A review of things you need to know before you go home on Thursday; no rate changes even from RBNZ, Fonterra shareholders unhappy, more concrete poured, swap rates up again, NZD stronger

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

MORTGAGE RATE CHANGES
No changes to report today either.

TERM DEPOSIT RATE CHANGES
No changes here again.

UNCHANGED, BUT MARKETS MOVE ANYWAY
As expected, the RBNZ left its official rate unchanged, citing both upside and downside risks. But there was more emphasis today on the upside aspects and the tweaked their forecasts to show that. Still, they also said current settings are likely to stay as they are until 2020 at least. Market commentators were a tad sceptical that they can hold out that long it current pressures persist. Consequently, the RBNZ settings encouraged the currency to rise, and wholesale rate yields to rise noticeably.

NOT HAPPY WITH PROGRESS
The Fonterra Shareholder's Council issued a report reviewing 'progress' and our largest company and it was a warts-an-all review, and not flattering about progress in extracting premiums for higher-valued products. The report shows a -$2 bln 'opportunity cost' in foregone earnings during Fonterra's 17 years of existence; 'value-added' business returns 'significantly below' what is needed.

A BIG POUR
Data for the amount of concrete poured in the September quarter was released today showing growth at +4.0%. In Auckland, the 278,000 m3 poured in the June to September period was an all-time record, and up almost +10%. There were good gains elsewhere including Wellington which has been doing some quake remediation. But volumes are tailing off in Christchurch.

REACTIONS IN BIG MARKETS
In the shadow of the US mid term elections, Wall Street closed up +2.1%. The Shanghai stock exchange is up today so far, but only marginally, and just like the Australian and New Zealand indexes.

NOT SO POPULAR
Fonterra's latest seven-year bond offer has closed, with Fonterra ending up paying at the top of the indicative interest rate margin and with none of the potential $50 mln available oversubscriptions taken up. Fonterra will issue $100 mln worth of the bonds, with the interest rate margin set at 1.35%, which is at the top of the 1.25% to 1.35% indicative range for the offer. The final interest rate is therefore set at 4.15%. The Bonds will be issued on 14 November 2018 and will mature on 14 November 2025.

OUT OF CONTROL
Venezuela's consumer prices rose 833,997% in the 12 months through October, according to a report by the opposition-controlled Congress. It will probably reach 1 mln percent in calendar 2018. The IMF expects hyperinflation to reach 10 mln per cent in 2019.

SWAP RATES RISE AGAIN
Swap rates are rising again today on top of yesterday's leap, but today's rise is more modest. This has added another +1 bp to the two year swap, +3 bps to the five year swap and +2 bps to the ten year. Going up as well is the UST 10yr yield which is now up to 3.23%, a +3 bps gain today. But the UST 2-10 curve has moved to just under +26 bps. Other benchmark bond rates are not as volatile. The Aussie Govt 10yr is at 2.76% (up +4 bps today), the China Govt 10yr is down -3 bps at 3.53% which is a big move for them, while the NZ Govt 10 yr has powered up another +5 bps to 2.81%. The 90 day bank bill rate is up +1 bp at 1.98%.

BITCOIN UNCHANGED
The bitcoin price marked time today, unchanged at US$6,524.

NZD EVEN FIRMER
The NZD has risen again today as well and is now at 67.9 USc. On the cross rates we are holding high at 93.4 AU, and at 59.4 euro cent. That puts the TWI-5 at just over 72.1.

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28 Comments

Anyone wants a free car??? Just buy a house in aussie

As long as you don't do it in Darwin! That's one expensive BMW...
"Darwin’s property crash, which has wiped $1 billion off the Territory’s property market since 2014, equating to a 53% drop"

Darwin's pretty far-flung. Much like a couple of islands nestled in the South Pacific.

Much like the world views New Zealand?

53% is 53%

Is all the extra concrete in Auckland going into residential and commercial building construction? Cant really think of any new infrastructure using significant amounts of concrete, except maybe the city rail loop?

In that case, you are not looking hard enough ...

See this.

A few infrastructure things on that list, but most aren't large scale.
Puhoi motorway
City rail loop
America's cup bases
AMETI
And some water care stuff that might be significant.

Most of the other stuff is commercial/residential or not started yet.

Oh sorry I didn't put a link for this in yesterday.
https://www.newshub.co.nz/home/politics/2018/11/exclusive-housing-minist...

We are celebrating an increase in concrete pour?

Concrete has a massive carbon footprint: it contributes 5% of annual anthropogenic (of human origin) global carbon dioxide production. “The rule of thumb is that for every ton of cement you make, one ton of carbon dioxide is produced,” says Marios Soutsos, who studies concrete at the University of Liverpool. “Modern cement kilns are now more efficient, and produce about 800kg of carbon dioxide per ton but that is still a big emission.”

Not to mention bye bye beaches ...the world supply of sand is not infinite.

Construction sand is usually make from crushed rock, beach sand doesn't have nice sharp edges.

Sand and gravel are now the most-extracted materials in the world, exceeding fossil fuels and biomass (measured by weight). Sand is a key ingredient for concrete, roads, glass and electronics. Massive amounts of sand are mined for land reclamation projects, shale gas extraction and beach renourishment programs. Recent floods in Houston, India, Nepal and Bangladesh will add to growing global demand for sand.

I seem to remember you saying to me a while back everybody has the right to have kids.. those kids have to live somewhere, and that somewhere is usually built on a concrete pad/foundations, with concrete kerbing, and their food comes from shop with concrete walls etc. People = infrastructure = concrete and steel. = Burning fossil fuels and making carbon.

That's not how it works in NZ, our reproductive rate has dropped below the rate of replacement. It's not having kids that's causing the infrastructure demand, it's immigration.

Nope was not me? I'm for depopulation personally (no kids). I enjoy living on this wonderful planet but the abuse it gets daily makes angry.

Not quite Doris, concrete re-absorbs a lot of CO2

Concrete products reabsorb nearly half CO2 released in cement manufacture
https://www.abc.net.au/news/science/2016-11-22/concrete-is-a-carbon-sink...

"Venezuela's consumer prices rose 833,997% in the 12 months through October"

What??? is that not a typo??? that's very roughly 2000% every day. Is that possible???
So if for example on day 1 milk costs 1 Bolivar, the next day it costs 20 Bolivar and the next 400, 8000 on day 4, 160'000 on day 5, 3.2 Mill on day 6 and 64 Mill the week after it started at 1 ???

Surely I'm getting something wrong? Please correct me

I'd like to say "WOW" but I can't, my chin is still on the floor

Nobody will be using Bolivar. They use USD because the hyper inflation makes the money in your pocket worthless while you take a kip.

Back to the situation where using banknotes is cheaper than buying toilet paper.. probably doesn't work so well if they have new plastic notes.

Ewww.

is it a problem with the sharp edges or absorption?

You don’t know who has wiped with it before you.

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=121...

Well well well .. Auckland is not too far away!!!

Yes, life in Venezuela must be tough. Their own money is of no value. What do you do? It's survival. You barter. You wait, for days sometimes. You stay off the streets after dark. You work your family & friendships for all your life is worth. And you're grateful it's warm, most of the time, so you can survive outdoors. Venezuela is the end product of social democracy which is the urban liberal's nice way of saying socialism. It doesn't work.

In another sign of repeating 2015, the Chinese are beginning to mobilize their “reserves” again. Three years ago, in a futile attempt to staunch CNY’s stubborn “devaluation” various government authorities blew through just about $1 trillion. It didn’t work. You would think that everyone could learn from this episode.
https://www.alhambrapartners.com/2018/11/07/chinas-not-safe/