Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Kiwibank tweaked a 'special' 2 year rate marginally higher. BNZ cut two rates and moved one higher.
TERM DEPOSIT RATE CHANGES
Christian Savings made some small changes.
DEPOSIT PROTECTION COMING
The Government is signaling that a mandatory "new deposit protection scheme" is in the works. They are limiting the protection to between NZ$30,000 and NZ$50,000. (Australia insures its accounts to AU$250,000.) Customers will pay for this protection via lower deposit interest rates.
CREDIT FOR WHOM?
Credit card balances as at the end of May were up only +1.1% from the same month in 2018. This is the smallest year-on-year rise since September 2016. Maybe somewhat surprisingly, credit card credit balances are now up to $119 mln, their highest level in twelve years and they grew more than +5% year-on-year to May. However, even though these cards are named after this type of behaviour (and there can be a good reason to run a credit card with a credit balance) these type of balances are truly rare, amounting to only 1.6% of all balances. 98.4% of these cards are run as debt. And on average, this debt attracts a weighted average interest rate of 18.0%. Despite the slow rise in exposure to credit card debt, the volume of transactions following through these cards is rising quickly, up +6.2% in May. This is where Visa and Mastercard win. They clip the transaction activity off of merchants that accept the cards, whereas the issuing banks get the interest income on the holder's debt balances. (Banks pay full local taxes on their involvement; Visa and Mastercard have structured their affairs so they effectively don't.)
FMA, RBNZ TO WATCH BANKS' PROGRESS IN REMOVAL OF SALES INCENTIVES
The Financial Markets Authority and Reserve Bank say all NZ banks have outlined plans to remove sales incentives from front line staff and their managers. This follows last year's review by the two regulators of banks' conduct and culture. The FMA and Reserve Bank say they will now move to monitoring banks' progress against the plans they've provided. They say some banks plan to retain sales incentives for a small group of staff who service business and wholesale customers, plus a small number of retail customers.
MORE GREEN BONDS
Auckland Council is the latest organisation to signal that it is wants to issue a "green bond". No details yet.
AN UPDATED HES IS COMING
Statistics NZ is getting ready for another Household Economic Survey. They will be surveying between July 2019 and June 2020 and results are expected by the end of 2020. The last HES was released for the year ended June 2018. Yours truly was asked to participate in a previous survey. It is professional and comprehensive. It takes some work, but it also delivers valuable anonymous insights that can't be collected any other way and are essential for good public policy.
FARMERS BEAT ANZ IN COURT OF APPEAL
Taranaki dairy farmers Bill and Sharon Coomey and their trust Bushline have had a victory in the Court of Appeal over ANZ in an interest rate swaps case. "As requested, the question of the determination of damages payable by ANZ to Bushline is remitted to the High Court to be determined in accordance with this judgment," the judgment says.
A TIGHT RANGE
Of the few equity markets open today, most are level-pegging with small rises or falls. The NZX50 seems to be doing the best, up +0.2% so far today. The ASX200 is down -0.2% so far today. Hong Kong, Tokyo and Shanghai are all in-between somewhere.
SWAP RATES FIRM
Local swap rates have risen today with the two year up +1 bps, the five year up +2 bps and the ten year up +3 bps. The UST 10yr yield is unchanged from this morning at 2.06%. Their 2-10 curve is a 'positive' +28 bps while their negative 1-5 curve is at -15 bps. The Aussie Govt 10yr is up +3 bps to 1.31%. The China Govt 10yr is unchanged at 3.27%, while the NZ Govt 10 yr is up +1 bp at 1.55%. The 90 day bank bill rate is unchanged at 1.58%.
NZ DOLLAR STABLE
The Kiwi dollar is little-changed today, now at 65.9 USc. On the cross rates we're at 94.8 AUc. Against the euro we are still at 58 euro cents. That leaves the TWI-5 at 70.4.
BITCOIN HIGHER
Bitcoin is still in the clouds. It started today at US$10,739 and then powered up to US$11,307. But it has been straight down from there, and it is now at US$10,642. The range is +/-4% today alone. This price is charted in the currency set below.
This chart is animated here.
Daily exchange rates
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5 Comments
The Financial Markets Authority and Reserve Bank say all NZ banks have outlined plans to remove sales incentives from front line staff and their managers
In short, no commissions to sales staff henceforth because most people are too ignorant to make informed financial decisions even in the age of internet. Next up - no more sales kickbacks to car dealers!
It's all happening today. Now we have Winston saying that if he were the RBNZ guvnor he'd have called for John Keys resignation.
The can of worms has been opened.
The mortgage loan and fraudulent reporting to the RBNZ is still to come!
https://www.stuff.co.nz/business/113740487/peters-i-would-have-called-f…
RE: Stuff article:
"The capital requirements are designed so we don't end up like, for example Greece or Portugal, where there are people lined up for kilometres down the street trying to get their money out because the banks don't have enough by way of reserve."
New Zealand banks may or may not have sufficient reserves, but they certainly do not have enough vault cash on hand to redeem a small fraction of their liabilities to unsecured depositors.
Total bank assets are currently recorded at ~$455,031 millions, whilst cash (notes and coin) register $888 millions. Link
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