A review of things you need to know before you go home on Wednesday; small rate cuts, money supply and bank accounts swell, building consents diverge, confidence up here and in China, NZD higher

A review of things you need to know before you go home on Wednesday; small rate cuts, money supply and bank accounts swell, building consents diverge, confidence up here and in China, NZD higher

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

TODAY'S MORTGAGE RATE CHANGES
The Cooperative Bank tweaked some of its fixed mortgage rates, setting them lower. But not to any market leading positions. Housing NZ cut both its floating and fixed rates.

TODAY'S DEPOSIT RATE CHANGES
Aotearoa Credit Union cut some term deposit rates today.

UNRESTRAINED
Bank lending to all sectors grew slower in August that in July on a year-on-year basis - except for housing. That grew by +6.3% from the same month a year ago, up from +6.0% in July. Net lending for housing expanded by +$1.4 bln during August and has now reached $206 bln. Last week's new loan approvals were also unusually strong again.

PLENTY OF MONEY
Money supply growth eased up a bit, but is still expanding at an eye-popping +9% pa rate. The growth of M1 was especially spectacular.

FAT ACCOUNTS
Household deposits are also growing fast, up +11.9% from the same month a year ago in August. The lower currency gave an added boost to the [relatively small] holding of foreign currency deposits.

GOOD BUT NOT GREAT
Westland Dairy Company announced a 2014-15 final payout of 4.95%/kgMS, plus they retained 10c. This was slightly better than their last estimate, and better than the $4.40/kgMS announced earlier by Fonterra. But it was no-where near the $7.10 plus $0.63 retention that Tatua confirmed for the same period yesterday.

BUILDING CONSENT DIVERGENT TRACKS
Residential building consents dropped in most regions in August and were down by a third in Auckland following a stellar July. Consent levels are still strong in the regions around Auckland, but are falling away in Canterbury as the housing remediation work tails off. But things are much brighter in other (non-housing) building sectors which recorded their strongest month ever. Activity in Canterbury totaled a massive $419 mln, more than triple the level recorded in August 2014. Non-residential consent levels in Waikato and Bay of Plenty were about double their level a year earlier, but activity in Auckland fell by half from last August, dragging three-month annual growth in the region to a 19-month low of -13%.

MARGINAL UPLIFT
Firms’ own activity expectations rose 5 points to +17. Less downbeat agriculture sentiment, along with solid improvements in construction and manufacturing, led the lift. That is companies reporting on their own prospects. When they are asked about the economy generally, they are still negative, although less so than in August.

3 TO 1
In August, the total proportion of fixed rate mortgages reached 75%, it highest level since January 2010.

AN EARLY STUTTER?
Three of five equity crowdfunding projects fail in September. There are now five equity crowdfunding platforms and together they have raised $13.7 mln since inception in 24 successful offers. But the mojo may have passed.

NO STRIKE NOW
The fuel tanker strike we noted yesterday seems now to have been called off. The union claims the company folded.

CHINESE CONSUMERS UNWORRIED
The Westpac MNI China Consumer Sentiment Indicator increased 1.7pts from 116.5 in August to 118.2 in September. The Indicator is now 4.4% higher than a year ago and just 1.7% below its long run average. The rally in Chinese consumer sentiment has come despite more equity market volatility, continued concerns about China’s growth prospects and more signs of weak conditions across China’s manufacturing sector.

WHOLESALE RATES GAIN
After yesterday's sharp falls, swap rates gained back about +2 bps today. The 90 day bank bill rate is down -1 bp however at 2.84%.

NZ DOLLAR UP
The Kiwi dollar firmed quite strongly today and is now at 63.7 USc, at 90.9 AUc and at 56.6 euro cents. The TWI-5 is now at 68.5. Check our real-time charts here.

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5 Comments

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Highlight new comments in the last hr(s).

Chesapeake Energy (one of the most notable US shale oil companies) slashes another 15% of its workforce as shale oil fails to live with low(er) oil prices:
http://portal.ransquawk.com/headlines/chesapeake-energy-chk-are-to-reduc...

Meanwhile 'man camps' in North Dakota empty as unemployed shale oil drillers exit stage right:
http://www.bloomberg.com/news/articles/2015-09-29/man-camp-exodus-spurs-...

''Chain saws and staple guns echo across a $40 million residential complex under construction in Williston, North Dakota, a few miles from almost-empty camps once filled with oil workers.

After struggling to house thousands of migrant roughnecks during the boom, the state faces a new real-estate crisis: The frenzied drilling that made it No. 1 in personal-income growth and job creation for five consecutive years hasn’t lasted long enough to support the oil-fueled building explosion.''

''With the region’s drilling-rig count at a six-year low of 74 and roughnecks coping with cuts in overtime and per-diem pay, the vacancy rates in Williams County man camps are as high as 70 percent. Meanwhile the average occupancy rate of new units in Williston was 65 percent in August, even as 1,347 apartments are under construction or have been approved there.Officials in Watford City about 45 miles away have issued 1,824 permits for apartments, duplexes and homes in the past 18 months after only three houses were built between 1980 and 2000. They are in limbo, worried about filling the units.''

Jeez a lot of people have surely lost their shirts in the US shale boom, that is for sure.

Yep on all levels....but that is the free market in action.

Try harder Whiner. There is a good reason there are fewer rigs. I guess real estate is the last cab off the rank.

"A recent presentation by Range Resources shows that over the past five years the average length of the horizontal “laterals” drilled in the Marcellus shale in southwest Pennsylvania has increased by 114 percent; at the same time, drilling cost per unit length of lateral has reduced by 71 percent and completion cost by 42 percent.

It is not just that costs are going down – output is going up. The number of operating rigs in the US is down more than 40 percent from the peak, but production per rig has increased ninefold since 2010."

https://www.bnef.com/ViewEmail/b2bf7dc5-b249-cd8a-be6c-93e526d06c3c-6600...

"A number of U.S. shale oil and gas companies are securing unchanged or even increased credit allotments during their semi-annual loan reviews, defying expectations that banks would slash small firms' credit lines in response to low crude prices.

According to a Reuters review of disclosures made by 19 independent U.S. shale oil and gas companies since Aug. 1, at least 11 have said their borrowing bases have been or will be maintained or increased. In contrast, just five talked about cuts.

It is too early to tell if the whole sector will emerge equally largely unscathed from the reviews. Many more companies from a batch of about 60 U.S. independents typically tracked by investment banks will probably make disclosures after the usual loan reset deadline of Oct. 1.

But outcomes so far suggest an expected pullback by banks may be far less severe than many in the industry have feared." Or in Whiners hoped rather than feared?

http://uk.reuters.com/article/2015/09/29/oil-usa-banking-idUKL1N11G19E20...

And yet US production keeps plunging....down 500,000bpd in just 3 months.....or do you know better than the EIA?

No, I thought not.

Try harder Profile....facts eh........ bugger......never mind bro, I feel your pain.

So lots of idle rigs makes sense? no. ie if these substantial improvements could compensate for the low oil price by making production even cheaper than the oil price the rig counts would not have dropped. I mean according to you / EIA there is no such thing as sweet spots so lots of places left to drill. Then there are the bankruptcies and fire sales...but if you are so confident in their viability while others run, well buy, that would be a huge future profit for you.