Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
There are no changes to home loan rates to report today.
TODAY'S DEPOSIT RATE CHANGES
There are no term deposit changes to report either.
IGNORING GOOD NEWS
The US Fed's Beige Book reported that American economic activity expanded in nine of the country’s 12 districts. The mixed signals from late November to early January - improvements in their labour market and consumer spending being offset by the drag of a strong dollar and low energy prices - is not impressing investors however and Wall Street ended down -3%. That is setting the tone.
AUSSIE JOBLESS DATA IMPRESSES
Australia’s unemployment rate has held steady at 5.5% in December (not seasonally adjusted), embedding the lower rate first seen in November and beating economist expectations. This was enough of a positive surprise to limit the decline in the Aussie dollar vs the greenback. The labour market rout expected as a result of the severe mining downturn just isn't happeneing. There is a mines-to-services transition going on. 5.5% is actually lower than our own unemployment rate of 6.0% (also before s.a.) but our participation rate is much better at 68.2% vs the Aussie rate of 65.6% and that makes a considerable difference. (Also remember, ABS labour force stats have a reputation problem.)
SBS APPOINTS INTERIM CEO
SBS Chairman John Ward has announced the appointment of current Chief Risk and Innovation Officer Mark McLean, as Interim Group CEO following the recent passing of Wayne Evans.
SPENDING FOR A GOOD TIME
Retail spending using electronic cards hit a record high of $6 bln in December as spending on 'hospitality' shoots up. But economists are divided over outlook for 2016. Using our cards for 'consumables' is still in growth mode. But using them for 'durables' is not.
INFLATION RISK ABSENT
None of this strong card spending is causing inflation however. ANZ monitors CPI trends monthly and the latest review shows 'sedate' growth. Their index posted a +0.2% increase in December, about par for the course for this time of year. Prices were up +0.3% in the December quarter. These continuing low readings don't point to any rise in the official CPI data that is due out on January 20. "A low inflation backdrop provides the RBNZ with the luxury of maintaining accommodative policy settings. The risk profile remains that the OCR moves even lower," said ANZ.
WHOLESALE RATES SLUMP
Swap rates followed the lead given by Wall Street today, giving up sizeable ground. The two year swap rate is down -3 bps and the ten year swap is for -5 bps. The 90 day bank bill rate is up +2 bp however at 2.76%.
NZ DOLLAR SINKS
The New Zealand dollar has recorded a deliberate downward trend today and is now at 64.8 USc. The fall against the Aussie less to 93.5 AUc but there was also a good drop to 59.4 euro cents. Risk aversion was strong today hurting commodity currencies. The TWI-5 is slightly higher at 70.3. Check our real-time charts here.
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5 Comments
Retail spending using electronic cards hit a record high of $6 bln in December as spending on 'hospitality' shoots up.
In my mailbox from ANZ;
Retail spending on electronic cards fell 0.2% sa in December (+5.3% y/y) – weaker than the +0.5% m/m consensus expectation. Core spending (which strips out fuel and motor vehicle-related spending) also fell (-0.4% m/m, +5.8% y/y) after the 0.3% November rise. The weaker-than-expected ECT data is in contrast to anecdotal reports of strong Christmas trading for retailers.
"A low inflation backdrop provides the RBNZ with the luxury of maintaining accommodative policy settings. The risk profile remains that the OCR moves even lower," said ANZ.
US has the same Fed confounding problem. The much watched 5-Year, 5-Year Forward Inflation Expectation Rate keeps collapsing.
Not much chance of businessmen risking career failure by borrowing at current interest rates - best to wait and see - unfortunately so will economic growth.
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