Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes reported today.
DEPOSIT RATE CHANGES
SBS Bank reduced its headline 7 month TD rate today to 3.30%, a -35 bps cut. Perhaps that is in anticipation of a new TD 'special' for a different term?
BEST IN NINE YEARS
Today's headline is that the unemployment rate fell to 4.6%, its lowest since late-2008. Construction jobs were up +10% from a year ago. Wages were boosted by the Government accepting the pay equity deal. The working-aged population rose by +87,600 in the year to September, but the number of people employed rose by +102,700 in the same period. +41,100 of those were aged 25 and under, and +36,100 were aged 55 years and over. There was a good rise in hours worked as well. The participation rate leaped to a very impressive 71.1% which is miles higher than for other countries we reference ourselves with. Average ordinary time hourly earnings also rose, by +2.2% to $63,336 pa.
UNDERPAYING STAFF COSTS
A Labour Inspectorate investigation uncovered employment breaches in a series of connected Asian restaurants in Auckland, who now must pay nearly $200,000. The Employment Relations Authority ordered the restaurants to pay $99,000 in penalties for failing to provide minimum wage and correct holiday pay, as well as $97,000 in arrears to 132 employees.
MARKET COOLING BITES
The housing market could be in for a difficult summer, particularly in Auckland. New listings on Realestate.co.nz are well down on a year ago, but unsold stock is up in Auckland, Waikato, Wellington and Canterbury.
HOLDING HIGH
Rent levels are little changed in October. Essentially for a 3 br house in Auckland they are stable and near their highs (which was in May), In Wellington they are high and still near their April peak. And in Christchurch, they are still slipping and a long way lower than their peak first reached in February 2014.
A BETTER WAY FORWARD?
The NZIER is calling on the new Government to shift the RBNZ's focus from inflation targeting, to targeting nominal GDP growth. But that will mean the RBNZ will need the Government to be its 'mate'.
'A SIGNIFICANT TURN OF EVENTS'
The Sydney housing market is now past their peak and falling. Prices there fell -0.6% over the quarter and were down -0.5% over the month. It marks the first rolling quarterly fall in Sydney since May 2016 when the first round of tighter borrowing requirements were still working their way though credit policies. It is the second month in a row Sydney prices have faltered after they slipped -0.1% in September.
A NEW RISING TIDE?
Here is something I wasn't expecting: more than half the babies born in China in the first eight months of 2017 were second children. Some 52% of the 11.6 mln babies born between January and August have an older sibling, according to official figures. That compares to about 45% in 2016, when 18.5 mln babies were born in hospital, the highest since 2000, according to the data.
WHOLESALE RATES TURN UP
Swap rates are moving back a little higher today after a few days of declines. This trend mirrors the US Treasury yields. The two year is up +2 bps, the five year is up +3 bps and the ten year is up +3 bps. The 90 day bank bill rate is unchanged at 1.94%. Markets are now waiting on tomorrow's RBNZ MPS signals.
NZ DOLLAR INCHES HIGHER
The NZ dollar has firmed over the past 24 hours, not by a lot, but across the board so it is now at 68.8 USc. On the cross rates we are at 89.9 AUc and recovered to 59.2 euro cents. The TWI-5 is still at 72.1. The bitcoin price has held above over US$6,000 again, and now it is at US$6,126, a +1.6% gain on the day.
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7 Comments
There will be "almost no prospective returns" from U.S. stocks over the next decade because the market is fully valued following years of gains, according to the global strategist at Allianz Global Investors, which manages $569 billion.
Low interest rates and bond purchases by central banks have left cash and many other asset classes "significantly mispriced," Neil Dwane said Monday as part of a panel discussion on long-term investing at the Toronto Global Forum.
"The U.S. is fully valued," said Dwane, whose firm is owned by Munich-based insurance giant Allianz SE. "There’s almost no prospective returns for the next 10 years from the U.S. equity market, and therefore investors have to look into Asia or Europe where valuations are significantly lower." Read more
The economic mysteries of 2017 aren’t at all unexplained. Without labor market growth there is no income growth, therefore no spending growth. Without spending, the economy at any point can’t gain sufficient acceleration especially with high levels of remaining inventory. Read more
The stock market's valuation is back to the point where Greenspan warned of 'irrational exuberance'
https://www.cnbc.com/2017/10/31/spooky-market-valuations-at-greenspan-i…
https://www.cnbc.com/2017/09/20/robert-shillers-surprising-case-for-buy…
Japan, the world’s petri dish for monetary policy, is discovering that even the tightest labor market in a generation is no quick spur for higher wages.
That’s an ominous warning for central banks and governments elsewhere who are grappling with how to translate surging corporate profits into rising salaries, a dynamic that remains missing even as around 75 percent of the globe enjoys an economic upswing.
The Bank of Japan on Tuesday left its massive monetary stimulus program unchanged and lowered its inflation forecasts, blaming in part a deeply entrenched attitude among firms and households that prices won’t rise. That’s even with an unemployment rate below 3 percent. Read more
There's some fundamental differences between Japanese and Anglo-Saxon labor markets and and how employees salary growth. In Japan, job security of company employees is of relatively greater importance than shareholder interests. Also, Japanese employees place higher value on job security over income growth expectations, which are more linked to seniority,
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