Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
ASB has cut its 2-year 'special' fixed rate by 20bps to 4.19%, making it a market leader along with TSB Bank. ASB has also hiked its 1-year and 18-month 'special' rates by 10bps to 4.25%. See this story for more. TSB has also introduced a new 6-month 'special' rate of 4.75%.
TODAY'S DEPOSIT RATE CHANGES
No deposit rate changes today.
AUST INFLATION LOWER FOR LONGER
The RBA has lowered its forecast for underlying inflation to between 1 and 2% for the year to December, from 2 to 3%, noting "broad based weakness in domestic cost pressures". That represents a half a percentage point revision from its previous inflation forecasts. The RBA now does not expect inflation to return to the lower end of its 2 to 3% target inflation range until 2018. The RBA has made the announcement in its Statement on Monetary Policy further to it earlier this week cutting its official cash rate to a record low of 1.75%.
ORGANIC THE WAY TO GO
Fonterra is forecasting an opening market-linked organic milk price of $9.20 per kg/MS for the 2016/17 dairy season - an increase of 63% or $3.55 from the current season. Fonterra says: "Increasing demand for organic milk products, and organic food in general, is leading to high prices for these products in international markets. While global milk prices have been volatile recently, prices for organic dairy ingredients have remained at the same relatively high levels since 2013/14... The margins the Co-operative is achieving on its organic milk products are similar to some of its highest-earning consumer and food service products.”
RETROFITTING FOIL INSULATION LIKELY TO BE BANNED
The Ministry of Business Innovation and Employment (MBIE) has begun consultation on a proposed ban on retrofitting foil insulation into existing residential buildings. MBIE proposes banning the practice under the Building Act, because of the risk that anyone installing foil could pierce live electrical cables when attaching it to the building's structure with fasteners such as staples or nails.
MIA WELCOMES ELECTRIC VEHICLE PUSH
The Motor Industry Association is welcoming Government incentives aimed at doubling the number of electric vehicles in New Zealand every year to reach 64,000 by 2021. It says: "Over the next five years, vehicle distributors will progressively bring in new models of electric vehicles, with the vast majority of these being plugin hybrid electric vehicles. However, these vehicles come at a premium price due to the level of technology in them compared to normal internal combustion engine vehicles. The uptake of plugin vehicles is expected to increase progressively over time but will remain a small overall component of total vehicle sales unless the incremental cost of purchasing them can be partially offset as happens in most countries."
HOW'S AU$18M FOR A SALARY?
Macquarie Group's chief executive, Nicholas Moore, is on track to becoming Australia's highest paid listed company boss, after being rewarded for hitting a record 2016 annual profit. The financial services heavyweight has beaten its 2008 profit, posting a AU$2.06 billion earnings result for year ended March 31. The company's annual report shows Moore's total remuneration jumped 10% to AU$18.1 million from AU$16.5 million in 2015 financial year.
SWAP RATES SINK
Wholesale swap rates have fallen sharply in the long end of the curve, flattening out the 2-10 swap curve in the process. Swap rates from 3-years to 10-years are now at record lows as noted in our earlier story here. The swap rate moves in NZ are approximately half of those across the Tasman today, where we have seen double digit declines in the 3-year to 10-year part of their swap curve.
NZD TURN-AROUND
After trending higher against most of the major currencies during the morning session the NZD did a rapid about turn against the USD at around 1.30pm. Coincidentally this was right about the time the RBA lowered its forecast for inflation. Subsequently the AUD sank, bond and swap yields fell away further. Although weaker against a number of the majors, the NZD is up against the Aussie and euro.
We are seeing some USD strength ahead of the weekend's Non-farm Payrolls report. BNZ in its daily currency commentary suggests a solid payrolls release, accompanied by stronger-than-expected average hourly earnings growth, could prompt the market to increasing its expectations for Fed rate hikes this year.
The Kiwi dollar is at 68.5 USc, 92.7 AUc, 60.1 euro cents. The TWI-5 remains at 71.7. Check our real-time charts here.
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33 Comments
The RBA has lowered its forecast for underlying inflation to between 1 and 2% for the year to December, from 2 to 3%, noting "broad based weakness in domestic cost pressures". That represents a half a percentage point revision from its previous inflation forecasts. The RBA now does not expect inflation to return to the lower end of its 2 to 3% target inflation range until 2018.
What are they doing that fails to nurture recovery to the point that previous upward inflation forecasts apparently tied to interest rate cut stimulus are forever being revised downward as time marches on? Do they (central bank governors) not realise human beings have very short lives and the loss of compound economic growth over periods greater than 10 years heavily impacts lifestyle quality.
after reading the governments electric incentives and checking into it, realized like everything they do it is half of nothing and wont achive much at all.
the greens had a much better idea, remove the finge benefit tax for company cars, you would increase the electric fleet no end, the government would still make money with the increased power usage
Half of nothing is the NZ motto of politics in general is it not?
I love how they think EV prices will miraculously come down in price.....much like Max Bradford believed electricity cost would. No, not in well known rip off NZ will the NZ car retailer allow this to happen no matter how popular the idea may become. Hands must be forced to stop clipping the ticket on this one and that takes a government with balls. We don't have that, we have gutless suit wearing con artists and charlatans!
I agree. I have driven a Hyundai hydrogen car(only for 10 minutes around the streets of Rotherham in UK)and was impressed. Toyota pulled out of a JV with Tesla to focus solely on hydrogen. In fact all the Japanese car manufacturers are focused on H.
I think hydrogen is the future for storing surplus renewable energy and for vehicles. The rollout is just starting in the UK and California.
or a convoy of driverless tankers, tick tick Boom
http://www.cnet.com/news/driverless-truck-convoy-platoons-across-europe/
Waves of Billions pouring into NZ based 'Trusts'.
http://www.stuff.co.nz/business/79714914/the-panama-papers-new-zealand-…
Some used to then buy NZ property.
No wonder the PM wants to spend money on security trying to prevent occurrences as the Panama Papers outing.
Gee it must have been the 70 odd billion debt they racked up that did the trick then.
Or nothing to do the with massive construction in CHCH or the house bubble, which could crash and destroy the economy at any time.
I'm pretty far from a socialist by the way, you definitely don't have to be a socialist to realize what a poor job they are doing.
The Panama Papers: Behind Mossack Fonseca's secret New Zealand deals
http://www.afr.com/news/politics/world/the-panama-papers-behind-mossack…
Shonkey still doesn't quite get it does he? once a shark always a shark, http://www.stuff.co.nz/business/industries/79641396/budget-2016-prime-m…
While most people think doing this kind of thing is immoral, as well as helping criminals and money launderers out that use these trusts, old Shonkey just thinks the only thing bad about it is if you get caught!
That's the problem I suppose when there is a big black hole where your morals should have been.
whats in a name
http://m.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11634…
Asked by Louisson whether he was Key's lawyer, the Auckland-based businessman initially said: "Yes."After some discussion, he amended this to: "I'm not calling myself a lawyer; Mr Key is.
"Louisson went on to report that "later (Whitney) conceded he was retired from legal practice, although he said he was a consultant with Alexander Dorrington Lawyers, the practice that bought Whitney's practice, Ross & Whitney, in February 2014, which he shared with Ian Ross.
Disturbing reading.... It only takes a small percentage of the 12,000 (or is it 20,000) NZ based secret foreign trusts to tarnish NZ's reputation for years to come.
As the linked article suggests "an unprecedented leak of almost 40 years’ worth of documents has revealed the firm’s services can also be used to facilitate massive money laundering, tax avoidance and criminal activity, including drugs and arms dealing."
https://mishtalk.com/2016/05/05/its-the-debt-stupid/
Mish mash of a Greek Tragedy...and an IMF tax free Lagarde perk with French Patisserie Dressings..
Warnings mount on world's corporate debt, China crisis
http://www.telegraph.co.uk/business/2016/05/06/warnings-mount-on-worlds…
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