What happened Tuesday

A review of things you need to know before you go home on Tuesday; service sector expansion slows, dairy auction prospects flat, swaps rise and steepen, NZD jumps vs the USD

19th Apr 16, 4:00pm by David Chaston

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

TODAY'S MORTGAGE RATE CHANGES
The Napier Building Society cut its variable rate today by -40 bps to 5.85%. They also cut their one year fixed rate.

TODAY'S DEPOSIT RATE CHANGES
Nothing here today.

THE EXPANSION SLOWS
New Zealand's services sector experienced slower levels of expansion in March according to the BNZ - BusinessNZ Performance of Services Index (PSI). The PSI for March was 54.8. This was 1.9 points lower than February, and the lowest level of expansion since November 2014. But it is still a good level of expansion.

LOCALS FAVOURED
In Australia, the CBA (ASB's parent) is curbing lending to borrowers heavily reliant on offshore income. This comes as the RBA raises concerns about their apartment market.

NOT MUCH TO LOOK FORWARD TO
Early tomorrow morning we will have another dairy auction of dairy commodities. Expectations are for another small rise in USD, but not enough to change anything materially at the farm gate. In fact, with the high NZD, the result in local currency could well be negative.

OPTIMISTIC INVESTORS
Following the Dow's climb above the 18,000 index level (up +0.6% last night), the NZX50 is flat today, the ASX200 is up +1.0%, Singapore is up +0.7%, Shanghai is flat, and the Nikkei225 is up an eye-catching +3.5% so far today.

DON"T GET CAUGHT: FLEE OR DIE
China is putting a price on its death penalty. Execution will apply in “extremely serious” cases of embezzlement or bribes worth 3 mln yuan (NZ$660,000) or more that have an “extremely vile impact,” according to a judicial ruling issued yesterday. These convicted are lucky they did so in New Zealand.

WHOLESALE RATES RISE & STEEPEN
Wholesale swap rates rose today, up +3 bps for one year, +4 bps for five years, and +5 bps for ten years. NZ swap rates are here. But the 90-day bank bill rate is unchanged at 2.33%.

NZ DOLLAR RISES
The Kiwi dollar rose sharply against the USD, now at a 312 day high. 70 USc is now very close. It is a story of a falling greenback, propelled lower by a weakening oil price and a rush by markets to invest in 'risk'. The NZD is now at 69.8 USc, at 89.8 AUc and 61.7 euro cents. A NZD this high will worry the RBNZ as they work to set their policy position ahead of next week's OCR review. The TWI-5 is at 72.6 which is now right at the top of its 2016 range. 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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9 Comments

by Cowpat | 19th Apr 16, 5:00pm 1461042017

312 days . I mssed a month on the chart. Looks like it will head toward 75.

by Learn to Socia… | 19th Apr 16, 5:03pm 1461042223

Info like this just jumps off the screen and says, "Repost on Interest.co.nz"

http://articles.mercola.com/sites/articles/archive/2016/04/19/grass-fed…

"By Dr. Mercola

The secret is out: grass-fed dairy products are not only rich, creamy and reminiscent of the way dairy products used to be, but they're also better for your health, the environment and the cows providing the milk.

As a result, demand for grass-fed dairy products is growing at an impressive rate. Organic, grass-fed yogurt, for instance, is experiencing 82 percent dollar growth, which is more than three times the growth of yogurt that does not contain the grass-fed label, according to Organic Valley dairy.1

Their "Grassmilk" brand is the top-selling grass-fed dairy brand in the U.S., and it's had double-digit growth since its 2012 debut. Organic Valley stated that their Grassmilk goes beyond the pasturing standards for ruminants required by the U.S. Department of Agriculture's (USDA) National Organic Program........" there is more!!!

by Stephen Hulme | 19th Apr 16, 5:30pm 1461043804

A NZD this high will worry the RBNZ as they work to set their policy position ahead of next week's OCR review.

Just another to add to the pile that never gets resolved. The pending financial instability crisis funded by the RNBZ's supposed capacity, hence crusade, to raise CPI inflation with OCR cuts is still in need of an outcome befitting the finance minister's demands.

Is there any evidence of a central bank single handedly addressing the minister's shrill outburst to justify the social carnage caused by industrial sized dollops of RBNZ initiated financialisation enveloping the residential shelter market?

by Justice | 20th Apr 16, 7:39am 1461094778

David, could this site please do an article on the U.S. Fatca Act? Where they (US) are forcing other nations financial institutions like banks to hand over personal account infomation under the justification they are looking for tax dodgers. This actually hits me personally in the fact that my partner is a U.S. citizen but she also is now a 12 year permanent NZ resident. She can't seem to find real clarity on this issue. From what I've read the whole thing stinks! Her only income is here in NZ and she owns no assets in the U.S but they still seem to want to tax that income ?. Any others out there with partners and spouses from the U.S.?

by billsay | 20th Apr 16, 7:59am 1461095959

It will be a life-long issue if she remains a US citizen. The US will tax world wide income (on individuals) so long as they are still citizens. She can claim taxes paid here against taxes 'owed' there - but the paperwork is extensive and gets worse over time. (It makes no difference where the income is earned - it is deemed to be made in the US.)

Many people in this situation ignore the issue, but if the IRS has her address, the issue won't go away. And (being wary of US approach) there is always potential in future to have difficulties in entering the US - via future changes to their "Patriots" Act or "Heroes" Act.

by Justice | 20th Apr 16, 10:29am 1461104995

They have no idea she exists at this point. And I have read that the income threshold is $50,000 and over who are the subject of this Act. She will be remaining a U.S. Citizen at this point as her family remain in the country. She can apply for full citizenship here of course.

by scarfie | 20th Apr 16, 8:38am 1461098280

Justice, I recall this being covered in some detail in the forums a few years ago. In addition to Billsay, it was also mentioned that all past filings of tax returns need to be completed in order for a US citizen to get out from under the IRS net. Not easy by all accounts.

by billsay | 20th Apr 16, 9:34am 1461101645

and 'expatriating' to become a non-US citizen is not easy either. It can take up to several years and involves more paperwork, IRS records, and worse and you can then still be subject to ten years of scrutiny to prove you didn't expatriate to avoid US tax payments.

It is, after all, the land of the free and the home of the brave.

by Justice | 20th Apr 16, 10:23am 1461104605

Yes, great and all. I have read a few articles on the subject but nothing covering in detail the likes of say her KiwiSaver account etc and whether such things are taxable. I don't want hearsay and speculation. I want an informed interview or something similar with our revenue minister or someone of authority so we know exactly where we stand. We obviously have an accountant but that their knowledge only goes so far. Still a lot of grey areas