A review of things you need to know before you go home on Friday; UDC trims rates, house prices rise, PMI up, RBNZ wants banks better capitalised, currency swaps popular, interest swap rates unchanged, NZD drifts, & more

A review of things you need to know before you go home on Friday; UDC trims rates, house prices rise, PMI up, RBNZ wants banks better capitalised, currency swaps popular, interest swap rates unchanged, NZD drifts, & more

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

MORTGAGE RATE CHANGES
No changes to mortgage rates today.

TERM DEPOSIT RATE CHANGES
UDC has trimmed its rate offers again, taking -10 bps off its shortest terms and up to -25 bps from its longest terms. Now that UDC is staying with ANZ in the meantime (and got an improved outlook rating from S&P) they clearly feel they can afford to offer less.

REGIONAL STRENGTH
REINZ data shows the housing market remained steady in November with sales volumes up slightly compared to a year ago. Median house prices hit new records in six regions, but not in Auckland. In Auckland, the November median is $867,000 which is similar to the $880,000 median recorded in October 2016. Nationally they reached $575,000 a +6.5% year-on-year gain and well above the HYFEU projection of +5.2% for this year. Outsized gains are still being recorded in Northland, Hawkes Bay, Manawatu, Wellington and now Southland.

FEELING A BIT BETTER
Local factories are feeling a bit better with the November PMI recording a solid gain. This index is now at 58.5 indicating a faster expansion in the sector than in October. At this time last year it was at 62.5 and which turned out to be the end of a two year upswing. But the November 2018 level is back to the average in that period.

EQUITY MARKET UPDATE
After yesterday's good rises the equity markets are struggling again today. Tokyo is down by -1.8%, the ASX is down -1.2% and the NZX is down -0.6%. This comes after Wall Street closed unchanged. Shanghai is only in morning trade and is lower by -0.6% while Hong Kong is also in early trade and is down -1.6%.

REDUCING THE LEVERAGE
The RBNZ released a policy paper today on bank capital. It is proposing a significant increase in capital requirements that will eat up 70% of the sector's profits over 5 years. But they claim the move will only have a 'minor impact' on borrowers.

IMPORTANT NET WORTH DATA
We got some important data from Statistics NZ today that will inform us about how household net worth is shared among income groups. Obviously it shows that the wealthiest did best and the poorest didn't. It shows that half the households have 94% of household net worth, and the top 10% have half of it. There is a lot to absorb here because the summary data filters the results by age, education, household makeup and ethnicity. So reader insights are welcome. One thing I didn't notice however was by City.

LOWER SUPPORT, BUT ALSO LOWER YIELDS
Treasury's Debt Management Office tendered $250 miln of NZGB 2029s today and it was surprisingly poorly supported with a coverage ratio of just 1.8x. However those that did bid pushed the yield down to 2.48% and that is the lowest for this series in the eight tenders than have been held. Nineteen of the 43 bids were successful.

AN UNUSUAL JUMP
The volume of currency swaps rose sharply in October, according to RBNZ data released today. They almost reached $200 mln for the month, the highest level for any month since November 2014. Volumes of forwards and spot purchases were unremarkably normal however.

OUT OF TOUCH
Just how out-of-touch with modern social media that some judges are has been exposed today in Melbourne by a judge who is trying to keep Cardinal Pell's name from being mentioned in his conviction on sex charges. The world's media, and all of social media are reporting the fact, but the judge is threatening local Australian news people with jail for the 'breach'. Heck, even the Catholic Church's own news outlet has the story.

SWAP RATES FIRM
Wholesale swap rates are little-changed today. The UST 10yr is down -2 bps to 2.91% and their 2-10 curve is holding at +14 bps. The Aussie Govt 10yr is at 2.44% and down -3 bps, the China Govt 10yr is also up +3 bps at 3.35%, while the NZ Govt 10 yr is at 2.51%, down -2 bps today. The 90 day bank bill rate is down -1 bp at 1.97%.

BITCOIN DOWN
The bitcoin price has fallen today, down to US$3,273 for a loss of -3.3% from this time yesterday.

NZD SLIPS
The Kiwi dollar is a little softer at 68.0 .3 USc following the RBNZ bank capital proposals (on the basis that this might hint at a pseudo-tightening). On the cross rates we are unchanged at 94.68 AUc and at 59.8 60 euro cents. That puts the TWI-5 at 72.7 9.

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USD 
NZD
End of day UTC
Source: CoinDesk

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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21 Comments

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Highlight new comments in the last hr(s).

Brexit 'delusions' risk putting UK into crisis, warns Ivan Rogers
https://www.theguardian.com/politics/2018/dec/13/brexit-delusions-risk-p...

the most relevant bit = "Ivan Rogers said the Brexit debate had suffered from “opacity, delusion-mongering and mendacity on all sides”
In other words SNAFU

.

The anti- Brexit forces are in full swing trying every dark art in the book to try to stop the UK getting free from the non-democratic EU empire.
Why should the UK be saved?, they say.

MB,

As someone who lived in Scotland for most of life,not one person I know there thinks as you do. None of them are blind to the many faults in the EU,but what is happening is madness. You are deluded if you think that the UK will emerge stronger from the wreckage of Brexit.

Yeah the euro is a mess but Britain will be screwed without trading with them. I doubt they would give Britain any kind of nice exit - why would they.

Germany, France etc & the EU will still trade with the UK after Brexit.
They need the UK.
But the UK values Democracy more than pure trade considerations.
https://www.scotsman.com/news/opinion/eva-oer-despite-brexit-here-s-why-...

'Earlier this week Eurostat revised Q3 2018 GDP across much of the Continent. For the EA 19 unit, growth was just +0.15% Q/Q, or an annual rate of 0.623%. To put that into perspective, quarterly growth in Q4 2017 was more than last quarter’s yearly rate.

https://www.alhambrapartners.com/2018/12/13/the-end-of-qe-will-always-de...

China’s top monetary authority, Yi Gang, Governor of the People’s Bank of China, started the process by warning about further “downside pressure on the economy.” No kidding. It’s been forecast all year, and over the last several months it has begun to appear more forcefully. Not trade wars, external illiquidity.

https://www.alhambrapartners.com/2018/12/13/sometimes-bad-news-is-just-r...

"Just how out-of-touch with modern social media that some judges " Arguably, we're no better as the Millane Case shows.

David, at 4pm the NZD was trading at 67.9 US cents.....40 bps lower than quoted above.

Yep, you are right. Caught out by the dip just prior to 4pm. Corrected now.

It was moving fast! Cheers

Bitcoin sets a new post bubble pop low. Only by a few $ from earlier this month, but still a new low.

Surely a good opportunity to invest? Trade in some of that inferior fiat currency?

Fill yer boots son!

aka. I won't touch it with a 10ft bargepole.. not even a borrowed bargepole.

Yeah nah I think I’ll give it a miss too. But obviously someone still believes all that crap; otherwise it would have reached its true value - $0.

Grexit is also still a possibility.

Grexit would make sense. They would get a nice new low value currency to export from. Brexit doesn’t have that advantage.

Is China’s Debt Crackdown Hitting California’s Commercial Real Estate Bubble?

https://wolfstreet.com/2019/01/29/china-debt-crackdown-hitting-californi...

I never heard of the leaning tower in SF

https://wolfstreet.com/2016/10/04/condo-owners-leaning-tower-of-san-fran...