What happened Wednesday

A review of things you need to know before you go home on Wednesday: Co-op trims TD rates, NZ competitiveness slips, Truckometer points low, Aussies gloomier, swaps on hold, NZD firm, & more

9th Oct 19, 3:59pm by David Chaston

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
We accidentally missed it, but the Co-operative Bank has also cut most of its term deposit rates yesterday.

LESS COMPETITIVE
The World Economic Forum's Global Competitiveness Report for 2019 has placed New Zealand at 19th, down one place from 2018. The US has fallen from #1 to #2 with its score falling a rather large -1.9 points. Also falling is Germany which fell -1 point. Top of the heap is now Singapore. This survey includes 140 countries and involves 13,000 surveyed people.

'LOSING TRACTION'
ANZ's truckometer report for September was out today. Their Heavy Traffic Index has had its weakest quarterly growth in 7 years, suggesting GDP growth will be weak in Q3. Their Light Traffic Index held steady in the month but remains in a trend decline.

STRENGTHENED REGULATORY ROLE FOR NZTA
Transport Minister Phil Twyford says the Government's strengthening the New Zealand Transport Authority’s regulatory role following a review. Twyford says the review, by Martin Jenkins, found under the previous National-led government NZTA focused on building roads at the expense of keeping people safe. Thus the Government will create a statutory Director of Land Transport responsible for carrying out NZTA’s regulatory functions and powers, get NZTA's board to develop a new regulatory strategy, instruct the Ministry of Transport to update NZTA’s regulatory objectives, functions and powers, and inject up to $45 million into NZTA’s regulatory function.

MAKING EVERYONE GLOOMY
Take a look at the chart in the link here; The Westpac MI consumer sentiment index in Australia has fallen hard and is now at a four year low. The leaking away of confidence since the RBA rate cuts is stark - they are doing exactly the opposite of the regulatory intention. Now we have both the business sentiment sinking after the rate cuts, and now consumer sentiment as well. Lets hope the RBA stops cutting soon.

INVESTORS SHUN RISK
Earlier today, Wall Street took fright and ended up down -1.6% on the day, taking the October decline to -2.8% in just six trading days. That has unnerved Tokyo which is down -0.9% at the open, Shanghai was down -0.6% at the open but has now moved up into positive territory, and Hong Kong is down -0.2%. Locally, the ASX200 is down -0.7% in mid-day trade and the NZX50 is looking at a -0.5% retreat.

SWAP RATES HOLD
Wholesale swap rates are up +1 bp today across the curve. The 90-day bank bill rate is unchanged again at 1.04%. Australian swap rates are unchanged. The Aussie Govt 10yr is up +2 bps at 0.89%. The China Govt 10yr is unchanged at 3.14%. The NZ Govt 10 yr is up +2 bps at 1.04%. The UST 10yr yield is down -3 bps to 1.54%.

NZ DOLLAR FIRM
The Kiwi dollar has held it levels in the face of the equity risk retreat and is still just on 63.1 USc. Against the Aussie we are firm at 93.7 AU cents. Against the euro we are at 57.6 euro cents. That puts the TWI-5 up to just on 68.7.

BITCOIN HOLDS
Bitcoin is marginally weaker today US$8,167 after yesterday's strong rise. The bitcoin price is charted in the currency set below.

This chart is animated here.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

Daily swap rates

Select chart tabs

Source: NZFMA

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

19 Comments

by rastus1 | 9th Oct 19, 4:22pm 1570591347

David Stockman -
Trump the biggest spender in 50 years.

National Fed Debt up $600 Billion in just 90 days.

https://www.youtube.com/watch?v=N7TXaGoHiuQ

by bw | 9th Oct 19, 4:37pm 1570592254

"We've been sleepwalking for the last couple of decades" Too right! But, hang on, isn't 'spending" just that stimulus stuff that everyone is crying out for, and Trump has just been overly good at it? ( sarc/off)

by Advisor | 9th Oct 19, 5:34pm 1570595692

They'd rather have a Democrat spend it on building "gender neutral" toilets and paying off the trillions owed in student debt: which interestingly is still the second largest debt category by amount owed among American millenials after credit card debt.

by Fritz | 9th Oct 19, 5:53pm 1570596785

He has to spend.
The Trade War is hurting the USA (and China), and he needs to moderate the effect with an election not too far away now.
And he doesn't want to surrender in the Trade War.
And there's real limits as to how much he can further cut taxes.

by Wrong John | 9th Oct 19, 4:30pm 1570591807

Central banker's trying to kick-start the spluttering global economy are running out of ammunition. Not only that, but a lot of the recent talk suggests by reducing your interest rates you're sending the wrong signal. IE: People see it as a negative not a positive. So, will the CB's & their spouses have the balls to a) hold the line or b) tweak things up a notch, as things get progressively tighter? Only time will tell. What is coming out is what I'd finally understood about 15 years ago, that a lot of the world's finances are driven by confidence. And confidence (or not) is usually a pretty good read on where things might end up, financially speaking.
And right now, the globe is running short on confidence, especially financial confidence, by the day.

by solardb | 9th Oct 19, 4:49pm 1570592990

August /September was ultra quiet in the motor and farming service industries. A time when they normally ramp up . Can't pin it on one specific thing.

by Pathos | 9th Oct 19, 5:20pm 1570594841

"We accidentally missed it, but the Co-operative Bank has also cut most of its term deposit rates yesterday."

Bad grammar for a journalist!
"Yesterday" requires use of the simple past - not the present perfect. "The bank cut ...yesterday." Not "has cut".

by custard | 9th Oct 19, 6:25pm 1570598710

Most Americans would just use the past simple. However, in New Zealand the present perfect is used much more in this situation - probably linking the past action to the present.

by streetwise | 9th Oct 19, 5:37pm 1570595829

yeah right, dollar is relatively firm for now, but wait till the BNZ manufacturing PMI released at 10.30 am Friday.

by Fritz | 9th Oct 19, 5:59pm 1570597188

OK let's talk economic strategy.
Are Labour leaving fiscal stimulus too late, or are they playing it well?

I assume they are going to bring out the bribes before next year's election. So from June / July next year.

Smart move, or leaving it too late?

If the economy tanks in the next 6 months, keeping the lollies for the election would have been too late. They will be fodder for the opposition.

Are they banking on the OCR cuts to keep the economy floating, before they unleash their fiscal stimulus ?

Thoughts?

by J.C. | 9th Oct 19, 6:22pm 1570598527

I think they're saving up for the bribes. Possibly too late. Cut from the same cloth as National in that regard.

by J.C. | 9th Oct 19, 6:23pm 1570598629

When the Bahadur family moved into their new home in Melbourne's booming outer west four months ago, they dreamed of suburban bliss. But it turned out to be a nightmare.

"We feel cheated," Binod Bahadur said.

"We bought this land on the promise that we will have a dedicated train station, and a bus stop within 300 metres of this development. But it looks like that was all a false promise."

Their home is in Tarneit, one of Melbourne's fastest-growing fringe suburbs.

https://www.abc.net.au/news/2019-10-09/tarneit-suburb-on-melbourne-frin…

by Audaxes | 9th Oct 19, 6:33pm 1570599196

The Westpac MI consumer sentiment index in Australia has fallen hard and is now at a four year low. The leaking away of confidence since the RBA rate cuts is stark - they are doing exactly the opposite of the regulatory intention.

The key question remains: why have businesses remained unwilling to pay more for workers or inputs? Link

by streetwise | 9th Oct 19, 8:05pm 1570604715

Businesses have a no-wage-increase mindset these days. The traditional path is for the employee to look for another employer who will pay them more if they get no joy with their own employer. Employers know there is uncertainty in the air so they just sit tight. I think it has a lot to do with lower order and middle management not wanting to rock the boat so they just stay put; often this sector may not have transferable skills. The CEOs seem to be the only ones that can call the tune, and perhaps tradesmen and certain professionals.
But past a certain level upper management seem to be creaming it particularly in Govt Departments, Local Body Councils, DHBs, etc. Those Departments sometimes fail, eg the ministry of Transport as we have seen on tonight's tv news; A fat salary doesn't always guarantee performance. But even these CEO's don't always stay long in a role; I suppose they just stash away what they can and move on to something less stressful.

by Justa comment | 9th Oct 19, 6:39pm 1570599570

I see the 5 year term deposit rate in Australia is now 1.55% (Anz.com.au). Looking like tough times for investors coming up. Maybe we will have to do it the old fashioned way, go to work! lol

by Justa comment | 9th Oct 19, 6:53pm 1570600425

by Justa comment | 9th Oct 19, 6:52pm 1570600323

whoops

by bw | 9th Oct 19, 8:23pm 1570605801

Golly! Who would have thought....

The new head of the International Monetary Fund has issued a stark warning over a $19 trillion global debt timebomb and warned the world’s economy faces a “synchronised downturn...She urged central banks to keep interest rates low “where appropriate” to tackle the weakest growth in almost a decade, but she also voiced alarm over the potential side-effects of the stimulus.”.

Laughable isn't it?! "she also voiced alarm over the potential side-effects of the stimulus" but do it anyway....

by BS | 9th Oct 19, 10:46pm 1570614398

What else would you expect from a bureaucrat born to a family of bureaucrats? Why must we always have a slippery European in this role? The joke is she is being spun as a representative of the developing world when she cut her teeth in the World Bank and EU.