A review of things you need to know before you go home on Tuesday; no rate changes, power prices spike, immigration lower, visitor numbers jump, IRD gets new clues, swap rates on hold, NZD slides

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

MORTGAGE RATE CHANGES
Nothing to report today.

TERM DEPOSIT RATE CHANGES
No changes here either.

HOLIDAY REMINDER
If you are a reader from ourside New Zealand or Australia, please note tomorrow is a public holiday in both countries; ANZAC Day.

SHARP SPIKE
New Zealand's lake levels and inflow are higher than in the past two years and above their long run average. But wholesale electricity prices jumped sharply yesterday. The Benmore price moved up by a third; but the Haywards price is up by +250% and the Otahuhu price is up by +275% from the day before. We occasionally get these spikes - there was one at the start of the year - but are unsure what is causing it this time. If you know, please add a note in the comment box below.

LEAVING
Our immigration gain in March was the smallest in four years. A rising numbers of departing non-New Zealanders; over 3000 non-Kiwis left in March - a record for a March month.

ARRIVING
Infometrics reports: "Tourist arrivals in March surged +13% higher than last year. Part of this lift was due to the slightly earlier timing of Easter and Australians taking the break here in New Zealand. But we also saw strong increases in arrivals from the United Kingdom, the United States, and South Korea." The increase from China was only +4.3%, March-on-March. On a year-to-March basis (overall +7.9%), the big increases have come from the UK (+16.4%), Korea (+13.9%, Canada (+10.4%), China (+8.5%) and the USA (+8.3%).

IRD GETTING NEW DATA ACCESS
The IRD is gearing up for a comprehensive exchange of financial account data with about 100 offshore jurisdictions. It will receive its first batch in September and then use that data to compare with taxpayer filings here. Best to declare anything before the tax authorities come calling. Meanwhile, the OECD Global Forum has awarded New Zealand its top rating in an international review of tax transparency and exchange of information standards.

NOT THERE YET
Australia is having trouble getting inflation up to or over +2%. Analysts expected it to reach that benchmark in March, but in the end could only manage +1.9%, the same as for February. Weaknesses in Brisbane, Perth and Darwin are keeping the national average restrained. The average rises for Sydney, Melbourne, Canberra and Adelaide is +2.25%

BIG & GETTING BIGGER
Primed by migration inflows, for the first time on record Sydney’s population grew by more than +100,000 people in one year. Sydney’s population hit 5.1 mln at June 2017, an increase of +101,600 people (+2%) since June 2016. But it was Melbourne that recorded the largest - and fastest growth - of Australia’s capital cities in 2016-17, increasing by +125,400 (+2.7%) to reach 4.9 mln. Together, Sydney, Melbourne and Brisbane accounted for over 70% of Australia’s population growth in 2016-17 although only half its total population. Australia now has a population of 24,913,700.

BIG NEW COST
The RBA is estimating that the switch regulators are requiring banks to action the switch from interest-only loans to principal-and-interest will cost the average household another A$7,000 per year, an amount they say is "non-trivial" for those affected, but not material for most households.

BENCHMARK INTEREST RATES HOLD
Local swap rates eased slightly today. The UST 10yr yield is now at 2.96%, down -2 bps after having taken a run at 3% overnight. The Aussie Govt 10 yr is now at 2.85% (down -1 bp). The China 10 yr is up +2 bps to 3.58%. The NZ Govt 10 yr is down -1 bp at 2.92%. The 90 day bank bill rate slipped another -1 bp to 2.04% today.

BITCOIN RISES
The bitcoin price has taken a jump today and is now at US$9,186 which is up +3.9% from this time yesterday and most of that rise happened in the past four hours.

NZ DOLLAR SLIDES
The NZD is lower at 71.1 USc. It is also down on the cross rates where we at 93.6 AUc and at 58.4 euro cents. That has the TWI-5 down to under 73 and its lowest level in 2018.

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End of day UTC
Source: CoinDesk

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6 Comments

The power price spike was caused by wind generation coming in under forecast, demand being high and the slow start thermal plant being off. The combination of those 3 things cause the HVDC carrying power from the South Island to constrain, leading to high reserve and energy prices in the North Island.

I was looking at em6live and the generation price for the north island was between $12-$14 per kWh. Compared to the typical 4-6 cents per kWh.

As you said demand was high with the north island demand being about 3.6 GW at peak (which is a lot).

A hotter summer with more aircon/HVAC use and lower average wind velocity because this was a La Nina year, meaning fewer of the normal stronger westerly winds for the wind turbines. Thanks for the data, mathclub.

Power price spikes:
As a spot price retail customer for about two years, I have never been able to find reasons for particular spikes. Neither could or would the retailer provide any.
Interestingly, yesterday's spike was forecasted before it happened, and it finished as forecasted too.
Someone must know the reason for yesterday's spike ...?

UPDATED: Mathclub just answered my question. Great insight! Thank you.

Always start with the very comprehensive WITS site that gives everything in real time including any constraints.

Available at; https://www1.electricityinfo.co.nz

What happens when green luddites promote solar and wind boondoggles.

"By reporting on the declining costs of solar panels and wind turbines but not on how they increase electricity prices, journalists are — intentionally or unintentionally — misleading policymakers and the public about those two technologies.

Electricity prices increased by:

51 percent in Germany during its expansion of solar and wind energy from 2006 to 2016;

24 percent in California during its solar energy build-out from 2011 to 2017;

100 percent in Denmark since 1995 when it began deploying renewables (mostly wind) in earnest.

The price of natural gas declined by 72 percent in the U.S. between 2009 and 2016 due to the fracking revolution. In Europe, natural gas prices dropped by a little less than half over the same period.

The price of nuclear and coal in those place during the same period was mostly flat."

https://www.forbes.com/sites/michaelshellenberger/2018/04/23/if-solar-an...