Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today - so far.
TERM DEPOSIT RATE CHANGES
None here either.
ANOTHER LOW RATE CREDIT CARD OFFER
Kiwibank has launched a new low rate credit card on the Visa network. The main feature is the 9.95% interest rate and this applies to both cash advances as well as purchases. Its annual fee is $30. Only the Co-operative Bank offers something similar, although with a 12.95% interest rate and a $20 annual fee.
A COMPETITIVE CREDIT CARD ALTERNATIVE
Heartland Bank has launched a new hybrid transaction account. It pays 2% on credit balances, and costs 10% for overdraft use. The overdraft limit is two months of your take-home pay. It comes with zero fees, making the offer very competitive with a credit card. This account comes with an Eftpos card and an app.
STATE OF THE LAKES
Our hydro lakes are full for this time of year. Inflows are high and storage levels are too, similar to this time last year. They are +10% fuller than the 90 year average. But the story is much different for Auckland's water storage dams. They are currently averaging 60% full whereas normal for this time of year is 80% full. Auckland also draws some water from the Onehunga Aquifer, and the Waikato River. The river meets between 8% and 15% of the area's annual needs, depending on weather conditions and dam levels.
SITTING PAT FOR NOW
The RBNZ kept its Official Cash Rate unchanged at 1.50% today. Immediately after the announcement, the NZD rose but swap and bond rates were little-changed even if marginally firmer. The policy committee said they saw risks "tilted to the downside" because of "ongoing weakening of global trade". Chances are the markets will raise their bets of another cut at the August 7 review and Monetary Policy Statement. The focus now turns to what the RBA will do in Australia on Tuesday and a cut there seems more likely (although the latest poll of economists there actually comes down on the side of 'unchanged' at this next review).
NO ACTION
It is now 45 months since the RBNZ last intervened in our currency markets. This is now the longest period of 'no intervention' since their data starts in July 2004.
RENTERS NOT AS HAPPY
Findings from Statistics NZ's General Social Survey show a third of renters say their house is very suitable, compared to half of homeowners.
10,195 NEW HOMES IN AUCKLAND
The latest figures from Auckland Council show that 87% of the CCCs issued in April were for buildings that were consented within the previous two years. The number of new homes being completed in Auckland could increase by about a third over the next two years.
BIG DROP
The value of engineering work completed in Australia is down sharply. This is not normally a data item we follow, but the -13% year-on-year fall to March is significant.
STILL FIT FOR PURPOSE?
The RBA has warned that the core banking systems in Australia are ageing and causing problems. Outages are doubling in intensity and extending in time according to their data for 2018 compared to 2017. Some serious money needs to be spent by the banking industry to get back to a reliable system.
SWAP RATES FIRM
Local swap rates are up +2 bps across the curve today except for the ten year which is up +1 bp. The UST 10yr yield is essentially unchanged from this time yesterday at 2.01%. Their 2-10 curve is a 'positive' +27 bps while their negative 1-5 curve is at -19 bps. The Aussie Govt 10yr is down -1 bp to 1.28%. The China Govt 10yr is unchanged at 3.27%, while the NZ Govt 10 yr is up +1 bp at 1.57%. The 90 day bank bill rate is up +1 bp to 1.60%.
NZ DOLLAR UP
The Kiwi dollar is up after the OCR decision, now at 66.5 USc. On the cross rates we're also firmer at 95.5 AUc. Against the euro we are still at 58.5 euro cents. That pushes the TWI-5 up to 71.1.
BITCOIN HIGHER STILL
Bitcoin is still in the clouds. It is now at US$11,885, up +7% in 24 hours. This price is charted in the currency set below.
This chart is animated here.
Daily exchange rates
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8 Comments
The UST 10yr yield is essentially unchanged from this time yesterday at 2.01%.
This level of yield essentially mirrors the poor state of an economy not offering the inhabitants the growth opportunities often associated with higher returns:
For example, it is normal in a recovering or expanding economy for the labor force participation rate to rise as people enter the work force to take advantage of the job opportunities. During the decade of the long recovery, from June 2009 through May 2019, the labor force participation rate consistently fell from 65.7 to 62.8 percent
Hmm, not sure if that is quite right. US-T 10s are a measure of global opportunity to a large extent, not just the US economy. The USD system has two parts, onshore and offshore, and LIBOR is the short term measure for the offshore system, but the two systems combine for longer terms, both using US-T 10s as a reference. I suspect the drive down in US rates is more to do with impending disaster in Euroland, actual disaster in Argentina and Turkey, and serious difficulties in Asia.
A strong USD causes chaos everywhere else, it seems. Thus capital flees Europe for USD assets in the US, stocks and bonds or property; or gold in the vault in Switzerland or London.
LIBOR is showing signs of stress
"Last week, for the first time since February 2008, the LIBOR curve inverted. The 3-month tenor has been on the move downward for some time. The 1-month rate has been gentler in its slope. Last Thursday, the two finally crossed. As unnatural as inversion in the UST curve or elsewhere, it’s another sign of imminent rate cuts."
For the fifth month in a row, US total cross-border investment was an outflow (-$7.8bn) - the longest streak of outflows since 1982..
Since May 2018, foreigners have sold a record $214.2BN in US stocks.
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