What happened Thursday

A review of things you need to know before you go home on Thursday; some small rate changes, house prices soft, job ad growth modest, record low linker yield, swaps rise, NZD unchanged, & more

1st Nov 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 so far today.

TERM DEPOSIT RATE CHANGES
NBS has trimmed -10 and -5 bps off of their TD rates for 2 and 3 years. NZCU Baywide has trimmed the rates for some savings accounts by -15 to -30 bps.

FAST-SOFTENING PRICES
QV house price data for October showed national prices up +5.4% year-on-year but up only +1.0% in the past three months. In Auckland, the year-on-year change has been +1.1% with a fall in the past three months.

FAST-RISING INVENTORIES
Realestate.co.nz inventory data for October shows a big rise in unsold properties. Nationally there are 20 weeks of sales at the current rate available, up from 17 weeks in September. In Auckland the level is up to 25 weeks, the highest since late 2011.

MODEST GROWTH
Somewhat similar to yesterday's MBIE job ads report, today's ANZ tracking showed annual growth to October running at +5.8% year-on-year, up from 3.0% in June. But this is well below the solid rates of growth seen over 2017, and is consistent with the economy having lost some momentum, says ANZ.

RESERVE BANK ACT REVIEW
Phase two of the Government’s review of the Reserve Bank kicked off on Thursday with the first round of public consultation that is due to close on January 25. This round of consultation is focused on five key issues: Objectives: What high-level financial policy objectives should the Reserve Bank have? Regulatory Perimeter: Which financial firms should the Reserve Bank regulate and how should the regulatory perimeter be set? Depositor Protection: Should there be depositor protection in New Zealand? Separation: Should the regulation of financial firms remain with the Reserve Bank? Governance: How should the Reserve Bank be governed, including who should make the Reserve Bank’s decisions? The full consultation document can be read here.

ASB CLAIMS BLOCKCHAIN FIRST
ASB says it has successfully launched New Zealand’s first bank blockchain single trade window in partnership with VerifyUnion. ASB says the platform was used by meat exporter Greenlea Premier Meats to make a trade with a Korean importer. The platform was used in parallel to the traditional trade process.

STRATEGIC CONCERNS
The Australian Strategic Policy Institute has issued a report about the clandestine efforts by the Chinese People Liberation Army sending scientists to do collaborative 'research' in Western universities. It is in a PLA program called "picking flowers, making honey". You can read their report here.

LOCALS WINNING AT ONLINE RETAIL
BNZ released its monthly online sales review today, showing total online retail spending in September +11% higher than in September last year. Annual online spending across the retail categories we cover is now running at approximately $4.5 bln (excl GST). Spending at local online sites grew very strongly and was up +15% compared to September last year. In contrast, growth in spending at traditional stores was only up +4.5%. Online spending at international merchants was up +7% compared to September last year.

RECORD LOW YIELD
Another $100 mln of Government September 2040 inflation-indexed debt was tendered by the Treasury today and it attracted modest demand with a coverage ratio of 2.7x. The yield today was 1.70%*, the lowest ever for this maturity.and this type of debt over all 14 previous such issues. (* = plus CPI.)

BIG TRADE SURPLUS
Australia has recorded a record AU$3 bln trade surplus in September on the back of strong iron ore exports, mainly to China. The Aussie dollar strengthened on the result because it was not expected.

MONOPOLY BEHAVIOUR REVIEW
The Commerce Commission says it is broadly satisfied with Christchurch Airport but has concerns with Auckland Airport’s targeted profitability. Auckland and Christchurch Airports, both natural monopolies, are subject to a form of regulation called information disclosure, which involves the Commission shining a light on the airports’ performances – their profit, investment, pricing, and service levels.

NO WORRIES
Share trading on the Shanghai stock exchange is up +1.2% so far today. That means it is up +4% since Tuesday. This comes after Wall Street posted a +1% rise earlier in the day.

SWAP RATES RISE FURTHER
Swap rates are up and steeper across the curve today. The two year is up by +2 bps, the five year is up +3 bps and the ten year is also up +3 bps. The UST 10yr yield has firmed as the day has progressed and is now at 3.16%, up +3 bps. The UST 2-10 curve has widened to more than +28 bps. Other benchmark bond rates are firming as well. The Aussie Govt 10yr is at 2.66% (up +5 bps), the China Govt 10yr is going the other way 3.54% (down -3 bps), while the NZ Govt 10 yr is at 2.59% and up +2 bps. The 90 day bank bill rate is up +1 bp to 1.92%.

BITCOIN STABLE
The bitcoin price is up today by a marginal +0.5% and now at US$6,318.

NZD LITTLE CHANGED
The NZD fell overnight but has clawed all that back so far today, back to 65.5 USc. On the cross rates we are softer at 92 AUc following the big Aussie trade surplus, and unchanged at 57.8 euro cents. That leaves the TWI-5 at just over 70.1.

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

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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19 Comments

by Boatman | 1st Nov 18, 4:18pm 1541042303

You know , since the GFC we have had what is really effectively a sustained period of very good years .

Steady GDP growth , high employment , stable exchange rate , low costs of borrowing , excellent terms of trade , rising wealth levels .

Its almost too good to be true ,

by rastus1 | 1st Nov 18, 4:28pm 1541042937

In your world boatman. For a lot I know its been miserable...like those young one'd watching the boomers voting back the shonkey denialist who made the asset owners his top priority.

The most disgraceful 9 years I have witnessed.

by Nzdan | 1st Nov 18, 4:53pm 1541044398

But if those young ones cut back on lattes, then maybe they can afford to save the required deposit for a house. Never mind that deposit today is near enough the same multiple of income that would have bought you a house outright when Boomers were buying their first homes.

by Zombie ponzi | 1st Nov 18, 5:13pm 1541045622

You can't expect to have your first house in Herne Bay Nzdan!! Try starting further out in Ponsonby or Grey Lynn like we did back in my day!!

Gosh....these kids want it all straight away these days....a sub-hour commute.....babies....to clear a mortgage before they hit 65....it's unbelievable.

by Nzdan | 1st Nov 18, 5:57pm 1541048262

These kids just don’t work hard, they’re too busy on their IPods. Try working for £9 & 6 shilling per week like we did. We had 9 percent interests rates, 9 percent!!

by roscizzle | 1st Nov 18, 6:47pm 1541051264

That kid is smart. He knows he'll work in a bank one day and dial up credit to his customers and charge interest on it and make 2 billion a year. Lazy? Nah. Savvy!

by Roger Witherspoon | 1st Nov 18, 5:19pm 1541045981

We rather lack the high paying jobs and high return investments that Australia has:
Australia has recorded a record AU$3 bln trade surplus in September on the back of strong iron ore exports, mainly to China.

Auntie Helen and Cousin John thought half a million new people and their money would be a good investment. I can't remember exactly why. In fact I don't think they actually asked us first, so they didn't need to say. I think the idea was that they would somehow magically create jobs for themselves and us. Not sure who did the investment analysis.

by RickStrauss | 1st Nov 18, 5:27pm 1541046477

Michael Reddell pointed out well the deferred cost of such a tack. I struggle to imagine Helen and John didn't know that cost would be incurred. Short term gains, long-term costs deferred for someone else to pick up.

by scarfie | 1st Nov 18, 6:20pm 1541049643

Have you thought of the prospect that we will never catch up? Auckland will turn into a shanty town.

by Roger Witherspoon | 1st Nov 18, 6:37pm 1541050667

Well on the way already it seems. Garages used to be for cars, now they are for families.

by scarfie | 1st Nov 18, 7:28pm 1541053702

And cars are now serving as houses. Beggars seem to be a permanent part of our culture now. I get down Queen St once or twice a year, heck I can recall when I was ten I would jump on the Birkenhead Bus to town and take my younger brother to the movies. It was once a benign place, can't really say that about it anymore.

by frazz | 1st Nov 18, 6:59pm 1541051996

Having walked down Queen St a few weeks back..is getting closer to slumsville by the minute

by Fritz | 1st Nov 18, 7:43pm 1541054604

I feel at some point soonish Auckland property will revert back closer to it's fair value. The city is growing, but there's probably a net loss in terms of talent and wealth. Lots of young and older Aucklanders moving out of the city. Don't think too many of these low skilled immigrants will place much buying pressure on property.

by yeahnah | 1st Nov 18, 5:30pm 1541046652

My thoughts entirely. When did we actually get to vote on population growth policies? Essentially they have reduced our per capita GDP making us poorer overall, made it harder to buy a house, get to work/school and put a greater strain on our utilities and the environment.

Although though some (including multi-residential house owning MP's) have done very nicely thank you.

by Advisor | 1st Nov 18, 11:06pm 1541066771

Some banks making a couple of billion dollars in profit from the NZ market have also returned the favour by extending board positions to ex-PMs that made it all happen for them.
After being swindled out of our living standards by Clark and Key, let’s see what Jacinta and ILG have to hit us with behind door no. 2!

by Wrong John | 1st Nov 18, 5:40pm 1541047219

It started in 1988 after the share market crashed. It was, in hindsight, a bi-partisan approach. This is the third Labour led govt with 2 National ones involved in the 30+ year immigration programme. In fact, Auckland house prices fell 15-20% in most areas, more in hot spots. It cost us $40,000+ if I recall correctly. It was last one out turn off the lights time... again. We didn't die. We got through it. I was one of many thousands middle management redundancies. Remember AHI? We'll get through this one too. The young ones will grow up & get on with it. Eventually. We all do. Damn it.

by scarfie | 1st Nov 18, 6:22pm 1541049756

So the rate curve was a hot topic a could of months back, projected to hit zero in October. Didn't happen.

by Uninterested | 1st Nov 18, 7:35pm 1541054157

There will be lots of sponsored mainland Chinese in NZ learning and researching how we do things here in fields other than the military. Things like manufacturing, health, banking etc.

by Kate | 1st Nov 18, 8:10pm 1541056210

Yesterday's news but not sure I'd seen any discussion on it;

https://www.newshub.co.nz/home/politics/2018/10/government-scraps-natio…