What happened Friday

A review of things you need to know before you go home on Friday; more Christchurch houses, RBA lowers sights, volatile commodities, China trouble, wholesale rates diverge

8th May 15, 4:01pm by David Chaston

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

TODAY'S MORTGAGE RATE CHANGES
There are still no changes to report.

TODAY'S DEPOSIT RATE CHANGES
There are no changes here either.

CHRISTCHURCH CENTRAL HOUSING
191 new homes at two inner-city sites are about to be built as part of the Housing Accord with the Christchurch City Council. Contracts have been signed with Fletchers. 38 of the new homes must be priced at or below $450,000. This price limit fits the new KiwiSaver HomeStart scheme that provides grants of up to $20,000 to help first home buyers put together a deposit a new home.

GROWTH DOWN BUT NO STEER ON CUTS
The Reserve Bank of Australia has lowered its growth forecasts for the Australian economy and will "adjust policy as needed", according to the bank's May Statement of Monetary Policy. But they have not explicitly restored an indication that more rate cuts will be required in the future.

SHARP SHIFTS
The latest IMF commodity price monitoring out today reveal some big shifts. In the past month iron ore is down -20%, Russian natural gas prices are down -22%, Arabaca coffee is down -10% as is the price of salmon, also down -10%. Going the other way olive oil is up almost +30%. Compared with a year ago the iron ore price is down almost -50%, beef is up +27% while Dubai crude (where NZ sources its supplies from) are down -36% in price. We track more than 50 items in the IMF series, here.

TROUBLE IN CHINA
China’s exports unexpectedly declined -6.4% in April and imports slumped -16.2%, adding downward pressure on an economy grappling with overcapacity and waning competitiveness.

NZF GROUP SEEKS VOLUNTARY ADMINISTRATION
Sharemarket listed NZF Group says after considering options "to expedite a timely distribution" of funds to NZF capital notes holders, its board has decided the most effective course of action is "to initiate the process for NZF to be placed into voluntary administration."

WHOLESALE RATES RISE AND FALL
Yields on Government bonds rose strongly again today, up +4 for the 2021s, up +6 bps for the 2023s and up +8 bps for the 2027s. But wholesale swap rates went the other way in domestic trading today after a strong rise overnight in offshore markets. They are down -2 to -7 bps in a flattening bias today. The 90 day bank bill rate is now at 3.57% down another -2 bps on the day.

NZ DOLLAR SIDELINED
The New Zealand dollar has moved in a tight range today. As of late this afternoon it is at 75.4 USc, 94.4 AUc, 66.4 euro cents, and the TWI-5 is now at 78. Check our real-time charts here.

You can now see an animation of this chart. Click on it, or click here.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

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.

8 Comments

by King of the whiners | 8th May 15, 4:12pm 1431058374

And silently, oh so quietly....petrol hits $2.10 (a 21% rise off its January lows,in a mere 4 months). But, perhaps if we just ignore it, it won't feed through into inflation, eh?

by David Chaston | 8th May 15, 5:58pm 1431064717

Largely given a boost by the falling NZ dollar. Yes, petrol price rises will raise tradeables inflation. And that will likely keep the RBNZ from cutting ... maybe even bring raising back into the frame if the effect is large enough.

by steven | 8th May 15, 6:16pm 1431065785

The thing is David that raise would be a double whammy on a) consumers pockets as they are not earning more and b) that results in ppl spending less elsewhere ie tradeables.

I am not so sure on it raising tradeables either as that again ignores ppls ability to pay. ie There seems to be the belief that the price is immaterial to ppls ability to pay," its essential so they will pay no matter what". $148 for oil in July 2008 which then caused all sorts of issues should have raised far more eyebrows than it clearly did.

by King of the whiners | 8th May 15, 10:05pm 1431079514

Dubai crude is up over 40% in US$, and up 44% in NZ$ terms (your own most recent data:
http://www.interest.co.nz/charts/commodities/oil-and-petrol). Not much difference there. Certainly not enough to justify 'largely given a boost by the falling NZ dollar'.

Do try and keep up.

Still there is merit in the rest of your comment. Perhaps you would be so kind as to draw it to the attention of some of the 'professional' economists you get to headline articles?

by sharetrader | 9th May 15, 12:08am 1431086897

with oil back at 60, and our NZD weakening against the USD, prices will start to rise again so I can see inflation back in the middle so the OCR wont change. what is more interesting is government spending is up and revenue is down which I would think is a by product of the high immigration, i.e keeps wages in check but increases costs for health, education, WFF, etc etc

by Kumbel | 8th May 15, 5:02pm 1431061325

What Didn't Happen Today:

Still no monitoring report on the Auckland Housing Accord 5 1/2 weeks after the latest quarter ended. We are interested because this is the halfway point of the Accord.

Every month Statistics NZ collates building consent data from over 70 councils and reliably publishes not only the data but a commentary. Auckland Council struggles to produce its monitoring report once every three months just from its own data.

Given AC struggle to do this one tiny thing in a timely manner it's no wonder so few dwellings are being built and property prices are so high in that city.

by Brendon | 8th May 15, 5:55pm 1431064555

38 affordable homes qualifying for a government subsidy is of no significance. It is just PR spin. Get back to me when the number reaches 10,000 houses or 1/2 the houses built in any given period.

by skudiv | 9th May 15, 7:16am 1431112567

From what I've seen, there are plenty of houses being built for under 450k in Chch. Not that I think a 450k house is all that affordable, but it is a new house, and they generally have double glazing, full insulation, great kitchens and are perfect for a young couple. For a first home-buyer, I would start cheaper for a few years, then upgrade to one of these once I had a bigger deposit.