What happened Wednesday

A review of things you need to know before you go home Wednesday; mortgage and deposit rate changes; ANZ Job Ads; local authority finances; Ponzi scheme; patient portal usage; Australian GDP; local rates lower; NZD up

6th Sep 17, 3:58pm by Suraj Varma

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

MORTGAGE RATE CHANGES
The Co-operative Bank has reduced its 1 yr and 2 yr standard and owner occupied rates by -4 bps. See rates here.

DEPOSIT RATE CHANGES
Heretaunga Building Society has reduced its call account rate by -25 bps to 2.00%. Asset Finance has reduced its 2yr term deposit rate by -10 bps and 3 yr by -5 bps to 5.30% and 5.70% respectively.

JOB ADS
ANZ Job Ads report, which measures the number of ads available on SEEK and TradeMe, showed that the number of jobs ads, seasonally adjusted, bounced back +1.0% in August to a record new high. Job ads growth has slowed to just +0.6% q-o-q and annual job ads growth has eased from a peak of 20% in January to 11% in August. Job Ads in Auckland have fallen for three months straight and Auckland is now at the bottom of the national table in terms of annual growth. The service sector is the big driver of job ads at the moment, with the construction sector running out of steam and the retail sector facing headwinds.

LOCAL AUTHORITY FINANCES
On a seasonally adjusted basis, local authorities booked a total operating income of $2.4 bln in the June 2017 quarter, up 0.5% on the previous quarter and 6.5% on the June 2016 quarter. On an actual basis, total operating income was $2.6 bln, which was made up of $1.4 bln in rates, $148 mln in regulatory income and petrol tax, $375 mln in grants and subsidies, $240 mln in investment income and $459 mln in sales and other operating income.

MAN DECEIVES FRIENDS AND ASSOCIATES
Shane Richard Scott has admitted to charges brought by the Serious Fraud Office (SFO) in relation to a Ponzi scheme he operated. Mr Scott had some friends and associates that invested with him over a number of years and some who were relatively short term. The long term investors believed he had been working on various overseas investments and short term investors believed profits would be realised from property developments and import/export deals. SFO was happy that Mr. Scott revised his plea to guilty as it provided the victims with some closure and saved the public some money as a result of the matter not going to trial.

MORE THAN DOUBLE
The number of people signing up for a patient portal has more than doubled over the last year. The portal allows patients to access their personal health information whenever they need it, book appointments, request repeat prescriptions and message staff securely from their computer or smartphone. 233,839 people registered between June 2016 to June 2017, taking the total people registered to 407,049.

AUSTRALIAN GDP
The Australian economy grew by +0.8% in the June quarter in seasonally adjusted real terms. GDP in current dollars fell 0.1% as a result of declining commodity prices. On a year-on-year basis, the economy, in real terms, grew by +1.80% in the June 2017 quarter when compared with the June 2016 quarter.

WHOLESALE RATES LOWER
Local swap rates curve is lower and flatter today with the 2yr rate down -3 bps, the 5 yr down -5 bps and the 10 yr down -6 bps. The 90 day bank bill rate is unchanged at 1.95%.

NZ DOLLAR UP
The NZD is higher from this time yesterday at 72.3 USc. Overnight the NZD had risen to trade at 72.5 USc this morning, but has since declined slightly. On the cross rates we are at 90.5 AUc and at 60.7 euro cents. The TWI-5 is at 74.3. The bitcoin price is up to US$4,524.

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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6 Comments

by Yvil | 6th Sep 17, 5:01pm 1504674099

Swap rates down, down & down...

by Stephen Hulme | 6th Sep 17, 5:07pm 1504674469

The Australian economy grew by +0.8% in the June quarter in seasonally adjusted real terms. GDP in current dollars fell 0.1% as a result of declining commodity prices.

Oops

A planned shake up of Australia’s consumer price index could result in a significant paring of inflation expectations.

Westpac Banking Corp. economist Justin Smirk has run the numbers on how the statistics bureau could revise its inflation basket to bring it up to speed with the latest spending patterns and technological changes. Using its estimate for the weights revision, Westpac found that 0.4 percentage point could be shaved off its inflation forecast by the fourth quarter of 2018, while the core inflation forecast may drop by 0.3 percentage point. Read more

I guess official interest rates will follow to reflect the deflationary environment.

Thus, the decline of interest rates to zero corresponds with a monetary imbalance in favor of deflation, if at least an abundance of deflationary pressures. This is something that Milton Friedman also talked about, particularly in 1998 with regard to Japan. He called it the interest rate fallacy, meaning that low nominal interest rates signify "tight" money conditions, or what would be consistent with significant deflationary pressure. It is and remains a fallacy because economists like those at every central bank around the world have decided instead that low rates are only "stimulus."

To correct this view, Friedman pointed out the basic, non-trivial distinction between a liquidity effect and an income effect. Low rates can be stimulative in the short run (the liquidity effect), but over the long run their persistence means something far different. A yield curve is supposed to be upward sloping given the core time value of money and investing. That arises from opportunity cost, meaning the more plentiful the opportunities the greater the time value and the steeper the curve (the income effect). Yield and/or money curves (the eurodollar curve and even the history of the OIS curve) that collapse and remain that way unambiguously demonstrate that "stimulus" deserves only the quotation marks. Read more, more and more

by Stephen Hulme | 6th Sep 17, 9:05pm 1504688748

Young Australians are increasingly likely to live most of their lives in high-density rented accommodation – and that’s not necessarily such a bad thing.

That was one of the more controversial findings of a major study into the housing market released in recent days.

The Committee for Economic Development of Australia (CEDA) concluded that capital city home ownership would continue to be unaffordable for at least the next four decades. Read more

by David Chaston | 6th Sep 17, 9:15pm 1504689350

We reported this on August 29. Is it only real for you if Zerohedage or some other American bear site picks it up ?

by Stephen Hulme | 6th Sep 17, 10:12pm 1504692773

Take it down then.

by Didge | 7th Sep 17, 7:16am 1504725414

Thank you Stephen for this. Your wording is much better than the 29 August report because it provides more meaning in regard to how it will effect people especially younger ones. Certainly your wording had far more impact on me than the original comments.