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A review of things you need to know before you go home Tuesday; Co-op Bank changes rates, affordability improves, cost of risk falls, WMP prices firm, Limmer wins SFF job, swaps slip, NZD up

A review of things you need to know before you go home Tuesday; Co-op Bank changes rates, affordability improves, cost of risk falls, WMP prices firm, Limmer wins SFF job, swaps slip, NZD up

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

MORTGAGE RATE CHANGES
The Co-operative Bank has cut -6 bps from their one year fixed rate to 4.49%.

DEPOSIT RATE CHANGES
The Co-operative Bank has added +5 bps to their 9 month term deposit rate, taking it to 3.50%.

AFFORDABILITY IMPROVES
The latest October data for home loan affordability shows it improving as lower quartile prices fall in Auckland, Tauranga & Wellington. Lower house prices see Central Auckland join Papakura and Franklin as the only parts of greater Auckland where housing is considered affordable for first home buyers. Everywhere except the other three zones in Auckland, and Queenstown, is now affordable. 

NO PRICE FOR RISK
'Risk' premiums continue to decline. Not only is the VIX near its all-time low, the premiums between risk-free US Treasuries and NZ Govt stock is shrinking as well, also down to all-time lows across the curve. One year swaps are also near all-time lows, as are investment grade CDS spreads. Markets seem to be underpricing risk substantially. It is the type of investment signal that supports asset price bubbles. And behind it all is the wall of liquidity generated by a wealthy boomer generation who are shifting their investment horizons shorter. They are besotted with ETFs and these types of funds place a premium on liquidity so they can react to mandate adjustments. Investors (like the NZSF) who can think longer term have the high return segment to themselves. Risk is evaporating from 'normal' markets - in fact, it is making them abnormal.

ME TOO
Kiwibank is the latest bank to launch a mobile payment app and device combo that will enable their business clients to take card payments from their customers.

LOOKING UP
If the dairy derivatives market for WMP continues on its current trend and holds the price indication from today, then the next dairy auction should show a +6.2% rise. The next auction is Wednesday, December 6, 2017.

EQUITY MARKETS LOWER
It is a sea of red across the equity markets in our time zone. The NZS50 is down -0.4%, the Singapore market is down -0.1%, Hong Kong is down -0.6% and Shanghai is down -0.1%. Tokyo was up but is now in negative territory. Only Sydney is up, by +0.2%.

LIMMER GETS SFF CEO JOB
Silver Fern Farms has appointed Simon Limmer as its new chief executive. He will replace Dean hamilton in March 2018. He come to the role after being Zespri's chielf operating officer and with international experience in a number of countries including China.

WHOLESALE RATES EDGE DOWN
Swap rates are up -1 bp across the curve. The 90 day bank bill rate is up +1 bp at 1.92%.

NZ DOLLAR UP, BITCOIN HOLDS HIGH
The NZ dollar has moved up more than +½c since this time yesterday and is now at 69.2 USc. On the cross rates we are up to just under 91 AU, up to 58.1 euro cents. That has the TWI-5 marginally firmer at 71.9. The bitcoin price has held on to yesterday's jump. It is now at US$9,712 and despite the rise in the NZD, it is still just above NZ$14,000. The US$10,000 benchmark will have to wait for another day. We now have the bitcoin price included in the currency chart below.

You can now see an animation of this chart. Click on it, or click here.

Daily exchange rates

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Source: RBNZ
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End of day UTC
Source: CoinDesk

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4 Comments

A group of former Credit Suisse Group AG staff, led by Australian investment banker John Wylie, has started an Asia-Pacific credit investment fund to take advantage of banks reining in lending.

Tanarra Credit Partners has raised more than A$285 million ($216 million) for its Asia-Pacific Fund I, which will invest in senior and mezzanine debt, and is targeting as much as A$500 million before closing the fund to investors in the first half of 2018, Managing Partner Michael Tierney said.

The commitments include a cornerstone investment from A$60 billion pension fund UniSuper Management Pty for a managed account which will focus on sub-investment grade secured loan opportunities in Australia and New Zealand. Read more

Greater fools still reaching for yield?

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The bitcoin price has held on to yesterday's jump. It is now at US$9,712 and despite the rise in the NZD, it is still just above NZ$14,000. The US$10,000 benchmark will have to wait for another day. We now have the bitcoin price included in the currency chart below.

Hmmmm...

Some nervous nellies are seeking shelter in Bitcoin as they detect tremors in the more traditional markets creeping ever-higher to new records. To some degree, Bitcoin may be doing the job that gold used to do, providing the aura of a “safe haven” from a possible global financial mega-storm. The last time such an event came out nowhere (ha!) after the “permanent plateau” of 1929 collapsed, the government confiscated as much physical gold as it could get its paws on. So who wants to be there? (Echo answers….) Read more

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Not enough taxable income to extinguish national debt.

Two new studies by the UK's leading think-tanks paint a grim picture for Britain, as its living standards are expected to decline further, while the national debt is not expected to begin shrinking until the 2060s.

The post-budget analysis by the Institute for Fiscal Studies highlights that the average wages in Britain are expected to be be some £730 lower in 2022-23 than in 2007-08, if inflation is taken into consideration.

IFS Director Paul Johnson stated that Britain is "in danger of losing not just one but getting on two decades of earnings growth", Evening Standard reports. Read more

Is New Zealand consigned to the same harrowing fate?

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As a whole, the Australian economy has grown through a property bubble inflating on top of a mining bubble, built on top of a commodities bubble, driven by a China bubble.
http://www.zerohedge.com/news/2017-11-27/australias-housing-bubble-star…

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