A review of things you need to know before you go home Tuesday; confident consumers go impulsive, low farm & lifestyle block sales, few late payments, swaps up yet again, NZD recovers

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

MORTGAGE RATE CHANGES
ANZ has cut its two year 'special' and introduced a new three year 'special.

DEPOSIT RATE CHANGES
The Co-op Bank has reduced its six month TD rate by -5 bps.

FIRM BUT FLAKY CONFIDENCE?
The quarterly consumer confidence survey out from Westpac McDermott Miller today shows it remaining "at firm levels". Households are still in the mood to spend they say, though their tastes have been changing. Services are getting priority, while goods, even major appliances, are taking a back seat. Consumers are becoming very short-term focused with holidays, entertainment getting priority. Paying down debt still not a big goal for households, according tho this report.

FEW BUYERS
REINZ says too much rain has affected farm sales in many parts of the country. There were only 91 sales in August in the whole country, the lowest of any month since January 2013. You have to go back to 2010 for a lower August. There were only 9 dairy farm sales, only 4 arable farm sales nationally. Average $/ha prices are falling too. Very noticeable was the very low activity in the Manawatu, no doubt undermined by tough requirements from the Horizons Council.

LIFESTYLE OUT OF FAVOUR
Lifestyle block sales are following the residential market down in Auckland. Nationally, there were only 617 lifestyle blocks sold in the month, only 82 in Auckland, the lowest August in five years. Only Northland is holding on to its recent levels.

A SLIGHT SLIP
Dun & Bradstreet claim they are seeing a rise in late payments by companies in New Zealand in the June quarter. But the rise is tiny, up from 5.9 days late to 6.2 days late and hardly material. They say the largest companies are the slowest to pay on time, 4 days slower than the average. Main centre firms are the slowest, with the worst in Auckland, followed by Wellington. Christchurch firms are 'average'. But our 'worst' are much better than average payment times in Australia where they see those delays at almost 15 days.

EYES ON DAIRY
There is another dairy auction tomorrow morning and the derivatives market is signalling that WMP may fall by -2% and SMP may fall by -3%. A lower exchange rate may limit the slippage.

A MANAGEABLE DEFICIT?
Tomorrow we get the Q2 2017 balance of payments data as well. Markets are expecting a -NZ$0.9 bln deficit. The Q2 2016 deficit was also a -NZ$0.9 bln deficit. For the full year that will make it a -$8.1 bln deficit, or -3% of GDP and close to its lowest point over the past 25 years.

AUSSIE HOUSE PRICE RISES MODERATE
Residential property prices, while continuing to rise in Melbourne and Sydney this quarter, have begun to moderate. Annual price movements ranged from -4.9% in Darwin to +13.8% in Sydney and Melbourne. But these annual rates overstate the recent, more modest rises.

WHOLESALE RATES STILL RISING
Local swap rates for two years is up +1 bp, the five year is up another +3 bps and the ten year is up another +3 bps today. The 90 day bank bill rate is unchanged 1.94%.

NZ DOLLAR SLIPS, THEN RECOVERS
The NZD fell overnight as the US dollar strengthened, but during today the Kiwi dollar has clawed back some of that ½c fall and is now at 72.7 USc. On the cross rates we are at 91.3 AUc and at 60.8 euro cents, both higher than this time yesterday. The TWI-5 is now at 74.8. The bitcoin price is still in a strong recovery mode and is now at US$3,951, up another +5.9% on the day. However, it is still $1,000 off its high of US$4,951 just 19 days ago.

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13 Comments

The RBA’s board again highlighted the cloud of high household debt hanging over an economy otherwise showing positive signs on employment and investment. The currency’s more than 10 percent advance this year remains a headwind and the weak wage growth story is still a drag.

Policy makers are also enjoying a boost from government infrastructure spending as residential housing appears to have peaked. But they’d be somewhat perplexed by markets bringing forward the chance of a rate move to about 60 percent in June 2018, driven by a generally stronger developed world outlook. Read More

Australians’ average weekly household income grew by A$213 ($170) between 2004 and 2008. Since then, it’s increased by a total A$27 ($3 p.a.).

The extremes roughly reflect a surge and fall in export income -- as industrializing China sent demand for iron ore and coal rocketing. But despite their stagnant wages, just over a quarter of Aussies have amassed debts equal to three times their income -- mostly as housing surged during a central bank easing cycle designed to cushion the end of the mining investment boom.

“Wages growth was very, very strong, but there weren’t the productivity gains to match it, so now it’s very weak because we’re simply not competitive,” said Alex Joiner, chief economist at IFM Investors. “So there needs to be a longer adjustment period, and that’s why you’re probably going to see wage growth only start to bottom out in the next few quarters.” Currency depreciation has helped, he said, but not enough to restore competitiveness.

https://www.bloomberg.com/news/articles/2017-09-18/wages-rising-just-a-3...

"debts equal to three times their income "

Negative gearing has been government tax policy in Australia for a very long time now. If you have any debt carrying capacity at all you are supposed to buy a house and leverage for tax and capital gains.

Well yes. I would suggest that most of the "bidding up" has been driven from existing equity. If incomes are basically stagnant since the GFC, then the value of tax relief is going to be relatively greater in the eyes of the borrower.

Nudge theory executed well by institutions. Like controlling puppets on a string.

Surprise, surprise, chicken littles begin backdown on runaway global warming. "Climate change poses less of an immediate threat to the planet than previously thought because scientists got their modelling wrong, a new study has found."
http://www.telegraph.co.uk/science/2017/09/18/immediacy-threat-climate-c...
"Myles Allen, professor of geosystem science at the University of Oxford and one of the study’s authors told The Times: “We haven’t seen that rapid acceleration in warming after 2000 that we see in the models. We haven’t seen that in the observations.”

The article says we are possibly winning a bit due to alternative energy use, but possibly not when you boil it down.

Poor Scots
Scotland's longest lasting patch of snow could melt away by the weekend.

Iain Cameron, who seeks out and records snow that survives on Scotland's highest mountains, believes the patch known as the Sphinx has days left.

Scientists say the patch at Garbh Choire Mor on Braeriach in the Cairngorms has disappeared only six times previously in the last 300 years.

According to records, the snow previously melted in 1933, 1953, 1959, 1996, 2003 and 2006.

1 News tonight - 10% more people sleeping on the streets compared to last year according to the City Mission.

A baby death at Waikato hospital caused by understaffing, hospitals descibed in critical condition.

National can be so proud.

As a nation we can not be so proud you mean.
50 years ago, "Streets of London" says it all (after a British Labour govt, but it doesn't matter)
https://www.youtube.com/watch?v=DiWomXklfv8

Tax cuts are the solution....

Looking the other way is the near universal response, except just before an election.
A more nurturing, inclusive society would help with issues like this and suicide; poorer countries than ours have much lower suicide rates; don't know how you can change the materialistic Kiwi culture with more or less taxation or by changing the Govt.

It's because our culture at times really 'sucks' as us younger ones would put it (even though we like to talk up how friendly and nice we are to everyone)...

Our suicide stats are the real reflection of what life is like in NZ for many. This isn't a sign of success. It's an obvious sign that as a society were off course. That we need to start travelling in a different direction and doing things different. What's the point of having an expensive house if you don't want to live? Sounds like a fools paradise to me...just saying...

Well said