A review of things you need to know before you go home Tuesday; BankDirect closed for good, gold jumps, quake impact on Kaikōura, Aussie housing in doldrums,swaps slip, NZD stable

A review of things you need to know before you go home Tuesday; BankDirect closed for good, gold jumps, quake impact on Kaikōura, Aussie housing in doldrums,swaps slip, NZD stable

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

MORTGAGE RATE CHANGES
No changes to report today. But please note that ASB has announced it is closing its BankDirect brand.

DEPOSIT RATE CHANGES
Ditto for BankDirect. The Cooperative Bank has reduced their 1 month TD rate by -10 bps to 2.15%. Their Step Saver account has also been reduced, this one by -20 bps to now at 2.20%.

GOLD SPARKLES
The price of gold hit US$1,310 following the rise in Korean tensions. That is a one year high in US dollars, but only a three month high in NZ dollars.

A NEW RBNZ ASSISTANT GOVERNOR
The Reserve Bank has named Sean Mills as assistant governor and head of operations. He starts on November 29, replacing Geoff Bascand who is becoming head of financial stability next month. Mills is currently chief information officer at the Department of Corrections.

HEARTLAND BANK 5-YEAR BOND TO PAY 4.50%
Heartland Bank is to borrow $150 million through an issue of five-year, unsecured, unsubordinated bonds. The bonds will pay investors 4.50% per annum, being a margin of 1.88% over the underlying five-year swap rate. The bonds, which will be quoted on the NZX debt market, have a BBB credit rating from Fitch.

STILL GOING BACKWARDS
In Australia, a drop in new apartment sales have contributed to the further falls in new home sales nationally. They peaked in mid 2015. July’s result was driven by a -16% drop in multi-unit sales and a "more measured" fall in detached house sales. The large drop in multi-unit sales this month reverses the strong sales volumes late in 2016 and early 2017.

ONLY A BANK CAN REPORT LIKE THIS
BNZ's full nine-month Disclosure Statement was released today. In the last 12 months to June 2017, BNZ made a tax-paid profit of $925 mln after paying $358 mln in tax. (Their payroll is only about $450 mln annually. Only large banks can make a tax-paid profit of double their payroll.) And, "only" 46.6% of its lending is for housing, and in my view this factor alone makes their balance sheet the soundest of all local retail banks. Sadly, BNZ are trying to raise that level, responding to the current twisted capital adequacy calculation rules.

25% VANISHES
Just how hard a community can be hit economically by a major natural event has been set out in a Statistics NZ review today. Last year’s Kaikōura earthquakes caused spending in the town to fall -25%. The sales drop came as the quakes choked off the town’s usual summer rush of tourists.

NOT GOING AWAY - FOR 40 YEARS (AT LEAST)
Australia's housing affordability crisis is likely to continue for another 40 years unless there are major changes to the market, according to the latest report from the Committee for Economic Development of Australia.

WHOLESALE RATES DOWN AGAIN
Right at the end of trading in New York, their UST 10 yr yield suddenly dropped -3 bps today to 2.13%. This was one market reaction to the North Korean missile firing "over Japan". Our local swap rates have followed and are -1 to -4 bps across the curve. The 90 day bank bill rate has also given up -1 bp to 1.95%.

NZ DOLLAR STABLE
The NZD has reacted little to the missile launch and is still at 72.4 USc. On the cross rates we are also basically unchanged at 91.3 AUc and at 60.5 euro cents. The TWI-5 is stable as a consequence at 74.5. The bitcoin price is up just +1.4% today to US$4,427, closer to its all-time record of US$4,496.

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Right at the end of trading in New York, their UST 10 yr yield suddenly dropped -3 bps today to 2.13%

Oh dear.

According to orthodox theory, if interest rates are falling because of term premiums then that equates to stimulus. Term premiums are what economists have invented so as to undertake Fisherian decomposition of interest rates (so that they can try to understand the bond market; as you might guess it doesn’t work any better). It is, they claim, the additional premium a bond investor demands so as to hold a security that much longer (more return to entice an investor to buy a 5-year UST rather than a 4-year, or a 10-year as opposed to a 2-year).

This is, of course, backwards. Lower term premiums would relate to curve dynamics. It is not risk that applies here but opportunity; or, in the parlance of John Maynard Keynes, liquidity preferences. The greater the opportunity in the real economy, the more term premiums demanded for investors to forego that opportunity and hold a liquid substitute. It is why yield curves steepen in recovery. Read more

12
up

Late in the day - more good news for the billshitter...

"Prime Minister Bill English fought to have his police statement over the Todd Barclay affair withheld from the public despite assuring Parliament it was a police decision to keep his involvement secret."

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=11913303

.. and almost half of NZ think they can trust the guy - Kiwis so dumb lah!

Not good for a Catholic lad. Commandment number 8: Thou shalt not bear false witness.

That's ok Rick, we don't have bears here

By some measures, Japan’s current run of economic growth shapes up well against booms of years gone by.

A quick glance at gross domestic product data shows six straight quarters of expansion, with a seventh on the way, which would be the best performance since 2001.

A Cabinet Office panel of experts, who examine a complex array of gauges including industrial production and the coincident index to determine business cycles, may in time judge that present upswing is the second-longest of the postwar era.

Should this streak last through September, it will beat the so-called “Izanagi boom,” a 57-month expansion through July 1970 that’s named after one of two deities who legend has it created the Japanese islands.

But as the chart shows, economic growth is no longer providing significant improvement in compensation for workers Read more

Is the social contract torn asunder to irrevocably favour corporations?

I think this is a new one for Auckland - inner city pods to rent, a bargain at $200 per week.

http://www.trademe.co.nz/1405614030

Looks like a single small apartment from which the owner is looking to increase their yield.

Truly a "sign of our success" and a "good problem to have", if ever I saw one.

I bet the insurance company and body corp love the idea.

It's been removed.

No it hasn't.

Will be soon I predict now it's all over social media - can't be legal.

Wow those pods look great. This is a big step forward to developing Auckland as New Elysium. Where are those people who teach our kids, work in shops and mow our lawns going to live? Well, there's your answer right there!

Anyone know results for trade me rent price index for walk ago bay of plenty???

Australia's housing affordability crisis is likely to continue for another 40 years unless there are major changes to the market.....

Almost biblical in its prophecy. In pre-modern times, the Church, superstitions, and mythology shaped the beliefs of the sheeple. Nowadays, organizations such as CEDA supplement that control through sponsored research and lobbying, but best framed by forecasts with tremendous magnitude, but light on any explanation for public understanding and always with the get-out-of-jail assumption like "unless there are major changes to the market", which effectively make the claims meaningless.