A review of things you need to know before you go home on Wednesday; AU CPI sparks RBA cut speculation, Turnbull eyes GST hike, Akl Council to spend $5.6 bln, Chinese lose confidence, swap rate fall

A review of things you need to know before you go home on Wednesday; AU CPI sparks RBA cut speculation, Turnbull eyes GST hike, Akl Council to spend $5.6 bln, Chinese lose confidence, swap rate fall

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

TODAY'S MORTGAGE RATE CHANGES
On the eve of the RBNZ rate review all is quiet.

TODAY'S DEPOSIT RATE CHANGES
No changes to report here either.

RATE CUT COMING?
The Australian inflation rate came in at +0.5% for the quarterly change, +1.5% as the annual change. But most economists look at their "trimmed mean" which shows annual inflation at +2.1%. All these results are lower than what the market was expecting and they are fueling speculation that RBA rate cuts are now more likely. This is moving their currency, and we are affected as well.

AU-GST HIKE COMING?
They may now have a 'better' chance of a rate cut, but the Aussie PM says he is looking at a GST rate rise there. They have a 10% rate with a plethora of exemptions. Its complicated, so presumably the rate will need to be higher.

VALUE FOR MONEY?
Auckland is planning on spending $3.7 bln in operating costs in the 2016/17 year plus another $1.9 bln in capital expenditure. All up, that is an annual spend of $5.6 bln. That is equivalent to spending $3,566 for every man-woman-and-child in the Auckland Council area.

REALITY CHECK
Chinese consumer confidence seemingly underwent a reality check in October, wiping out the gains accumulated since May. Consumer confidence has been one of the few bright spots for the Chinese economy and the latest fall is a blow. The household sector has, up until now, been resilient in the face of weakness in the heavy industrial, export and construction sectors. The Westpac MNI China Consumer Sentiment Indicator plunged -7.2% to 109.7 in October, registering the lowest value since the survey began in 2007.

WHOLESALE RATES UP
The 90-day bank bill rate jumped today by +2 bps to 2.90%. Markets are rapidly removing the pricing risk of a rate cut tomorrow. Swap rates on the other hand have fallen -3 and -4 bps for terms 2 to ten years.

NZ DOLLAR HOLDS
Today our dollar was buffeted by the Aussie CPI data. We fell with them on the news, but strengthened against them. It is now at 67.4 USc, at 94.7 AUc and 61.1 euro cents. The TWI-5 is unchanged at 72.6 however. Check our real-time charts here.

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USD 
NZD
End of day UTC
Source: CoinDesk

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Getting rather crispy down the East coast of the South Island again, El Nino and all...seems to be happening with increasing frequency, happened last year too (in a non El Nino year at that). Those NIWA folk with their long term 'Eastern coastal regions will get progressively drier with on-going climate change' predictions seem to be on the ball. Still not to worry, I am sure there will be plenty of opportunities going forward as a result - anyone for 'East coast dust-bowl farming?' What a chance to test new farming strategies. Or we could throw more billions at dam building, always a good thing to treat the symptom rather than the cause eh?

They may now have a 'better' chance of a rate cut, but the Aussie PM says he is looking at a GST rate rise there. They have a 10% rate with a plethora of exemptions. Its complicated, so presumably the rate will need to be higher.

Lower interest rates are a function of increasing regressive GST taxes filling in for contrived crown failure to collect those due by corporations.

I can only recommend a longer term position in 10 year plus tenor Commonwealth Government Securities, if the Aussie PM gets his way - for the same reason that Bill Gross is a billionaire - Read more

Today our dollar was buffeted by the Aussie CPI data. We fell with them on the news, but strengthened against them. It is now at 67.4 USc, at 94.7 AUc and 61.1 euro cents.

New Zealand Dollar a Cautionary Tale of an Outsized Currency Market's Volatility

While the kiwi will fall “over the next couple of months,” in the short term, “the risk is for a bigger squeeze higher,” Attrill said. “It’s going to be a very, very sharp toy later this week. Handled carefully.” Read more