"it is interesting that they are seeking this higher cost funding when the FLP is still available to them."
Is it? Or have they been quietly told that the FLP has ended for them, and others; a bit like the 40% LVR's were coming back in May ("But, nudge, nudge - you really ought to bring those back today)?
Time, and the End of February when Bold Grant comes out of the economic phone box in his SuperMinister outfit, might tell us.

bw
Not sure of the FLP detail and conditions, but possibility - and I wouldn't be surprised - if banks availing themselves of FLP need a certain level or percentage of other funding.
I recall a second tier bank (Co-operative?) recently availing themselves of FLP and on the same day increasing their TD rate presumably to attract more deposits to possibly ensure that level of other funding. Think about it - otherwise a second tier (or any bank) could be borrowing huge amounts currently at 0.25% and RBNZ aren't that irrational.
Perhaps David can confirm whether this is the case or not.

and RBNZ aren't that irrational.
???

https://www.rbnz.govt.nz/markets-and-payments/domestic-markets/domestic-...

Initial allocation = 4% of asset book, so WPC has $3.5b in initial drawdown capacity.

33 of the 109 close contacts of the infected South Auckland family have returned negative results

I know it is still early days for calling it a win but despite all odds of coming in contact with the highly-infectious UK strand, these people seem to have dodged it. That's impressive!

Apparently is just dumb luck according to the some commentator's on this sight and the Hosk.

I'd love to hear your theory as to why these more infectious UK and SA strains - which have both landed in the country - yet haven't got a foothold here.
And they have arrived at a point when compliance amongst the population is decreasing.

I'm thinking dumb luck is pretty accurate.

Front line diligent workers protecting your health and liberty, systems enabling fast testing turnaround Smart people working incredibly hard and sharing of information across platforms..how's that for a start Rog? But let me guess you don't use the Covid Tracking system as too smart?

Frazz, you may not be aware but it went through the smart, hard working people like a streak of rocket propelled duck sh*t.

There was a person who did a tour of Northland and also came into Auckland with the SA strain. No outbreak.
There is currently a family in South Auckland with the UK strain. Current information suggests no outbreak.

That is extremely lucky by anyones metric. And it was not due to tracking. AFAIK the Covid Tracking app has not prevented any infections to date.

Since you asked, I do use it. However I also use my phones Location Tracking which combined with my bank records and emails/texts/call records will be infinitely more useful - should I have to sit down and describe my travels - and more importantly who I was talking to.

A decent app would have the option of automatic location tracking and automatic location check-in. Ours is a minimal effort, like many of the decisions around the Covid response. And we can see that clearly by the low number of people using it to scan in.

Most of us don't have those accents....

More sunlight and fresh air. If only we could bottle it.

Really hope not, but noone can stop the UK or SA strains, and I think hard miserable lockdowns are inevitable really. What can you say but stock up on loo paper. Make the most of the warm weather. Winter is coming.

Government won't be comforted by the increasing frequency of these events. Without a vaccine rolled out it's just a matter of time.

(Westpac is most likely the bank that drew the $1 bln from the RBNZ FLP prior to Christmas at 0.25% pa, so it is interesting that they are seeking this higher cost funding when the FLP is still available to them.

That FLP funding is only available if Westpac undertook a counterparty repurchase agreement (repo) with the RBNZ by selling restricted amounts of NZGBs, acceptable Kauri bonds and RMBS with a liability to repurchase said investment securities from the RBNZ three years later. This is a moneyless capital transaction in so much as the participating banks witness no expansion of their balance sheets and a commensurate transformation of short term debt duration out to three years, priced at OCR plus applicable haircuts.

An hour( as at the time of David writing) is such a long time in the life of Bitcoin which could go thru its next 'barrier" at 50000 before Coro

Boom.

Bitcoin Smashes Through $50,000 Price As Bull Run Suddenly Accelerates - Forbes

Im still recovering from yesterdays meltdown in altcoins (any others that are not bitcoin) by up to 20%. Anyone else get a scare? I did NOT BELIEVE IT! Must be more cautious, crypto is not for the faint hearted. I only started last week. Dont pile in till you watch it for a while, and understand the rapid price drops that happen regularly

If you don't believe that several of your alt holdings will go close to 0 over the long term you're in the wrong game my friend. But if just one goes to $100 and you hold 10000 coins. Well, that'll be nice.

$50,240 is hardly a smashing, more a tippy toeing! India, Hong Kong, Nigeria, US banks are taking a tough line on crypto. It might crash soon

Only on coinbase too so hardly consensus. But a traditional rag like Forbes trying to get the scoop is pretty bullish.

Regulation is coming/maturing. Countries who are yet to be part of the new 3rd world will try and fail to stop global crypto.

BTW, it's interesting to note that 91% of wallets contain <1 Bitcoin. If you own more than 1 BTC, you're actually part of a small minority.

https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html

If you own 0.28 BTC “you’re statistically guaranteed to be in the richest 1% of the world in BTC terms"

https://news.bitcoin.com/this-is-how-much-btc-you-need/

This source is at odds with my quoted reference. I've seen it before. Regardless, I think what is most important is to understand the distribution. Furthermore, the reference I have posted is private wallets and doesn't include institutional holdings.

But wallets do not correlate to individuals, I have several addresses that mine are spread over. And likewise, exchange wallets contain Bitcoin from thousands of people.
Its the distribution and movement of wales that you want to look at.

The best thing at the moment to watch is the amount of Bitcoin available on exchanges to purchase. Institutions are buying and taking them to cold storage. Bring on the liquidity crunch...
https://twitter.com/CitizenBitcoin/status/1361374399325167621?s=20