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.
TWO RISES IN A ROW
Dairy prices took a good jump in today's GDT auction. Overall they were up +4.9% on a weighted average basis in USD (although only up half that at +2.45% in NZD). But most individual key components recorded good gains; WMP is up +5.1%, SMP up +6.5%, cheddar cheese is up +5.2% and butter is up +8.8%. The reason is the lower volumes on offer. Fonterra advised a -6% fall in milk production in December although total season milk volumes will only be down -3% in New Zealand. That brought out the bidders - there was the highest number in more than three and a half years. But before we get too carried away, prices are only back to where they were in early November and are now -3.7% lower than at this time last year.
A SOFTER END TO 2017 - I
ANZ tracks trucking activity as a proxy for economic (GDP) growth. This data is much more current than the official data. The two ANZ Truckometer indexes fell in December: the Heavy Traffic Index by -4.2%, and the Light Traffic Index by -1.7% month-on-month. Despite the December falls however, the indexes are providing a positive signal for GDP growth in Q4-2017, due to earlier strength. However, the Light Traffic Index is giving a mildly softer signal for growth in mid-2018. Annually, the Heavy Traffic index is up +2.8% and the Light Traffic index is up +4.1%.
A SOFTER END TO 2017 - II
The ANZ Commodity Price Index also ran out of puff in late 2017 with prices falling a further 2.2% in December. While dairy led the decline broader based weakness has started to creep in too, with nondairy components also slipping in December. The double-whammy for NZD returns was an increase in the NZD TWI. This saw NZD commodity prices slide -3.0% in December from November. This was the largest fall in world and local prices since the current upward cycle in commodity prices began in early 2016. Year-on-year however, prices are up +3.0% in world price terms, and up +6.4% in NZD terms.
LANDLORD OBLIGATION ENFORCED
An Auckland landlord, Aire Peter Sterk, has been ordered to pay $2,000 in damages after he was successfully taken to the Tenancy Tribunal for failing to install smoke alarms. And he was ordered not to commit the same offence within six years or he will face further legal action.
CAR INSURANCE SCAM
Major insurers Allianz and Suncorp have been caught in a bald car insurance scam in Australia. Together they will refund a combined AU$65 mln in premiums to more than 100,000 customers, after selling insurance via car dealers "that was of little or no use", according to ASIC. Allianz will refund AU$45.6 mln to 68,000 customers and Suncorp will refund $17.2 mln to 41,200 customers. (In Suncorp's defense, the offending happened in a brand it bought, before it bought them in 2014.)
AIR NZ PRETTY CLEAN
The same organisation that discovered the VW diesel cheating scandal has published a ranking of airlines that serve the US across the Pacific, in terms of their fuel efficiency. Air NZ ranked third of 20 behind first equal Hainan Air (yes, them) and Japan's ANA. The bottom spot was taken by Qantas who burned an average of +64% more fuel per passenger-kilometer than Hainan and ANA in 2016. Air NZ burned +3% more than the top two on this basis.
WHOLESALE RATES FLATTEN
Local swap rates are flatter today today, with no change in the 2 year, -1 bp for the 5 year, and a -2 bps fall for the ten year. The UST 10yr is now at 2.54%, a slip of -1 bp. In China, their sovereign 10yr yield is holding at 4.03% but with a firming tone. The NZ Govt 10yr yield is lower at 2.88% (-4 bps). And the Aussie 10yr is now at 2.75% (-2 bps).
NZ DOLLAR LOWER
The NZ dollar lost its recent gain overnight and has been steady today at 72.7 USc. We are ½ softer against the Aussie at 91.1 AUc and still at 59.2 euro cents. This puts the TWI-5 down at 74 even. But the big action has been for bitcoin, in fact for all cryptocurrencies. Bitcoin fell by almost 25% at one point getting as low as US$10,130 although it has since recovered some of that and is currently at US$11,235. Still that is an eye watering loss of US$1,765 or -13.6% in 24 hours. (Many other cryptocurrencies have seen -30% losses in the same time period.)
You can now see an animation of this chart. Click on it, or click here.