Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Nothing to report today.
TERM DEPOSIT RATE CHANGES
No changes here either.
LITTLE CONFIDENCE YET
Heading into what is usually a positive season for business, confidence data has remained very subdued. Own activity confidence levels are at their second lowest for a November since 2008. In the period 2009 to 2017 this index averaged a positive 36.0. The average for 2017 and 2018 is a tiny 7.0. For general business confidence, the change is even more stark, from to +31.1 to negative -38.2. If there is any good news in this survey it is that both residential and commercial construction intentions bounced back markedly from disaster levels in October. The failure of the overall business climate to improve has seen some unwinding of the gains the Kiwi dollar posted last night.
MASSIVE LEGAL FAILURE
The retentions regime designed to protect subcontractors in the event of a contractor failure and brought into effect on 1 April 2017 through an amendment to the Construction Contracts Act, wilted under the scrutiny of its first test in the Wellington High Court this month. The Court had to struggle against “gaps in the legislation" and “imprecise language" as it sought to resolve issues which should have been resolved by the lawmakers - in particular, how, and by whom, retention monies should be allocated in a receivership, in this case the Ebert Construction failure. Chapman Tripp says there are only two ways out of this mess, either the accumulation of case law to inject some much needed clarity, which will be a slow and expensive process, or the Government appoints an expert panel to review it and recommend improvements. The new law has made a very bad situation for subbies even worse.
20% SO FAR
The $3 bln, 3 year Provincial Growth Fund (aka the NZ First reelection pork barrel) allocated $140 mln to the West Coast region today. It included $87.5 mln for tourism, $32.8 mln for extending ultra-fast broadband and mobile coverage, $10 mln for a sand (garnet) mining project, and $9.9 mln for a milk segregation project with Westland Milk Products. So far $626 mln has been spent or allocated to projects.
A new rugged smartphone has been launched in New Zealand by Caterpillar's local dealer network. The new device features thermal imaging capability, built-in laser assisted distance measuring, and an indoor air quality sensor. For example, electricians can use thermal imaging to analyse a fuse box or wiring system, and the laser assisted distance measurement to estimate how much cable is required for the job. They can also live stream results back to base should they need further advice from a colleague.
The S&P500 surged higher today, up +2.3% and enough to push the index just higher than where it was at the start of 2018. The NZX50 is up +0.9% today (up +4.3% for the year) while the ASX200 is up +0.6% so far today (but still down -5.0% for the year).
TOUGH INTERNAL RATINGS
Treasury has announced the first if its Investor Confidence Ratings. The ICR is a three-yearly assessment of the performance of investment-intensive Government agencies in managing investments and assets that are critical to the delivery of NZ government services. The ICR provides an indication of the level of confidence that investors (such as Cabinet and Ministers) can have in an agency’s ability to realise a promised investment result if funding was committed. MSD received a ‘C’ rating and the Southern DHB was rated ‘D’. This is the first ICR assessment for both agencies. Housing NZ retained an ‘A’ rating and Defence a ‘B’ rating from their first assessments in 2016 and 2015 respectively. The NZ Transport Agency was rated ‘C’ after being assessed as ‘B’ in 2015.
SWAP RATES FIRM
Wholesale swap rates have firmed a little today, clawing back some of yesterday's late slippage. The UST 10yr is little changed at 3.05%. The 2-10 curve has widened to just under +25 bps. The Aussie Govt 10yr is at 2.62% and unchanged, the China Govt 10yr is down -3 bps at 3.41%, while the NZ Govt 10 yr is at 2.65% and also unchanged. The 90 day bank bill rate is down -1 bp to 1.98%.
The bitcoin price is now at US$4,110 which is an +8% rise from this time yesterday.
The NZD is also higher today at 68.5 USc as the greenback slipped on Fed comments that rate hikes may be nearing an end for now. It slipped later on the weak business confidence survey. On the cross rates we are marginally lower at 93.8 AUc and at 60.2 euro cents. That puts the TWI-5 up at 72.9.
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