A review of things you need to know before you go home on Tuesday; Co-op cuts TD rates, life expectancy rises, eyes on dairy prices, swap rates firm, bitcoin jumps, NZD settles, & more

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
The Co-operative Bank is the latest bank to reduce term deposit rates, trimming them by between -5 and -10 bps today for terms of two years and longer.

LOOKING AHEAD I
Stats NZ has released an update to its Life Tables series. Life expectancy at birth is now 83.6 years for females and 80.2 years for males. That is up from 82.2 and 78.0 years in 2006. If you make it to 65, on average a female can expect to live until almost 87 and a male can expect to live to almost 85 years. How's your retirement savings plan looking? (And don't forget half of us will live longer than these averages.)

LOOKING AHEAD II
In case you were wondering, the iron ore price is holding high. The recent spike hasn't been retraced yet. And in advance of tomorrow's dairy auction, the futures market is suggesting that WMP prices will be firm again, likely delivering another +6% rise. And if that happens, that would make it a +24% rise since the beginning of December. and overall prices back to where we were in the first half of 2018.

LOOKING AHEAD, AUSSIE EDITION
The release today of the RBA Minutes was not expected to bring any surprises. But the AUD was marked down marginally again and the NZD slipped with it. These minutes noted "if [house] prices were to fall much further, consumption could be weaker than forecast, which would result in lower GDP growth, higher unemployment and lower inflation than forecast." That said, they also observed that households are in resilient shape and "few households were in negative equity positions despite the falls in housing prices, implying that banks' losses would be limited even if household financial stress were to become more widespread."

WORLDCLEAR REMOVED FROM THE FINANCIAL SERVICE PROVIDERS' REGISTER
Hamilton-based Worldclear Ltd, which has featured in several interest.co.nz articles, has been removed from the Financial Service Providers' Register. A Companies Office spokeswoman says Worldclear didn't file its annual confirmation in November as expected and didn't respond to correspondence from the Registrar of Financial Service Providers. Registrar Ross Van Der Schyff thus initiated deregistration under section 18(1)(b) of the Financial Service Providers (Registration and Dispute Resolution) Act 2008 because he was satisfied Worldclear was no longer in the business of providing a financial service. No objection was received from the company within the time provided for this and it was deregistered, the spokeswoman says. Worldclear's director and largest shareholder is former Lost Soul blogger David Hillary.

STORAGE MITIGATES CLIMATE DRY
It is dry everywhere and as the soil moisture chart below shows, unusually dry. But where water has been stored, the impact is mitigated. In Auckland where there has been almost no meaningful rain in February so far, water storage dams are 85.4% full, and above normal for-this-time-of-year of 83.4% full. Our hydro lakes are also in reasonable shape although overall storage is now lower than at this time last year and lower than the long-term average.

TARGETING COMMISSIONS
In Australia, the opposition Labor Party has stepped up pressure on the government to start legislating the Hayne banking royal commission reforms, presenting draft laws to implement five changes, including ending billions of dollars in commissions payments.

TACKLING RURAL POVERTY
Official data in China is trumpeting that the number of "rural poor" people in the country nearly halved in 2018 to 16.6 mln or 1.7% of the total population. In 2017 it was 30.5 mln or 3.1% of their population. Most rural poor are in the West of the country. To be "rural poor" annual incomes below 10,371 yuan qualify (NZ$2,250 per year).

SWAP RATES STABLE
Update: Wholesale swap rates are unchanged for terms less than 5 years, and up +1 or +2 bps for longer terms. The UST 10yr yield is little-changed at 2.67%. Their 2-10 curve is now at just on +15 bps. The Aussie Govt 10yr is unchanged at 2.13%, the China Govt 10yr is up +2 bps at 3.13%, while the NZ Govt 10 yr is up +1 bp so far today to 2.26%. The 90 day bank bill rate is unchanged at 1.90%.

BITCOIN RISES AGAIN
The bitcoin price has risen strongly again today powering up +6.7% to US$3,896.

NZD SETTLES
The NZD is marginally lower today at 68.5 USc. And we are flat against the Aussie at 96.2 AUc, and down slightly at 60.6 euro cents. That has the TWI-5 back to 73.

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Daily exchange rates

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USD 
NZD
End of day UTC
Source: CoinDesk

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6 Comments

For those still think the EU is wonderful:
The EU subordinates innovation to the bureaucratic whims of officials who insist on keeping things as they were in 1980. The European regulation for technology and innovation is as slow, inefficient and burdensome as it is for the old economy, and it puts obstacles under the excuse of normativism but hides something much worse, the thinly-disguised goal of supporting low productivity sectors by putting barriers to high productivity ones.
https://www.dlacalle.com/en/europe-is-losing-the-technology-race-here-is...

These (RBA) minutes noted "if [house] prices were to fall much further, consumption could be weaker than forecast, which would result in lower GDP growth, higher unemployment and lower inflation than forecast."
A clear indication that the state of the housing market affects our perception of wealth and hence propensity to spend.
Those who make predictions on the future of the Auckland and New Zealand housing markets need to factor in that the RBNZ will be tweaking our LVRs and OCR to maintain a stable economy. The first, a tool they have not previously had for that long.

In my experience when a bubble bursts you can tweak all you like, but in the short to medium term it’ll make very little difference – reality and sentiment will take over.

Both of those tweaks involve more debt (or why bother to tweak either or both of them?), and the answer to too much debt isn't more debt.

I think Auckland is probably pumping flat out from the Waikato river pipeline. Having said that, most reservoirs are probably in pretty good shape , as up until around Jan 20th, we had around normal rainfall. Its the almost no rainfall , dry winds and weeks of above 30 degree temps that has hammered soil moisture since then. Unless this cyclone turns up some heavy rain , I would think February rainfall records will be the lowest ever.

Good riddance to Worldclear on the NZ FSPR, wonder where it's boss will show up next? Cayman Islands, Malta, USA?