This story is for those who return to work this week and want to get back up to speed with what has happened since just before Christmas.
(Good on you for having a proper break and not checking in on what's been going on.)
Interest rates
Wholesale rates
Wholesale swap rates have fallen since December 20. They are down between 2 and 6 bps for the 2 to five year terms, but up 6 bps for the one year term. They were rising just before Christmas and kept rising quite sharply until the New Year, but have fallen away since then. Credit spreads are pretty much unchanged over the three weeks.
Markets seem to be pricing in a 40% chance of an OCR hike on January 30. That's down from over 50% in late December. Most bank economists don't see a January hike coming; rather they expect the RBNZ to use the January statement to set up a rise (+0.25% ?) for March.
UST benchmark 10 yr bond yields made a run at breaking through 3%, but they just can't do it. Bonds are holding their value.
Mortgage rates
You will recall that just before the Christmas break, most major banks withdrew their mortgage 'specials' and raised rates. Over the break a couple of small institutions followed suit, and late last week BNZ also joined the trend. ANZ withdrew its Christchurch rebuild discounts, the last of the majors to do so. That just leaves Kiwibank with this feature.
The RBNZ's new 'new build' exemption is a the latest wrinkle in the regulators LVR policy. This may be a catalyst for a new round of market share competition between banks enabling hem to build back the high LVR lending they are missing out on at present.
The summer housing selling season is about to start, so more 'specials' may also emerge again in the low LVR market.
Term Deposit rates
Some banks have raised their term deposit rates, but these increases are mainly in the one to five year terms. TSB was the latest to do this, and before them BNZ. These rate hikes have been almost as much as the home loan rises. Borrowers may be focusing on about a 2 year fixed term, but savers tend to concentrate their terms on 6 months and one year and as such unless they 'go longer' they will miss out on these rises.
Property
Sales
We will get the QV data soon, but over the break Barfoots released their Auckland data for December. Average prices were much higher because the markets there skewed towards the flash suburbs and away from where regular people live. They also reported unusually low sales volumes in December, and even lower new listings. For only the second time in a decade they sold more houses than they listed.
Building consents
There was a sharp jump in November building consents issued in Auckland in November (as the Prime Minister had foreshadowed), mainly for apartments. There was a rise in Christchurch too. These rises pushed the figures to their highest level since 2008. But things are pretty lacklustre in the rest of the country on the residential consent front.
It was even more lacklustre for non-residential building, with consents for other types of projects a record lows - although October was very strong so there may be an evening out going on here.
Listings and asking prices
The low level of new listings were not confined to Auckland; it was a national trend with them falling to the lowest level in seven years. Asking prices also eased 6% in December, and even overall Auckland asking prices were down.
Rents
Rents were up marginally in December in the three big cities, but flat-lined elsewhere.
The local economy
Dairy industry
Dairy prices are holding despite some talk that they will be trending down in 2014. The latest auction did see some small declines for milk powders, but rises for cheese and especially butter.
Milk flows are running well ahead of previous records.
Danone has announced it is suing Fonterra for its losses over the botulism scare - they want about $500 mil.
Holiday retail
Local retailers had a very good selling season. Paymark, who handle the vast majority of electronic transactions, report the best results since 2008. December transactions were up +6.8% in volume and +7.5% in value.
Migration
In case you missed it as you walked out on December 20, the migration data out then showed +3,600 net new migrant arrivals in November, the third month in a row of over 3,000. Permanent departures to Australia continue to fall and are now at their lowest level in two years.
The Weather
You know how it has been. NIWA's soil moisture index shows we are having a normal year just about everywhere (except the West Coast where it is wetter). It is turning out to be a good year weather-wise for most farmers.
The red meat sector
Although prices for meat and wool are just 'ok' this year, this sector is facing some very big decisions because lamb numbers are falling fast and there is serious overcapacity in the processing industry. The two big co-operatives have chronic bank trouble, but the other private processors are reluctant to participate in reform. The MIE group seems to be stuck. Federated Farmers has released an options paper last week. Something will break in this sector soon, perhaps because of a banker push.
Car sales
They were strong in December, ending a very strong year. Used imports were strong too, and commercial vehicle sales broke all records.
Government debt
The gross amount on issue reached $76.3 billion at December 31, 2013, and climbing back towards the record set on March 2013.
International economies
United States
Janet Yellen was confirmed by the US Senate and is now the new head of the US Federal Reserve. Ben Bernanke is retired.
Jobs data out of the US is mixed. The early ADP reports showed strong gains, but last weeks NFP survey showed only low growth and only a small decline in the unemployment rate.
US exports are booming however. Holiday retail sales were good.
There were no debt ceiling or budget crises hangups this holiday season. The country is caught up in a severe cold weather period however.
Oil
The spectacular growth in US domestic oil and gas production is affecting international markets and causing refineries around the world to cut back or shut. American's are legally prevented from exporting oil, but their sudden withdrawal from international trade is removing demand. Prices are falling, slowly at this point (although falling quite quickly in the US itself). Gas prices are falling too. Low energy costs are becoming a big competitive advantage for US industry.
Deep water exploration off the lower South Island is about to begin.
China
China had another credit crunch over the holiday period and the PBOC came to the rescue again.
Manufacturing in China is now hardly growing according to the PMI surveys out last week.
China's population growth is slowing fast and may now be approaching a steady state, way sooner that most people and official agencies were expecting.
Chinese international tourists now make up the largest market with about 100 million of them traveling overseas. It turns out they are also the biggest spenders. We will see many more of them, and soon.
Australia
Despite the talk of tougher times, unemployment remains low and house prices are rising. Holiday shopping was ok. But weak wages growth is yet another problem for exploding budget deficits faced by their new government. It is how the Federal Government actually reacts to this deficit prospects that is causing the Aussie gloom. Ford and Holden's local demise just adds to the sense. Toyota is yet to decide.
The RBA is facing pressure to cut rates again. They want a falling exchange rate to boost exports. But they have a productivity problem too which they can't seem to get on top of. Major decisions in 2014 may be painful, and there could well be some blow back on us.
Europe
The eurozone grew over the holiday break; Latvia joined, mainly to bolster its defense against a grumbling Russia (after they saw what the Russians did in the Ukraine).
Otherwise, Europe is sleepwalking into deflation, bound up in impossible 'consensus' rulemaking, bureaucracy, and overall constipation. No-one expects anything but talk from Europe these days.
Exchange rates
You didn't miss much. The TWI is now at 78.3 from 77.6 when you went on holiday.
USD
You left on vacation when NZ$1 = 82.0 USc. Today it starts at 83.0 USc.
AUD
You left on vacation when NZ$1 = 92.5 AUc. Today it starts at 92.4 AUc.
YEN
You left on vacation when NZ$1 = 85.3 yen. Today it starts at 86.4 yen.
Yuan
You left on vacation when NZ$1 = 5.0 yuan. Today it starts at 5.0 yuan.
Euro
You left on vacation when NZ$1 = 60.0 euro cents. Today it starts at 60.8 euro cents.
UK Pound
You left on vacation when NZ$1 = 50.2p. Today it starts at 50.4p.
---------------------------------------------------------
You're up to date now. Back to work!
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.