Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Westpac floating rates rise 9 bps to 5.84% raising the separation from official and wholesale rates.
DEPOSIT RATE CHANGES
No changes to report today.
CROWN SURPLUS CONTINUES TO RISE
Crown Operating Balance was in surplus of $10.6 bln for the eight months ended February 2017, $6.5 bln greater than expected and the fourth highest increase in operating balance since July 2003. This was primarily driven by an operating balance before gains and losses (OBEGAL) of $1.4 bln, $900 mln greater than expected, and actuarial gains on ACC and GSF liabilities, which were $4.4 bln greater than expected. The OBEGAL surplus was driven by higher than forecast company tax revenue, even though this was partially offset by source deductions, and expected expenses being $395 mln lower than forecast, however, the majority of the decrease in expenses relates to costs in relation to the Kaikoura earthquake, which have not been quantified to complete certainty yet.
A MILLION MORE EACH 100 DAYS
Auckland’s rail network is adding a million passenger trips every three to four months. The region's passenger rail system is expanding at the rate of almost +20% pa carrying 19 million passenger trips in 2016. That is up to 22% of the 87 mln public transport trips, making it the fastest growing segment of the system. By comparison, Wellington had 38 mln public transport trips in 2016, of which 13 mln were by rail. (Wellington's public transport system useage only had +2% growth in 2016.)
COST OF ROAD CRASHES
The Ministry of Transport estimates that the social cost of each fatal crash is $4.7 mln, reported serious crashes are $912,000 and minor crashes were $99,000, all per crash. All up, the estimated total social costs of fatal and injury crashes rose from $3.53 bln to $3.79 bln in 2015 (in 2016 prices). The social costs for a crash include loss of life and life quality, loss of output due to temporary incapacitation, medical costs, legal costs and vehicle damage costs.
MARCH A BUSY MONTH FOR RENTALS
There were 15,379 bonds filed with the Tenancy Bond Service in the month of March 2017, the highest level since March 2011. National median rents were flat for the month at $400 and up $20 for the year, across all property types. Median rents for a three bedroom house continued to rise, to a national median of $430, a rise of $30 for the year. While the median rents for three bedroom houses in the major city centres were lower for the month, Auckland and Wellington were $15 and $20 up for the year and Christchurch was down $30 for the year. In terms of apartments, median rents for two bedroom apartments rose by $20 in March to $340, up $10 for the year. Again, median two bedroom apartment rents were up $20 for the year in Auckland and Wellington but the Christchurch market has seen a fall of $15 for the year.
WEAK CHINESE PMI
Chinese Caixin Services PMI, which focuses on small to medium sized companies, has shown that the service sector expanded at the slowest rate in six months. The fall is contributed to weaker growth in new orders and rising cost pressures. There are concerns that the Chinese real estate sector has peaked and this is likely to be a drag on the whole economy. The input cost pressures were the highest in four years and a number of firms cited salaries as the driver.
WHOLESALE RATES LOWER
Reversing the gains from yesterday, the swap rates dropped -2 bps across the board. The 90 day bank bill is up +1 bp and now at 2.00%
NZ DOLLAR RECOVERS
The NZD has recovered to trade at about the same level as this time yesterday, 69.7 USc, after testing lows of 69.4 USc this morning. Against the AUD, the NZD has rallied strongly today, having dropped to 91.7 AUc this morning, it now trades at 92.4 AUc. Against the EUR we are still trading at around the 65.3 euro cents level. The TWI-5 is 74.8, up slightly from this morning.
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8 Comments
Australian millennials have the second-lowest level of home ownership for their peer group, an HSBC Holdings Plc survey found, just ahead of an oil-rich absolute monarchy.
Only 28 percent of Australians aged between 19 and 36 own a home, pipping the United Arab Emirates on 26 percent, the survey of more than 9,000 people in nine countries showed. That was well below France on 41 percent and far beneath China on 70 percent. Three-quarters of Aussie millennials said the challenge of saving a deposit was their biggest barrier.
“Despite the rising costs, millennials overwhelmingly still want to own a home in Australia,” Alice Del Vecchio, head of mortgages at HSBC Australia, said in a statement Thursday. “The dream certainly isn’t dead.” Read more
The magic of compounding, rising interest rates is missing for this cohort, as long as cheap debt substitutes for well paid general employment.
JP Morgan’s CEO Jamie Dimon caused a stir yesterday with his 45-page annual letter to shareholders. The phrase that gained him so much widespread attention was, “there is something wrong with the US.” Dimon mentioned secular stagnation and correctly surmised it was the right idea if for the wrong reasons. He then gave his own which included a litany of globalist agenda items, including not enough access to mortgages. Read more
China is set to import record amounts of crude oil from West Africa this month as OPEC’s supply cuts pave the way for other nations to gain a greater foothold in the fast-growing Asian market.
West African producers led by Angola and Nigeria are poised to send crude to China at the rate of 1.48 million barrels a day in April, the most since Bloomberg began compiling the data in August 2011, according to loading programs and traders. Overall Asian imports of West African crude are poised to reach 2.4 million barrels a day this month, also a record. Read more
Hmmmm..
On April 12, Muhammadu Buhari, President of Nigeria, was in Beijing to negotiate Chinese aid for his ailing country.
It came in the form of an announced currency swap. Details are still a little short (pun intended), but in some ways, especially intermediate and longer term, the arrangement is all that matters. For Nigeria, the nation’s companies will be able to buy from China in yuan, as Industrial and Commercial Bank of China, the largest Chinese bank and state “owned”, provided both the swap basis and another loan offer. In other words, the Nigerian central bank now has an account with ICB with likely tens of billions of yuan in it.
Under the proposed terms of Nigeria’s swap China will be able to denominate buying of Nigerian crude in RMB. At present, the Chinese do not actually get much from Nigeria, so this appears to be an attempt to start moving in that direction.
There is also another angle to consider, one which does not even require any infrastructure commitments or expenses to move oil to China from Nigeria. The Chinese could, if pressed, purchase Nigerian oil on their own RMB terms and then immediately sell it in global markets where it already likely exists. In return for those sales, the Chinese would receive dollars, effectively converting RMB to dollars via what was really Nigerian collateral (in theory, the Chinese could just use the oil as dollar collateral, too, after having purchased it via RMB).
Nigeria, for its end, would get yuan but the country still needs more dollars and now they may have just shut off one avenue of flexibility with regard to their own dollar short (which is more of the mercantile, traditional variety). Read more
How long before NZ based Chinese banks demand to settle local WMP purchases with fabricated RMB?
and probably sooner than you think, the EU dairy stockpile continues to grow and we need an edge over the competition.
http://www.farmersjournal.ie/poland-the-first-country-to-offer-smp-to-i…
we ain't big enough to win that one or the next one
http://lefsetz.com/wordpress/2017/02/28/attention-2/
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