Here are the key things you need to know before you leave work today:
MORTGAGE RATE CHANGES
TSB has now ended its 4.44% one year 'special' fixed mortgage rate. The reverted rate is 4.49%.
TERM DEPOSIT RATE CHANGES
Heartland Bank has raised its 4 and 5 year offer rates by +10 bps to 3.90%. Kiwibank has decreased its 1 and 2 year rates by -5 bps to 3.40% and 3.60% respectively. And the Police Credit Union has trimmed its nine month TD rate by -10 bps to 3.50%.
'FRESH START'
ANZ reported its Commodity Price Index rose +0.7% month-on-month in January, a welcome change in direction following a 3-month slide. (It's +4.1% higher than in January 2017.) The lift was broad-based with meat, dairy, forestry and aluminium prices all lifting; the only fall was seen in milkfat products. The NZD continued to squeeze higher against major trading partners in January (NZD TWI up +1.8% m/m), pushing the NZD commodity price index down -2.9% m/m (but up +4.8% y/y). Only aluminium prices managed to increase in local currency terms.
RISING TIDE
Rents for three bedroom houses are holding at their record high $440/week nationally in January according to MBIE tenancy bond data. In Auckland they were down however to $620/week (but +3.3% above January 2017), in Wellington they are now a new record $600/week (and up +8.3% in the year), while in Christchurch they are now $420/week.
AUCKLAND REAL ESTATE STUMBLES
Major Auckland realtor Barfoot & Thompson have had their worst January sales since 2011 and the second-lowest of any month since then. They have started 2018 with lower sales, lower median prices, and inventory levels rising. Still, while all these levels are depressed they are nowhere near as bad as those we saw in 2011. In fact, their drop-out rate (listings that never sell) is in fact quite low at just 10.7% and the lowest since March 2015.
UPSIDE?
We have a dairy auction early on Wednesday morning and the futures pricing for WMP is signalling a +7.2% rise, and a +10.3% rise for SMP. If these eventuate, that will lift dairy industry spirits - and possibly hold the dairy payout levels forecast - even possibly give it some upside. But as regular readers know, those futures market signals are not always reliable.
CHINA SERVICE SECTOR TURNS UP
The Caixin China Services PMI rose +0.8 points to 54.7 in January, the joint-best reading since October 2010.
AUSSIE JOB ADS SURGE
In Australia, job ads surged by the most in a decade in January, pointing to still-healthy demand for labour despite months of rapid employment growth. The ANZ survey revealed a jump of +6.2% from December, when they fell -2.7%. That was the largest monthly rise since February 2010.
BIG ADJUSTMENT
Equities are taking a bath today. The ASX200 is down -1.6%, the Nikkei225 is down -2.5%, the NZX50 is down -1.4%, the Shanghai exchange is off -0.4% and the Hong Kong index is down -2.1%. These are all following Wall Street' s -2.1% drop on Friday EST as bond prices tumbled and yields raced higher.
BENCHMARK INTEREST RATES RISING
Swap rates are rising again today. The two year is up +1 bp, the five year is up +3 bps and the ten year is up another +4 bps. Meanwhile the UST 10 yr has risen again this afternoon and is now at 2.86%, up +8 bps from this time om Friday (NZT). The Aussie 10 yr is at 2.89%, up +7 bps since Friday. The Chinese 10 yr is at 3.94% (-1 bp), and the Kiwi 10 yr bond is 3.005, up +1½ bps from Friday. The 90 day bank bill rate is unchanged.
BITCOIN BELOW US$8,000
Bitcoin is now at US$7,992 and under US$8,000 again (it dipped below on Saturday first). Other cryptocurrency prices are falling similarly.
NZ DOLLAR LITTLE CHANGED
After a run up over 74 USc on Friday the NZ dollar is now down at 73 USc. The Kiwi is now at 92.1 AUc, and at 58.6 euro cents. This puts the TWI-5 at 73.9.
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17 Comments
And there's a loss & a capital raise coming from local insurer CBL Corporation - https://www.nzx.com/announcements/313727
So Barfoots 'drop out' out rate is just 10.7 percent. In the 12 months to February 1 2018, Barfoots listed 18,120 homes, it sold 9001 homes , its end month inventory has risen by just 700 during the year to 4320. Obviously Barfoots interpretation of 'drop out' is different or shadow inventory is hidden in closets.
No. The average drop-out rate for the twelve months to 31-Jan-18 is 16.9%. I am not sure the total drop-out rate related to the starting Feb-17 inventory is actually very relevant.
The 10.7% is our calculation (not Barfoots) on this basis:
Listing inventory at start of January = 4,160
plus 1200 new listings in Jan-18
less 593 actual sales
less 4,320 ending listings
means that 447 dropped out in the month.
So 447 as a percent of the starting inventory of 4,160 is 10.7%.
It's only the monthly drop-out rate, not the annual one.
David all the numbers are correct,(I used Barfoots ) perhaps using stock and flow can really only provide the number of drop outs in a timely way. Maybe using a lagged monthly sales to new monthly listings ratio provides a more meaningful insight (December withstanding) which fell from 52 to 34 percent from August- January
The value trade is finally having its day in the sun -- in China.
While chasing bargain stocks in overheating markets around the world has been a losing strategy, it’s a surprisingly successful play in Shanghai. A gauge of the city’s big companies with the lowest valuations is up 12 percent this year, taking it to a record relative to the benchmark, as banks and property developers surge. It fluctuated on Monday even as a selloff in global equities intensified.
It’s not for the fainthearted. Mainland shares just had their worst week since 2016 and are about twice as volatile as those elsewhere in the world, with retail investors dominating what is still a largely speculative market, according to Ken Wong at Eastspring Investments. Read more
Stephen, or anyone really.
Do bond fund managers, say of vanilla 401 type retirement bond funds, buy and hold a mix of duration bonds to maturity – or do they get involved in all manner of esoteric plays.
And how do they manage redemption's.
Why I ask is what if there should be some form of bond rout – excluding the professional investment bank players – what does it really mean for Joe Blow and their portfolio – if they stay the course, do they maintain an income source, albeit now out of market, and also is their capital maintained in the long term.
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