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A review of things you need to know before you go home Tuesday; UDC meeting 'closed'; latest affordability review; farm sales rise; lifestyle block sales slip; consumer confidence high; swaps up; NZD stable

A review of things you need to know before you go home Tuesday; UDC meeting 'closed'; latest affordability review; farm sales rise; lifestyle block sales slip; consumer confidence high; swaps up; NZD stable

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes today.

DEPOSIT RATE CHANGES
SBS Bank ended its seven month term deposit special today taking, the rate back to 3.30%. It is a reduction from 3.70%.

BEHIND CLOSED DOORS
Wednesday's UDC Finance investor meeting, on amending the Trust Deed to give UDC the option to repay about $1.3 billion worth of secured investments helping pave the way for ANZ to sell the finance company to China's HNA Group, is closed to media. ANZ says it's "a closed meeting to investors, with regulators, legal advisers and business senior management only in attendance". Supervisor Trustees Executors has apparently agreed to this. Investors who do attend are invited to post any observations from the meeting as comments on Wednesday's interest.co.nz 90@9, or on this bulletin tomorrow. Remember, this is a vote where investors are being offered a financial incentive to turn up and vote - but that incentive will only be paid if they vote to approve the transition.

DOUBLE IN AUCKLAND
Our May report on home loan affordability is out and this month we focus on how long to would take first home buyers to save the deposit. Nationally, it would take 22.1% of their take home pay to afford the mortgage on a first quartile house for a first home buyer couple aged 25-29. In Auckland it is double that at 45.2% of take-home pay.

FARM SALES VOLUMES RISE
Farm prices rise with dairy taking the lead albeit with some 'financier instigated' sales activity. Per hectare prices are here. The lifestyle block market has quietened down for winter.

HIGH CONFIDENCE CONFIRMED
A second consumer sentiment survey was released today, this time the ANZ-Roy Morgan monthly one for June. That shows similar positivity to the Westpac MM one released yesterday. This ANZ one shows consumer sentiment lifted in June, the second consecutive increase. An uplift in confidence points to more spending-based activity, says ANZ. While housing market momentum is slowing, there is still plenty for consumers to smile about: jobs, a high NZD that’s keeping prices down, and the Government’s $2 bin family package injection, to name just a few. House price expectations cooled in this survey.

RECORD PROFIT FOR SBS BANK
SBS Bank posted record annual profit of $27.4 mln for its March year, an increase of +37%. The bank and building society grew gross lending by +19% and deposits plus redeemable shares by +9%.

NEW ZEALAND'S LARGEST PORT
The Port of Tauranga has grown throughput to more than 1 mln TEUs per year. (A TEU is a 'twenty-foot container equivalent'.) It is the first port to get to this level.

PARLIAMENTARY EXCITEMENT
The Todd Barclay saga is gripping reporters at Parliament, and is the subject of Parliamentary questions and statements. The Police have made a statement. Suggestions of instability in Government ranks, especially in election year, gets people excited.

STILL RISING
In Australia, residential property prices rose +2.2% in the March quarter 2017, the fourth consecutive quarter of growth. That takes the annual rise to +10.2%. The city with the highest annual increase was Sydney. The total value of Australia's 9.9 mln residential dwellings increased AU$163.1 bln to AU$6.6 tln. The average price of dwellings in Australia is now AU$669,700 (= NZ$702,700. No one calculates an equivalent average in New Zealand.)

MISGIVINGS
China's One Belt, One Road initiative is not going quite to plan. Although New Zealand has signed up to it, Australia has misgivings, as do the EU. Those misgivings relate to a lack of transparency about the goals, investment and underlying objectives. China has been 'generous' with its money to get countries signed up - and that is 'helping' them turn some countries away from Taiwan, and to voting with China in a range of international issues. The implication of high-level bribery rather than principled negotiation is causing the rethink.

WHOLESALE RATES FIRMER AGAIN
Rates for all terms are +2 bps higher today. The 90 day bank bill rate is up by +1 bp to 1.94%.

NZ DOLLAR SLIPS
NZD is slightly softer today at 72.3 USc. On the cross rates, against the Aussie we are at 95.3 AUc, and we are at 64.8 euro cents. The TWI-5 is now at 76.7. And bitcoin is up +3% on the day at US$2,682 today.

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15 Comments

Housing market slowing is something for consumers to smile about.

Less chance of a massive downturn, means less chance I will lose my job, means I can be spend more now.

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- China’s government bonds extended gains Tuesday. The one-year yield fell six basis points to 3.51 percent, while the 10-year yield shed one basis point to 3.50 percent.

- One-year interest-rate swaps climbed two basis points to 3.50 percent, after tumbling by nine basis points on Monday

- The PBOC’s liquidity injections via open-market operations matched maturities Tuesday. The bank added a net 410 billion yuan of cash through reverse-repurchase agreements last week, the most since January. Read more

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China's One Belt, One Road initiative is not going quite to plan. Although New Zealand has signed up to it, Australia has misgivings, as do the EU.

Maybe New Zealand and Australia should consider reducing their reliance on export sales to China?

Australia will have to address domestic imbalances first, no matter how unsettling Chinese politics seem to the chattering classes.

More than 60 percent of the Australian banking system’s loan book is in residential property, nearly 20 percentage points more than second-placed Norway and more than double the U.S. ratio, according to data from the International Monetary Fund. In Hong Kong’s frothy housing market, the ratio stands at only 14 percent.

The exposure to housing reflects the lack of other lending opportunities for Australian banks, and the large profits they have made from home loans, according to TS Lim, head of research at Bell Potter Securities Ltd. “In Australia there are very few sectors apart from resources and mortgages -- and the former has also shrunk since the financial crisis," Lim said by email.

In the words of APRA Chairman Wayne Byres: “If we are going to put an increasing number of eggs into a single basket, we’d better make sure that basket is an unquestionably strong one.” Byres made the comment in April, noting in the same speech that the regulator is reviewing “the relative and absolute capital requirements for housing exposures." Read more HT Henry_Tull

Beggars can't be choosers

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Australia exercising actions that signify self preservation is a priority?

MOSCOW (Sputnik) – Australia has suspended its air campaigns over Syria after a US aircraft shot down a Syrian military jet, prompting the Russian military's suspension of incident prevention channels and an announcement that airborne objects would be tracked west of the Euphrates, local media cited the Australian Defense Department as saying Tuesday. Read more

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There's risk of escalation and both sides are to blame.

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Wide Boy Barclay is toast and BE has been found to be untrustworthy. Not good.

This all went down under Key's PMship. He knew it was going to explode back in Nov I am sure.

Poor ol Bill must be pissed as he looks at the underside of the bus that just ran over him.

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since MMP I would suggest the caliber of MP from all parties has dropped

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Some of the comments Barclay has made suggest that the Prime Minister may have lied to Police. How has National managed to create so many disasters on the run up to an election. I suspect the "no surprises" policy has been more of a cover up of dubious or corrupt activities policy.

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Wide Boy Barclay is toast and BE has been found to be untrustworthy. Not good.

Bill English has past form when it comes down to matters of trust.

He said yesterday he had paid back $32,000 and pledged not to claim any more taxpayer cash for housing. Read more

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The same reason why BE hasn't moved into the PM's residence in Wellington. He can't be trusted.

Talking about trust this might interest you Mr Hulme. Argentina has issued 100 year bonds.
http://www.cnbc.com/2017/06/20/argentina-sees-strong-demand-for-surpris…

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A nation going short dollars they cannot easily payback/rollover is not a suitable investment vehicle for allocated pension fund capital. The long issuance term is a ploy to turn attention away from the need to pay coupon interest many multiples greater than redemption value and well before the maturity date.

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DOUBLE IN AUCKLAND? GZ?

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Forget Todd Barclay! This...is the Barclay that's going to have a big impact on a variety of things.....

Barclays Bank and former boss John Varley charged with conspiracy to commit fraud by SFO....The SFO investigation into Barclays has centred on £322m in payments that Barclays made..... dubbed “advisory services agreements”

http://www.telegraph.co.uk/business/2017/06/20/sfo-charges-barclays-ban…

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So 8.7 years ago , my partner and myself starting saving for that lower quartile North Shore home as two 16 year olds . Where do i see issues with these home affordability measures using current median incomes to obtain future deposits.

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