Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Housing NZ Corp. has trimmed most of its fixed rates.
TERM DEPOSIT RATE CHANGES
ICBC trimmed some term deposit rates today, and raised a handful - 6 months to 3.40% and one year to 3.50% being the most notable.
IMPROVED INTEREST RATE DATA
The RBNZ today released new tracking of retail interest rates for mortgages. The extended data reconciles to the statistical returns supplied to them from banks. See here and here. But they are still just 'simple averages' (unweighted). (The RBNZ does publish some weighted rate averages.) You can still get data by individual bank from us. (We also supply the RBNZ with our offer rate carded data.)
USED IMPORTS SELL SLOWER
In contrast to booming new car sales, the used import trade continues to struggle. Stink bug problems were thought to be the issue inhibiting the flow of imports. But the October data shows a long run tailing off of this source of new cars. There were 12,100 of these vehicles first registered here in October, a -14.3% drop on the same month a year ago. That makes it nine consecutive months of declines. The all-time peak came in November 2017 at 14,924.
STEADY STATE EXPECTED
Tomorrow Statistics NZ will report the September quarter labour force data and our unemployment rate is expected to come in at 4.4%, down from 4.5% in June. Our participation rate is expected to be unchanged at 70.9%. And we are expecting New Zealand payrolls to rise +12,800 from June. (That is a long way lower than the +55,000 payrolls rise in the September 2017 quarter.) (These estimates are the median levels in the Thompson Reuters survey of economists.) Average hourly earnings are expected to rise just +2.7% pa, and short of the +3.1% gain recorded in June. Variations from these expectations may not only affect our currency levels, but will also colour the RBNZ MPS which is due to be released on Thursday. No OCR change is expected then.
RENTS UP IN AUCKLAND
National median rent for a three bedroom house is unchanged in October from September at $450/week. But the Auckland median spiked higher to $660/week and +6.5% higher than a year ago. In Wellington the change over the year is much less at +3.5% to $590/week. In Christchurch the change is only +1.2% to $420/week. Rent growth for flats is lower in each centre. Data is from MBIE's rental bond database.
GUINEY WINS IN COMEBACK BID
Fonterra shareholders have elected some 'new' directors and they have given the company a hurry-up. Shareholders voted to elect Peter McBride and Leonie Guiney to the Board. Incumbent Director Ashley Waugh, Jamie Tuuta and John Nicholls were unsuccessful. You will recall that Leonie Guiney was previous kicked off the Fonterra board, and then slapped with a gag order. This time will be different?
HISCO PAY REVEALED
ANZ's annual report is out and you can find compensation details for all the ANZ Group senior people. That includes, ANZ NZ's David Hisco. Check from page 54. There you will find details in AU dollars. Almost all senior managers had reduced compensation in 2018, some with rather large falls mainly in the variable portion. All up, the top seven managers took home AU$8.6 mln in fixed pay, plus they earned (but may not have gotten access to) another AU$13.4 mln in variable pay. That was -AU$2.6 mln less than the previous year, a fall of -12%. In this group of manager's Hisco's totals get shifted around by the exchange rate when reported in AUD, so the change for him isn't all in NZD compensation. He is the third highest paid in this ANZ group, and seems to have suffered the smallest reduction (before currency valuation changes). The division he manages starred in the ANZ group. Overall, the compensation of these seven top managers accounts for 0.2% of the profits. All employee costs are equivalent to 47.8% of before-tax profit.
APPLE PAY TEAMS UP WITH FLEXIGROUP
FlexiGroup today launched Apple Pay. It is available to all Q Mastercard and Flight Centre Mastercard customers with an eligible Apple device and can be used wherever contactless payments are currently available in New Zealand. FlexiGroup's credit cards charge higher than bank credit card interest rates, by at least +2%.
SWAP RATES HOLD
Swap rates are up again today, but essentially only for terms over 4 years and only by +1 bp. The UST 10yr yield has held at 3.21%. The UST 2-10 curve is back under +29 bps. Other benchmark bond rates are all in lockstep. The Aussie Govt 10yr is at 2.74% (up +1 bp today), the China Govt 10yr is also up +1 bp at 3.56%, while the NZ Govt 10 yr is at 2.67%, up +1 bp too. The 90 day bank bill rate is up +2 bps at 1.96% and back to levels last seen on July 10, 2018.
BITCOIN STABLE
The bitcoin price is up marginally to US$6,443 and little changed since this morning.
NZD HOLDING
The NZD is holding at at 66.6 USc. On the cross rates we are little-changed at 92.4 AUc, and at 58.4 euro cents. That puts the TWI-5 at just on 70.9.
This chart is animated here. For previous users, the animation process has been updated and works better now.
Daily exchange rates
Select chart tabs
11 Comments
National unsold housing stock (realestate.co.nz) has risen from 36,587 yesterday to 36,775 today. A rise of 0.5% in 24 hours
Auckland Unsold housing stock (realestate.co.nz) has risen from 13,795 yesterday to 13,858 today. A rise of 0.45% in 24 hours.
Auckland rental stock (Tradme) has risen too from 4,255 listings yesterday to 4277 today. A rise in availability of 0.5% in 24 hours.
The psychology of people and money never ceases to amaze me. I know a few people who own property in Auckland (National supporters as well....) who were quite happy to see the value of their properties growing so much the last 5 years and who would say they're not concerned about capital gains. They like their property because its 'home'. But now all of the sudden, like the last 6 months when the market sentiment appears to be shifting, they have changed their views. All of a sudden they're thinking about selling up and leaving town. So do you like your 'home' or not, or were you just enjoying tax free capital gains?
These same people couldn't be convinced that this might be a bubble, yet when it would appears we could be at a market peak, their behaviour is exactly what could cause a crash (everyone listing property at the same time and flooding the market with supply). So they don't believe something could occur, yet their own behaviour could be the trigger - how completely mad or just me?
The exact thing happened with my last landlord. The previous tenant told me that he'd offered to buy the house and the owner had turned him down. This was 2016 after the Welly market had been mostly flat for yonks. The owner had spent a serious chunk of change renovating too. At the beginning of my tenancy in conversation, the landlord states the same thing...would never ever sell, long term investment yadda yadda. A year in to the tenancy, a decent section comes up, so I get the builders out, speak to the council, get the lawyer to start looking at the paperwork. Think to myself... let me just call my landlord and make sure I can extend the tenancy long enough to complete a build.... (but its early 2018 and big capital gains have occurred in Wellington). Landlord says actually... he is thinking of selling. I still have till Oct on the lease, but he starts hassling me about wanting to sell sooner because his friend just sold and he CAN'T BELIEVE THE PRICE HE GOT OMG. He's a clever guy, he knows when a market has topped, he took the cash and ran. I don't blame him but let's not deny the amount of "investors" who are going to be tempted to cash in after a boom like this, if it looks like a slump is coming. This is doubly true if they've been using equity as a cash machine.
Yip - the narrative must be something like:
'there's no way this is a bubble' on the way up.
'I might just cash in my capital gains' when it peaks.
'Oh look at those prices dropping as everyone simultaneously lists' on the way down.
The herding/sheeple mentality is strong...
Wilco - what do you think of the result? Not a surprising result given that 3 people had to get 50% of the vote each, to have all vacancies filled.
Will be interesting to see who stands in round two of the election. I understand that anyone who stood this time and missed out cannot stand again in the next round (happy to be corrected).
I wonder where a director that resigned previously stands, if they decide to have a go?
I think a number of other directors will be very grateful it wasn't their turn to stand for re-election. The Waikato cartel's control of Fonterra may finally be beginning to unravel. I have real concerns about the endorsed candidate process however talking to farmers the alternative is letting them vote for the person who presents well on stage (popularity contest). Mr McBride was in this category but hopefully will bring some depth to the board. Mrs Guiney was a straight out protest vote supported by some big players. Unfortunately to maintain an effective board any improvements in governance will need to remain inhouse and we won't know who is responsible and who remains just dead weight.
Regarding the bankers earlier comments that the NZ mortgage market is about to get more competitive. I don't believe there is much down side left in interest rates apart from banks cutting into their own margins. There might be another 10-20 points to go as banks defend their market share. Being out of sync with the rest of the world doesn't mean NZ is big enough to defy overseas trends and those trends are now upwards. Try pricing a non residential loan.
We need to reduce our obsession with headline economic data such as number of jobs created and start basing our metrics of macroeconomic performance on granular analysis and commentary.
We posted record employment growth numbers in the last few years but underemployment rates remained high. We also have an overqualified workforce according to OECD, as our skills don't match the requirements of our labour market.
There have been similarly contradictory releases from across the Tasman: while unemployment has fallen to a multi-year low level of 5%, joblessness among STEM-qualified Aussies has actually risen because employers prefer experienced migrant workers over untrained Aussie graduates.
https://www.macrobusiness.com.au/2018/11/migration-council-howls-stem-s…
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11…
MELBOURNE CUP DAY TODAY.. Where was your money?
"And it's 'MELBOURNE' out in front, with 'A CASE OF TOO MUCH DEBT' following short behind.
'WERE ON THE ROCKS' is on the inside track, dragging along 'WE'VE OVERHEATED,'
'OOP's YOU DIDN'T WANNA' is leading the chasing pack with 'CAN-BEAR-A' falling over.
'AVOID THE CREDIT BUBBLE' stumbles and loses his rider 'Aunty Westpac'.
'50 PERCENT INTEREST ONLY LOAN BOOK' is making a move with 'NOW'S THE TIME TO BUY' and 'DON'T BE STUPID.'
'PERTH IS STILL BEHIND' falling away and never likely to catch up, but here comes 'SYDNEY's SPIRAL' 'ONCE A LOVELY PLACE TO LIVE' 'NOW WE'RE ROOTED' and 'STRUTH MATE'
"And who are these two riding up on the outside, I can't see, yes it is, the old mare from Auckland 'NEW ZEALAND IS DIFFRUNT' with '26% CLEARANCE'
'WHERE IS JOHNNY FOREIGNER' has fallen away now, with 'BARFOOT 'N' MOUTH' sliding back too.
It's MELBOURN OUT IN FRONT' with 'STRUTH MATE', followed by , 'HERE COMES SYDNEY's SPIRAL' 'NOW'S THE TIME TO BUY' and 'DON'T BE STUPID'"
He's fallen, yes 'CAPITAL GAINS' is out of the race, I hope his jockey is okay?... No, ouch he just got hit by 'REDUCED BANK LENDING'" and "WHERE IS JOHNNY FOREIGNER' 'I'm not sure if he's getting up from that?
"There's a whole bunch now in the middle but looking like the they don't have the legs for this, who can I see, yes 'WHAT DID TONY TELL US,' 'ALWAYS GO UP.' 'TREND IS YOUR FRIEND' who else is in there?, Looks like it's 'ASHLEYS CHURCH'S ON FIRE', yes it is! and 'SHOULD HAVE HAD DTI'S' and 'CREDIT BUBBLE' all herding together.
"What a race ladies and gents, a race to the bottom, good luck to all you wonderful punters as this plays out."
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.