Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today so far.
DEPOSIT RATE CHANGES
No changes here either.
GOVT FINANCES HEALTHY
The Crown accounts for the five months to November show an OBEGAL deficit of -NZ$768 mln versus a forecast of -$1.704 bln. Tax revenue is higher than expected while expenses are lower than expected.
HIGHER THAN EXPECTED
Inflation rose +0.4% in December quarter above the +0.3% market expectations. For the year it was up +1.3% pa, the first time inflation has breached +1% in two years. That takes it back inside the RBNZ's targeted 1% to 3% band.
STRONG DEMAND, LOWER YIELD
Yields fell slightly today in the NZGB tender of 20 year bonds. NZ$150 mln of 2037's were on offer and they received bids for NZ$544 mln, showing strong demand. The average weighted yield achieved today was 4.01%, just -5 bps below the previous equivalent tender.
PHASE TWO STARTS
The second phase of the Ultrafast Broadband infrastructure network was kicked off today adding another 151 more smaller towns plus 43 suburban fringe areas around the larger cities. This will provide access to around 423,000 additional New Zealanders in both rural and urban areas, from Ruatoria to Reefton.
BROAD TRACKING
We updated a whole range of commodity price data from the IMF today. Of interest is the very high and sustained rise in farmed salmon prices. And on that note the Government is proposing to relocate up to six salmon farms in the Marlborough Sounds "to locations with better environmental and economic outcomes".
GLOBAL SLIPPAGE
Latest findings from the 2017 Edelman Trust Barometer reveals trust in business, government, NGOs and media is in crisis. A global trust implosion has seen trust in media fall to all-time lows in 17 countries at 43% globally, while trust in government has also dropped in 14 markets to 41%. More and more people only want to read and believe what their social media echo chambers tell them. "Distrust" has become the lack of confirmation bias - if a news report doesn't confirm your bias, you treat it as 'fake'. People seem more likely than ever to believe 'alternative truth' made up for them. However, this survey does not reveal how 'trust' has changed in New Zealand. A separate release for us will come in mid-March.
TECH CHANGE CLOSER
Driverless vehicles are getting closer. New Zealand’s first trial of an autonomous electric shuttle will begin on private roads at Christchurch International Airport. HMI Technologies and the Airport will be working with NZTA and the Ministry of Transport on this. It will be a two year trial using a French-built Navya shuttle.
WHOLESALE RATES RISE
Following another sharp rise on Wall Street earlier today, local swap rates have risen strongly this time. They are up +3 bps for two years, up +5 bps for five years, and up +6 bps for ten years. All these rises are on top of yesterday's modest upswing. The 90 day bank bill is up +1 at 1.98%.
NZ DOLLAR ALSO RISING
The Kiwi dollar is rising still and at one point today broke through the 73 USc level. The NZD is not at 72.9 USc. On the cross rates, we are up also at 96.3 AUc, and at 67.8 euro cents. The TWI-5 index is now at 78.3. Check our real-time charts here.
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8 Comments
As the world puts the worst of the disinflationary threat behind it, tepid wage growth is shaping up as a key restraint to a genuine reflationary era taking hold in some economies. Nowhere is this more so than Japan.
Unlike the U.S. and Germany, where higher prices are driving up salary expectations, there is little pressure for pay hikes in Japan. The risk is that nascent inflation -- forecast to emerge this year on the back of resurgent oil prices and a weak yen -- erodes households’ purchasing power and crimps consumer spending. Isn't this the NZ experience?
Instead of a "virtuous cycle" in which rising wages boost spending, in turn spurring price gains that encourage more production and investment, consumers tighten their purse strings, undermining demand.
“Inflation works against households, whether it’s in Europe, the U.S. or Japan, but the negative impact is bigger here because pay hikes are harder to get,” said Masamichi Adachi, senior economist at JPMorgan Securities Japan. He sees “a good chance” that wages weigh down inflation in the world’s third-largest economy. Read more
How do Households get ahead when Low inflation = zero wage rises, high house prices (from foreign demand), but then mild/push inflation & interest hikes = low wage rises & less discretionary spending, & relatively large mortgages. Their governments have pitted them as competitors on a world market.
...high house prices (from foreign demand),...
Hmmmm...
Collective NZ bank housing mortgage assets rose 9.09% to $227.739 Billion for the year ending Nov. 2016.
Stats NZ claims: purchase [price] of newly built houses, excluding land (up 6.5 percent); with Auckland up 8.2 percent
I had reason to warn about over reliance on the shaky foundation of upward residential property asset valuations underpinned by bank sourced monetary growth, absent organic economic growth necessary to substitute for credit creation when banks are forced by capital scarcity to pull back. Read more
NZ house purchasers pay more, take larger mortgages, as they chase the upward price spiral, which is driven by immigration & purchasing directly&indirectly from foreign-related parties, international students, etc.
so NZ households, particularly those formed in the last 7 years struggle to improve financially.
Hey David some heads up! Transparency International are about immanently to publish their figures for this year, could be a good article to follow up. :)
http://www.transparency.org/news/pressrelease/media_advisory_corruption…
Quite funny. Currently events are strained through journalists' and editors' personal worldview so that every news-site, conservative and progressive, pumps out articles infused with partisan interpretation, and if readers are dissatisfied with this they are accused of seeking confirmation bias.
It is possible that journalism has never been objective but surely that is the ultimate goal it should be aiming for; fairly presenting both sides of an issue or, even better, leaving interpretation out of reporting? Otherwise why not just call journalists "propagandists" and have them provide a disclosure at the beginning of the article stating their political prejudices.
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