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A review of things you need to know before you go home on Tuesday; Co-op Bank goes risk-based for personal loans, Auckland Council eyes 136,000 new houses, Debbie is big, insurers promise more than half, swaps and NZD stable

A review of things you need to know before you go home on Tuesday; Co-op Bank goes risk-based for personal loans, Auckland Council eyes 136,000 new houses, Debbie is big, insurers promise more than half, swaps and NZD stable
28th Mar 17, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
No changes today. But the Co-operative Bank did change its personal loan rates to risk-based pricing, which will please those with a good credit score.

DEPOSIT RATE CHANGES
No rate changes here either.

PROVIDING FOR 136,000 NEW HOUSES
Public feedback is now open for the refresh of the Auckland Council Future Urban Land Supply Strategy. It will update the sequencing of land identified for future urban development. The present strategy was adopted in 2015 and covered future development potential for 11,000 hectares of greenfield land in north, north-west and south Auckland. The Auckland Unitary Plan now includes approximately 15,000 hectares of future urban land, which will enable around 136,000 new houses. It was hard getting to this point, but 'seeking public feedback' on the next phase won't be any easier.

A BIG ONE
The tropical cyclone slamming into northern Queensland is a big one with winds up to 263 km/h at Hamilton Island airport.

MORE THAN HALF BY YEARS END
Insurers are claiming that "the majority" of the November 2016 earthquake claims will "be complete" by the year end. For private insurers at least. The November 14, 2016 earthquake was not only the most complex of its type, but gave rise to one of the most expensive insured events anywhere in the world in 2016. Close to 38,000 claims are involved. In the residential space, claims span the country with the concentration of high volume-low value claims being in Wellington and Christchurch and high value-low volume claims in the top half of the South Island.

WHOLESALE RATES 'RECOVER'
Wholesale swap rates made back +2 bps today of the -3 bps they fell yesterday. The change was even across the board. But some of that recovery is evaporating at the time we publish this. The 90 day bank bill is unchanged at 1.98%.

NZ DOLLAR STABLE
The NZD is pretty much unchanged today at 70.4 USc. On the cross rates we are now at 92.3 AUc and 64.8 euro cents. The TWI-5 is now at 75.1.

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: RBNZ
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Source: RBNZ
Source: CoinDesk

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3 Comments

by  Stephen Hulme  |  28th Mar 17, 4:21pm 1490671260

As the New York Fed report in its March 27 report, "Oil prices fell owing to weakening demand" and explains as follows: "A decline in demand expectations together with a decreasing residual drove oil prices down over the past week."

While there was some good news, namely that "in 2016:Q4, oil prices increased on net as a consequence of steadily contracting supply and strengthening, albeit volatile, global demand" offsetting the "modest decline in oil prices during 2016:Q3 caused by weakening global demand expectations and loosening supply conditions," the Fed's troubling finding is that the big move lower since 2014 has been a function of rising supply as well as declining demand:

Overall, since the end of 2014:Q2, both lower global demand expectations and looser supply have held oil prices down. Read more

What comes first is the lack of growth, leaving economists to calculate an R* based on wherever interest rates happen to be due to their reactionary efforts trying (and inevitably failing) to do something about it. We can observe this relationship in any number of important ways:

How could this have happened? Ironically, for answers we can turn to the Fed for some very relevant pieces – just not in the way they were/are presented and understood. To start with, the San Francisco Fed provides us with an enormous clue derived from their lack of ability to offer an explanation for their R*:

These findings suggest that declining natural rates of interest are an international phenomenon and therefore stem in large part from developments common to many countries, rather than idiosyncratic national factors. This argues for more research that takes an international perspective in analyzing natural rates, by including data from economies besides the United States and by examining structural changes that influence natural rates across the globe. Read more

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by  unaha-closp  |  28th Mar 17, 5:25pm 1490675132

"The present strategy was adopted in 2015 and covered future development potential for 11,000 hectares of greenfield land [far away to the] north, north-west and south [of] Auckland."

And no, it was not hard getting to this point. All they did was identify all the land close to Auckland and make it forbidden to build on. Instead they picked several thousand hectares miles away in the middle of nowhere, added another 50% and shouted let the sprawl commence.

Now we get to rearrange the deck chairs. Consultation opens tomorrow.

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