Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
SBS Bank has set their 'specials' all at 5.35%, covering terms of 2, 3 and 5 years. HSBC has ended it 5.29% Premier 'special' offer, replacing it with varying rates. One year is now 5.20% for example, three years is 5.40% and five years fixed is now 5.60%.
TODAY'S DEPOSIT RATE CHANGES
BNZ has clipped -5 to -10 bps off of its 18 month to 5 year term deposit rate offers today. HSBC has nibbled similar amounts away from almost all their term deposit rates. In contrast, SBS Bank has gone the other way adding +25 to +35 bps to their 6 and 9 month term deposit offers. That makes those two rates stand-outs among banks. FE Investments also raised their 18 month rate, to 8.00%, a level rarely seen these days. FE has a sub-investment grade credit rating of 'B'.
AUTUMN CHILL
The ANZ Commodity Price Index fell by -7.4% in April. This has reversed most of the gains seen since the start of the year, with prices -15% lower than 12 months earlier and -18% below February 2014 peaks. Dairy product prices led declines, down -15.2% to be one-third lower than 12 months ago. Most of the other major sectors prices were steady to up slightly. Prices for meat however rose +2.3%.
ROBUST GROWTH IN H1
This is what Treasury said about our economy today: "High business confidence and activity expectations indicate continued robust economic growth in the first half of 2015. Profit expectations and investment intentions have risen. Capacity constraints are emerging, but with fewer firms expecting to face cost increases over the next quarter, fewer intend to increase selling prices. Households remain optimistic, a reflection of the lower inflation, faster house price growth and low interest rates, supporting private consumption growth."
STARTUP SUPPORT
Money is now flowing into startups in New Zealand at a faster rate. Angel networks and funds invested $55.9 million into young New Zealand companies in 2014 - a record high and the first time the Young Company Finance Index has recorded consecutive $50 million-plus investment years. 2014 saw $26.2 million investment into software and services, continuing that sector’s very strong performance over the past two years. Food and beverage companies attracted $4.8 million of investment - a large rise on the $900,000 in 2013. Health sector companies saw a decline with $2.2 million of investment in 2014 compared with $8.4 million the previous year. Some of this growth was supported by the Government's $300 mln NZ Venture Investment Fund.
WAREHOUSE BONDS
The Warehouse Group said today it is looking at making an offer of 'new' five year unsecured, unsubordinated, fixed rate bonds to refinance its $100 million senior bond maturing on 15 June 2015 "and for general corporate purposes". The offer will be seeking to raise up to $125 mln with oversubscriptions, and will be made in a general offer to retail and institutional investors and an exchange offer to holders of the Maturing Bonds.
DRAWING IN SUPPORTERS
The lobby group, The NZ Bankers Association now takes 'affiliate members'. It has five, two of whom have just joined, law firm Chapman Tripp and Visa International.
WHOLESALE RATES STEEPEN
Wholesale swap rates rose +1 bp across the curve, except for 7 and 10 years which rose +2 bps. That firming and steepening follows Wall Street bond markets and was expected. More may follow. The 90 day bank bill rate is also higher today by +1 bp to 3.63%. Yields on Government bonds however are unchanged today.
NZ DOLLAR AMBLES
The New Zealand dollar meandered within a tight range today and is now almost at the level it started the day. As of late this afternoon it is at 75.3 USc, 96.2 AUc, 67.2 euro cents, and the TWI-5 is still at 79. Check our real-time charts here.
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16 Comments
Lower for longer?
"Almost all countries can still economically produce oil at $15 a barrel, according to a new IMF and Rystard Energy Study. Only Canada/Australia with costs of $20 a barrel, Brazil at $30 a barrel and the UK at $40 a barrel needed higher prices, added the study. “Lower oil prices are expected to have a smaller impact on production of shale oil in the United States than on deepwater and oil sand production, especially in Brazil, Canada, and the United Kingdom,” wrote the IMF."
http://www.icis.com/blogs/asian-chemical-connections/2015/04/oil-price-…
https://s3-eu-west-1.amazonaws.com/rbi-blogs/wp-content/blogs.dir/383/f…
http://www.imf.org/external/pubs/ft/weo/2015/01/pdf/text.pdf
They are well head costs, not full cycle costs. Those costs are just the cost of pumping it out of the ground and getting it to market. Surprisingly there are other costs to consider, such as exploration, and drilling, maybe even fracking.
Any how, I'm paying over $2 litre for petrol again.
I remeber in the early 1990s that the MIT economist, Lester Thurow, told the US Senate Energy Committee to crack down on the oil companies because the per barrel production cost was US$ 10. Cheney and Bush fixed that for their friends. Now $15 is not much higher given the time passage.
If you follow the links though, the figure points at operating costs, as it says "Most oil producing countries have operating costs below $20/bbl" ie costs to pump already found and drilled for wells from what I can see, unless you have a more "true" link? New wells costs are more like $75 a barrel, due to complexities, there are few if any cheap conventional oils now. Sven shale well head costs are supposed to be in $35+. Plus then getting it to Wyoming. In terms of reducing costs it looks rather complex, for instance when rigs were in short supply services companies could reap big profits, now 1/2 the rigs are idle....
PS on top if that if the total costs were really that low then why reduce the rig count by 50% so fast?
If the impact on US shale is expected to be smaller than some, and the rig count is down 50% so far then there must be blood on the floor outside the USA.
Even if the oil is really more like $35 and that is really doubtful, many of the oil producers simply cant cope with oil even where it is. Arab springs pop to mind left right and centre.
This also doesn't bode well for a few years (3~8) from now if deep water etc development is canned. If this is so and its looking probable then we are not looking at a decline rate of 4% but double that.
that's exactly what he did - waves it away with total aplomb
http://www.interest.co.nz/property/75304/key-says-australias-foreign-bu…
Property Clampdown speeding up
They are not going going slow - especially when they can go fast
It's happening on multiple fronts - and it's happening now - and the fact there is this sudden rush, the floodgates are closing and the portcullis is coming down is a warning the problem is more serious than you have heard
APRA is leaning on the banks to curb lending to property investors
and
Westpac announces today it will curb it's lending to property investors
http://www.smh.com.au/business/banking-and-finance/westpac-to-curb-hous…
and on the same day
ASIC announces crack down on property spruiking
http://www.smh.com.au/business/regulator-cracks-down-on-property-spruik…
HELLO RBNZ
testing the waters to see if they can climb a few b.p. without too much squawking from the goose.
People start losing mortgages they start to complain to the Banking Ombudsman...
Again it is the FHB that are usually the most leveraged, and lower risk despite the higher income to loan rate, and the ones that test the worst in such examinations.
When banks start talking "curbing lending" they are usually only referring to lifting interest rates. A 1% lift will double their margin, yet have minimal effect on the borrowers.
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