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A review of things you need to know before you go home on Friday; move fast to lock in fixed rates as wholesale rates are climbing quickly, listings expand, non-residents buy more bonds

A review of things you need to know before you go home on Friday; move fast to lock in fixed rates as wholesale rates are climbing quickly, listings expand, non-residents buy more bonds
For Friday, June 13, 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.

ASB MOVES RATES UP
ASB and its siblings BankDirect and Sovereign all moved their floating mortgage rates up today. They follow ANZ and Co-operative bank yesterday. ASB also raised term deposit rates for 1-12 month terms, by +15 to +25 bps.

RISING TIDE
Currency market trading in the NZD in May was the highest in two and a half years, according to data published by the RBNZ today.

FOOD PRICES RISING
Food prices increased 1.8% for the past year to May 2014, the largest annual increase since 2011. The main rises were from Fruit and Vegetables (+5.6%), non-alcoholic beverages (+2.7%) and restaurants & meals (+2.1%).

MIDDLING MAY
Although still expanding, a softening of orders saw the May PMI slip a little again.

LISTINGS RISE FASTER THAN SALES
realestate.co.nz released May data today that showed a stronger rise in listings and asking prices than in supported by sales in the housing markets. Consequently the weeks of unsold inventory is growing. It is now at 31 weeks nationally, 16 weeks in Auckland, 19 weeks in Christchurch and 21 weeks in Wellington. It's and eye-popping 132 weeks (2 and a half years) on the Coromandel.

BEST FRIENDS
Foreigners are piling into our Government bonds. According to RBNZ tracking data out today, they now own 64.6% of them, up from 63.3% in April. That a big jump in just one month.

AHHH, THE POWER TO FINE
The NZX has fined Fonterra $150,000 for not informing the market quickly enough about the significance of the false botulism scare. The price of NZX stock was unchanged today.

YOU WANT TELECOM AS A TENANT?
The owner of the four buildings that make up the Telecom and Gen-i headquarters in Auckland is putting two of them up for sale. They will no doubt be attractive for foreign investors and are in a quadrant of the city that has only a 4% vacancy rate.

WHOLESALE RATES
Wholesale swap rates were up sharply again today with the 1-3 year terms up by another +4 bps. The 90 day bank bill rate also jumped again also by +4 bps, now at 3.53%. Hope you got your mortgage fixed today.

OUR CURRENCY
The NZ dollar has held on to yesterdays sharp rise higher. Late this afternoon, the USD is still at 86.6 USc, the Aussie is now at 92.1 AUc. The TWI is now at 80.7.

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8 Comments

Q1. Which of the following is an outlier?

a. BOE.  .5

b. Fed. .25

c. NZ 3.25

And 

NZ fixed 5 years.  7.4

USA fixed 15 years. 3.1 

International competitiveness? 

 

 

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http://www.oecd.org/eco/outlook/focusonhouseprices.htm

Explain to me how an economy with ultra high house prices remains competitive over the long term. Answer, it doesn't. High house prices = high wages = uncompetitive. Welcome to Australia.

 

LVR restrictions are a very good attempt by the RBNZ to reduce speed and number of interest rate hikes required. The more the government does to increase housing supply and stop speculation (local or foreign) the lower interest rates will be.

 

The alternative is to keep rates too low for too long - have a look at how that worked out for the housing market in the US. Be careful what you wish for.

 

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Agreed.  Just not sure that interest rates really are the major contributor to house prices in Auckland.  NZ had rapidly rising prices in 2005 - 2008 when the OCR got to 8.25, & while the general economy got driven into recession, the housing market was only marginally affected. 

Also the low rates in the US & UK are not the main driver of their housing market. If rates were the main factor then the UK would have a gigantic bubble.  

House prices outside Auckland are currently, flat, declining or growing at 2%.   So a wage earner in Taupo now pays $2500 more pa on their mortgage - how does that help our domestic economy? And how does it solve any structural issues with Auckland housing? 

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Yes, I agree. Interest rates are a blunt tool.

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Superficial pointless comparison without comparing the rest of the state of the respective economies 

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Has this article been covered on interest.co.nz yet- it is very interesting

 

http://www.telegraph.co.uk/technology/news/10881213/The-coming-digital-…

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Can interest be charged in the Bitcoin system?  Or is it immune currently?

the Internet for the disintermediation of old business models, and Bitcoin for the disintermediation of the old monetary system. 

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Interest charging is a matter of contract, so it wouldn't be that different than conducting your contract  for interest in another currency. with the same issues of fluctuating exchange rates if you want to convert bitcoin to another currency.

That said, the bit coin protocol does depend on individual players agreeing to the validity of each other's transactions, which makes it a potential problem if one group get more than 50% of the voting rights. Like at the moment.

http://hackingdistributed.com/2014/06/13/time-for-a-hard-bitcoin-fork/

 

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