What happened Tuesday

A review of things you need to know before you go home on Tuesday; some term deposit rate changes, stocks jump except on the NZX, Aussies more confident, more TAG debt, swaps steepen, NZD stable

28th Aug 18, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
SBS Bank have raised their nine month offer by +25 bps to 3.65%. NZCU Baywide have trimmed the rate offers across the board by between -5 and -15 bps for terms greater than 5 months.

THE BOOM MISSES US
Around the world, many equity markets are posting out-sized gains today. It started with the Dow up +1% on Wall Street. Now Hong Kong is up [another] +0.6%, Tokyo is up +0.7%. Sydney is up +0.7% as well. Earlier, Germany (DAX) was up much more than +1%. But Shanghai and the NZX are barely showing any gains today.

CHAOS IS GOOD?
In Australia, following last week's political chaos (and after they knew the outcome) Aussie consumers raised their confidence in their own situation and that of the economy, lifting their weekly consumer confidence score a very healthy +2.4 pts to 116.5. (For reference, the same pollster's NZ consumer confidence score was last reported at 118 and falling.)

MORE DEBT SOON
Turners Automotive Group (ex Dorchester Finance) has said that it is likely to be issuing bonds soon.

HOW TO WIN A TRADE WAR (?)
Easy, apparently. Subsidise your producers. The Trump administration will pay farmers up to US$12 bln (NZ$ 18 bln) to offset losses from trade disputes with foreign buyers of American rural exports. All with borrowed money, obviously.

SWAP RATES STEEPEN
Wholesale swap rates are up in a slight steepening tone with the 2 year unchanged, the five year up +1 bp, and the ten year up +2 bps. The UST 10yr has gained +4 bps and is now at 2.86%. The UST 2-10 curve is now just over +20 bps. The Aussie Govt 10yr is at 2.59% (up +4 bps), the China Govt 10yr is at 3.66% (up +1 bp), while the NZ Govt 10 yr is now at 2.63%, up +2 bps. The 90 day bank bill rate is down -1 bp at 1.91%.

BITCOIN UP
The bitcoin price has jumped today and is now at US$6,913, a gain of +3.6%.

NZD STABLE
The NZD is little changed at 67 USc. On the cross rates we are at 91.3 AUc, and 57.4 euro cents. That leaves the TWI-5 at 70.5.

This chart is animated here. For previous users, the animation process has been updated and works better now.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

8 Comments

by bw | 28th Aug 18, 4:39pm 1535431148

"HOW TO WIN A TRADE WAR (?) Easy, apparently. Subsidise your producers."
And what is Trump complaining about to enact such a policy? Well, in part....
"The Common Agricultural Policy of the European Union pays a lot of money to farmers - 60 billion euros each year. "
...and the EU has done this....for decades....Vive le Brexit!

by mfd | 28th Aug 18, 4:59pm 1535432391

I believe this $12 billion is in addition to the ~$20 billion the US pays in subsidies annually. The US and the EU are far from the only ones:

https://en.wikipedia.org/wiki/Agricultural_subsidy

by Wrong John | 28th Aug 18, 5:20pm 1535433608

Gotta look after the farmers bro. Europe starved in the 20th Century a couple of times. The Germans did it tough between the wars and food stamps were still being used in the UK in the 1950's. Showing my age now.
At least if Italy or Turkey starts a war these days they have a enough food for a couple of years. And before you off on a tangent, China relies on imported food to keep the factories open. Yeah, sure, Beijing doesn't care if most of them they starve, but they still need to eat.

by RickStrauss | 28th Aug 18, 5:36pm 1535434576

Also why you don't encourage and celebrate the mass sell-off of your most productive agricultural land into foreign ownership - especially state-private model ownership. NZ does not have the clout to be able to legislate over that land in terms that foreign state partners do not like, once enough has been sold off.

by Roger Witherspoon | 29th Aug 18, 7:42am 1535485327

Particularly if it has been covered in houses and asphalt. NZ is a wanton destroyer of prime agricultural land, the opposite of green. What's worse is we do it on purpose, in the belief that it is a good thing and it will make us more productive.

by OldNoob | 29th Aug 18, 6:47am 1535482074

That makes me shudder to think of what's unfolding in Zimbabwe 2.0, now playing in South Africa.

by Nzdan | 29th Aug 18, 7:01am 1535482914

Watch as the country turns into a barren wasteland over the next few years. All the good people are leaving the country in droves. What will be left is people wondering why the crops stop growing after the next harvest and why the power stations mysteriously stop working.

by Advisor | 29th Aug 18, 8:25am 1535487937

Yeah. It’s another Venezuelan crisis waiting to happen where yet another clueless ruler believes mass exodus won’t decimate the economy.