A review of things you need to know before you go home on Thursday; Kiwibank grabs rate attention, house prices dive, yields up, tourism strong, swaps rise & steepen, NZD rises broadly

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

MORTGAGE RATE CHANGES
Kiwibank has trumped most of its rivals with a 4.35% one year fixed 'special' plus a $2,000 cashback offer.

TERM DEPOSIT RATE CHANGES
No changes to report here today.

TURNING POINT
House prices took a dive in most parts of the country in January from December but were particularly soft in Auckland. Year-on-year, prices are down -1.2% in Auckland, but up +7% in the country overall. On the other hand, volumes were unchanged, year-on-year.

YIELD UP
The latest nominal NZ Govt bond tender achieved an weighted average accepted yield of 2.77%, up from 2.69% a month ago. The coverage ratio lower however at 2.8x and down from 3.3x.

SI WINS GREATEST SHARE
Tourism guest nights continued to increase in December 2017, up +4% from December 2016. This rise followed similar increases in October and November 2017. December’s growth was led by more international guest nights in the South Island and helped by a record month for international visitor arrivals.

BUILDING ON SUCCESS
Aussie employment data
out today was solid but not spectacular. It was also no market-moving. Their jobs growth is now the longest streak of gains on record, while unemployment fell a tick. Their participation rate is now 65.1%. This data showed +16,000 net new jobs were added in January, in line with analysts forecasts and a pleasing result given it came on top of unusually large increases in both December and November. Full-time positions are up +4.0% year-on-year to January, part-time positions are up +2.0%. (A more holistic review of the NZ labour market was published here.)

WMP PRICES SLIP
Not everything is positive today however. Trading on the NZX derivatives platform for WMP is inducating a -1% or more slip in pricing in USD. The next auction is on Wednesday morning. And if our currency keeps on rising, the results in NZD will be quite disappointing.

LOCAL JOB AD
This job is now open for application.

BENCHMARK INTEREST RATES HIGHER
After yesterday's weakness, today local swap rates have risen in a strongly steeper basis. The two year is up +2 bps, the five year is up +5 bps, and the ten year is up +5 bps. The UST 10 yr yield started the day at a high 2.90% and has inched up from there, now at 2.92%. The great bond repricing is underway, and is likely to be painful. The Aussie 10 yr is at 2.92% (up +8 bps). The Chinese 10 yr is at 3.90% (down -1 bp), and the Kiwi 10 yr bond is 3.05% (up +7 bps). The 90 day bank bill rate is down -1 bp at 1.90%.

IS BITCOIN BACK?
Bitcoin is now at US$9,412, up +9% from this time yesterday. Extreme volatility back in the building. In fact we should note that this is now a cumulative rise of +36% in the past ten days.

NZ DOLLAR UP
The greenback is taking a bit of a pounding today following the higher US CPI and rising inflation expectations. But the Kiwi dollar is gaining on its own against most of its other partners as well. It is currently at 73.9 USc, at 93.1 AUc and 59.3 euro cents. That puts the TWI-5 up at 74.5. And note that trading volumes in the New Zealand dollar and its derivatives are going sideways.

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USD 
NZD
End of day UTC
Source: CoinDesk

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12 Comments

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Ran across this epistle from Michael Reddell.

Basic argument: massive inwards net migration via deliberate Gubmint policy, is not a Good Thang.

Read the whole thing. Or Thang.

Thanks waymad that is an excellent document. It really shows how shortsighted Bill English was when he was P.M. and rabbiting on about skill shortages especially for lorry drivers.

Yes, Michael Reddell certainly opened my eyes about the negative impact of large scale immigration into New Zealand. I guess I drank the Cultural Marxist Cool Aid that immigration Is A Good Thing when I was younger. It can be a good thing but more often than not it is a disaster. Think Northern Ireland, viciousness continuing down the centuries from government sponsored immigration in the first two decades of the 17th century. Think Palestine from the point of view of the Palestinians, or the thuggery inflicted on Maori. It is dangerous destabilising stuff once it gets above a very low level.

Also, the most civilised countries on earth, such as the Scandinavians tend to be fairly culturally homogenous, which is reflected in them being Constitutional monarchies. All those little cultural habits (picking up litter, for example) do lead to a trust in your fellow countrymen that is essential for a sociaty to be civilsed.

I found this downright disturbing:
https://www.youtube.com/watch?v=bX3EZCVj2XA
A Russian defector talking about the KGB objectives to weaken to the west by encouraging socially destabilising cultural and moral destruction. I guess they had in mind the fall of Rome to the Germans when the plebians refused to fight for the aristocracy.

It can certainly be important...but we're going at twice the OECD norm, which is just a bit crazy. We can't be relying on immigration alone for GDP growth.

Excellent article thanks waymad. Interestingly Labour who promised in the election campaign to reduce immigration, along with NZ First, have put this off until October. Will they keep their promise? I think they will be too scared because of headline GDP, and as the article says, they will keep sacrificing long term GDP per capita. Let alone all the poor people now living in cars or paying exhorbitant housing costs.

Think yoi

Will be interesting to see the implications of the "Sydney slump" on consumer spending. Nothing to indicate that anything has changed. Also, more importantly, we tend to ignore the extent to which the property sector impacts employment (professional services, construction).

. Australian property prices have continued to fall, led by steeper declines in Sydney prices, which have now fallen for a fifth straight month.

. Sydney prices have now fallen more than 3 per cent, having surged around 75 per cent between February 2012 and the most recent peak in July last year. .

. Melbourne prices have also recorded a second straight month of decline, although both falls were just 0.2 per cent. .

http://www.abc.net.au/news/2018-02-01/home-prices-dragged-down-by-sydney...

This may be a bit lazy in regards to that new KiwiBank one year offer - but does anyone know what they mean exactly by "new lending". Does this mean it must be your first mortgage? or if you took your mortgages from another bank over to them is that "new lending"?

It means it is an offer only for new borrowing customers. Yes taking your existing mortgage over from another bank will qualify as 'new lending' if you don't already have a loan at Kiwibank.

New lending can also be a "Top Up" or "Re-Draw" facility in which an existing bank customer uses the equity in their property to access more funds/loans to buy a car or do renovations etc... Any loan that increases the banks profit margins and creates more debt is considered an asset that will become part of their income long term.

Record profit. Great effort from you all, really, now clear out your desk and pat yourself on back as you leave.