Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
There are no changes to report today.
TODAY'S DEPOSIT RATE CHANGES
There are no changes to report today. However, we did review the offer levels from banks for bonus saver accounts, noting the rates have been falling faster than the OCR benchmark.
'A VINTAGE YEAR'
New Zealand’s services sector ended 2015 with another healthy monthly result, according to the BNZ - BusinessNZ Performance of Services Index (PSI). The PSI for December was 58.9. While this was 0.9 points lower than November, it was still the third highest result for 2015.
UNDERWHELMING
Treasury reported today the Government's budget deficit for five months to November was NZ$1.64 bln which is NZ$383 mln worse than expected. The change has been caused by lower than expected corporate tax collected and less tax on interest earnings less than expected.
8% MORE
Credit card balances ended up +2.9% higher in December than the same month a year ago. Spending on these types of cards was up +6.4%. So, overall we are using these cards more and managing to keep the balances from rising too fast. But these are the dollar value changes. But we should keep in mind that overall prices rose just +0.1% in the year, and 'tradeables' (those things cards were probably used more for) fell -2.1% in the year. So 'real use' was probably up +8% or so. We now owe $6.7 bln in credit card debt, of which $3.9 bln is bearing interest.
TPP ASSESSED - OFFICIAL VIEW
If you are interested in the TPP, here is a link to a 277 page analysis of the costs and benefits of the Agreement for New Zealand.
SO MUCH FOR CENTRAL CONTROLS
While Australia is partying today and their markets are closed, the markets in Hong Kong are down -2% as is Japan, and the Shanghai market is down -1.5%. These are substantial falls and may well be reflected in Australia tomorrow. The authorities in China can't seem to contain their accelerating capital outflows. They jumped again in December, with the estimated 2015 total reaching an eye-watering US$1 tln, and underscoring the scale of the battle facing policy makers trying to hold up the yuan amid slower economic growth and slumping stocks. Outflows increased to US$158.7 bln in December, the second-highest monthly outflow of the year after September’s US$194.3 bln, according to estimates compiled by Bloomberg Intelligence. The tightening of bank rules isn't working. (Locally, we are down as well, but only by a modest -0.4%.)
WHOLESALE RATES SETTLE
Swap rates fell by -1 today across the curve. The 90 day bank bill rate also fell by -1 bp and is now at 2.72%.
NZ DOLLAR DOWN
The New Zealand dollar has fallen slightly today. It is now at 64.5 USc, at 92.8 AUc, and at 60 euro cents. The TWI-5 is now at 70.2. Check our real-time charts here.
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Daily exchange rates
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10 Comments
The change has been caused by lower than expected corporate tax collected and less tax on interest earnings less than expected.
I suppose it (government) cannot wind back the accommodation supplement/PI subsidy without introducing systemic financial risk into the "house of cards" economy. Vicious circle deficit spending dependent policies no less.
I have discussed this before.
All too often Government policies are confronted by future conditions and circumstance that were never forseen. When such situations arise it becomes obvious the policies weren't fully thought through at the time. They become impossible to unpick. WFF and Rent Assistance are examples
Consider these attributes
Locked In Syndrome
Irreversible decisions
Point of no return
Dance of the Tarantulas
Deadly Embrace
A Point of no return is the point beyond which one must continue on one's current course of action because turning back is physically impossible, prohibitively expensive, or dangerous
A simple test at the time of introduction of the policy and prior to implementation is the "sore thumb test" asking the question would the policy stand up if it had a sunset clause with an expiry date in say 5 years time.
AS and WFF can never be unpicked - they are here forever.
AS can only increase
'and the Shanghai market is down -1.5%'
End of trading session update.
Shanghai is down 6.42%
https://in.finance.yahoo.com/q/bc?s=000001.SS&t=5d&l=on&z=l&q=l&c=
Oh man those kings of the sub price crisis Bank of America have just stated everything will be fine...
http://www.bloomberg.com/news/articles/2016-01-26/china-inspired-fear-o…
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