What happened Wednesday

A review of things you need to know before you go home on Wednesday; HSBC raises some TD rates, lower listings, higher prices, record high employment, swap rates drop, NZD falls

4th May 16, 3:59pm by David Chaston

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

TODAY'S MORTGAGE RATE CHANGES
No changes announced today.

TODAY'S DEPOSIT RATE CHANGES
HSBC has cut its e-saver account to 1.75% from 2% today. But it has raised its term deposit offers for terms of 3 to 5 months, offering 2.55% for 3 months, 2.50% for 4 months, and 2.90% for 5 months. None are market-leading however.

THE NET RESULTS
Over the past 24 hours there has been a lot of economic news. Real market reaction to it all is distilled in the equity, interest-rate, and currency markets. And the NZX opened lower following the RBA rate cut, then recovered all those losses to be unchanged at 4pm. (The ASX200 is down more than -1%.) The wholesale interest rate markets rose sharply yesterday, but fell even more sharply today for a net loss of about -3 bps. Our currency dropped against most late yesterday (except the Aussie) and has fallen further today (except against the Aussie).

STILL ON THE BACK FOOT
Global dairy prices continue to bounce around the bottom in the latest auction. The GDT Index was down -1.4% from two weeks ago after two small rises. But both Wholemilk powder ( +0.7%) and cheese ( +1.8%) were higher. Given the recent falls in the NZD, the results were better in local currency. Today's auction did not change the minds of any analysts on future prospects.

FEW WANT TO SELL
The latest report from realestate.co.nz for April shows that the level of residential property for sale is now at its lowest level ever. There are now only 14 weeks of sales left listed on industry websites. In Auckland and Hamilton it is 10 weeks, Christchurch 15 weeks, Wellington only a meager 6 weeks. Still, asking prices took a dip in April.

RECORD HIGH EMPLOYMENT
For the first time ever, the total number of people who are employed exceeded 2.4 mln in the March quarter. Statistics NZ reported today a +1.2% jobs growth rate in that quarter. Private sector wage growth was +1.8% for year, public sector wage growth +1.4% pa. Both the rise in jobs and wages was higher than most forecasters had expected and the currency firmed on the news. The jobless rate rose to 5.7% although that was caused by a further rise in the already high participation rate, now at 69.5% on an unadjusted basis.

A SPREADING 'PROBLEM'
Two key housing market reports were out today. The Barfoots report on Auckland revealed another record high median price of $820,000 in April. Prices remain high but the number of sales and new listings are falling rapidly as the market prepares for the winter slowdown. A separate report by QV shows that rising housing values in Hamilton and Tauranga are now leaving Auckland in the shade. In Hamilton they are up +25% in a year, in Tauranga they are up +24%.

DEFLATING COMMODITY PRICES
Renewed NZD/USD strength saw NZD commodity prices decline -2.8% in April. Since the start of the year world prices in the index have fallen -1.6%, but NZD prices were down 5.7% over the same period. Commodity prices are roughly one-third below early 2014 peaks in world price terms, but are around one quarter below historic peaks in NZD terms.

WHERE DISTORTIONS SEEM NORMAL
Last week's mortgage approvals data was affected by the shorter ANZAC week trading so it is hard to glean much from the numbers. But the average mortgage approved did hit yet another record. now at $246,226. This time last year it was only $219,734, so that is a +12% rise. Given the distorted housing markets, that seems normal these days. We are inured to this crazy bubble.

GOT ALL THE RIGHT INFO?
The Commerce Commission is reminding lenders that failing to disclose key information to borrowers in their consumer credit contracts could result in the repayment of all fees and interest on each loan for the period until disclosure is corrected. Changes made to New Zealand’s credit laws (Credit Contracts and Consumer Finance Act 2003 (CCCFA)) in June last year mean lenders must disclose specific key information to borrowers, including the term of the loan, total amount, interest, fees, any security taken and the effect of that security, and the borrower’s right to apply for relief on grounds of unforeseen hardship.

ONLINE PURCHASES COST MORE
Total online retail spending by New Zealanders in March was up +11% on spending in March last year. Online spending at local merchants was up +9% on March last year, slightly ahead of the +6% annual growth rate for sales at physical stores. This data is according to the BNZ/Marketview survey out today. Online spending at offshore sites was up +14% on March last year. Part of this growth will reflect higher offshore prices in NZ dollar terms. For example, the NZD has depreciated -10% against the USD and -12% against the Euro since March last year.

WHOLESALE RATES DROP
The +4 bps rise we saw yesterday has been followed by a -7 bps fall today for most terms from 2yrs and longer, -8 bps for the 10yr term. NZ swap rates are here. The 90-day bank bill rate also fell but only by -1 bp to 2.37%.

NZ DOLLAR DROPS
The Kiwi dollar has fallen just as sharply and is now just on 68.9 USc, at 92 AUc and 60 euro cents. The TWI-5 is at 71.7. Check our real-time charts here.

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

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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35 Comments

by mack | 4th May 16, 4:46pm 1462337167

To
Andrew Little ,
I totally agree there should be a benchmark for rental properties , however I also believe that it there should also be stronger powers for landlords , in the form of an open register of tenants that have been found guilty of rent arrears and property damage through tenancy tribunal.
I have seen first-hand the damage done by tenants and the drawn out process landlords go through to try and recoup their costs and as such the next tenant in the property ends up with the reduced quality of the property on offer .
This is reflected in the fact that the housing NZ stock around the country has fallen into such a state of disrepair unwanted by any property management company .
I’ve heard the argument that this is the cost of doing business in the rental property game and my answer to that is ,if this is the attitude then that it is a straight line business deal of supply and demand then don’t rent the property … that’s business .
However this attitude will get neither potential tenant nor the landlord far .
I have seen good properties ruined by the tenants in short periods of time by simple things like not opening a window and allowing mould to grow ,uncleaned homes attaching vermin I can show you plenty of photo evidence of good quality homes ruined by poor quality tenants .
These are homes that in the past had been lived in by generations of families not dying from illness as the property was cleaned regularly by the occupants
These same tenants then move on to wreak havoc in the next property diminishing the quality of homes along the way ,
This would be slowed if not stopped in a tenant register was allowed instead these people know that they cannot be outed due to privacy laws .
Despite growing popular opinion landlords do not have an endless supply of money to keep renovating their properties while waiting for arrears and repayments for damage to be drip feedback by offenders at $20 per week.
Any legislation has to work for both the parties involved and this will in turn work to benefit the community as whole by providing a higher quality of rental properties available as those that damage properties will become more accountable, damaged homes repaired quickly and available to good quality tenants and landlords can have trust in and be able to value add to the property so that they are more desirable instead of trying to patch the properties up.

Hope this helps,
Regards

by dictator | 4th May 16, 5:05pm 1462338321

A comment from an actual landlord. It's seeing issues like these that some relatives deal with that puts me off ever getting a rental as an investment. I barely have free time as it is, and I don't need any more problems.

by sharetrader | 4th May 16, 7:10pm 1462345800

same here found and easier way to make money rather than repair bits and pieces most weekends, and I was luckier than some of my relatives, some of the damage wow,
I am glad not involved now with P around and the new laws coming, insulation and heat pumps

by Afewknowthetruth | 4th May 16, 5:49pm 1462340983

When humans lived in caves they threw their rubbish into corners, lit fires on the floor, drew pictures on the walls, and urinated and defecated on the ground outside.

Humans have not changed much in 50,000 years, and the façade of civilisation is very thin.

Being tied to a property via ownership tends the raise the standards of humans slightly, but I must say that every pre-owned house I have bought over a period of 35 years (six) had doors that didn't open or close properly, windows that didn't open and close properly, mould, fly shit on the ceilings, insulation that had not been fitted properly, blocked gutters, drainage problems etc.

Most people are basically lazy, rather selfish, and somewhat irresponsible, and legislation isn't going to fix that..

by Kakapo | 4th May 16, 5:58pm 1462341480

Anyone unable to deal with wired-in human nature and fallibility has no business being in residential property. Wrong risk profile. But then, even in commercial, shenanigans like massive grow-ops and P labs and piles of rotting garbage aren't unknown.

by Henry_Tull | 4th May 16, 6:53pm 1462344794

All told a pretty good set of practical issues that would suggest bank loans to the buy to let industry should not use the same light risk weightings of owner occupier loans.
Buy to let loans have a different and greater risk profile to those of the owner occupier.

Does Ken lobby on behalf of the buy to let industry?

by sharetrader | 4th May 16, 7:12pm 1462345974

especially as most P labs are set up in rentals and afterwards they are pretty much worthless without major repairs costing more than can be recouped

by xelnaga | 4th May 16, 7:27pm 1462346863

Is it true these tests don't really distinguish well between consumption and manufacture?

by steven | 4th May 16, 9:54pm 1462355653

They can determine degree of contamination, but the problem is even a very small % means the walls, ceilings etc all have to be removed.

by J.C. | 4th May 16, 6:05pm 1462341919

The march towards neo-feudalism

by KH | 4th May 16, 6:19pm 1462342796

All decisions of the Tenancy Tribunal should be online, all searchable by name , with clear ID of all involved.
Should be the go to site for all landlords and tenants thinking of getting into an arrangement with somebody.
And if your behaviours follow you forever. Tough.

by BadRobot | 4th May 16, 7:10pm 1462345829

Can't do that - got to protect the guilty.

by sharetrader | 4th May 16, 7:19pm 1462346363

the tenancy tribunal are toothless. results should be public and they should have the power for payments to be deductible from wages or benefits, gees they never go much above 20 a week no matter the cost,
second they should have the power to ban bad landlords (repeat offenders) from owning and renting property

by J.C. | 4th May 16, 8:51pm 1462351861

Landlords should have access to the Wanganui Computer Center. Yes or no?

by Kakapo | 4th May 16, 9:24pm 1462353875

It hasn't existed for years.

Police database, hell no. And it would be extraordinarily illegal.

by steven | 4th May 16, 9:52pm 1462355565

No.

by profile | 4th May 16, 7:43pm 1462347809

"The trial of 12 people accused of involvement in a multi-billion euro carbon-trading fraud opened in Paris on Monday, a case that has been described by French authorities as “the heist of a century”.

Shady deals, offshore accounts, money laundering… The trial has all the hallmarks of a crime thriller and comes nearly seven years after French authorities cracked down on a carbon-trading scheme that cost the European Union €5 billion – including €1.6 billion in France – according to Europol."

Though peanuts when compared to the $1.5 trillion/annum climate change industry.

http://www.france24.com/en/20160503-france-trial-multi-billion-carbon-e…
http://www.insurancejournal.com/news/national/2015/07/30/377086.htm

by Afewknowthetruth | 4th May 16, 9:24pm 1462353888

It pays to distinguish between actual climate science and the various scams that have been set up in an attempt to profit from meltdown of the planet or pretend that there is some techno-fix that can prevent meltdown of the planet. Climate science goes back to the 19th century, when Tyndall (1859) began investigating the properties of gases and Arrhenius (1896) calculated that burning coal would cause planetary overheating.

Climate scams are something completely different, associated with corrupt and ineffective governments and profiteering/disinformation on behalf of corporations. The NZ government has been up to its eyeballs in financial scams (such as carbon trading) which do nothing whatsoever the reduce emissions but do allow financial organisations to generate fiat currency through scam transactions. (I began pointing this out in 2007).

None of the so-called climate deals -from Kyoto on 1997 on- have made any difference to actual emissions, which have burgeoned in all nations except those that went through economic collapse or shifted their heavy industries to Asia (thereby shifting the source of pollution without actually reducing it). The latest, Paris 2015 was dead in the water before it was even ratified. As James Hansen ('grandfather of modern climate science) put it: "Fraud."

At 408 ppm, atmospheric CO2 is the highest it has been for at least 15 million years (the last time it was 400ppm oceans were 23 metres higher, and we are still playing catch-up, due to the massive thermal lag of the oceans). And the rate of annual increase has been increasing dramatically. Recent data indicate between 3 and 4 ppm per annum (versus the 2005 - 2014 average of 2.11 ppm per annum).

https://scripps.ucsd.edu/programs/keelingcurve/wp-content/plugins/sio-b…

New areas for operating climate scams include 'geo-engineering' where by fantasy schemes for 'sucking CO2 out of the atmosphere' are promoted, 'fantasy schemes to launch mirrors into space' and 'fantasy schemes to generate high-level dust or clouds', none of which will work, of course, because 'we' are still burning around 85 million barrels of oil a day and millions of tonnes of coal (nobody actually knows the figure) for an estimated total of about 35 billion tonnes of extra CO2 per annum entering the atmosphere and oceans.

Besides, the chief source of problems is 'solutions'.

The situation is already catastrophic:

http://thinkprogress.org/climate/2016/05/03/3774789/april-record-arctic…

and will be made a lot worse.

by Afewknowthetruth | 4th May 16, 9:36pm 1462354563

Perhaps I should have highlighted the following, for the benefit of climate change deniers:

'This was the hottest four-month start (January to April) of any year on record, according to newly-released satellite data.'

..... the University of Alabama at Huntsville (UAH) satellite data, which show that the lowest part of the atmosphere (the lower troposphere) was an impressive 1.3°F (0.71°C) above the historical (1981-2010) average — a baseline that is itself 0.8°F (0.45°C) hotter than pre-industrial levels.

.....So it’s easily been the hottest start to any year in the satellite record. Sorry Ted Cruz and other climate science deniers — we are observing human-caused global warming in every single dataset, including the satellites.

.... I asked co-author Professor Jennifer Francis of Rutgers, a leading expert on the connection between Arctic amplification and extreme weather, to summarize the findings. She explained:

Our new study does indeed add to the growing pile of evidence that amplified Arctic warming and sea-ice loss favor the formation of blocking high pressure features in the North Atlantic. These blocks can cause all sorts of trouble, including additional surface melt on Greenland’s ice sheet (the primary focus of this study) as well as persistent weather patterns both upstream (North America) and downstream (Europe) of the block. Persistent weather can result in extreme events, such as prolonged heat waves, flooding, and droughts, all of which have repeatedly reared their heads more frequently in recent years.

What happens in the Arctic does not stay in the Arctic.'

http://thinkprogress.org/climate/2016/05/03/3774789/april-record-arctic…

by profile | 4th May 16, 11:02pm 1462359777

All that frothing at the mouth and nary a mention of el nino. Going by UAH - glad you accept btw - April 98 was warmer than April 16. So we've added ~30% post industrial CO2 since then and the temp anomaly is lower. Now that is a lousy correlation. Cherry picking el nino's - how predictable.

"I expect average cooling to continue throughout the year as El Nino weakens and is replaced with La Nina, now expected by mid-summer or early fall. Nevertheless, 2016 could still end up as a record warm year in the satellite record…it all depends upon how fast the warmth from the El Nino dissipates and La Nina sets in."

So you'll have to wait and see. Perhaps you could worry about mmr vaccines, acid rain or desertification in the meantime.

by Afewknowthetruth | 5th May 16, 9:38am 1462397910

Hilarious, profile. You cherry-pick 'ancient' data of dubious worth, and then accuse others who provide broad analysis and the most up-to-date data of cherry-picking!

You completely ignore all global trends and search frantically for one small piece of datum that momentarily bucks a global trend, and then construct a phony narrative around that one small datum.

Meanwhile, in the real world everything gets made rapidly worse.

Daily CO2

May 3, 2016: 407.75 ppm; May 3, 2015: 403.60 ppm. Up 4.15 ppm year-on-year. (2005 - 2014 average 2.11 ppm per year)

and the ice just keeps on melting:

https://ads.nipr.ac.jp/vishop/vishop-extent.html

by profile | 5th May 16, 1:11pm 1462410702

Yes it sucks when the datum doesn't fit the hypothesis but that is science isn't it. '98 satellite is now "ancient" is it - now that is grasping as staws.

Click on your sea ice link and go to Antarctic. Note how Antarctic sea ice extent today is higher than the 1980's average. Not much correlation with CO2 is it? Cursed inconvenient datum. Perhaps Mike's Nature trick could fix it up? Ancient though - 1980s - so I guess irrelevant.

by steven | 4th May 16, 9:51pm 1462355516

So you and millions refuse to deal with CC, and now whine as the costs mount. Well if we did not have climate change to deal with there wouldnt be this cost now would there.

by profile | 5th May 16, 2:03am 1462370618

It's always changed Steven. I resent politicans and gravy trainers diverting resources from real problems today like basic sanitation, vaccination and education etc for a hypothesis.

by steven | 5th May 16, 7:17am 1462389468

and those changes in the past led to huge physical changes and we will have huge changes to adapt to, but the changes are all man caused so can be stopped by, man.

No hypothesis as the evidence is available, copious amounts of it.

Oh and what about the diversions of money into weapons? factors bigger than climate change costs so far, that's OK?

by groma | 4th May 16, 8:42pm 1462351330

Is an unemployment rate of 5.7% framed as being 'good news' here?. This is 1.5 pp above anything like where full employment sits. To say we have 'record high' employment is misleading as strong pop growth means we also have 'record high' working age population! The rate is what matters, even if participation is high, as it shows how far demand for jobs exceeds what's available. It's no better than Australia's at the moment.

by steven | 4th May 16, 9:48pm 1462355287

Look around the world, 5.7% is good news.

by steven | 4th May 16, 9:47pm 1462355228

You missed Donald Trump is now pretty much effectively lined up for a shot at the Whitehouse. Personally I think he has a good chance at it, and god help us all if he wins.

by positivelywallstreet | 4th May 16, 9:59pm 1462355977

Steven,
Remember Ronald Regans, and Richard Nixon and many others...he could be the best thing to happen to america..

by steven | 5th May 16, 7:23am 1462389819

You missed Bush jnr. If you look at RR's legacy economically he was a disaster. Richard Nixon? where do you want me to start on that dishonest son of a bitch? How about he killed Thorium research because it didnt produce nuclear weapons or benefit his constituents. If we had that capability today the world would be a far safer and better off place IMHO.

Both were basically in-competent and one criminal.

by Zachary Smith | 5th May 16, 7:34am 1462390443

I agree Steven. Trump will be incomparable to those guys.

This is how I view Trump

by positivelywallstreet | 5th May 16, 7:47am 1462391274

I said that about Obama and was quite disappointed
As Dylan says..
"Who will take away the llicence to kill"

by rastus1 | 5th May 16, 9:04am 1462395853

Jiimy Carter put solar panels on the Whitehouse, Regan took them dow. That reflected the change in foreign policy (corporate energy domination by whatever means) re energy...hence the unlikely marriage of Saudi and the US (and eventually the end of Sadam who refused to sign up)..

by Afewknowthetruth | 4th May 16, 10:06pm 1462356369

Since 'profile' has raised the matter of climate change it is worth noting that the Himalayas are on fire. I am reminded of the early 1960s film 'The Day the Earth Caught Fire'.:

'It’s the highest mountain range in the world. Featuring peaks that scrape the sky, dwindling glaciers, and lush forests, these gentle giants are essential to the prosperity and stability of one of Asia’s greatest lands. For rainwater and glacial melt flowing out of the Himalayas feeds the rivers that are the very life-blood of India and her 1.25 billion people.

But in 2016, amidst what is likely to be the most intense period of extreme heat to ever impact India, the Himalayas are burning.

Throughout April and into early May temperatures have soared to well above 104 degrees Fahrenheit (40 C) and to sometimes higher than 122 F (50 C) all across the broad plains at the feet of the Himalayas. There, water stress now affects more than 330 million people. There, water trains are now necessary to keep whole towns from suffering dehydration. Farmers who have seen fields transformed into a baked white hard-pan are migrating to the cities in search of food, water and work. And armed guards now patrol the local water sources in regions hardest hit by the drought — preventing private farmers from stealing public water supplies for their crops.

The temperatures are so high that more than 300 people have now perished as a result of heat injuries. And Indian officials have now banned cooking during the day in an effort to reduce loss of life. But today the forests themselves are cooking as the air is filled with the smoke of more than 21,000 fires burning upon the flanks of India’s great mountain ranges.'

https://robertscribbler.com/2016/05/03/the-fires-of-climate-change-are-…

by steven | 5th May 16, 7:30am 1462390231

Meanwhile the world financial system staggers on through death of a thousand cuts,

"The world is in effect playing a high-stakes game of pass the parcel, with over-indebted countries desperately trying to export their deflationary problems to others by nudging down exchange rates."

sound familiar?

and the icing,

"Prices fell by 0.2pc in April and deflation is becoming more deeply-lodged in the eurozone economy, with no safety buffers left against an external shock. The European Commission this week slashed its inflation forecast to 0.2pc this year from 1.0pc as recently as November."

http://www.telegraph.co.uk/business/2016/05/03/aep-us-dollar-plunges-as…

Great Depression mkII coming to your door, pity I was hoping it would hold for 12~18months so I am debt free.

oh well.