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A review of things you need to know before you go home on Wednesday; another TD rate rise, Canterbury building consents surge, Trustpower on the block, swaps stable, NZD stable, & more

A review of things you need to know before you go home on Wednesday; another TD rate rise, Canterbury building consents surge, Trustpower on the block, swaps stable, NZD stable, & more

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

MORTGAGE RATE CHANGES
No changes reported today.

TERM DEPOSIT RATE CHANGES
BNZ followed yesterday's move up from both Kiwibank and Heartland Bank for TD rates. More here.

CANTERBURY BUILDING CONSENT SURGE
In Canterbury in March 2021 there were 586 new residential dwellings consented across the three major Councils in the Christchurch region. This is about +47% higher than February 2021 and this is an increase of +43% from the 410 new dwellings consented in March 2020. This is the highest number of new residential dwellings consented in the last four years.

STILL HUGELY EXPENSIVE
Wholesale electricity prices have moved back up today to almost $300/MWhr again. Still no real sign things are easing here.

ON THE BLOCK
Trustpower (TPW) has said it has received a number of non-binding indicative proposals to acquire its mass market retail business, following its announcement of a strategic review in January. They are now progressing into the due diligence stage of the process.

LIMP INFLATION
In Australia, their CPI came in lower than expected in the March quarter, even if it was higher than Q4-2020. And that was despite sizable increases in beef and petrol prices. The ABS data show prices rose an average of just +1.1% over the past year. Analysts were expecting +1.4%. This probably keeps the pressure on the RBA and fiscal authorities to maintain more stimulus than they were expecting at this time.

CHINA BUYS BIG
Australia has recorded a goods trade surplus above AU$8 bln, as imports and exports both increased +15% in March 2021. China accounts for 37% of all exports from Australia, and iron ore helped push exports to the Middle Kingdom up by +17%. (New Zealand exports 29% of its trade to China.) Today, the iron ore price has risen again. But that has not stopped China dumping on Australia diplomatically, saying it "is sick". Meanwhile, China is increasing pressure on New Zealand exporters. reminding us of the consequences of straying from their "correct path".

GOLD SLIPS
The gold price has slipped -US$4 to US$1772/oz in early Australian and Asian trading from this time yesterday. It ended in New York earlier at US$1776/oz and in London at US$1784/oz.

EQUITIES HOLD FIRM
The S&P500 ended today's session unchanged but still near its record high level. In Shanghai, it has opened +0.2% higher and Hong Kong is +0.3% higher at their open. The very large Tokyo market has opened up +0.4% in early trade. The ASX200 is up +0.5% in early afternoon trade while the NZX50 Capital Index is up +0.3% in late trade.

SWAPS & BONDS FIRM
We don't have today's closing swap rates yet. If there are significant movements today, we will note them here later when we get the data. They are probably little-changed. The 90 day bank bill rate is unchanged at 0.35%. The Australian Govt ten year benchmark rate is down -2 bps from this time yesterday at 1.67%. The China Govt ten year bond is up +1 bp at 3.22%. And the New Zealand Govt ten year is up +1 bp at 1.63% and at the level of the earlier RBNZ fixing at 1.63% (+3 bps). The US Govt ten year is up +4 bps at 1.62%.

NZ DOLLAR ADJUSTS
The Kiwi dollar is now at 71.9 USc unable to hold above the 72c level. Against the Aussie we are sharply firmer at 93 AUc after their CPI data release. Against the euro we are softer at 59.6 euro cents. That means the TWI-5 is on the soft side of 73.8 although actually little-changed.

BITCOIN RECOVERS FURTHER
The bitcoin price is now at US$55,587 and +3.1% higher than this time on yesterday. In the past 24 hours, volatility has been moderate +/- 2.3%.

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30 Comments

The government committed to 100% renewable energy by 2030,

Every time I check generation pages recently, can see that Coal (aka Huntly) is running full steam 24/7, and Gas is fired up around the clock, we've used proportionately less renewable energy this year than in a long time.

It's a big goal, it will be bloody expensive, and I'm happy to chip in my bit to pay for it, wonder if they actually plan to do anything towards it (outside of 1 x pumped hydro project).

The government has all the support from its voter base to load more costs onto energy-intensive sectors, scaring the few remaining players off to more conducive political environments overseas. That should help reduce the electricity demand to levels our existing renewables capacity can take care of.

https://infracom.govt.nz/projects/pipeline/

Heading politically correct into subsistence living...

10
up

Get woke go broke

Do you genuinely think that trying to burn less fossil fuels is "Woke"?

I think it seems like a good idea.

Does your source make it clear if Huntly is burning coal or gas? Is it publicly available?

Do you genuinely think that trying to burn less fossil fuels is "Woke"?

If you read the inference properly, you'll see the commenter thinks having no electricity is the problem, not burning fossil fuel.

Source of generation is available,
https://www.em6.co.nz/em6/faces/pages/login.jspx
Coal is running at capacity around the clock

Predominantly because of lower hydro generation. Dams haven't gone anywhere so this is just a result of lack of rain. The new wind farms under development should help out.

https://www.oneroof.co.nz/news/39346

Auckland first home buyers are turning their attention to another Kiwi classic: the brick and tile unit.

Bayleys agent Dianne Burt, who sold a three-bedroom unit at 4/48 Rawhiti Road, One Tree Hill Auckland under the hammer last week for $1.155 million says that close to 70 people looked at the home, mostly first home buyers.

Twelve bidders registered for the auction, although only eight bid on the day, and six of them actively competed for the unit which had a 2017 council valuation of just $790,000.

. The ABS data show prices rose an average of just +1.1% over the past year. Analysts were expecting +1.4%.

Which of course is likely to be nonsense if the CPI were represented the price sensitivity and perception of a representative Australian citizen. A 1.1% increase would be barely noticeable to that individual.

This probably keeps the pressure on the RBA and fiscal authorities to maintain more stimulus than they were expecting at this time.

Why do central banks bother with so called 'stimulus'? - evidence

"The Bank of Japan is expected to cut its inflation forecast for this fiscal year...reinforcing market expectations it will maintain its massive stimulus for the foreseeable future." Yet, they still call this 'stimulus.' What got stimulated? Media stories Link

more evidence

Some more timid term deposit interest rates increases. Come on banks, it is time to start acknowledging the reality of increasing market rates, and to start increasing both mortgage and deposit rates

Do wholesale rates matter with FLP in place?

And Peter Harris on the wires , stating the RBNZ not meeting its employment objectives, no need to remove stimulus and low rates only one factor behind rising house prices. Always better to row the boat with two orrs.

Today, the iron ore price has risen again. But that has not stopped China dumping on Australia diplomatically, saying it "is sick". Meanwhile, China is increasing pressure on New Zealand exporters. reminding us of the consequences of straying from their "correct path".

What has been the Australian government’s reaction to China’s attempted rapprochement?

Not one senior Australian politician has responded favourably to Wang’s overtures. Instead, we’ve had more sabre-rattling.

On Sunday, Defense Minister Peter Dutton said that, while Australia would continue to work with its allies to achieve peace in the region, the chance of a conflict with China over Taiwan “should not be discounted.”

On the same day, Home Affairs Secretary Michael Pezzullo (who is slated to become the new secretary of the Department of Defense) delivered an Anzac Day message to his staff.

In the context of referring to escalating tensions over Taiwan, Pezzullo opined that “the drums of war” were beating and that Australia must be prepared “to send off, yet again, our warriors to fight.” He asserted that Australia must become “armed, strong and ready for war” and lavishly praised the rabid Cold War warrior, General Douglas MacArthur.

It would be difficult to imagine a more irresponsible or inflammatory statement than this, or a more dangerous evocation of Cold War rhetoric. Link

I suspect that these "audits" by China are nothing at all to do with its' Wuhan virus. More to do with investigating how western countries go about their food production.

Australia is calling out Chinas injustices of which there are many. This sort of official talk is extreme, but not unwarranted. Like it or not we're going to have to decide where we stand as a nation. Smiles, understanding nodding and being kind won't cut it

Might have to, against nuclear armed China and her Russian ally.

Nato didn't have much choice a few days ago: Putin recites the distribution of power in central Europe

It seems to escape decision makers that to lower carbon emissions they actually need to pull finger and build some new generation. And if it’s renewables we need some new storage capacity.

There must be a good dam opportunity somewhere in the north island.

Yes I struggle to see the new projects that are needed, all the more urgently so because they've strangled gas and so Huntly is burning coal.

Do you really think a new dam can be built? Seems to be that the endless legal challenges and environmental reviews and whatnot mean that it's impossible.

I don’t know. Honestly I don’t even know if there are good north island sites.

But we are going to need some hard choices. If people really think climate change is an existential risk then some environmental sacrifices are warranted.

We also need to start subsidising solar and home batteries.

We are just talking about stabilising prices and retiring Huntley.

After that we need more generation to meet the needs of electric cars and to retire industrial heat processes that use coal.

That’s a lot of new generation that doesn’t seem to be planned.

The govt also needs to think about how they can expand the number of generators if we are going to persist with a competitive market.

Scroll down to proposed generation to see the huge opportunities already consented. Some are already being built and others are following shortly. No shortage of generation options out there, but some more storage would be great. Hopefully the study into lake onslow is positive and that will get moving, then we're sweet.

https://en.m.wikipedia.org/wiki/List_of_power_stations_in_New_Zealand

You are right, lots of good projects there.

Unfortunately not much north island hydro.

We might need some grid scale battery storage.

Lots planned, sure, but only the one actually under construction.

True, more coming very shortly. Meridian are about to start building the second largest wind farm in the country

https://www.nzx.com/announcements/368070

Contact are up to all sorts, building new geothermal and clearly gearing up for more wind generation.

https://www.nzx.com/announcements/367535
https://www.nzx.com/announcements/369593

Mercury are buying Tilt to get hold of their wind farms and development pipeline

https://www.nzx.com/announcements/369080

I suspect higher electricity prices will be a long term feature of New Zealands economy. The governments ban on drilling in 2018 had a chilling effect on investment in the sector overall and created an energy cliff that is now starting to take effect, we probably need a period of far higher sustained prices to coax investment back into the sector.

It's actually a classic case of what George Soros might describe as "reflexivity".

Another post about lack of investment in new generation. Following the gentailers shares, they have all been stepping up to build or buy new generation over the last year or so - the market signals are already in place and are having the desired response. Coal is on the way out, despite the current weather-related swan song.

created an energy cliff that is now starting to take effect

Not ideal in the short-term but ultimately this could have a positive effect in the medium term driving down cost and speeding up adoption of solar and wind generation on individual residences.