What happened Friday

A review of things you need to know before you go home on Friday; Heartland moves down, Rabobank to move north, used import sales rise, RBA watching global trends nervously, swaps down again, NZD up, & more

4th Oct 19, 3:59pm by David Chaston

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
Heartland has cut most of its term deposit rates, trimming them back to a smaller premium over the main institutions.

ON THE MOVE OUT & UP
Rabobank is shifting its head office out of Wellington to Hamilton. The bank says the move will take key Rabobank staff closer to their clients. When they have gone, only two banks, one of them Kiwibank, will have head offices in Wellington (and the Kiwibank CEO is based in Auckland).

BACK AS 'STABLE'
Following an equity injection, ratings agency S&P have affirmed its 'B' long-term and 'B' short-term issuer credit ratings on FE Investments (FEI). At the same time, they removed the ratings from CreditWatch, where they had been put with negative implications in early February 2019. The outlook is now 'stable'.

HAWKING ACCUSATION
Aussie life insurer, Colonial Mutual is facing criminal charges in Australia from an action in three months of 2014 when it sold life insurance over the phone to people who didn't request a call. There are apparently 87 instances, all via a telemarketing company that has been deemed to be an agent of the company, Colonial Mutual has been owned by CBA since 2000.

THE CAR SALES RISE WAS BROAD-BASED
Yesterday we reported a good rise in new car sales, boosted by heavy Tesla sales. Today we can report that used imports were up +8% year-on-year in September, reversing s string of 19 straight months where year-on-year results were lower. We are on track to have total annual car sales of 300,000 in 2019, about -3 less than for 2018. That is one 'new' car for every 17 people, believe it or not.

AN UNEASY WATCH
In Australia, the RBA has released its October financial stability review and warned of the growing risk to their growth from the deeper slowdown in the global economy.

SWAP RATES KEEP ON SINKING
Wholesale swap rates are down another -2 bps today across the curve on top of yesterday's -4 bps fall. That means swap rates have fallen -15 bps in a week and -44 bps since just before the shock -50 bps OCR cut. Sadly this cut hasn't exactly inspired investor confidence, rather the opposite has happened. The 90-day bank bill rate is down further too, by -2 bps to 1.05% and a -10 bps fall in one week. Australian swap rates are down -1 bp across their curve. The Aussie Govt 10yr is down another -3 bps to under 0.90%. The China Govt 10yr is unchanged at 3.16%. Keep an eye on this when markets open in Shanghai on Monday. The NZ Govt 10 yr is down another -3 bps at 1.03%. The UST 10yr yield is down another -5 bps at 1.54%.

NZ DOLLAR RISING
The Kiwi dollar is +½c firmer today from this time yesterday, now at 63.2 USc. Against the Aussie we are firm at 93.6 AU cents. Against the euro we are up at 57.6 euro cents. That puts the TWI-5 at just on 68.7.

BITCOIN SOFTISH
Bitcoin is lower today, now at US$8,122, a -2.7% fall from this time yesterday. The bitcoin price is charted in the currency set below.

This chart is animated here.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

Daily swap rates

Select chart tabs

Source: NZFMA

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

11 Comments

by Glitzy | 4th Oct 19, 4:12pm 1570158771

Bit misleading to say car sales were boosted by Tesla sales, Toyota were the big winner. Why though ? Maybe fleet sales last year that appeared in Oct and Nov were simply moved forward for discounts.

Of note Ports of Auckand car shipments continue to fall.

https://www.mia.org.nz/Sales-Data/Vehicle-Sales

http://www.poal.co.nz/media-publications/Pages/Ports-of-Auckland-Annual…

by bw | 4th Oct 19, 4:15pm 1570158930

Still a tad better than across The Tasman!
"new car sales figures for September revealed that new car sales have declined for 18 consecutive months, down 6.9% year-on-year "

by Pragmatist | 4th Oct 19, 4:27pm 1570159652

Yep, real easy to beat the salemen up and get a good deal over there at the moment, a mate just got a new Kia Stinger.. quite a car according to him.

by Mark L | 4th Oct 19, 4:31pm 1570159864

Good to see that oil has returned to prices last seen in early January.
Still waiting for the immediate reduction to happen at the pump as it did on the Saudi attack spike.

by Roger Witherspoon | 4th Oct 19, 5:05pm 1570161957

Shh now. Walls have ears, you know. Those that know best are just dying to put up our petrol taxes. Apparently dearer petrol is good for us (unless the money goes to the people who actually, er, produce it, in which case it is very, very bad, I can't remember why). Watch out for the Thought Police, they are all around you.

by CJ099 | 4th Oct 19, 5:07pm 1570162032

Kind of appropriate give the current chaos in UK politics: BBC Banksy MPs as chimpanzees painting sells for £9.9m https://www.bbc.com/news/uk-england-bristol-49924281

by Audaxes | 4th Oct 19, 7:44pm 1570171497

In Australia, the RBA has released its October financial stability review and warned of the growing risk to their growth from the deeper slowdown in the global economy.

With around one-third of households having mortgage debt, in aggregate this could result in a sizeable decline in consumption and so amplify any shock to the economy and so the financial system.

Most household debt is held by households in relatively strong financial positions. In particular, the Australian Bureau of Statistics’ 2017/18 Survey of Income and Housing confirms that around 75 per cent of the value of all household debt is held by households in the top 40 per cent of the income distribution.

Higher income borrowers have more capacity to maintain their loan repayments by adjusting their expenditure if their circumstances change. This reduces the risk of bank losses (but could nevertheless pose downside risks to household consumption and economic growth).

Meanwhile households in the bottom 40 per cent of the distribution account for only around 10 per cent of all household debt (Graph 2.10). Moreover, the median debt-to income ratio for households in the top 20 per cent of the income distribution is more than three times that of households in the lowest 20 per cent.

The so called leveraged wealth effect caused by repetitive RBA interest rate cuts is reserved for the few located at the top end of town and yet 40-50% of bank lending is to households. Only the foolhardy should be willing to accept money, devalued by frivolous bank credit creation, for time spent earning a wage.

New Zealand reality check

by Audaxes | 5th Oct 19, 10:18am 1570223904