A review of things you need to know before you go home on Wednesday; no retail rate changes, QV data variable, Barfoot results strong, GDT prices rise, Aussie growth slows, swaps weak again, NZD firm, & more

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

MORTGAGE RATE CHANGES
No changes today.

TERM DEPOSIT RATE CHANGES
None here either.

QV REPORTS ITS NOVEMBER DATA
QV is saying that national housing prices are still rising, but with Auckland flat that is limiting the gains. They say there are still a few hotspots such as Invercargill, Dunedin, Whanganui, Palmerston North, Napier & Whangarei where house values show double digit annual growth.

BARFOOTS REPORT STRONG TRANSACTION VOLUMES
Barfoot & Thompson, Auckland's larges realtors, reported their November sales which show a steady market, with sale volumes up +24% year-on-year and prices holding their own. The data surprised some analysts.

RISING DAIRY PRICES
Also rising are dairy prices, at least in US dollars. The latest GDT auction brought a +2.2% rise, the first in 14 auction events. In NZD however the gain was much smaller.

COMMODITY PRICES EASE AGAIN
The ANZ World Commodity Price Index fell for a sixth consecutive month in November, but the decline of -0.6% month-on-month recorded in November was considerably smaller than the previous months’ falls. The index is -5.3% lower than a year ago. Meat was the only category to record stronger prices in November. Again, gains were lower in NZD as our currency rose.

BNZ SHARE CAPITAL BOOSTED, PAYS NAB DIVIDEND
BNZ's ordinary share capital is increasing by $600 million following the issue of shares to parent National Australia Bank, which also gets a $345 mln dividend on about December 7. Separately BNZ paid September year annual ordinary dividends of $620 million, down from $700 million last year.

PLAYING CATCH-UP
Job ads in the ANZ survey rose +0.5% month-on-month in November. At this level, they are +7.7% higher than the same month a year ago. The recent data can be broadly described as ‘steady’. Wellington is now the strongest main centre for job demand (up +12.7), while Canterbury is lagging (-3.4%). However, 45% of all job ads are for Auckland positions - at this time last year this level was almost 47%. Auckland job ads are only +3.8% higher than in November 2017.

INDIGESTION
The pace of new building work completed in the September quarter sagged somewhat, being +6.1% higher than in the same quarter a year ago. In the June quarter, that increase was +8.1% so this is evidence of a tiring in the sector. Bankruptcies of some big contractors won't be helping. There may be lots of work around but buyers are screwing contractors down in ways that threaten the sector's viability - and work is being pushed back. Fixed price contracts will be harder to negotiate. Home building however is still active (and fixed price contracts are not common there).

SLOWING FASTER THAN EXPECTED
Australia's economy appears to be slowing much more rapidly than expected, after a spurt of growth in the first half of the year. In the September quarter it grew at an annualised rate of just +2.8% which is sharply lower than the +3.4% rate recorded in the June quarter. In Q3-2017 it grew at a rate of +3.0%. Aussie households are the weak bit. The subdued growth in gross disposable income coupled with an increase in household consumption resulted in the household saving ratio declining to +2.4% in the September quarter. This is the lowest saving rate since December 2007.

SWAP RATES LOWER
Wholesale swap rates are down -2 bps across the board. The US Treasury yields are down as well. The UST 10yr is now down at 2.92%. At one point earlier in the day (and late in the Wall Street session) the 2-10 curve fell to below +10 bps but is now back just under +12 bps, a -2 bps fall since this time yesterday. The Aussie Govt 10yr is at 2.49% and down another -4 bps, the China Govt 10yr is down -2 bps at 3.35%, while the NZ Govt 10 yr is at 2.52%, down -2 bps. The 90 day bank bill rate is unchanged 1.97%.

BITCOIN UNCHANGED
The bitcoin price is now at US$3,864 and that is unchanged since this time yesterday.

NZD FIRMER
The Kiwi dollar is holding its own against the greenback and no doubt aided somewhat by the positive dairy auction. It is now unchanged at 69.3 USc. On the cross rates we are sharply firmer as well at 94.8 AUc on the big underwhelm for their Q3 GDP. We are at 61.2 euro cents. That puts the TWI-5 up at 73.9.

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11 Comments

Nice to see some of the smaller centres getting their time in the spotlight. Go the regions.
The Aussie story is flagging across the board. Look at their sports teams right now. And they love their sports teams as you know. The Lucky Country is still one of the top global players & we're lucky enough to be able to ride on their coat-tails (mostly) but every so often things don't go quite to plan & you have to learn to guts it out for a while. A bit like NZ Inc really. They'll get over it & get on with it. They usually do. But a correction won't do them any harm in the long term.

Yep, plenty of "she'll be right" on both sides of the Tassie.

From the just released ME Bank Financial Comfort Report, 54% of Aussie h'holds have cash savings less than $10,000 – including 26% with less than $1,000 in cash savings. 20% of households have cash savings of $10,001–$50,000,

Puts it into perspective. Kind of paycheck to paycheck IMO.

https://www.mebank.com.au/getmedia/2046702b-39c0-457b-8950-80d75e716bcd/...

Zachary boy Wil dispute it

~75% have cash saving of less than $50k?!
If diversification is the old "1/3 of each" thing, then 1/3 in assets; 1/3 in shares and 1/3 in cash means the average net worth is far less than $150k. That won't enough to get through the economic winter that's setting in.
Now what, after interest rates have been cut to 'zero' that is?
(It's still not too late to sell - anything and everything......'who to', is the only dilemma)

After reading the Household Financial Comfort Report I feel somewhat buoyed about the financial state of Australia. The report starts off kind of gloomy and then gets more upbeat as you read through it.

Many things have actually improved since the last report. Notably net wealth, employment prospects and rental stress. South Australia seems to be going gangbusters. Brisbane is surprising in that it seems to be in the doldrums - I thought people here in NZ were saying it was Nirvana there with cheap housing and high salaries - confusing.

Here are some quotes from the report. It is worth reading and I think quite fair if overly gloomy and exaggerating things in the introduction.

For households with home loans, the proportion paying more than 30% of their household income towards a mortgage was relatively unchanged at 45% – much the same as previous reports. Somewhat encouragingly, the number of people arguably in extreme stress who contribute more than 60% of their income towards their mortgage has halved from 8% to just 4%. This is perhaps a sign of recent banking regulations to encourage responsible lending that are having a positive impact.

For renters, there has been a significant fall in rent stress, with those contributing more than 30% of their income falling from 72% to 67% – including falls among households spending greater than 60% of their income on rent as well as 30–40% of incomes on rent. Cooling housing markets and, in turn, falling rents in some major cities is easing the high levels of rental stress.

South Australia jumped markedly to a record level of financial comfort in June 2018 – up 16% to 5.78 – and surprisingly, the highest across Australia as a whole. This reflected a broad-based improvement in all drivers and, in particular, increased ‘confidence in handling a financial emergency’ as well as higher comfort with investments’, ‘cash savings’ and ‘income’.

Self-employed’ workers were the only workforce segment to report significantly improved comfort during the six months to June 2018,

Households with ‘mortgages on investment properties only’ or who ‘own their own home outright’ reported higher household financial comfort than households with mortgages on their home and an investment property and, to a greater extent, households with only a home mortgage. This arguably reflects that households with investment loans tend to have both higher incomes (before and after tax) as well as higher (net) wealth.

Household demand for debt slowed over the past six months to June 2018.

Comfort with net wealth – as measured by what would be left in cash if you sold all your assets and paid off all your debts – increased by 2% to 5.67 out of 10, which is slightly above the historical average of 5.66 since the report commenced.

Households indicated it was ‘easier to find a job in two months’ (up two points to 44%) if they became unemployed in June 2018. After the fourth consecutive improvement, job availability is the highest it’s been in over three years.

Who needs canaries when emus are falling over everywhere.

Just by way of note our economists and ditto their cousins missed forecasts, again on the downside by such a wide margin in relation to the Aussie GDP and NZ building work put in place ( last weeks retail sales miss was large) one has to question where their data comes from. When the the pat finally hits the fan,they will all be covered.

More kiwibuild failure... https://www.tvnz.co.nz/one-news/new-zealand/five-auckland-kiwibuild-apar...

A different failure to the Wanaka ones.. these ones had ballot winners and runners up that decided.. "Yeah, Nah" (or maybe the bank made that call for them?)