A review of things you need to know before you go home on Thursday; Rabobank cuts some rates, retail limp, inflation gauge topping out, very cheap Govt bond funding, swaps hold, NZD firm, & more

A review of things you need to know before you go home on Thursday; Rabobank cuts some rates, retail limp, inflation gauge topping out, very cheap Govt bond funding, swaps hold, NZD firm, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes reported today.

TERM DEPOSIT RATE CHANGES
Rabobank has trimmed its rate offers across the board. The reductions ranged between -10 and -15 bps, although their six month rate is still unchanged at 3.30%

LITTLE RETAIL ENTHUSIASM
Market analysts were unimpressed by the June data on electronc card spending. Although it was up +3.2% from the same month in 2018 on a 'core' basis (without petrol, the -13% fall in June petrol prices didn't look like it freed up spending impulses anywhere else. In fact 'core' retain spending in June came in at the second lowest of any month in the past nine (only February was lower)

TOPPING OUT
ANZ's independent inflation gauge now sees inflation running at 2.8%, boosted by insurance premiums and to a lesser extent, some housing-related items. But ANZ analysts suspect this guage has now peaked and it will show lower rises in future months.

DIRT CHEAP MONEY
In today's Government bond tender, $732 mln was bid for the $250 mln on offer by 51 bidders. But only seven were successful. These low bidders won by offering an average of 1.535% for these ten year nominal bonds. In fact your bid would not have won if you had bid 1.536%. This is a record low yield for 2029 nominal bonds over the fourteen prior tenders.

CLAIMING CREDIT FOR AN UNSOLICITED CONFESSION
The Commerce Commission "alleges" that Westpac breached the Credit Contracts and Consumer Finance Act by failing to provide key information it’s required to under the law to thousands of its credit card customers. Westpac itself reported the situation to the Commission, saying it overlooked including a disclosure brochure with cards it sent out between May 2017 and March 2018. That oversight now has the Commission hauling it into court.

EXCESSIVE MARGINS
The Government is adjusting its "use of money interest rates" payable on underpayments and overpayments of tax and duties "in line with market rates", they say. The rate charged on underpaid tax will increase from 8.22% to 8.35%, while the rate for overpayments of tax will decrease from 1.02% to 0.81%. The new rates will apply from 29 August 2019. The IRD claims "the new rates are consistent with the floating first mortgage new customer housing rate and the 90-day bank bill rate." What they don't say is that they add +250 bps to the mortgage rate and deduct 100 bps from the bank bill rate to come to these; today the average floating mortgage rate is actually 5.73% and the actual 90 day bank bill rate is 1.60%.

HUGE RETREATS
Lending to households in May in Australia were -16% lower than the same month a year earlier. This involves a -AU$3.6 bln drop in the May month and for the year to May it is a -AU$22 bln drop. Lending to households for investment property was down -22% in the same period. That involves a -AU$10 bln drop May-on-May and and for the full year it was a -AU$23 bln drop. This data was released by the Australian Bureau of Statistics today.

SWAP RATES HOLD
Local swap rates are little-changed again today but on the soft side. That contrasts with even lower swap rates today in Australia on top of yesterday's falls. The UST 10yr yield is weaker today and now at 2.04% a fall of -3 bps since yesterday. Their 2-10 curve is a 'positive' +23 bps while their negative 1-5 curve is now -14 bps. The Aussie Govt 10yr is unchanged at 1.34%. The China Govt 10yr is down -3 bps to 3.18%, while the NZ Govt 10 yr is down -1 bp to 1.56%. The 90 day bank bill rate unchanged at 1.60%.

NZ DOLLAR FIRMER
The Kiwi dollar is +½c firmer today at 66.5 USc and has held that level all day today. We are holding firmer against the Aussie dollar at 95.5 AUc. Against the euro we are back firmer at 59.9 euro cents. That puts the TWI-5 up at 71.4.

BITCOIN DIVES
Bitcoin is down to US$12,002 a fall of more than -US$1,000 from this time yesterday. (In the seven plus hours between 2 am and 9:30 am it fell -US$1,356.) It's fallen further since this was written. Today's volatility is +/- 7%.This price is charted in the currency set below.

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USD 
NZD
End of day UTC
Source: CoinDesk

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20 Comments

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Watching money going in a hundred different directions at the same time is fascinating. It must be something like flying very large aircraft with hundreds of dials & readings all taking place at the same time. Way beyond me.

Re IRD and the usurious UOMI rates: perhaps an Interesting case could be made under the RICO Act - after all, one of the key definitions of 'Racketeering' is the raising of a threat, and the offer to mitigate it if the palm is crossed with sufficient silver, all by the same person (natural or corporate).

If the glove fits.....

Every bitcoin dip is a buying day for me

YAWWWWWN . . yeah , right ... whatever ....

Lonewolfnz at 17500 NZD for a single bitcoin, thats not pocket changre. Are you trading on an exchange using leverage or holding these coins . Are there holding costs ? Just curious.

Thought for today.

Whilst the FBB allows apartments approved by the OIO to be sold to overseas investors it seems the law then precludes resale of those apartments to anyone who is a non resident.

Is anyone actually explaining this to the overseas buyers who are purchasing these off plan new builds ?

I'm curious as I would have thought that if you knew this you would have serious reservations about buying.

My thought for the day : Phil Twyford is now minister for transport ,and given his complete failure overseeing the Kiwi Build policy , I'm declaring a Roads Emergency in NZ . .

... hes already upheld and agreed with the mothballing of 12 major roading projects around NZ . ...
As if Kiwis are going to abandon our 100 year car culture , and buy into the Greens new agenda for us , and utilise a pathetic public transport system ...

Roading Emergency , guys .... you heard it here first !

Solve the roads emergency by taking the licences off the idiots on the roads. Followed one moron for 5 minutes that couldn't figure out he was driving without his lights on despite being flashed by at least 5 people.. and he was driving an old MR2 with pop-up headlights, so you pretty much can't fail to see that they are up or not.

And yes, the public transport system needs to get way better before any reduction is car numbers is going to occur, not all of us want to go to and from the CBD, which is about the only place with good public transport options.

That would seem to be a normal intuition of the term "new build" or "off the plans". If you're buying a second hand apartment or house it's no longer a new build. Assuming the market is not overpriced, what cause would there be for reservations?

...the NZ Govt 10 yr is down -1 bp to 1.56%
LOL - the tender just traded $250m at a weighted average yield of 1.5346%

There is actually no correlation between the price quoted on these morning and evening updates and the actual bond prices in the market. Quite bizarre but also quite true ;)

Even the RBNZ came up with a NZ Government 10yr yield of 1.57% today. - Link

Nonetheless, I cannot imagine the underwriting bank market makers would want to book a marked to market loss on the same day as the tender.

“ANZ's independent inflation gauge now sees inflation running at 2.8%”

As if the ANZ hadn’t sufficiently annoyed the RBNZ already – they come out with this and attempt to undermine ad nauseam “inflation below target” pronouncements.

Indeed, with realistic inflation running that high what possible justification could there be for cutting rates?

10
up

The over-leveraged banks "investment" in housing.

My McDonald’s inflation gauge was pretty disappointed this morning. Having not had a bacon and egg McMuffin for about a year.. this morning, well those Golden Arches were just too much of a temptation. But i’ll be damned if upon inspection they haven’t reduced them in size by about 50% since my last visit. Had to buy a second one.. the hash browns also seemed to have downsized too.

McMuffin reduced or stomach increased Mr Wilkes? :)

Definitely the muffin!

Surely Lonewolfnz is the perfect example of the psychology of bubble behaviour?

Am I missing something?? Log prices are tanking, workers are being laid off in droves but there seems to be very little coverage on this... Bitcoin has very little effect on the average kiwis day to day life but a massive drop in income from our third biggest exporter certainly will... what gives?