Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).
MORTGAGE/LOAN RATE CHANGES
ASB cut its 3 and 4 year fixed rates, taking them down sharply to 6.39% and matching some rivals. More here.
REVERSE EQUITY RATE JUMPS +52 BPS
Heartland Bank has raised its variable reverse equity interest rate from 9.98% to 10.5%. (Heartland Bank's normal floating rate is 7.99%. Main bank floating rates average 8.64%. These reference rates remain unchanged.)
TERM DEPOSIT/SAVINGS RATE CHANGES
ASB also trimmed some longer term TD rates as well, for all terms 18 months and longer.
BIG MOVE
Fonterra has put a swathe of of its assets on the block including brands such as Anchor and Mainland. In a surprising announcement, the dairy giant plans to divest its consumer business, along with operations in Australia and Sri Lanka.
CONSERVATIVE STANDARDS ALREADY IN EFFECT
Updated data to March from the RBNZ shows that current lending practices on a Debt-to-Income (DTI) basis are running well below the maximum standards the regulator has signaled it will impose. so when those regulations come in to effect later this year, there is unlikely to be any immediate impact. Banks have already adopted these standards with substantial margins below. BGI (Borrow Gross Income) standards are also very conservative.
SOFT UNDERBELLY
The latest NZGB bond tender had a soft underbelly today. The $250 mln May 2031 tranche was well supported with 29 bids worth $615 mln. But the May 2034 $250 mln only attracted $355 mln in 25 bids and most of those had to be accepted (22).
THE ONE MULTIFUNCTIONAL CARD
A single Visa payments card can now switch between debit, credit - and buy now, pay later options. More here.
WINTER IN FARM CAPEX
New tractor registrations were low in April at 157, and apart from the pandemic that is the lowest April month since 2017. For the year to April, this is the lowest since 2011.
RBNZ CONSULTS ON PRUDENTIAL STANDARDS
The Reserve Bank (RBNZ) is consulting on policy proposals for new prudential standards to be made under the Deposit Takers Act. This covers four core standards to be used as the criteria for determining the eligibility of banks and non-bank deposit takers for licences under the Act. The four are; capital, liquidity, the Depositor Compensation Scheme standard, and a disclosure standard. The RBNZ is using a proportionality framework for these standards, placing deposit takers into three groups, depending on their size. The deadline for submissions is 5.00pm on July 26.
HAPPY TO SELL AT A DISCOUNT
Aucklanders who know Shortland Street in the CBD might be interested to know owner Kiwi Property Group has conditionally sold the 38 level Vero Center "to a Hong Kong China based conglomerate for $458 million." That is less than they had it valued at, a -1.9% discount to the building’s September 2023 valuation. The deal is subject to OIO approval.
EASING OFF
The Aussies released their monthly April labour force data today. Their jobless rate rose to 4.1% from 3.9% in March. (NZ was 4.3% in March.) That means 593,000 of their 14.9 mln labour force are without work. Full-time employment fell by -6100, part-time employment rose by +44,600. It was tougher in NSW where full-time employment fell -16,300 and part-time employment only rose +13,100.
COPPER JUMPS AGAIN, IN SHORT SQUEEZE TERRITORY
The copper price has breached US$11,000 and an all-time high and now we are into the crazy world where short sellers are being squeezed, and having to buy their way out of the frenzy which bids up the price further.
SWAP RATES SLIP
Wholesale swap rates are likely to be lower on global forces today, especially at the longer end. Our chart below will record the final positions. The 90 day bank bill rate is down -1 bp at 5.63%, a level it has hovered around for more than 70 days. The Australian 10 year bond yield has dropped a remarkable -13 bps to 4.24%. The China 10 year bond rate is still at 2.31%. The NZ Government 10 year bond rate is down -9 bps to 4.63% and the earlier RBNZ fix was at 4.59% and down -8 bps from yesterday. The UST 10yr yield is down -12 bps from yesterday at 4.32%. Their 2yr is now at 4.72%, so the curve has shifted out to -40 bps inverted.
EQUITY MARKETS MIXED & ONLY MOVING MINOR AMOUNTS
Finally, the NZX50 is having a banner day. It is up +1.2% in late trade. The ASX200 is up +1.6%. Tokyo is up +0.7% in morning trade. Hong Kong is +1.1%. Shanghai is up only +0.3% however. Singapore is up +0.6%. Wall Street ended its Wednesday session up +1.2% on the S&P500 as 'risk' returned to equities in a rush.
OIL HOLDS
The oil price is little-changed from this time yesterday, still at just over US$78.50/bbl in the US, while now also still at just over US$82.50/bbl for the international Brent price.
GOLD STILL RISING
In early Asian trade, gold has continued its rise, up +US$27 from this time yesterday and back at US$2387/oz. Some of this is because the USD is falling.
NZD RISES
The Kiwi dollar has risen nearly +¾c from this time yesterday, now at 61.2 USc. Against the Aussie we are up +½c at 91.6 AUc. Against the euro we are also higher at 56.2 euro cents. This all means the TWI-5 is up at 70.3, and a +40 bps gain.
BITCOIN JUMPS
The bitcoin price has risen to US$65,899 and up +6.7% from this time yesterday. Most of the gain however came last night. Volatility of the past 24 hours has been very high at +/- 4.1%.
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