What happened Wednesday

A review of things you need to know before you go home on Wednesday; mortgage rate rises, dairy auction slippage, weak Aussie data, debt stays high, swap rates unchanged, NZD rises

18th Jan 17, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
The Co-operative bak raised most rates, including its floating rate. Heretaunga Building Society raised its 2 year rate.

DEPOSIT RATE CHANGES
No changes today for any savings or term deposit rates.

NO 2107 RISES
Today's dairy auction brought little change - but because it is in USD, the effective prices in local currency are lower. Some analysts are questioning the wisdom of higher volumes on the platform.

MORE SLIPPAGE
In Australia, both building work completed, and engineering construction in the September quarter both fell.

FAKE NEWS? NOW FAKE DATA
Some league tables are just strange. The latest is the Happy Planet Index. This ranking puts Costa Rica on top, followed by Mexico. New Zealand is at #38 behind Nicaragua, Bangladesh, El Salvador, Guatemala and Venezuela. Australia is ranked #105. This is a ranking system devised by the nutty UK "New Economics Foundation". I think they started with a political world view and then selected "data" to meet their 'conclusions'. Maybe not. But their 'conclusions' won't be doing their cred any favours.

GROWTH DIVIDEND YET TO SHOW
For all the talk about our coming budget surpluses, the data out today about the gross level of Government securities on order shows little change. There is no noticeable reduction in central government debt yet.

BACK IN THE SADDLE
Our auction database entries are about to start with real estate companies scheduling them again for the new year. Next week we will have early results.

WHOLESALE RATES UNCHANGED
Despite the sharp drop in UST benchmark rates overnight, local rates only fell by -1 bp across the curve. The 90 day bank bill is unchanged.

NZ DOLLAR UP AGAIN
The US dollar is softening, but we are making gains against most others. The NZD is now at 72 USc, up another 1c today. On the cross rates, we are also up at 95.5 AUc, and at 67.4 euro cents. The TWI-5 index is at 77.6. 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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5 Comments

by Stephen Hulme | 18th Jan 17, 4:35pm 1484710537

For all the talk about our coming budget surpluses, the data out today about the gross level of Government securities on order shows little change. There is no noticeable reduction in central government debt yet.

Nonetheless, a tad more conservative than the neighbour?

The Australian Office of Financial Management has priced A$9.3 billion of December 2021 bonds at 2.24% yield, according to a statement from the government funding arm. Read more

by Stephen Hulme | 18th Jan 17, 4:48pm 1484711300

After gorging on a record amount of Japanese bonds in 2015 and the first half of last year, China took a breather. That may end as a widening interest-rate gap starts burnishing the allure of its neighbor’s securities once again.

The Bank of Japan’s mega stimulus in recent years made it attractive for foreigners buying Japanese government bonds when hedging the exposure through the swaps market. Dollar holders benefited from the discount offered to borrow yen. China, one of the largest holders of dollars outside the U.S., was a big buyer of the bonds, BOJ data show. Read more

It is noticeable China's largest JGB purchases were made when the JPY cross CCY basis swap was most negative, thus more profitable.

by MortgageBelt | 18th Jan 17, 5:10pm 1484712643

Fake news and fake data. I guess we have seen a lot of this with the 'foreign buyer' 'data' in NZ.
And the downgrading now of most news channels, into either consumer complaint outlets, or conventional 'wisdom' apologists. CNN and Stuff etc will never be viewed the same after 2016.

by Penguin | 18th Jan 17, 7:02pm 1484719379

This will give the Auckland property bulls something to hang on to!! :)
https://www.bloomberg.com/news/articles/2017-01-17/hong-kong-and-mumbai…

by NM | 19th Jan 17, 8:34am 1484768093

Could a knowledgeable financial person please explain to me why some banks (ASB, BNZ, TSB) are offering reasonable rates for a 9 month TD, and again for two year TD, while the 12 month rate is not changing? What’s the difference to these banks between a 9 month TD, at say, 3.6%, and doing the same for 12 months?