A review of things you need to know before you go home on Friday; more rate cuts, retail lull, Kiwibank reports lower result, KiwiSaver an offshore investment, swap rates rise. NZD firms, & more

A review of things you need to know before you go home on Friday; more rate cuts, retail lull, Kiwibank reports lower result, KiwiSaver an offshore investment, swap rates rise. NZD firms, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
HSBC trimmed most of its mortgage rates, taking -55 bps off its floating rate, and dropping its eighteen month and three year rates toi market leading levels. It cut all other rates except its four and five year fixed offers.

TERM DEPOSIT RATE CHANGES
HSBC cut almost all its rates, and they are now down to 2.20% for six months and one year. TSB also cut most of its rates.

NOTHING TO WRITE HOME ABOUT
Retail sales were just +3.4% higher in the June quarter from the same period in 2019, and that is the slowest rate of growth since early 2013. Stats NZ called it a "lull". It is quiet for grocery, food, pharmacy and furniture retailers, a bit better for most other categories and especially online and for recreation goods.

LESS PROFITABLE
Kiwibank cites banking fee reductions, bill paying services returning to NZ Post, and lower insurance income as its annual profit drops by -$7 mln to just $108 mln from $115 mln in the 2018 year. To put that in perspective, ASB who also reports to June, had net profit after tax up +$108 mln, or +10%, to almost $1.2 bln. ASB has loans & advances of $83 bln compared with Kiwibank's $23 bln so is 3.7 times as large. But ASB's profits are eleven times as large. Kiwibank's return on equity is +5.2% whereas ASB's is +15.2% and ASB has five times the equity of Kiwibank.

THE NEW CHALLENGES OF INFLATION TARGETING
The Reserve Bank and the International Monetary Fund are hosting a conference in Wellington next week to discuss broad issues around monetary policy, the labour market, and the future of inflation targeting. Special speakers include the head of the San Franciso Fed, Mary Daly. The event will bring together central bankers, "thought leaders" (?), academics, and policymakers from more than 20 countries.

NZX AN UNDER-PERFORMER
Most equity markets are up modestly in trade today - except the NZX50 which is down -0.8% so far and if it stays at this level it will end unchanged for the week. The ASX200 is likely to end up +1.7% for the week, Shanghai will be up +2.0%, Hong Kong up +0.6% and Tokyo up +0.4%.

KIWISAVER INVESTMENTS IN NZ ABOUT TO BECOME THE MINORITY
New data out from the RBNZ shows that we now have $59.6 bln invested in KiwiSaver accounts, up +17% from this a year ago in June 2018. The proportion invested in New Zealand is now down to just on 50%, a drop of -2.0% in a year. That means that of the extra +$8.7 bln growth in the past year, less than 40% was invested locally.

SWAP RATES FIRMER
Wholesale swap rates have risen sharply today, up by +4 bps across the whole curve. The 90-day bank bill rate is up +1 bp at 1.19%. Australian swap rates are little-changed so far today. The Aussie Govt 10yr is up 4 bps at 0.97%. The China Govt 10yr is unchanged at 3.07%, while the NZ Govt 10 yr is up +1 bp at 1.14%. The UST 10yr yield is up +6 bps to 1.65%.

NZ DOLLAR BACK UP
The Kiwi dollar is up off the carpet and back to the level it was this time yesterday at 63.9 USc. Against the Aussie we are firmer at 94.6 AU cents. Against the euro we are little-changed at 57.7 euro cents. That puts the TWI-5 back to 69.3.

BITCOIN BLIPS
Bitcoin is also back higher, now at US$10,107, up +1.6% from under the US$10,000 level in the past 24 hours. The bitcoin price is charted in the currency set below.

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Just looking at re fixing a loan.anz have offered me 3.55 for one year.Is that close to the going rate or do you reacon i should shop around?Don't want to go longer as we will be re developing the site in about a years time if bank will come to the party.

I would hold out. If the predictions of another OCR cut come to fruition in September, the fixed rates should fall also

Thanks for the heads up. 1 year definitely the way to go, I'd take it, it may drop to 3.49% but I doubt it'll go much lower so 0.06% is not a difference waiting for

“and the future of inflation targeting”

For a start maybe gain a better understanding of how to correctly measure it for the average Joe and you may just have a fighting chance.

Retail sales growth struggling - even with a rapidly growing population – how about year after year of eroding individuals purchasing power and then perhaps it's no wonder?

However, good news and no matter, RBNZ to lower the cost of and encourage the use of debt / or erode savings and all will be well.

I don't think so.

Apart from the Central Bankers brigade I’m not sure who is really cheer-leading this madness on?

Problem is they are in there own bubble, same as politicians.

Petrol up (thanks Jacinda 16% new tax), food up, local rates up.....but when your on huge wages like them its just meh, here have some more cash....

A chunk of that petrol tax is only there to avoid raising rates to the necessary degree to pay for infrastructure too. Don't want to raise rates on those with a lot of land wealth...better to target the poorer folk who have to drive further instead.

MY2C is starting to look like an ideological mouthpiece.

That nonsense about covering 3% of the planet this morning - I spent some of the day travelling past endless pasture. For somrthing other than human use, one is told to suppose. Sorry, some of us think.

I quite liked DC's ? about 'thought leaders'. This is economics we're talking about. They're blindsided unless they have ex-discipline knowledge.

Don’t you think the people driving on the infrastructure should pay for it rather than the elderly who barely drive or the guy who walks to work?

That's not what the added fuel tax is for that was a replacement for raising rates. It's not the same as the other fuel taxes that do go to fund roading.

The city infrastructure provides betterment in the form of increased wealth to those folk.

... Jacinda is correct ... we are being fleeced ... except it's by her . .. not content with raising the excise in petrol , Julie Anne Genter and her anti-car cronies have shut down 10 if the 12 roads of significance projects ...

Oooh yeah Jacinda : we are being right royally fleeced. . .