A review of things you need to know before you go home on Thursday; no rate changes yet, house sales levels skid, beneficiary ratio improves, NZGB yields up, swap rates up strongly, NZD unchanged, bitcoin wilder

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. Update: ANZ has tweaked some term deposit rates.

PRICES UP (JUST), VOLUMES SKID LOWER
REINZ says the national median house price rose +1.9% to $550,000 in December from November, or an +5.8% increase for all of 2017. Auckland prices are only up +1.8% for the year. But national sales volumes are down -10.1% year-on-year in December, or -16.7% for all of 2017 compared to 2016. For Auckland the situation is worse, down -22.2% on the same basis. It's a shrinking marketplace.

JOBS GROW FASTER THAN BENEFICIARY NUMBERS
We have had seven years where the growth in the number of workers has been faster than the growth in beneficiaries, despite the ageing population. But is that trend about to reverse?

NZGB YIELD RISES
Data out yesterday saw a drop in the amount of Government securities on issue drop by NZ$5 bln. Today's NZGB bond tender brought a rise in the weighted average accepted yield to 2.69% from 2.56% just one month ago, a +13 bps jump. But a year ago, the yield on this bond was 3.13%. Today's coverage ratio slightly lower at 3.3x.

STRONG JOBS GROWTH
In Australia, strong jobs growth has pushed newly created positions for 2017 to +393,000, eighty one percent of which were full-time jobs. But their jobless rate ticked unexpectedly higher at 5.5% s.a. That was because their participation rate inched up to 66.2% its highest level for more than eight years.

GULP, OCKER, HOW HIGH?
In Australia they have been hit with an unwelcome surprise. Their already stratospheric household-debt-to-income ratio was thought to be 195%, but a recent change to include self-managed super funds properly has seen it balloon to 199.7%. SMSFs are a debt magnet so I hope we don't adopt that option here. By the way, the equivalent NZ ratio is 167%, which is high enough thank you. Fortunately, ours has been stable for all of 2017.

WHOLESALE RATES RISE STRONGLY
Local swap rates are +3 bps higher today across the board, except for the one year which is up +1 bp. The UST 10yr is sharply higher at 2.59%, a jump of +5 bps. In China, their sovereign 10yr yield is at 4.04% firming by +1 bp. The NZ Govt 10yr yield is up even more at 2.94% (+6 bps). And the Aussie 10yr is higher too at 2.79% (+4 bps) after being up +6 bps a couple of hours ago.

NZ DOLLAR UNCHANGED
The NZ dollar is little changed since this time yesterday at 72.6 USc. We are level pegging against the Aussie at 91.3 AUc and marginally firmer at 59.5 euro cents. This puts the TWI-5 at 74.1. Basically we were stronger against all until the Aussie jobless rate release, then we slipped back to yesterday's levels. The wobble was quickly erased however.

BITCOIN GOES WILDER
But the big action has been for bitcoin again today. It fell sharply to US$9,200 at one point getting and has since recovered and is now at US$11,571 which is about US$350 more than at this time yesterday. That is massive volatility of +/- 23% in just one day. Those sort of movements just confirm it is not 'money' as we know it. Most, but not all, other cryptocurrencies are on a similar wild ride.

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

Daily exchange rates

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USD 
NZD
End of day UTC
Source: CoinDesk

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11 Comments

Data out yesterday saw a drop in the amount of Government securities on issue drop by NZ$5 bln

The unretired NZGS 15/12/17 6.00%'s rump expired and extinguished the issue.

Scarce USD hedged funding persists (negative x-ccy swap quotes) for Japanese investors. Hence:

It currently costs 2.09 percent to hedge three-month positions for the dollar-yen, compared with last year’s low of 1.41 percent in February. In comparison, the cost to hedge similar euro-yen positions has fallen below zero, indicating Japanese investors can pick up extra returns on top of yields. Read more

China’s top nickel supplier aims to boost output of a material used in car batteries by 40 percent this year, joining the ranks of global producers ramping up operations to meet demand from electric vehicles.

Jinchuan Group Co. expects to raise production of nickel sulphate to 70,000 metric tons from 50,000 tons in 2017, Simon Bao, vice general manager of its marketing unit, said in an interview in Shanghai. The country is already the world’s largest automotive market and sales of new-energy vehicles may hit 1 million in 2018 after topping 700,000 last year, according to manufacturers. Read more

In Australia they have been hit with an unwelcome surprise. Their already stratospheric household-debt-to-income ratio was thought to be 195%, but a recent change to include self-managed super funds properly has seen it balloon to 199.7%.

Highly levered FHBs may exacerbate the trend.

More Australians are able to get on the property ladder as policy and regulatory changes over the last year cool investment activity. In New South Wales, home to Sydney, monthly first-home buyer loan approvals have jumped 60 percent since the state government started offering discounts on stamp duty in July, says Australia & New Zealand Banking Group. The rush of new owners is putting an upward pressure on prices for lower-end properties even as Sydney’s housing market cools, ANZ economist Daniel Gradwell said. Read more

Rather than Bitcoin, a blind stab on the horses would be a far better and safer investment.

It's better to pick a selection of the top altcoins. Most of them are unlikely to be shipped off to the glue factory.

Why? Look at graphs from the last 48hrs.. Pretty much everything moved in unison with bitcoin.

Why? Because Bitcoin is being superseded by much better tech. It's a very large, but lumbering dinosaur.

https://coinmarketcap.com/charts/ -> Percentage of Total Market Capitalization (Dominance)

The largest tokens by market cap aren't there for nothing. Some have the potential to change the world for the industry sectors they target.

Maybe interest.co.nz can buck the dumbed down clickbait media trend and produce something educational on whats going on in this space.

The market is rebounding just fine after yesterdays shake out.

Millennial biased greater fool attractants.

Gotta love the endgame for bitconnect that happened today... I'd suggest that maybe look at investing in productive elements in society instead of non-productive shiny bits of fools gold. I'm still a bit bemused at just how far this ponzi scheme has come along. I'd suggest that an equally valid investment strategy to cryptocurrency is to head to sky city and put your money on red/black, or buy a bunch of lotto tickets this weekend. Tulip mania indeed.

BitConnect had a bunch of really cool songs though!

This morning interest.co.nz says oils prices steady. Yesterday falling.

Yet NZ Herald report AirNZ down due to strong oil prices despite the strong currency negating that.

Who would believe the media?

"Air New Zealand dropped 1.7 per cent to $2.89. Stent said the stock had been falling due to continued strength in oil prices and expectations the company may find business a bit tougher due to increased costs."
http://mobile.nzherald.co.nz/business/news/article.php?c_id=3&objectid=1...