A review of things you need to know before you go home on Thursday; no rate changes, no food price changes, NZGB 2029 yield rises, limp housing market, equities start major correction, swaps soft, NZD holds

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

MORTGAGE RATE CHANGES
No changes here today.

TERM DEPOSIT RATE CHANGES
None here either.

FRESH IS BEST & CHEAPER
In the year ended September 2018, food prices were basically unchanged (up just +0.1%). There were higher prices for ready-to-eat food (up +3.5%), and milk, cheese and eggs (up +2.2%). Prices decreased for vegetables (down -8.9%) and fruit (down -3.6%), which helped keep overall food inflation low for the year.

RISING YIELD
The latest tender of $250 mln for NZGB April 2029 bonds brought a higher yield for investors today of 2.63%. That is up on the 2.57% at the previous tender. More than $840 was bid giving a coverage ratio of just under 3.4x.

MORE TAXPAYER BORROWING
Housing New Zealand has launched a new minimum NZ$100 mln 10 year medium term note issue. And it wants to increase its existing 2.97% 06/23 notes (with a maximum of NZ$300m in aggregate to be issued across the two tranches).

NELSON STARS, BUT LIMP EVERYWHERE ELSE
The number of homes sold last month was the lowest in September since 2011 but prices remained flat, going nowhere. National median prices changed little from August and were up +5.9% year-on-year. In Auckland, volumes fell -2.1% and prices were unchanged from both August 2018 and September 2017. In every other region, volumes fell in September from August without exception. On the price front, half the country's regions saw small median price rises, the rest flat of declines. The most notable activity was in Nelson where volumes sold held flat, but prices took off higher. There were up +13% in September from August, and a whopping +23% than from September 2017.

A GLOBALLY IMPROVER
New Zealand has gained one place moving to 8th in the latest global ranking of national energy performance by the World Energy Trilemma Index. We are the only non-European country to rank in the global top ten. Canada ranks #13, the USA #14, and Australia, well they rank #38. This ranking measures three things; energy security, energy 'equity' (by which they mean affordability), and environmental sustainability of the energy sector.

DUE AN ACC REFUND?
If you were in your first year of self-employment between 2002 and 2017, or paid provisional ACC levies after ceasing trading, ACC may owe you a refund. ACC expects to refund around $100 million to approximately 300,000 business customers who were incorrectly charged levies during that time.

OMINOUS SIGNS
Both the Shanghai and Hong Kong stock exchange indexes have opened sharply lower today, Hong Kong down more than -3.6%, Shanghai down -3.4%. These follow Wall Street's greater-that-three-percent falls earlier in the day. Even the NZX is down -3% ahead of its close. There are ripple effects with the UST 10yr dropping sharply, and bitcoin taking a dive. These are all benchmarks that we will be watching well into the night. We will also be watching for signs of a rescue from China's 'home team' of SOE buyers to prop up their markets.

SWAP RATES SOFT AS BOND YIELDS DROP
Swap rates are unchanged for 2 years, down -1 bp for five years, and down -2 bps for ten years as we write. But things may well get turbulent as Asian markets play out. The UST 10yr has dropped -6 bps to 3.15% with the UST 2-10 curve holding at +32 bps. The Aussie Govt 10yr is at 2.73% (down -3 bps), the China Govt 10yr is at 3.63% (also down -3 bps), while the NZ Govt 10 yr is at 2.65%, and down -5 bps. All these yields are in play as we publish so further falls are possible before each market closes. The 90 day bank bill rate is up +1 bp again to 1.90%.

BITCOIN SLUMPS
The bitcoin price has slumped to US$6,237 and down -6%. If you follow bitcoin and other cryptos, you might be interested in this.

NZD SOFTER
The NZD is slightly softer today from this time yesterday, now at 64.7 USc and the same as we started when we opened this morning. On the cross rates we are firmer at 91.5 AUc, and softer 56.1 euro cents. The TWI-5 is at 68.8.

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USD 
NZD
End of day UTC
Source: CoinDesk

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30 Comments

Crude price has fallen more than 6% since this time last week and NZD has recovered 0.6% over the past couple of days. However, petrol stations are not showing the same hurry to slash fuel prices as they do to hike when these market rates were treading in the opposite direction. Hmmm I wonder why?

They are in business - why would they not sell their products for the maximum that they can ?

Every vegetable you purchase that goes through the auction system is sold that way - yet I don't see comments targeting them.

Many investors will hold energy companies shares and are very happy to see improved returns on their investments.

It is totally irrational to target oil companies for not immediately lowering their prices - why should they lose money on their existing stock they purchased at the old prices.

Reflect a moment before posting what can only be termed totally ill thought through comments on products sold in a competitive market environment.

Yeah i know right, i mean fuel is just a product. It doesn't underpin society's energy needs, there's no need to be ethical about pricing strategies.

Vegetables underpin the worlds food needs.

What is the difference ?

I think the difference can be found by growing some oil in your back yard.

But the oil industry is higly competitive and margins are razor thin..

Palmerston North - A snapshot of a property crash about to hit New Zealand. It's time to call bullshit on this market.
I have just looked at the 175 Listings on Trademe for Palmerston North and uncovered the following:
45 Listings are New Builds or Plots, most that have been built will have been financed for top of market prices. (25.6% of the market)
3 Listings were bought in 2018 and are already back on the market (1.7%)
11 Listings were purchased in 2017 (6.2%)
25 Listings were purchased in 2016 (14.3%)
7 Listings were purchased in 2015 (4%)
8 Listings were purchased in 2014
7 Listings were purchased in 2013
7 Listings were purchased in 2012
8 Listings were purchased in 2010/11
22 Listings were purchased between 2000-2009
6 Listings were purchased between 1990 -1999
5 Listings were purchased pre 1990
There is no data on either Tradme or QV for 21 listings. (12%)

If anyone needs any help working out how exposed Palmerston North is following the speculation in the market then please call the helpline 0800 WHAT A BLOODY PICKLE.

Well, some bargains pipeline for those who haven't downsized yet.

But-but-but...scoop nz thursday 11 october says "NZ house prices rise to new record on dwindling supply"
http://www.scoop.co.nz/stories/BU1810/S00343/nz-house-prices-rise-to-new...
I found the article such an inversion of truth that I simply do not know where to start..any other readers ? Help please!

Re: OMINOUS SIGNS
"We live in interesting times". The next few days and weeks will be interesting. Shanghai down well over 6% since return from Golden Week holiday. NSDAQ 4.2% yesterday, Nikkei over 4% today.
The previous big events 1929 and 1987 were in October and October tends to be a nervous time for many investors; these events wont be calming any nerves.
I note that the "Don't panic Mr Mainwaring" calls have already started such as NZ Herald.

Let's keep this in context.

Look at a graph of any of the major indices over the last 5+ years - today's movement is barely a blip.

Strong buying support has emerged at lower price levels - what's there to worry about ?

JB – the world’s second largest economy:

“Shanghai shares dropped 4.3 percent, on track for their worst day since February 2016, to their lowest level since late 2014, while China blue chips slid 4 percent.”

I’m being ridiculously simplistic and take your point – a blip, sure and then maybe, but I just think of the wealth effect, leverage, confidence etc in a country that has had so much economic impact of late.

Maybe the reef fish have finally turned after 10 years of onwards and upwards.

I just feel that we could be in for some interesting times in the next few months with some hard lessons to be learned for new investors who have never seen a downturn including NZ Superfund that have walked on water since inception.

Higher interest rates - and I suspect there will be more as inflation emerges from the woodwork in the US - will drive assets prices lower still. You can't run 1 $ Trillion deficits without consequences.

Watch this space !

National Unsold housing stock has risen to 34,945 - a 0.8% rise in 24 hours
Auckland's Unsold housing stock has risen to 13156 - a rise of 0.8% in 24 hours

That usually happens in spring and is usually supported by growing buying activity. This time may be different, with listings rising but buying activity lagging.

Fritz - Did you ever hear about all those sellers that got stranded on Waiheke Island - thought we should look at somewhere nice after our visit to Palmy. 2 sales in 3 months and here is the reason why! There are 160 properties for sale but on Waiheke the canny buggers know how to hide their sale price history but here are the other 118 sellers (some of whom have already had over a year trying)

New builds - 2
Previously purchased in 2018 and back on the market already- 1
Previously purchased in 2017 - 5 (4.2% of identifiable stock)
Previously purchased in 2016 - 13 (11%)
Previously purchased in 2015 - 23 (19.5%)
Previously purchased in 2014 - 6 (5%)
Previously purchased in 2013 - 8 (6.8%)
Previously purchased in 2012 - 8 (6.8%)
Previously purchased in 10/11 - 7 (5.9%)
2000-2009 -35 (29%)
1990-1999 -5 (4.2%)
Pre 1990 - 5 (4.2%)

There are 42 others but the details are so well hidden including them would disrupt the reality. Why do such a large portion of sellers want to leave within 3 or 4 years? Or has Waiheke been pumped and dumped!

Now that the Hon PM has fingered Fuel and more recently Supermarkets as being allegedly some sort of Opolists (fleecers, etc), and is beefing up ComCom with new sticks with which to beat 'em, surely it's time to turn the same set of sharp legal minds to the verticals/duopolists in the building and construction sector. Perfect anti-trust target I would have thought.

Fletcher, to take a single example, own:

Winstone Wallboards have had a recent Commerce Commission enquiry and emerged with a clean bill of health if I recall correctly.

Golden Bay have a major competitor in Holcem.

Placemakers have Mitre 10, ITM and Bunnings as major competitors

Struggle to see how in such strongly competitive markets any anti-trust issues would arise.

Well, that’s a fairly impressive four year round trip to nowhere:

“Shanghai shares dropped 4.3 percent, on track for their worst day since February 2016, to their lowest level since late 2014, while China blue chips slid 4 percent.”

https://www.reuters.com/article/us-global-markets/asia-shares-plummet-af...

Shanghai seems to be mirroring Waiheke Island on a round trip to no-where.

Speculators jumping ship from A2 (-11.5%) ouch!

There's been a few hits today but that's a big one. There's probably a few people moving their position to cash right now.

Looks like I'm due an ACC refund. I doubt that it'll be much based on their indication so far.

NZX50 is down 3.64% and European/US markets aren't looking great. It's not panic stations but there's a sentiment change.

Me too, 300 bucks, the man on the wireless said this afternoon. That’ll pay the petrol to get down to the Bach for Christmas. Chrr ACC.
There’ll be a couple of billion wiped off the markets too today. Remember the PRC loaned money to citizens to buy on the stock market... this could smart a bit. Shanghai down over 5% today.

Debt trap diplomacy, China over Sri Lanka.

https://www.thenational.ae/world/asia/sri-lanka-hands-over-port-to-china...

Getting access to English ports post WWII was how the US one part of them becoming the world empire.

A little Bitlesscoin..too. Red Sales in the Sunset.

https://www.marketwatch.com/investing/cryptocurrency

Housing drooping, Stocks flopping, Crypto cracking, Bonds bombing, Buy Gold?

grow vegetables....

Grow oil in your back yard.