A review of things you need to know before you go home on Wednesday; six year low house sale volumes, food prices up +2.3%, teachers win more funding, LGFA gets strong demand, swaps and NZD stable

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

MORTGAGE RATE CHANGES
No changes to report here.

TERM DEPOSIT RATE CHANGES
No changes here either.

REINZ RESULTS
As per the November figures from REINZ, the number of homes sold, at 6283, was at its lowest level for a November since 2011, down -9.2% year-on-year. There were some pockets of solid growth in the provinces. But in Auckland, the number of homes sold was down -16.7% year-on-year to 1910. While the volumes were down, prices generally held with the median prices at $540,000, up +10% compared to October 2017 and just below the March peak of $542,500. In Auckland, median prices were $880,000, down -$25,000 since March 2017.

FOOD PRICES
Overall food prices were up +2.3% year-on-year, pushed up by substantial increases for fruit and vegetables (+6.4%). Annual rises have been above +2% for seven consecutive months now, but this follows six years of increases that averaged only +0.4% pa. 

$9.5 MLN FOR TEACHERS
The Government has prioritised $9.5 mln to address immediate pressures in the teaching system and promised to consider the need for further initiatives in Budget 2018. The Government says this funding will support more graduates into permanent teaching positions, support experienced teachers back into the profession and recruit new graduates into teaching.

STATE SECTOR CHIEF EXECUTIVE PAY
The average remuneration increase for Public Service chief executives in the 2016/17 year was +2.0%. The average increase for Tertiary Education Institution and District Health Board chief executives was +2.7%. The average increase for Crown Entity chief executives was +4.1%. Over the same period the average salary increase for Public Service staff was +2.2%. For the first time the Commissioner has identified Crown entity Boards that chose not to follow the Commission’s advice and gave remuneration increases above recommended levels: Guardians of NZ Superannuation, ACC and Telarc. The Government has signaled that changes to legislation may be required to curb the high pay levels of some State sector chief executives.

LGFA TENDER #52
The LGFA tender issue #52 saw a different mix of bonds being offered today and these were met with strong demand, with a weighted average coverage ratio of 3.9x. The April 2025 (which did not have sufficient demand at the previous auction) had a coverage ratio of 4.6x. The weighted average accepted yield for the issues ranged from 2.33% to 4.26%, with the weighted average for all issues reading at 3.34% (2.92% at the prior auction.)

BETTER ON THIS SIDE
In Australia, Fonterra as increased its milk payout for their 2017/18 season by +AU$0.10/kgMS, taking the average milk price to AU$5.62/kgMS, and "incorporating changes to seasonal curve and milk composition". At today's exchange rate, that is NZ$6.13/kgMS and compares to NZ$6.40 it is paying its NZ suppliers. (NZ shareholders get a dividend on top of this.) At the same time Fonterra Australia "has also revised its forecast closing milk price range, [down] to AU$5.62 to AU$5.70/kgMS, and noted that whilst currency has weakened, there had also been some softening in the global market".

ELECTRONIC AUSSIE DOLLAR
In his speech today, RBA Governor, Philip Lowe, has discussed the idea of electronic bank notes for Australia. He was not specific about the technologies that may be used to enable this, as they are still developing. The electronic notes may be issued by the RBA or a private entity but there would be a requirement for some entity to stand behind the liability. The history of private issuance is one of periodic panic and instability and, as such, it would be better if the electronic currency was issued by the central bank, he said. While this may be technologically feasible, Lowe does not see significant public benefit from this change and therefore it is not about move in this direction. However, the topic will remain under review at the RBA.

WHOLESALE RATES UP SLIGHTLY
Swap rates were marginally higher and flatter today, with the 1 yr though 4 yr rates up +1 bp and longer duration rates unchanged. The 90 day bank bill rate is holding its new record low of 1.88%.

NZ DOLLAR UNCHANGED
The NZ dollar is unchanged from this time yesterday to 69.4 USc. On the cross rates it is at 91.7 AUc and 59.1 euro cents. This puts the TWI-5 at 72.7. The bitcoin price is holding high at US$16,726. It hit another all-time record high of US$17,632 eight hours ago.

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