What happened Wednesday

A review of things you need to know before you go home on Wednesday; more houses for Wellington, larger trucks and buses, swap rates slip, NZD holds

9th Dec 15, 3:59pm by David Chaston

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

TODAY'S MORTGAGE RATE CHANGES
There are no changes to report today.

TODAY'S DEPOSIT RATE CHANGES
No changes today here either

AN EXCUSE
It was the interest.co.nz Christmas Party today so we are a little behind with updates. This story will be added to over the next hour or so.

MORE HOUSING FOR WELLINGTON
The three new SHAs cover around eight hectares of currently underused land in Shelly Bay, Newlands and Newtown and together with the existing Shelly Bay SHA, were announced today and will provide more than 330 new homes. These additions bring the total SHAs in Wellington to 24, with a total combined capacity of around 2,750 houses.

BIGGER. 'BETTER'?
The Government is looking at allowing larger, heavier trucks and buses on our roading network. A review is to look at increasing the permitted width limit, increasing limits on some dimensions, and allowing ‘50MAX’ vehicles operating on the 50MAX network to work without permits.

NZ BANKERS MORE OPTIMISTIC THAN INTERNATIONAL COUNTERPARTS
New Zealand bankers are the most optimistic they're prepared for risks and least anxious of those from 20 countries surveyed by PwC for the firm's annual Banking Banana Skins report. The report shows the top five fears for NZ banks, in order, as technology risk, social media, the macro-economic environment, conduct practices, and the pricing of risk.

HOT DEMAND
LGFA Bond Tender Number 34 for $105 mln saw massive demand today with over-subscriptions for all maturities. The average weighted accepted yield was 3.77%, in line with the previous tender.

LOOKING UP
GDP growth is expected to spring back after two disappointing quarters, says Westpac, on the back of stronger manufacturing and services. Rising tourist spending will help to keep the current account deficit in check.

WHOLESALE RATES SLIP
Local wholesale swap rates fell -1 bp across the board today. The 90 day bank bill rate steadied at 2.81%. Ahead of tomorrows RBNZ review the market now assesses the chance of a cut at 60%.

NZ DOLLAR HOLDS
The Kiwi is now at 66.3 USc, at 91.8 AUc, and 60.7 euro cents. The TWI-5 is now at 71.7. Check our real-time charts here.

You can now see an animation of this chart. Click on it, or click here.

And don't forget to make history and vote in the Flag Referendum.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

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.

12 Comments

by Stephen Hulme | 9th Dec 15, 5:05pm 1449633929

LGFA Bond Tender Number 34 for $105 mln saw massive demand today with over-subscriptions for all maturities. The average weighted accepted yield was 3.77%, in line with the previous tender.

Hmmm - I suppose Xmas cheer can excuse the fact that comparing the $allocated weighted yields across two tenders with differing tranches and $amounts across different durations called for an IRR outcome.

The 27's attracted a 4.3868% yield for $25million today versus 4.1483% for $60million in the previous tender.

by steven | 9th Dec 15, 7:29pm 1449642589

Commodities rout,

http://www.theguardian.com/business/2015/dec/08/commodities-rout-deepen…

and for OZ metals down as well,

http://www.bloomberg.com/news/articles/2015-12-08/anglo-scraps-dividend…

"The company is selling assets, closing mines and will eventually employ 50,000 people, compared with 135,000 now, Chief Executive Officer Mark Cutifani said on a conference call with reporters Tuesday, without giving a time frame. Anglo also scrapped its dividend for the second half of this year and for 2016. The shares plunged 12 percent, the biggest drop since 2009."

So the Fed will raise? cannot see it myself.

Time for 2.5% if not 2.25% from the RBNZ.

by steven | 9th Dec 15, 7:58pm 1449644336

Yet some think oil may rally.....interesting times.

http://www.thestreet.com/story/13390537/1/why-oil-is-about-to-start-a-h…

by Stephen Hulme | 9th Dec 15, 8:11pm 1449645102

Be careful what you wish for. ZIRP/NIRP has not done what it was supposed to, other than fund excess world wide capacity, which has forced down the price of products below their ability to service excess corporate capital debts. In response large wholesale banking operations have cut their lending capacity, which in turn is causing the clearing price of commodities and other industrial scale assets to further collapse in value. Good luck with further state sponsored redistribution of bank depositor's wealth, based upon a spurious redefinition of what constitutes inflation. Read original

by steven | 9th Dec 15, 8:20pm 1449645650

a) I dont agree, ZIRP stopped the GFC becoming The Great Depression mk2.
b) there is little evidence that excess capacity (can you provide some?) has been funded by Zirp but in fact that capacity was put in place before demand collapsed by grow for ever fools.
c) Excess corporate debt, well see b)
d) commodities are collapsing in value due to lack of demand.
e) inflation criteria for CPI and core is well documented and agreed on before the GFC, re-writing now because you dont like the answer is as wonky as show stats
f) I dont wish it, I see it as inevitable.

by Stephen Hulme | 9th Dec 15, 8:27pm 1449646043

Don't give up the day job.

by steven | 9th Dec 15, 8:32pm 1449646375

I wont as its an honest one, unlike some in here.

by sharetrader | 9th Dec 15, 9:02pm 1449648138

d) commodities are collapsing in value due to lack of demand
was mostly driven by (non central) china using a mountain of debt to build infrastructure, property development etc
when the funding stopped so did much of the demand but meanwhile suppliers had ramped up production to cope Also taking on debt to expand.
now you have the BHP and rio tintos etc deferring investment, down sizing and working on repaying debt.
are we in a better position because of ZIRP or have we made the problem worse by growing the world debt mountain.
when you have Saudi and china using their cash reserves up to maintain the illusion then we have a problem.
there is nothing wrong with a downturn even a big severity one. weak companies die, new ones sprout strong ones get stronger its the circle of life

by steven | 9th Dec 15, 8:29pm 1449646144

By the way looking back you fail to answer why raising the OCR will not cause a recession, how about an answer?

by Stephen Hulme | 9th Dec 15, 8:47pm 1449647268

We have a USD recession at ZIRP. Thus that is no longer an option.

That is because there is, namely that the global “money supply” of wholesale eurodollars is contracting both to reflect this altered, perhaps permanently shrunken global economy and to be the very means to enforce those perceptions. The PBOC is not trying to “buy yuan” that the private market is discarding in outflows, they are hanging on, barely, straining to fill the “dollar” gap as the eurodollar tide recedes; supplying “dollars” in various wholesale formats so that the whole financial network, dollar to yuan, onshore and off, doesn’t just blow open (again) into chaos and full disorder. The exchange rate, by virtue of telling us the relative cost structure of financing “dollars”, is a barometer of funding stress for China. Read more

by MortgageBelt | 9th Dec 15, 8:40pm 1449646834

OCR unchanged at 8.25%. Dec decision.
Wait,... That was Dec 2007. Times have changed,
But still house prices were soaring at that time/rate.

by sharetrader | 9th Dec 15, 10:41pm 1449654080

the high interest rates slowed the growth of debt from 2007
http://www.rbnz.govt.nz/statistics/key_graphs/household_debt/
In the 20 years to 2011, total housing and consumer loan debt increased around six-fold in dollar terms. As a ratio of household disposable income, the percentage at June 2011 of 147% is about two and a half times that of 58% at March 1991. Through the mid-2000s, household debt grew strongly, at an average annual rate of over 14% in the five years to June 2007. The rate of growth slowed sharply from 2007, averaging well under 4% per annum in the four years to June 2011. This deceleration in the rate of growth of household debt arrested the growth in the debt to income ratio from 2007. Falling interest rates have been the main driver of falling interest servicing as a percentage of disposable income from 2008.