Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
HSBC has ended its 3.79% 2 year 'special' rate, reverting to 4.19%. China Construction Bank has raised many of its local mortgage rates to 3 years fixed.
DEPOSIT RATE CHANGES
No changes to report today.
BIG SALE
One of the largest freehold high country stations in Wanaka is now for sale. The 6,639-hectare Lake McKay Station is one of the Southern Lakes’ most prominent properties. It stretches from Wanaka and Mount Aspiring to Hawea and the Clutha River. It is being sold by Colin Harvey, and Auckland businessman involved with animal pharma company Ancare. It will be sold on December 16, 2016.
RECORD MERCHANDISE TRADE DEFICIT
The New Zealand trade balance in September was marginally worse than expected, but that result had little impact on our currency. Lower meat prices was one reason for the fall. But slippage in the merchandise trade balance has nowhere near the impact these days, with booming exports in services (tourism, education, etc.) more than covering these shortfalls. Still, the $1.434 deficit is the largest on record, even though it has come in the traditional low point of the trade cycle. (Air New Zealand did import yet another Dreamliner in the month, which bumped up imports.)
A TOUGH OLD YEAR
The 2015-16 dairying season was a tough year for Westland Milk Products’ shareholders and suppliers, and the company itself, retiring chairman Matt O-Regan said in the co-operative’s annual report released today. O’Regan acknowledged that the final net average cash payout of $3.88 per kilo of milk solids was disappointing and below break-even point for farmers. And they only paid $3.88 by dipping into reserves to the tune of 26c.
BETTER IN AUSSIE?
Fonterra Australia said today it has increased its average farmgate milk price to A$5.10 per kilogram of milk solids (kgMS) for the 2016/17 season. They have been followed by Murray Goulburn. A$5.10 converts to NZ$5.44 today. Fonterra NZ has indicated NZ$5.25 for its New Zealand farmers, plus dividends (which are not available in Australia).
HIGH DEMAND & RISING (BUT STILL-LOW) RATES
The latest NZGB tender of NZ$150 mln 2033's received bids for NZ$557 mln, a coverage of 3.7x showing that demand for long-dated bonds remains strong. The average weighted yield for this tender was up to 2.98% from the previous yield of 2.75%.
LOW RATES STILL TOO MUCH FOR MANY
A year ago, almost 41% of all new lending was interest-only. That level of new lending fell to 39.8% in June, and to 37.6% by September 2016, according to RBNZ data released today. But of all existing lending, the level is stubbornly holding at over 28% of the $224 bln owed in residential mortgages. Even though interest rates are at record low levels, more than one in four don't want to pay even that.
A DIFFERENT PATH
After the ugly sessions involving Wynyard and Pumpkin Patch, the NZX50 is up +0.6% in late trading today. But this is not what is happening in most other markets in our time zone, which are mostly lower again. In the dairy derivatives markets, we are still seeing rises, although a little less than we saw yesterday. We are now up an indicative +10% since the last auction.
WHOLESALE RATES STEEPER
Most swap rates rose +3 bps to +5 bps in a steepening bias for terms 2 to 10 years. The 90-day bank bill is down -1 bp to 2.13%. Yields for NZGBs are up by +1 bp today.
NZ DOLLAR LITTLE CHANGED
The NZD/USD has been stable today. It is still at 71.5 USc. On the cross rates, it is trading at 93.6 AUc, and is at 65.6 euro cents. The TWI-5 is now at 75.8. Check our real-time charts here.
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