Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
Kiwibank has cut two fixed mortgage rates, which will be effective Monday. Their new 6 month rate will become 4.75%, and their three year rate will become 4.49%. Neither are market-leading levels. (AMP branded mortgages are making the same moves.)
TODAY'S DEPOSIT RATE CHANGES
No changes here today.
NO CHANGE BUT MANY SIGNALS
The RBNZ has left the OCR unchanged at 2.25% as most local economists expected. Wheeler said the NZ$ is 'higher than appropriate' and said that Auckland house prices are 'very high' and 'more housing supply needed'. He says 'further policy easing may be required'. He also signaled tougher loan-to-value-ratio controls for investors 'towards the end of the year, or before that'. He said debt-to-income controls are a longer term prospect, but confirmed they are talking about it with the Government.
JUNE IS THE NEW MARCH
Reinforcing the housing distortions, data out today for last week's mortgage approvals show volumes up +8.6% and values up +19% from the equivalent period a year ago. Both rises are a sharp acceleration. And remember, we are in the 'winter' selling season. This year there is no letup. Approval volumes were as high last week as they were in March!
RBI STAGE 1 COMPLETE
The technical rollout of the first main stage of the Rural Broadband Initiative is now complete. It has cost $234 mln. It has brought copper-broadband to 110,000 users. It has involved upgrading 1,235 rural cabinets and exchanges. A second stage is now starting focused on mobile coverage involving 154 new cell towers.
INFLATION & DEFLATION
Consumer prices rose +2.0% in China in May, below the expected +2.2% annual rate. In fact, China has now had three consecutive months where prices fell, month-on-month. Going the other way, producer prices have been growing in the past three months, clawing back to an annual -2.8% change, much changed from the -4.6% they suffered a year ago.
FORCED TO RENT
While the number of people renting their house rose nationally from 25% to 36% in the years from 1986 to 2013. However, if you are Maori, that change is from 46% to 55%. For Pacific peoples, the change is from 49% to 63%.
SWAP RATES RISE SHARPLY, FLATTEN
Today saw a strong reaction from interest rate markets to the RBNZ MPS. The 1-5 curve dropped to just 16 bps and the 2-10 curve fell to 52 bps. This all came as yields rose sharply, especially at the short end, and it has gotten to be a stronger trend as the day progressed. It is a strong bear steepening and doesn't seem very market-friendly to the RBNZ. NZ swap rates are here. The 90-day bank bill rate rose +6 bps to 2.42%.
NZ DOLLAR JUMPS
Despite the RBNZ comments that the level of the NZD is a concern to them, markets have read their action/inaction and marked the currency sharply higher. Is now at 71.2 USc, at 95.3 AUc, and 62.4 euro cents. The TWI-5 is now at 74.2. 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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1 Comments
That KIWI just may get stronger on the back of renewed USD weakness and more so if the Bloomberg Commodity Index continues it's strong recovery path - over exuberant fixed income markets are staring down the risk of inflation inspired dislocation.
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