A review of things you need to know before you go home on Thursday; Moody's gives our banks a tick, used imports drop, cheap linkers, Wtgn rents jump, petrol inflation threat, swaps rise & steepen, NZD drops

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

MORTGAGE RATE CHANGES
No changes today.

TERM DEPOSIT RATE CHANGES
FE Investments have launched a new 5% 'special for a 15 month term, minimum $10,000.

CONCISE IS BEST
Firstly, we are attracting many new readers, and many more comments. As part of our management of these we have instituted a small change so that the first 100 words of a comment show by default, and a click of the "read more" button will be needed to reveal the rest. No other change has been made. And there is also no change to our Commenting policy.

MOODY'S LIKES OUR BANKS
Moody's ratings agency says its stable outlook for the New Zealand banking system is underpinned by healthy domestic economic conditions, although slowing credit growth and rising wholesale funding costs could exert modest pressure on profitability. It also says delinquencies on housing loans are likely to remain low and continue to underpin overall strong asset performance.

A BIG DROP
There were only 11,533 used imports registered for the first time in September, a chunky -15% drop on the same month a year ago. This was not unexpected because the stink bug season is starting and the logistics for getting cleared vehicles in are much harder now.

LOW NET YIELD POPULAR
The $100 mln offered by Treasury for the 2040 inflation-linked bonds were popular today, attracting $365 mln in bids, the most this series has ever attracted. The net winning yield was a low 1.81% (plus inflation of course), and nearly the equal lowest.

WELLINGTON RENTS ON THE MOVE UP
Median rent data
for September from MBIE (from the large bonds database) showed no change from August nationally for a 3 bdr house. But these rents fell in Auckland and Christchurch, rose in Wellington. And rents for 2br flats rose sharply in Wellington too, and were up in Christchurch. Wellington flats now cost the same as Auckland after rising +15% in a year.

CARD FRAUD PREVENTION
BNZ said today it has contracted IBM to help it beef up its anti-fraud processes. "IBM Safer Payments uses both financial and non-financial data together with a customer’s transaction history, to perform rigorous authentication and profiling on each and every transaction. Fraudulent transactions are quickly identified – allowing them to be stopped, or put on hold pending further validation."

$2.50/L VERY SOON
The recent sudden rise in crude oil prices this week, combined with the sharp fall in the exchange rate today will push pump prices up by +10c just for these two impacts, with GST, that is a coming jump equivalent to the Auckland regional fuel tax imposed reently - except iot will be nationwide. $2.50/litre for U91 is a certainty now and fairly soon. This will give local inflation a sudden boost. Remember (if you can) discounted pump prices were under $2/L at Easter, so that could be a +25% change in just seven months.

EYE ON CHINA
Wall Street closed flat today, despite the range of good data. Hong Kong has just opened and is sharply lower, down -1.7% in the first hour and now heading towards a -5% drop in a week. (Shanghai is closed for the Golden Week holiday. But when it re-opens on Monday, it could be ugly.)

EYE ON WMP
The surging US dollar is putting a dampener on WMP prices (in USDs) on the dairy derivatives market today.

SWAP RATES RISE, STEEPEN
Swap rates reversed course today in response to Wall Street and are up and steeper. The two year is up +2 bps, the five year is up +3 bps, and the ten year is up +5 bps. The UST 10yr raced higher today on good US data and is now at 3.19%, a gain of +13 bps, with the UST 2-10 curve pushing up and out to almost +31 bps. The Aussie Govt 10yr is also up strongly and now at 2.72% (up +9 bps), the China Govt 10yr is at 3.67% (unchanged given it is a holiday week there), while the NZ Govt 10 yr is at 2.65%, and up +3 bps. The 90 day bank bill rate is unchanged at 1.90%.

BITCOIN LITTLE CHANGED
The bitcoin price is marginally higher since this morning at US$6,581.

NZD DROPS
The NZD is lower again today at 64.9 USc and down a whole cent on a surging greenback. In fact this rate is at its lowest in nearly three years. On the cross rates we are only marginally lower at 91.6 AUc, and 56.6 euro cents. That puts the TWI-5 down to 69.4.

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

Daily exchange rates

Select chart tabs »
The 'US$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
Loading...
USD 
NZD
End of day UTC
Source: CoinDesk

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment or click on the "Register" link below a 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.

71 Comments

by Zombie ponzi | Mon, 02/07/2018 - 09:58
NZD heading to sub 65 cents this year, and sub 60 cents during 2019, regardless of business confidence.

Sorry couldn't help myself. That's the "first leg of the double" ticked off. Not as sure about sub 60 cents next year as I was, but there's still a reasonable chance.

Will someone have a quiet word to R. Kerr at the water cooler and remind him the US/NZ yield spread matters.

Well done!

But these rents fell in Auckland and Christchurch, rose in Wellington. And rents for 2br flats rose sharply in Wellington too, and were up in Christchurch. Wellington flats now cost the same as Auckland after rising +15% in a year.

Housing shortage in Auckland.. and falling median rents? Whats happened to the rules of Supply and Demand?

For the foreign investors (as we have been told),that once packed the Auckland auction rooms in those balmy 2015 and 16 years , shuffled bags of cash into agents hands,or offshore mortgages into lawyers palms must be feeling a modicum of pain about now..

Gas up to $2.50. The imputed value of my bike ride home just increased again. Feeling richer by the day!

Do cyclists feel like they are freeloading on the infrastructure they use? (especially the purpose built cycle-only lanes?) The time might come when the taxpayer will want fees/taxes for all that ...

Shhh

Let's hope the government doesn't do anything so silly as discouraging a sustainable and healthy mode of transport. They've done enough damage in mandating bike helmets.

Cycle helmets are a no-brainer just like wearing seat belts.

Nope.

The data on cycle helmets is much less conclusive.

There's a reason there's now law for this almost everywhere else on earth - and it's not because Kiwis are clever.

So you want to risk a head injury on inconclusive data when a cycle helmet may be beneficial - your choice but don't come crying to us if you suffer a head injury after a cycle crash and you weren't wearing a cycle helmet.

I would likely still wear a helmet. It's the compulsion that is the problem - it gives the impression that cycling is a risky activity when it has a net positive impact on life expectancy. This discourages cycling making it more dangerous for the remaining cyclists (there is a strong safety in numbers effect).

Interesting.. do you also want to give motorcyclists the freedom to not wear helmets.. or is that compulsion somehow different?

Great idea - a motorcyclist with no helmet will travel at much lower speeds and be much safer

Perhaps we should remove seatbelts and airbags too then, and collapible steering columns too? make everyone safer by removing safety features?

Now you're starting to understand this risk compensation thing. More seriously though, the fitness benefits from cycling more than outweigh the risk of injury, so whatever we can do to encourage people to cycle, we should be doing. This is even before making an economic or environmental argument.

I hope you don't actually believe what you wrote above.. It doesn't work like that in the real world.. people just die more.

I was pretty much joking about the car features, although it is true that adding safety features tends to encourage risky behaviour. My main argument is that even biking with no helmet is a net good both personally and for society compared to driving a car, and one impact of mandatory bike helmet laws is to reduce the number of people cycling. Therefore, the law is a net bad.

In your opinion its a net good. And if they went all out and put divided cycleways everywhere then i'd agree. but that is going to cost a fortune and not be possible in lots of places, and in the meantime you get lots of cyclist deaths, lots of traffic disruption when cyclists potter along at 25kph on an already congested arterial road.

The economic benefits are net negative when you have cyclists sharing the rush hour roads with cars IMO.

I wonder if the case for helmets would be stronger if the data included newer MIPS technology helmets? They're meant to be much better at protecting the noggin.

https://academic.oup.com/ije/article/46/1/278/2617198

“Helmet use is associated with odds reductions of 51% for head injury, 69% for serious head injury, 33% for face injury and 65% for fatal head injury. Injuries to the neck were rare and not associated with helmet use,” the study found.

Doesn't seem that inconclusive to me.

What if wearing a helmet makes it more likely you are hit in the first place?

http://www.bath.ac.uk/news/articles/archive/overtaking110906.html

What about all the cyclist that fall off all by themselves and smack their heads into the road? Those are when the helmet helps. Helmet won't protect you against being hit by a ton of steel.

It might help prevent a nasty bruise or a skull fracture in that case, but it probably won't save your life. Death is much more commonly caused by rotational impacts, so Zombie Ponzi is likely on to something with the MIPS helmets. Making these better known and cheaper might actually save some lives.

Not if you don't make people wear them.

I’m pretty sure I could find the same type of evidence for lower speed limits decreasing car deaths. So if anything that reduces deaths should become law, why not drop the speed limit significantly? Heck why not drop it to 0 and prevent all road deaths?

Because wearing is a tiny up front cost ($15), and otherwise has no effect on the rider going about their business. It doesn't slow them down, or have any real ongoing costs.

Slowing down all the vehicle traffic to walking pace will grind the economy to a halt, increase fuel consumption and emissions for the same distance travelled and generally completely screw up any productive business that involves moving people or products around. which is in effect this situation that you are rooting for... https://youtu.be/0k5aVLi_yhM?t=27s

All I’m saying is that the pros need to outweigh the cons. My understanding is that the number of cycling deaths per km travelled did not drop after the helmet law. Yet the number of people cycling dropped significantly. A fail in my opinion.
I think we all know that reducing speed limits will definitely save lives. Cyclists, drivers, pedestrians and kids. It will cause some economic consequences- so some sort of analysis should be done first. But at the moment we seem to have some of the most restrictions on cyclists in the world and some of the highest city speed limits in the world. Maybe we know best - or maybe we have a driving culture.

Fast cycling especially on tracks cross country and I'd be enthusiastic helmet wearer. However the gentle pedalling of a gold card holder - I just cannot see how I will hit the top of my head. I can imagine going fast downhill and someone putting a stick through my wheel would cause an over the handbars accident but that is unlikely. A small child running in front of me - slam on brakes, slide on side and remove skin from arm and legs - I can imagine that but the entire advantage of a bike at my age is I'm slow and the visibility is fantastic - I ought to see potential child running out when no car driver would. The only way I can imagine hitting the top of my skull is one of the many idiots in cars simply not seeing me and driving into me. At that point I am really scared of surviving but quadriplegic - rather have my skull smashed.

Its not the top of your head, its the side. And speed has nothing to do with it.. simply the fact that when upright on a bike your head is ~2m above the ground, take the wheel out from under you on a painted white line, gravel or whatever and your head hits the ground rather damn hard.

Sorta like this poor woman. Got startled, wobbled, fell, died. No helmet. Would a decent helmet have saved her.. probably.
https://www.telegraph.co.uk/news/2016/12/05/cycling-headphones-kills-mot...

And remember, gold card pensioner bones are brittle. you break easy.

In 60 years I've fallen three times - never remotely hit my head - smashed my shoe and leaked blood (I was on blood thinners). If cycling fast and choosing to cross gravel I would be wearing a helmet. The example of the lady is exactly why I avoid my helmet (I always carry it but usually do not put it on) it very slightly restricts hearing. Without it I can detect vehicles behind me better than when it is on and it makes my head sweat which also doesn't help.
Clearly you are a faster cyclist and while I sit up you probably crouch over your handbars. Maybe the law could be amended: wearing lycra must have a helmet on and wearing cycle trouser clips or having a wicker basket on front of bike allow the cyclist to decide.

In my opinion, it should be a matter of choice. Personally I hate wearing a helmet. Im against the cotton wool brigade removing all personal responsibility in life. It makes us dumb.

In that case why not make helmets compulsory in cars? There are a lot of head injuries and deaths in cars...

Why not bubble wrap everyone before they get in a car - silly argument.

Because putting helmets on people in car is actually making the problem worse, not better, Wearing a helmet in a car puts extra strain on the neck in the case off an accident, and results in higher chances of spinal injuries unless they wear a HANS device. Except a race seat, 4+ point harness and a HANS device makes it near impossible to check blind spots, so they would end up killing more cyclists.

In a typical production car in an accident you don't hit your head against anything if your seatbelt is worn correctly, whereas falling off a bicycle or motorcycle there is a very high chance of cracking your noggin against the road. Completely different mechanisms for injury, making wearing a helmet in a modern car without a rollcage actually a bad idea, not a good one.

While cars users make riding a bike on the road completely unsafe, it is only fair for car users to pay to provide an alternative.

I would really rather we focus - as a society - on higher standards of behaviour for all road user, rather than turning this as some kind of weird tribalistic war between cyclists and motorists.

I'm in favour of much harsher penalties for traffic violations, mandatory license tests every few years. AND I'm in favour of cyclists needing a license as well.

The person driving the car is the one with the leathal weapon. The cyclist is probably only going to kill themselves.

In my book the cyclist has the same rights - and responsibilities - as any other road user.

Stupid idea about a cycle license. However children do need to be taught that pedestrians have right of way and that any pedestrian may be blind and or deaf. When a cyclist collides with a pedestrian the cyclist should be presumed guilty and fined accordingly.

Why would they?

They pay taxes as well.

Your warrant and rego payments are a drop in the bucket compared to what it cost to maintain roads in NZ.

No, they keep going on about how car drivers are subsidised.. while funding for building their cycle lanes and subsidising 55% of their public transport comes (in part) out of the NLTF which is funded by fuel tax, RUCs and registration.

The roads of national significance (eg waterview and Waikato expressway) paid for by general tax. local roads are 50% funded by general rates. That’s a big road subsidy. But the real subsidy is the realestate given to roading for free.

And that money will be recovered from company taxation from the economic benefits it produces by enabling goods to be moved and services to be delivered in a more time and fuel efficient manner.

As with cycleways from decreased obesity and pollution

Personally, I drive and cycle, which is the case for most cyclists I think. So most cyclists are also paying the GST and levies on fuel.

Even for someone who only drives it's not necessarily a subsidy. The question has to be what gives the best reduction in congestion per dollar spent? It may not be cycling infrastructure, but in theory at least, every dollar spent on cycling infrastructure should make the driver's journey less congested. In reality maybe not.

Yes I drive much more than I cycle. But because I cycle too I know how dangerous it feels having cars wizzing past at 60km/hr. Either the speed limits need to drop a lot or we need seperate cycle infrastructure. If the likes of David doesn’t want to pay for the cycle infrastructure, maybe its the latter.

dp

When I grew up everyone cycled. Now maybe half of all motorists have never cycled so they have no idea. If I'm cycling down the steep hill where I live a car can overtake me within a few centimetres (that is if it can catch me) but cycling up the same hill I need over 1 metre of leeway to allow for my random wobbling - any experienced cyclist knows this but roughly half of all drivers haven't a clue. I wish they could add a cycling element to the driving test.

It would also be really helpful if police would at least occasionally monitor and enforce cars passing cyclists at safe distances. Maybe some drivers don't understand the danger because no-one ever pulls them up on it to explain that what they are doing is wrong and really dangerous.

David - Maybe the time might come when cyclists are given more credit for the positive contribution they make? I pay loads of taxes and rates and choose to leave my car parked at home and ride my bike to and from work instead. In doing so I'm reducing pollution, decreasing my net burden on the public health system, I'm far less likely to hurt someone else in an accident, I'm reducing congestion on roads during peak times and I create very little wear and tear. Perhaps we should give cyclists a tax credit as a small thank you and to encourage more people to stop hauling 1-2 ton of metal in and out of town each day. The Ministry of Transport reckons most Kiwi adults now don't walk even 100m on an average day - how embarrassing is that? No wonder 1 in 3 NZers are obese (3rd worst in the whole OECD). What's the true cost of that on society in both financial and non-financial terms? Surely we need more not less incentives for people to choose healthy, efficient, clean forms of transport. An additional tax for cyclists must rank as possibly one of the dumbest and most unfair ideas ever. What's next, an extra tax and registration for people who walk or run to work?

CONCISE IS BEST

Well done, if you can't make a point in 100 words it's probably not worth reading

Also congrats on getting more readers, I hope most "support" Interest by way of a month payment

Testing...

Lorem ipsum dolor sit amet, consectetur adipiscing elit. Nullam cursus eleifend porttitor. Cras a risus in felis condimentum finibus. Donec nec sem varius, sollicitudin quam a, pellentesque metus. Morbi massa odio, maximus interdum varius sed, ullamcorper quis tellus. Praesent lobortis ultricies velit sed porttitor. Quisque cursus ut mi ac placerat. Duis id ligula sed odio interdum sollicitudin. Curabitur egestas nulla mi, eget venenatis lorem feugiat a. In hac habitasse platea dictumst.

Donec ultrices convallis ipsum. Vestibulum feugiat lorem scelerisque, egestas augue quis, condimentum lectus. Donec tincidunt ante non risus blandit, ac convallis urna consectetur. Morbi iaculis sapien ac arcu consequat ullamcorper. Curabitur ornare nibh ut dolor consequat aliquam. Aenean a urna rhoncus metus ultrices viverra eu nec mauris. Praesent rhoncus odio quis erat pellentesque egestas. Pellentesque iaculis fringilla neque sed tempor. Fusce efficitur metus tempus bibendum finibus. Proin imperdiet quis quam laoreet sollicitudin. Vivamus eu convallis sapien, et cursus diam. Curabitur ultrices tellus id tellus sollicitudin, rutrum tristique tortor aliquam. Proin faucibus velit neque, nec faucibus elit vestibulum vel. Nulla sed elementum magna, sit amet facilisis justo. Donec at tortor lacinia, auctor mi id, tempus diam. Nunc nisi mi, suscipit quis justo ut, gravida rhoncus massa.

Etiam nibh justo, pharetra et porttitor id, tincidunt eu ligula. Integer orci dui, pulvinar vel euismod et, sodales vel eros. Donec finibus efficitur est, at sagittis nunc vulputate et. In tempor non urna at tempus. Aenean varius placerat dui sed facilisis. Maecenas aliquam ligula maximus dolor scelerisque mollis. Donec sed erat justo. Morbi vitae odio tincidunt, maximus odio vitae, rhoncus massa. Praesent auctor vulputate velit in suscipit. Sed a hendrerit eros. Aliquam feugiat urna ac ante vulputate elementum. Nullam et aliquam lectus.

It's rubbish, but interesting as light entertainment..

I am still waiting for my "Thank you for supporting us" letter for donating to Interest.co.nz?

Pretty wild in Bond Land – US 10YR 3.21% & US 2YR 2.9%

NZ$ might have a miserable time of it overnight.

Quite the jump. US rates go up, USD goes up, NZ inflation goes up, RBNZ does?

Nothing... again.

Our HR team has been flooded with droves of CVs from ICT and engineering workers wishing to make a move from Auckland to Wellington, mostly migrants. I guess more expats are desperate to capitalise on the living cost arbitrage to keep whatever's left of their Kiwi dream alive.

A Few Questions From Today’s BOND ROUT!!!!

Here we are again. UST yields suddenly burst higher today. Today’s action, however, doesn’t suggest reflation so much as liquidation. A 10 bps move in the 10s is a volatile one. Are UST holders afraid of Jay Powell’s view, or did something else happen?

It is interesting that this takes place while China is closed. And EUR is getting hit, too. Like April, bond yields are up as is the dollar where it really counts. We don’t know what CNY would be at today, but there are pretty consistent indications that it wouldn’t be in the direction of reflation.
https://www.alhambrapartners.com/2018/10/03/a-few-questions-from-todays-...

As an aside, it would seem that Mr Powell may well be made of sterner stuff than his predecessors.

Overdue in my view.

The national party’s reasons for opposing things crack me up. They oppose banning letting fees because they might lead to increased rents.

Also, trade me above 12080 after just crossing 12000 yesterday.

Well in fairness, National got up in arms and opposed their own tahr cull policy.

Promise y'all, this ain't aboot cycles, helmets, bike lanes or other Essential stuff.

It's only about Gubmint budget assumptions - boring but telling to them wot understand 'em...

TWI - 71.31, Treasury BEFU assumption 'The trade-weighted exchange rate is assumed to remain broadly stable around 75 over the forecast period'
WTI - 76.14 Treasury BEFU assumption 'West Texas Intermediate (WTI) oil prices fall from US$62.9 per barrel in the March 2018 quarter to US$60.0 by mid-2018 and remain stable thereafter'

Hey Andrewj are you still farming? For months you were predicting an American beef surplus and a resultant price meltdown. Well everyone gets to be right sometime. The American price is dropping rapidly and manufacturing schedules are following along even though it is the start of spring when traditional supply in NZ is at it's lowest volume.

it melted down in the States but we appeared immune, cows with calves at foot dropped from $3600 to $1000. now you have a massive cow kill in the States, record beef numbers , Brazil with a low currency and a record herd, there ones hell of a lot of beef in the world.
Those ETF's control the beef market, lets see how that works out. It's the biggest dairy cow kill since the dairy herd liquidation in 1986, when they start killing 87,000 cows a week it's got to get interesting.

Hi Andrewj

I'm old enough to remember when US national debt was just a little over $5 Trillion dollars so much less than the current $21 Trillion. If I think back, yes it was 2007.

To try fit this with the rest of the thread, we'll call it the massive debt 'cycle', lot of thoughts on the merit of a helmet above. Advice should be to wear one.

https://www.youtube.com/watch?v=KwvWtZl2ICY

I pretty much totally gave up cycling on public roads once I had to wear a helmet. I used to enjoy it. Having this thing on my head took away the pleasure of riding for me.