What happened Monday

A review of things you need to know before you go home on Monday; TD and savings rate cuts, lower wholesale trade, Landcorp changes tack, earns cheers, swaps and NZD hold

7th Mar 16, 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 have been no changes today.

TODAY'S DEPOSIT RATE CHANGES
Westpac has followed ANZ and trimmed their savings accounts right back - basically to 1.00%. It's not just the banks cutting; the Debt Management Office of the Treasury has cut the retail rates on Kiwi Bonds by -0.25%. All terms 6 months to 2 years are now 2.00%, and their 'Earthquake Bonds' are down the same amount to 2.25% for 4 years.

'IT'S ALL GOOD'
The Commerce Commission has lanched an animated campaign to provide information and guidance about the laws it enforces, including the Credit Contracts and Consumer Finance Act (CCCFA). Each episode features a situation many New Zealanders will be in at some stage in their life, for example getting a loan, being a guarantor or facing repossession. It's about borrowers knowing their rights ... and their wrongs.

VEHICLES KEEP WHOLESALE TRADE FROM FALLING SHARPLY
Thursday this week the RBNZ will issue its latest Monetary Policy Statement. Thursday the following week we get the Q4-2015 GDP growth data. That means we are now getting the final components released and today it was for wholesale trading. Sales in this sector were lower than the September quarter, but that one was unusually strong. Equally influential on the GDP result is stocks, and those are up +5.6% from the same perod a year ago. That is not going to hurt the Q4-2015 GDP result.

PULLING BACK
State-owned farmer Landcorp says it will sharply reduce the scale of its forestry-to-dairy conversions at Wairakei Estates, citing financial and environmental reasons. Both environmentalists and Federated Farmers have welcomed their decision.

A NICE SURPRISE
Our weekly grocery price monitoring showed up an interesting change today. Our healthy food index changed little, but the other series we monitor (but don't graph) fell sharply with lower costs for things like sausages, non-organic apples, bread, and Weetbix. Could only be a short-tem effect though.

GORDON HEADS HIGHER
The Reserve Bank has appointed Steve Gordon as its new Head of Currency, Property and Security (CPS). He is currently head of Risk, Assessment and Assurance at the RBNZ, having joined the central bank in 2012. His banking career includes stints at BNZ, Westpac, and the old National Bank.

WHOLESALE RATES IN MINOR MOVES
Local swap rates are up a minor +1 bp across most terms today. NZ swap rates are here. But the 90-day bank bill rate is another -1 bp at 2.56%.

NZ DOLLAR UP
The Kiwi dollar has wobbled around today, but held its recent higher level. It is now at 68 USc, at 91.7 AUc and 61.9 euro cents. The TWI-5 is at 72.4. Check our real-time charts here.

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

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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10 Comments

by Stephen Hulme | 7th Mar 16, 4:31pm 1457321514

Westpac has followed ANZ and trimmed their savings accounts right back - basically to 1.00%. It's not just the banks cutting; the Debt Management Office of the Treasury has cut the retail rates on Kiwi Bonds by -0.25%. All terms 6 months to 2 years are now 2.00%, and their 'Earthquake Bonds' are down the same amount to 2.25% for 4 years.

Are the affected funding agents just getting what they deserve, rather than what they should be entitled to, given they are by default the last resort funding underwriters of both banks and government? The contempt of unreined power is palpable.

by Roger Witherspoon | 7th Mar 16, 5:16pm 1457324194

I liked your idea of a Savers Guild. Maybe Grey Power could drum up some civil action, like everyone moving their money from Westpac to ANZ on Thursday and then to Kiwibank the following Thursday and so on. That would stir the arrogant bastards up. Better still if everyone withdrew $100 in cash on the same day - that would really, really scare them. Then $200 the next Thursday....

by Henry_Tull | 7th Mar 16, 5:26pm 1457324783

Yes for a craft it is.....

The livery companies of the City of London comprise London's ancient and modern trade associations and guilds, almost all of which are styled the "Worshipful Company of..." their respective craft, trade or profession.
Eg
https://en.m.wikipedia.org/wiki/Worshipful_Company_of_Skinners

by steven | 7th Mar 16, 5:38pm 1457325515

Interesting idea, I like it. Sadly (sort of) it wont happen. The thing is few businesses can afford to pay high interest as there isnt the return to pay it.

by Stephen Hulme | 7th Mar 16, 6:07pm 1457327240

You have to be kidding - $billions upon $billions of high yield, yet to be worthless, corporate debt structures taint citizen's global pension plans.

Over gearing with debt and avoiding taxes via tax deductible interest claims is the business mantra of choice until it blows up.

by Stephen Hulme | 7th Mar 16, 5:51pm 1457326291

What annoys more than anything else is the RBNZ paying 2.38% to foreign owned banks and investment bank counterparties. I do not believe the open market operations mandate should include providing bespoke RP eligible RB Bills collateral and above NZ government Tbill yield returns to foreigners. View today's evidence

by steven | 7th Mar 16, 5:36pm 1457325381

Those same agents can take their money elsewhere and invest it.

by Stephen Hulme | 7th Mar 16, 6:00pm 1457326832

Don't be shy - give the audience some alternatives from your collection of retail dealing experiences. I can only offer inappropriate industrial sized solutions.

by Roger Witherspoon | 7th Mar 16, 6:26pm 1457328370

I've been finding Harmoney and Lending Crowd rather eye opening. Not for the fearful and faint of heart though. Personally I think it is safer than it looks, but then my father always swore he was a Viking.

by Stephen Hulme | 7th Mar 16, 7:43pm 1457333001

Oops
Kangaroo bond sales are running at half the pace of last year as the cost of borrowing in Australia and switching out of the local currency makes fundraising less attractive.

The cross currency basis swap, a measure of the discount foreign issuers receive for shifting funds out of Australian dollars, has declined amid a drop in offshore borrowing by banks and other companies from Down Under. International borrowers issued just A$5.35 billion ($4 billion) of bonds in Australia since Dec. 31, the slowest start to a year since 2009 when there was no issuance at all in the first quarter.

Global market turmoil has put a damper on Kangaroo deals, and leading sale manager Toronto-Dominion Bank says bond buyers appear to have less conviction in adding to their allocations for Aussie securities. Demand has also been undermined by a dearth of maturing Aussie dollar bonds this quarter, meaning less money that needs to be reinvested. Read more

And our Aussie banks believe they can strip mine the domestic funding sources of income while they struggle to fund lending greater than domestic deposits can currently support.

Why aren't regulatory authorities making it clear that heightened down under risk profiles need to addressed locally - that is higher bank deposit rates - where are our democratic representatives hiding and from whom?