A review of things you need to know before you go home on Thursday; only floating rate changes, few TD rate changes, lower Govt bond yields, Aussie insurers star in NZ, swaps sink further, NZD firms, & more

A review of things you need to know before you go home on Thursday; only floating rate changes, few TD rate changes, lower Govt bond yields, Aussie insurers star in NZ, swaps sink further, NZD firms, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
The Cooperative Bank have also taken 50 bps off their floating rate, taking it to 5.15%. The Nelson Building Society (NBS) reduced its floating rate by -40 bps to 5.70%.

TERM DEPOSIT RATE CHANGES
There have been a set of -10 bps reductions in Notice Saver products from Westpac and Kiwibank. First CU and NZCU Auckland have also trimmed term deposit rates.

STILL POURING
There has been a small pickup in the amount of readymixed concrete delivered in the June quarter. At 1,081,000 m3, this was the most ever for a June quarter and up +2.9% from the same period in 2018. More impressive was the growth in Auckland which was up +10% on that basis to an all-time record high. The pour in Wellington was up +6% and in Christchurch it is down -5%.

LOW YIELD
The 16th tender of the April 2029 NZ Government bond today brought a yield of just 1.12%. That was -42 bps lower than the same bond tender in mid July, and the lowest ever for this bond. A year ago, this same bond yielded 2.59%. It was very well supported with $758 mln offered for the $250 mln on offer.

STRONG YEAR FOR IAG
IAG has posted an annual insurance profit of A$390 mln for its Kiwi operations, up from A$218 million last year and says the underlying profitability of the business is expected to remain strong. IAG, NZ's largest general insurer trading under the State, NZI, AMI and Lumley brands, recorded a 5.2% increase in gross written premiums to NZ$2.836 bln. Its reported loss ratio dropped to 53.5% from 61.7%. IAG's reported insurance margin increased to 24.7% from 13.8%. 

EVEN STRONGER YEAR FOR SUNCORP IN NZ
Suncorp's New Zealand business posted an annual profit of A$245 mln which was up an impressive +81.5%. Among the key brands here are Vero, Asteron Life and AA Insurance. New Zealand didn't feature in the Group's natural hazard experience in the 2018/19 year.

A MINOR LIFT
After being down for much of the session, Wall Street closed flat. Today, Shanghai has opened up +0.7%, Hong Kong is up +0.5% and Tokyo is up +0.6%. These moves make back a fraction of the declines we had earlier in the week. The ASX and NZX are posting modest rises as well today. China holding its currency fix at 7-to-the-dollar seems to have calmed markets in the meantime.

INTIMIDATION VIA THREATS TO FAMILY
In Australia, it is being reported that students who support the Hong Kong protesters are getting visits at the homes of their parents in China from Chinese government people. If you want to understand what is behind the Hong Kong anger, read this.

MORE LIKE LAWYERS? REALLY?
In Australia, economist Wayne Byres who heads regulator APRA has said today that bankers should be more like lawyers. That fits the Aussie drive to regulate in detail and prescriptively.

SWAP RATES SINK AGAIN
Wholesale swap rates are down more than -4 bps today. The 90-day bank bill rate fell from 1.44% yesterday to 1.21% today, a drop of -23 bps. Australian swap rates are up +3 bps so far today. The Aussie Govt 10yr is down -5 bps to 0.97%. The China Govt 10yr is unchanged at 3.07%, while the NZ Govt 10 yr down another -5 bps today to just under 1.13%. The UST 10yr yield has risen +6 bps, now at just 1.74%.

NZ DOLLAR FIRMS
The Kiwi dollar is firming after yesterday's sharp fall and is now just on 64.6 USc. Against the Aussie we down to 95.3 AU cents. Against the euro we are firmer at 57.6 euro cents. That means the TWI-5 is now at 69.7.

BITCOIN RISES
Bitcoin is up today to US$11,969, a gain of +2.9%. The bitcoin price is charted in the currency set below.

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NZ Govt 10 yr down another -5 bps today to just under 1.13%

That 50 bp OCR cut has not elicited a bond market response associated with so called "stimulus" actions undertaken and described as such by the RBNZ. In fact, liquidity hedgers are part of a global stampede to secure position in pristine collateral securities, namely sovereign debt. Central banks purchases of such collateral only affects a swap from one riskless instrument to another, namely stagnant RBNZ reserves. So what's the real solution to overcome a global shortage of stateless unregulated eurodollar liquidity generally made available by now reluctant G-SIB banks operating in various jurisdictions?

A, none of the recent rate cuts have provoked any curve steepening.

It seems that the market is viewing these rate cuts as a panic reaction to a cooling property market not a stimulus. So I guess we should assume more rate cuts and negative terms rates a real possibility.

The NZD is ratcheting back up: it reached down to .6378 yesterday but now back up to over .6450.
RBNZ won't like this...they're wanting our dollar lower.
Roger will be doing handstands come Monday as the NZD zooms back up to over .6600.
ASB economist Kelleher said yesterday there's over 1 billion dollars of 'positions' to be unwound shortly which will further lift the nz dollar. I guess that's what happens when of all the global pokies the NZD is the most popular for its size.
I think we should try fixing our currency to shake off all the currency speculators.

I'm not entirely sure they are playing the depreciating currency, race to the bottom game.

NZ imports almost everything other than fruit, veg and meat so if we devalue (against our main trading partners ~ China and Oz) there will be an effect on disposable income.

I think (~?) RBNZ are simply hoping lower rates are going to stimulate consumer demand and prop up the ailing Auckland housing market. Fat chance.

You could very well be right Glitzy, perhaps it is all about consumer consumption. So, it's off to buy those shiny toys (twin-cab utes, suvs, and electronic trinkets and gimcracks).
The farmers/exporters would just want to pay down debt,refinance, and other boring stuff if we had a lower dollar and their returns thus increased.

What are the banks waiting for to reduce their fixed rates?

I'd ask why the variable rate is so high. Its about 450bps over OCR. That's an insane margin. Term mortgage rates are about 250bps over swaps which is punchy but nothing on the variable rate margin.

What make you think those are going down? Banks have funding requirements to meet, term deposit rates are still 3%..

Correction: The Kiwibank 3-month Notice Saver rate dropped from 3.10% to 2.70%