A review of things you need to know before you go home on Friday; factory activity stays elevated, big KiwiSaver shakeup, ANZ moves against investor borrowing, swaps steepen, NZD holds, & more

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
ASB has raised some term deposit rates for tersm between 9 months and two years. And we are expecting some mire from other banks on Monday.

THE STRONG FACTOY EXPANSION CONTINUES
BNZ says of today's PMI result for April. "At 58.4 in April, the Performance of Manufacturing Index remained relatively racy. Not as fast as it was in March, with its 63.6 – but that was a local land speed record. 58.4 is still well above the PMI’s long-term average of 53.1. April’s results were also solid when looking at their main component detail. Production hardly missed a beat, with 64.5, from 66.5 in March. Employment, with its 52.7, was not much slower than March’s 53.6, to remain comfortably above its historical norm of 50.5. New orders, while down from a March spike to 72.3, at 60.9 stayed upbeat about the pipeline."

TIME TO PAY ATTENTION
The official KiwiSaver review has brought a big shake-up of default providers. Some major players have been dropped including ANZ, AMP, ASB, Fisher Funds and Mercer who won't have their contracts renewed. Smartshares and Simplicity are new to the default provider panel. If you originally went into KiwiSaver via the default process and were assigned to one of the now-dropped provider funds (eg. ASB or ANZ), and never subsequently made a choice change, that now means you will be automatically moved to one in the new set of KiwiSaver default providers, and into a Balanced fund. If you don't want that, you will need to act relatively quickly to make a purposeful choice. This involves about 380,000 members. The FMA is lauding the change because it will mean a "value for money for investors", as well as meeting new standards of 'social investing'.

UNUSUAL SPIKE
A reader has pointed out a very useful wholesale electricity cost live resource here. H/T TR. He also drew my attention to an eyewatering spike last night, here.

PEAK PASSED?
House prices came off the boil in most parts of the country in April, according to the REINZ house price index. House prices were particularly soft in Auckland, with prices heading lower both on the North Shore and in Central Auckland.

INTENDED CONSEQUENCE
The Government's intention to phase out over four years the ability of residential property investors to claim mortgage interest payments as a tax-deductible expense is already starting to bite, with the country's largest mortgage lender taking the change into account when deciding how much investors can borrow. ANZ has reduced the amount of projected rental income residential property investors can use in their income calculations when applying for a mortgage, from 75% to 65%. This will likely reduce the amount they can borrow, unless they are also able to provide significant income from other sources to service the mortgage.

TIGHTENING THE SCREWS
The Government is raising the pressure to reduce GHG emissions from the transport sector. It has released Hīkina te Kohupara – Kia mauri ora ai te iwi - Transport Emissions: Pathways to Net Zero by 2050, a Ministry of Transport report outlining potential policies and pathways to a net zero emission transport sector.

RABOBANK WORKS WITH FMA TO CLEAR UP DERIVATIVES BOTCH-UP
Rabobank "self-reported" to the Financial Markets Authority (FMA) last year after realising some of its milk derivatives customers didn't actually meet necessary requirements to trade the products. Rabobank says seven customers agreed to have derivatives contracts cancelled at no cost to them. Rabobank didn't say how much this cost it, but interest.co.nz has heard it was more than $1 million. Steps have been taken, Rabobank says, to make sure customers are correctly classified in future. The FMA says on the basis Rabobank self-reported, it engaged directly to ensure the bank completed remediation with a small number of affected customers.

$21.7 MLN QUARTERLY PROFIT FOR UDC
UDC Finance has reported net profit after tax of $21.7 million for the December 2020 quarter. Following its sale by ANZ to Japan's Shinsei Bank last year, UDC has changed its balance date to December 31 from September 30, and didn't provide a profit comparison with the 2019 December quarter. UDC says quarterly revenue was $41.2 million and total lending was $421 million. UDC says it wrote back $780,000 of impairment charges during the December quarter. In its September 2020 year, UDC's credit impairment charge was $26.044 million. 

INDUSTRIAL COMMODITY PRICES RETREAT
The iron ore prices is slipping still and now off its highs. Copper is too.

GOLD HOLDS
The gold price is now at US$1821 and up +US$3 from this time yesterday in early Asian trading. But this is lower than the New York close at US$1827; London closed at US$1822/oz.

EQUITIES TURN UP
The S&P500 ended +1.2% higher on Wall Street earlier today as it found some up momentum in the afternoon session. Tokyo is up +1.8% and making back yesterday's drop in early trade. In Hong Kong up up +0.9% in early trade and Shanghai is up +1.2%. Meanwhile in Australia, they are up +0.8% in their early afternoon session. The NZX50 Capital Index is down another -0.2% and is heading for a weekly drop of -2.6%.

SWAPS & BONDS STEEPEN
We don't have today's closing swap rates yet. If there are significant movements today, we will note them here later when we get the data. They are probably steeper. The 90 day bank bill rate is lower by -1 bp at 0.36% and that is now its highest in more than a year. The Australian Govt ten year benchmark rate is unchanged at 1.74%. The China Govt ten year bond is down -1 bp at 3.15% after yesterday's rare dip. And the New Zealand Govt ten year is up +2 bps at 1.91% and above the 1.88% in the earlier RBNZ fix (-2 bps). The US Govt ten year is down -2 bps at 1.66%.

NZ DOLLAR UNCHANGED
The Kiwi dollar has stayed down but not fallen further and is now at 71.8 USc. Against the Aussie we are still at 92.9 AUc. Against the euro we are unchanged at 59.4 euro cents. That means the TWI-5 is still at 73.6.

BITCOIN VOLATILITY CONTINUES
The bitcoin price is now at US$49,753 and down a minor -0.7% from this time yesterday. Volatility has been very high at +/- 4.7%.

This soil moisture chart is animated here.

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