A review of things you need to know before you go home on Thursday; big trade deficit, higher incomes, iPredict closed, Aussie capex slump, rising yields

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

TODAY’S MORTGAGE RATE CHANGES
No rate changes again today, but Kiwibank has an interesting incentive.

TODAY’S DEPOSIT RATE CHANGES
No rate changes today.

WE ARE BUYING MORE THAN WE ARE SELLING
The trade deficit widened to $963 mln in October 2015, compared with a deficit of $892 mln for the same period last year, Statistics New Zealand said today. This result matched analysts expectations. Exports fell more than imports. The rise and fall of dairy exports has been driven by demand from China, and is reflected in our total exports to China. China became the top export destination in November 2013, but fell below Australia from March to September 2015. However, China is now both our top export destination for goods, and our top source of imports. Although milk powder exported to China fell -65% for the year ended October 2015, it is still the largest commodity. Smaller exports such as beef and fruit have doubled in value in the past year. The signals of rising demand from China has analysts looking forward more positively.

‘AVERAGE UP +5.7%’
Statistics NZ today release details of its Household Economic Survey to June 2015. They pointed out average annual income from all regular sources was up +5.7%, to $93,880. (The median was $75,000, up +4.6%.) Average annual income from New Zealand Superannuation and war pensions was up +4.8%, to $24,322. And the proportion of households receiving wages and salaries was up almost 2 percentage points, to 76%. Their data also showed that average weekly housing costs increased +4% from the year ended June 2014, to $295.40. Building-related insurance payments increased +9.9% to $28.70 per week, and average weekly mortgage payments were $400.20, while average rent payments were $301.00 per week.

87% SAY INCOME ‘ENOUGH’
In the same survey, Statistics NZ reported this: “We randomly selected one person 18 years or over in every household to complete an additional questionnaire on behalf of the household. Respondents were asked how adequately their household income meets their everyday needs (eg accommodation, food, and clothing expenses). Of the people asked: 59% reported their income was enough or more than enough, 28% said it was only just enough, 12% said it was not enough.”

GOVT AML CONCERNS LEAD TO DEMISE OF IPREDICT
Online prediction market iPredict says its closing down in NZ and looking into inclusion on PredictIt in the US having been deemed “a legitimate money laundering risk” by Associate Minister of Justice Simon Bridges. iPredict, which is owned by the commercial arm of Victoria University, says this is because it does no customer due diligence checks. iPredict had sought an exemption from the Anti-Money Laundering and Countering Financing of Terrorism Act. Failure to gain this means compliance costs are too high, iPredict says. Over 7 years it has handled 3,782 withdrawals with an average trader net worth of $41. And here’s the announcement.

WHO SHOULD PAY?
The Government wants to make travelers pay for the costs of border control but the border charge is a poor user charge and an inefficient tax says NZIER. They say it will dampen services exports and hence economic growth more than other revenue raising options. “If we need additional border control it would be far better to fund the system out of general taxation and welcome more visitors to New Zealand,” they say.

OUCH !
Australia’s capital expenditure data dropped -20%, the most on record. ‘Buildings and structures’ were down -24%, ‘equipment plant and machinery’ down -14% year-on-year. That undermined their currency. No-one was expecting falls of this magnitude.

RISING YIELDS
Today’s DMO tender for September 2020 Government nominals saw the coverage ratio spike sharply, along with an average yield at 2.87% up sharply from the previous 2.73%.

WHOLESALE RATES HOLD
Local wholesale swap rates held the line today, although they gave up another -1 bp at the long end (5, 7 and 10 yrs). The 90 day bank bill rate also pulled back -1 bp to 2.86%.

NZ DOLLAR MOVES UP
Our currency has strengthened a little today, again. The Kiwi is now at 65.8 USc, at 91.1 AUc as the Aussie gave up yesterdays gains, and 61.9 euro cents. The TWI-5 is now at 71.5. Check our real-time charts here.

You can now see an animation of this chart. Click on it, or click here.

Daily exchange rates

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for(i=0;i

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