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A review of things you need to know before you go home on Tuesday; another TD rate rise, terms of trade rise, carbon price, SME's on the edge, a2 Milk spills, car sales up again, swaps hold, NZD firm, & more

A review of things you need to know before you go home on Tuesday; another TD rate rise, terms of trade rise, carbon price, SME's on the edge, a2 Milk spills, car sales up again, swaps hold, NZD firm, & 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 today.

TERM DEPOSIT RATE CHANGES
Nelson Building Society raised their 2 year TD rate by +30 bps to 1.25%.

'MOVING ON UP'
New Zealand's terms of trade rose in the December quarter. The "terms of trade" measures the relative pricing of exports and imports. ANZ economists summarised the key data by reporting "goods terms of trade lifted +1.3% q/q in Q4, reversing the downward move from the previous quarter. Both export and import prices weakened with export prices falling just -0.4% while imports fell -1.7%. The volume of goods traded lifted despite ongoing freight challenges. Exports lifted +3.3% q/q and imports gained +6.5% on a seasonally adjusted basis. The services terms of trade increased +2.8% with exports up +2.4% and imports down -0.5%."

TRACKING THE CARBON PRICE
Based on market data supplied by the team at OMF, we are now displaying the daily price of carbon as traded, in NZ$ per tonne of CO2. (A New Zealand Unit, or NZU.) You can see the daily price charted over the past year in the right-hand sidebar on any rural page (desktop version only). A click on that chart takes you to the official CommTrade webpage giving you more specific daily price information. It is today $38.60/NZU and has risen more than +50% over the past year.

HOLDING HIGH
Stats NZ released its January employment indicator data today. Westpac economists summarised the key points, reporting "the number of filled jobs was flat in January, following a surprisingly strong 0.7% increase in December (though this was revised down from 0.9%). Jobs are up slightly (+0.1%) compared to the same time last year. The labour market as a whole has been fairly resilient through the Covid-19 shock. The closure of the border and the loss of international tourists has clearly hit some areas hard, such as retail and hospitality. But this has been offset by growth in more domestically-focused sectors such as government and construction. Recent data on job advertisements point to further growth in these areas."

A STEP BACK
There was a sharp drop in new home completions in Auckland at the end of 2020. In fact, it was the worst December in three years for the number of new dwelling completions in the SuperCity.

HERO TO ZERO
One time glamour stock a2 Milk Company (ATM) has seen its value more than halved in a little over six months and analysts believe the business has some way to go to get back on track.

'CRIPPLED BY INCREASING PRESSURE & COSTS'
Auckland employers lobby group EMA is warning that many SME's are near the end of their viability. "Many of our smaller businesses are just hanging on and reaching the end of their capability to continue supporting their staff and their own operations. The vast majority of business owners, supported by their staff, have gone out of their way to try everything they can to keep people in work." However, spokesperson Brett O’Riley says that may not last much longer as more tough decisions loom.

CAR SALES RISE AGAIN
February new car sales continued the bounce-back first seen in January. New car sales were up +10% year-on-year in February after a +6.7% rise in January. But used imports were down -15%. Sales of commercial vehicles is dominated by utes to tradies, and the overall commercial category was up +21% in February. (We will report on the NEV numbers separately tomorrow.)

MASSIVE CHANGES
After a very sharp run-up in building consents for dwellings at the end of 2020 (juiced by regulatory incentives), they fell back sharply in January 2021. But for houses, they are still running +30% above January 2020 levels. However for apartments and townhouses, it is much grimmer; these are down -19% year-on-year to levels last seen in January 2012.

FITCH MORE UPBEAT ON SMALL NZ FINANCIAL INSTITUTIONS
Credit rating agency Fitch has revised the outlook on its credit ratings for the Wairarapa Building Society, Credit Union Baywide, the New Zealand Association of Credit Unions and First Credit Union to stable from negative and affirmed their ratings at BB+, BB, BB-, and BB, respectively.  The shift to stable outlook for the four entities reflects the reduction of downside risks since May 2020, Fitch says.

BIG POOL
Australia's pool of superannuation assets has now surpassed AU$3 tln or an average of AU$120,000 per capita. (KiwiSaver is only worth NZ$73 bln or just NZ$14,300 per capita.)

RBA ABOUT TO SPEAK
All eyes will be on the RBA policy review that will be released at 4:30pm this afternoon.

GOLD SLIDES LOWER
Gold is trading in Australia, and soon in Asian markets. So far today it is at US$1724/oz and down -US$23 from where it was at this time yesterday. At the close of New York trading earlier today this price fell sharply to US$1725/oz, while in London it had closed earlier at US$1734/oz.

EQUITY RECOVERIES EXTEND
The NZX50 Capital Index is up a strong +0.9% in late trade. The ASX200 is up +0.4% in early afternoon trade ahead of the RBA rate review. Wall Street finished its session higher with the S&P500 up 2.4% in a strong showing. But Tokyo is flat at its open after a very strong rise yesterday. Hong Kong is up +0.5% at its open, and Shanghai is up +0.2%.

SWAP & BONDS RATES HOLD
We don't have today's closing swap rates yet. If there are movements today, we will note them here later when we get the data. Today the 90 day bank bill rate is unchanged at 0.31%. The Australian Govt ten year benchmark rate is up +2 bps at 1.67% ahead of the RBA review. The China Govt ten year bond is down -1 bp at 3.27%. But the New Zealand Govt ten year is unchanged at 1.76%. (We can't compare that to the RBNZ fix because they say they have "technical difficulties".) The US Govt ten year is unchanged at 1.42%.

NZD FIRMS
The Kiwi dollar is up to 72.7 USc. On the cross rates we are softer at 93.6 AUc as the Aussie makes stronger gains than us. Against the euro we up to 60.4 euro cents. That all means our TWI-5 is holding at 74.3.

BITCOIN TURNS BACK UP
The price of bitcoin is up today, now at US$48,999 and a gain of +6.4% from this time yesterday. Volatility over the past 24 hours has been a high +/- 4.9%.

This soil moisture chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Daily exchange rates

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End of day UTC
Source: CoinDesk

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15 Comments

"export prices falling just -0.4% while imports fell -1.7%. The volume of goods traded lifted..." + "Many of our smaller businesses are just hanging on and reaching the end of their capability to continue.."

Surely not! I thought we'd been told Inflation was a certainty!

Changes in export and import prices is largely a function of the exchange rate which is much stronger than a few months ago.
Non tradables (comprising 60% of the economy) is the place to look for inflation having its effect.

Check this out Keith,

DAP, Urea Prices Surge 21% Over Last Month as Fertilizer Prices Spike

https://www.dtnpf.com/agriculture/web/ag/crops/article/2021/02/17/dap-ur...

Media stories: NZ-based importers are being held to ransom on freight charges by suppliers and shipping companies.

Reality: Import prices (valued at CIF by Stats NZ) fell while volumes rose.

Port charges, container detentions and extra trucking costs for things like north port offload are all excluded from cif basis. Stats imports info is also based on fx converted at the customs rate which is updated every two weeks and tracks the currency spot rate. This rate is not indicative of the actual rate that these products may be being paid for offshore, but is the trigger for the nz $ equivalent for GST payable on customs clearance.

I am just curious as to wether the governments carbon credit holdings( form existing forests) , affect the govt books significantly. ?

Could the RBNZ extend their excuse of "technical difficulties" to explain why 10 years of lowering interest rates has not helped them achieve inflation targets?

How do you know that? Maybe we would have been in massive deflation for the last 10 years had interest rates stayed at 8% or so.

I know that because quarter after quarter they lament tepid inflation. Who knows what would have happened if interest rates stayed at 8%. Maybe capital would have flowed to productivity and innovation and wages would have risen and inflation could have been higher.

A2M stock price up 8% on the ASX. Seems like some feels that it's going cheap.

A classic INZ bungle. https://www.tvnz.co.nz/one-news/new-zealand/migrant-worker-furious-says-...?
""Immigration was not satisfied Sharma was responsible for planning menus, organising events or arranging the purchasing and pricing of goods. It also was not convinced of his food safety knowledge."" Why does INZ try to be experts in all businesses? If Mr Sharma is seriously needed and adds value to NZ then he will be on a decent salary.
Wishing Mr Sharma all the best - after 12 years in NZ he ought to become one of us. Nobody deserves such shabby treatment.

Maybe he's not a ponzi-investor therefore worthless in govt.nz eyes

PSA: New Zealand Vaccine count.

Doses administered 1500
Covid vaccine doses in country 146000
First Vaccine arrival date 15/2/2021

Australia:
Doses administered 31894
First Vaccine arrival date 15/2/2021

Source:
Vaccination counts:
https://ourworldindata.org/covid-vaccinations
Doses in NZ
https://www.reuters.com/article/us-health-coronavirus-australia-new-zeal...
Second shipment:
https://www.tvnz.co.nz/one-news/new-zealand/76k-more-covid-19-vaccine-do...

Roger... and HK have done 20 000 in 3 days. South Korea 25 000 in 3 days and the mighty Senegal 25 000 in 6 days. After 30 days I now reckon we will be lucky if we are at 12 000.
I would like these journos to ask them if before we got the vaccines whether they set daily targets, notified the staff involved in the roll out that that would have to work weekends and longer hours, discussed what issues may prevent them from achieving these daily targets and how they would overcome any of these issues that may arise. Was a specific plan on how to monitor and regularly assess the speed of the roll out part of the planning? And bearing in mind many other countries are two months ahead of us (and we could learn from their experience), which countries have they spoken to about the problems they faced to try to ensure we did not face similar, in some cases, totally avoidable issues and what did they learn from this communication.
Even as an unskilled, unemployed and completely unqualified person, I would have seen the importance of ensuring a speedy roll-out and that being organized and proactive enough to take the above steps was the bare minimum required and expected of me.
NB: I am not seeking employment so please do not solicit me with unwanted offers of employment. LOL

Granny Herald seems to be running 99% of articles about punishing people who catch Covid. We need this vaccine fast because no one is going to get tested anymore with all that hate going on. Career criminals seem to be treated better than someone who goes out of their way to get tested to help society. Do we honestly think that all people are going to isolate for days because of the slightest symptom? Im not sure a lot of the stone throwers have, but they sure do love to make their point.