Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
The Cooperative Bank responded quickly to the OCR cut, taking the full -25 bps off its floating rate. No-one else has yet, so far. Update: ANZ has announced only a -10 bps cut, keeping the rest for itself.
TODAY'S DEPOSIT RATE CHANGES
Westpac has cut the full -25 bps off their bonus saver, reducing the potential rate now to 2.75%. Asymmetric rate announcements going on here. This cut is effective immediately. Gold Band Finance cut all their TD rates for terms 1 to 5 years.
BLINDSIDED
In a stunning surprise, Graeme Wheeler blindsided financial and currency markets today with a -25 bps OCR cut. Only one minnow bank has responded so far; the rest weren't prepared and have yet to announce their response in terms of follow-through mortgage rate reductions, and/or term deposit cuts. Wheeler has had to follow up with a 'reminder' that he expects banks to cut rates to customers.
MORE RETAIL BONDS
ANZ NZ opened two offers of unsecured unsubordinated bonds to institutional and New Zealand retail investors. The offers are for up to NZ$100 mln floating rate bonds and up to NZ$100 mln fixed rate bonds, with the ability to accept unlimited oversubscriptions (at ANZ’s discretion). They are both rated AA- because these liabilities will rank with regular unsecured deposit holders.
HIGH DEMAND FOR TOURIST ACCOMMODATION
Meanwhile, back in the real economy, tourist accommodation guest nights reached a record high in January, up +6.1%. These are now at their highest in the 20-year history of the StatsNZ data survey. International guest nights, especially in the South Island, contributed to most of this rise.
REAL INFLATION
China's CPI inflation is rising more quickly than analysts were expecting. It was up +1.8% (annual rate) in January, but has leaped +2.3% in February. Analysts were expecting just another +1.8% rise. At the same time, China's PPI fell -4.9% in February (annual rate).
CREDIT NEGATIVE
Moodys rating agency said today that yesterday's payout cut is 'credit negative' for Fonterra.
WHOLESALE RATES DIVE
Markets were completely unprepared for today's rate cuts and have fallen sharply since. NZ swap rates are here. The 90-day bank bill rate fell -18 bps today to 2.38%.
NZ DOLLAR DROPS
The Kiwi dollar fell sharply today after the OCR cut. It is now at 66.3 USc, at 88.7 AUc and 60.4 euro cents. The TWI-5 is down at 70.5 which is not as low as you might have thought given the nature of today's surprise. Check our real-time charts here.
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3 Comments
China's CPI inflation is rising more quickly than analysts were expecting. It was up +1.8% (annual rate) in January, but has leaped +2.3% in February.
However, what is most disturbing - from both a social unrest and economic-stimulus-hope basis, is that Food prices exploded 7.3% YoY - the most in 4 years. Read more
What is the impact on Fonterra's profitability if the Chinese authorities demand lower prices? Or is it a case since TPPA assumed frontline status in respect of our trade partner arrangements nobody here cares anymore?
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