Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
There are no changes to home loan rates to report today.
TODAY'S DEPOSIT RATE CHANGES
There are no term deposit changes to report either.
CHEAPER FOOD (MORE $ IN YOUR POCKET)
Food prices have fallen. In the year to December 2015 food prices decreased -1.3%, influenced by lower prices for grocery foods. This is the largest annual fall since July 2012. Grocery food prices decreased -3.0% over the year, led by lower prices for some dairy products, and for breads and cereals. Fresh milk prices were down -14%. Meat, poultry, and fish prices decreased -3.8% over the year, led by lower prices for chicken. Chicken prices are now at their lowest level since January 2008. Fruit and vegetable prices increased +2.4%, with higher prices for avocados and bananas.
A BROAD-BASED LIFT
ANZ's confidence survey of small and very small firms is impressively positive. It sees broad-based optimism that points to a good year ahead. Only the rural sector lags.
LEVERAGE CHANGES
The accountants have decided to change the rules on how 'operating leases' are recorded on balance sheets. This means they will need to be capitalised, just like finance leases. A lot of lease obligation will now be recorded as debt, such as building leases. In New Zealand it could involve many billions. (Just 20 NZX companies sampled will need to add $5 bln between them.) This will have a practical impact where companies have made debt-to-equity promises to their bankers. The Aussies have recently been pushing 'novated leases' in New Zealand, and it will be interesting to see how companies deal with what may have become a trap.
BIG KAURI
A big new $550 mln Kauri bond has been placed and priced in NZD. This bond was issued by the World Bank. It yields 3.554% p.a. for a 2021 maturity. ANZ, TD and Westpac clipped the ticket.
NEXT WEEK ...
There is some grunty data to be released next week. At some point the REINZ will issued its December results (maybe Tuesday), the NZIER will release its QSBO on Tuesday. Wednesday will start with a dairy auction (and WMP signs are not overly encouraging), followed by the Q4 CPI data (Westpac sees a 'fresh low of +0.2% annual rate). This will be followed by some consumer confidence data on Thursday and the November Crown accounts on Friday.
WHOLESALE RATES RECOVER
Swap rates have risen by +2 bps across the curve except for the 1 year. The 90 day bank bill rate is down -2 bp however at 2.74% and back to where it was on Wednesday.
NZ DOLLAR SOFT
The New Zealand dollar is still soft against the greenback and is now at 64.6 USc. It is soft against the Aussie as well, now at 92.8 AUc, and is at 59.5 euro cents. The TWI-5 is unchanged from this morning (and this time yesterday) at 70.2. Check our real-time charts here.
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Daily exchange rates
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2 Comments
Maxed Out Mama doesn't blog often (analyst for US east Coast bank, IIRC) but when she do, she nails it...
http://maxedoutmama.blogspot.com/2016/01/so-what-will-this-recessions-s…
A big new $550 mln Kauri bond has been placed and priced in NZD. This bond was issued by the World Bank. It yields 3.554% p.a. for a 2021 maturity. ANZ, TD and Westpac clipped the ticket.
I have little doubt whilst credit wrapping NZ bank debt funding, at rates below domestic issuance cost structures, the basis well rewards IBRD with sub-libor financing via the inevitable cross currency basis swap. Read more
It is this type of back door OBR avoidance arrangement that places undue over reliance and capital haircut risk upon unsecured depositors without appropriate reward in the event of insolvency.
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