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A review of things you need to know before you go home; just a few rate rises so far, TD and savings rises very tame, dairy prices sag, bond yields stable

A review of things you need to know before you go home; just a few rate rises so far, TD and savings rises very tame, dairy prices sag, bond yields stable
For Friday, March 14, 2014. <a href="http://www.shutterstock.com/">Image sourced from Shutterstock.com</a>

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

UP, UP, UP FURTHER
Graeme Wheeler raised the OCR yesterday, and banks have started to respond. Yesterday ANZ was first out of the blocks, followed by ASB. Today we have had rate rises from Kiwibank and a few other minnows.

The full 25 bps was added to ANZ's Serious Saver product, but that really just brought it up to the rest of the market. Kiwibank also added 25 bps to all term deposits for terms up to 5 months. But because Kiwibank was slightly below market in these terms it doesn't really now offer a 25 bps advantage over their main rivals. Still that do have an small advantage now, although none over some second tier banks (like RaboDirect, Heartland and Co-op Bank).

It looks like the bulk of the interest rate adjustments will come next week. We are going to be very busy keeping our rate tables up to date.

MANUFACTURING PMI UNCHANGED
Well, it was unchanged on a seasonally adjusted basis at 56.2, but it rose on an unadjusted basis, reversing the fall from the past two months. But this survey came before the OCR hike and the subsequent rise in the NZD (which has clearly surprised everyone, especially Graeme Wheeler).

DAIRY PRICES SAG
The latest USDA international market monitoring of dairy prices indicates a small fall-off in prices for SMP and Cheese, a bigger fall-off for WMP, and a continuation of the rises for Butter. But, and it is an increasingly important But, in NZD terms the sag is greatly accentuated by the sharp rise in the exchange rate in the past day or so.

IIB BOND AUCTION
The second inflation indexed bond tender for 2014 has seen new 2030 linkers receive a successful weighted average yield of 2.9257%. With CPI at 1.6%, that means they will currently yield about 4.53% (although of course that will change each time the interest is paid, based on the CPI at that time).

WHOLESALE RATES
Swap rates gave back up some of yesterdays rises today, slipping 1 bps for every year of term. From here on out a lot will depend on how fast borrowers move to fix. The 90 day bank bill rates were stable today at 3.04%.

OUR CURRENCY
The NZD is has held on to most of yesterday's gains and it is ending the (NZ) week at US85.5c and A94.7c and the TWI is still at a record of 79.9.

 

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