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A review of things you need to know before you go home on Monday; some TD cuts and a 'special', sheep production holds, IAG's issue priced and rated, TPP treaty to Parliament, swaps bounce, NZD stable

A review of things you need to know before you go home on Monday; some TD cuts and a 'special', sheep production holds, IAG's issue priced and rated, TPP treaty to Parliament, swaps bounce, NZD stable

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

TODAY'S MORTGAGE RATE CHANGES
There were no changes announced today.

TODAY'S DEPOSIT RATE CHANGES
Asset Finance cut their two year rate. Heartland Bank launched a 9 month 'special' of 3.75%. TSB Bank cut all rates from 3 months to 2 years. The Police Credit Union cut its rates for period 9 months to two years.

BOTTOM OF THE CLIFF
The 2016 Budget will provide for about 3,000 emergency housing places across the country via NGOs. The Government will provide more than $40 mln over the next four years for this emergency housing, plus some funding for very short-term accommodation grants.

SHEEP UP, BEEF DOWN
Unlike beef, sheepmeat production levels are holding in New Zealand. They are up +1.1% this year over last. Beef production is down almost -6%, more in the South Island. The production levels in Australia are better for sheep (+3% year-on-year, and worse for beef (-20% year-on-year).

WHAT PRICE RISK?
The size of IAG's 'debt raising' has now been revealed. Insurance Australia Group Limited announced today that it is making an offer of up to NZ$250 mln of "unsecured subordinated convertible notes" to institutional investors and New Zealand retail investors, with the ability to accept up to NZ$100 mln in over-subscriptions at its discretion. All or some of the Notes will convert into ordinary shares in IAG if a non-viability event occurs (or, if conversion does not occur, the Notes will be written off). A non-viability event could occur if IAG encounters severe financial difficulty. For this risk, you are being offered a fixed rate for the first 6 years, then a margin of between 2.6% and 2.9% over the 90 day bank bill rate. Given today's 90 day bank bill rate, the first fixed rate will be probably a bit north of 5%. S&P is rating these bonds an investment grade BBB.

TPP MOVES FORWARD HERE
The Trans Pacific Partnership bill was presented to Parliament today. The full text of the treaty is here. Our independent assessment of key Chapters is here.

SWAP RATES IN SMALL BOUNCE
The deep dive we saw at the end of last week in wholesale swap rates may have been a bit too far. Today they firmed somewhat, up +2 to +4 bps across the curve. NZ swap rates are here. The 90-day bank bill rate is unchanged at 2.36%.

NZ DOLLAR UNCHANGED
Very light trading today that has not shifted rates much at all. The Kiwi dollar is still at 68.3 USc, 92.7 AUc, 60 euro cents. The TWI-5 remains at 71.6. Check our real-time charts here.

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13 Comments

The deep dive we saw at the end of last week in wholesale swap rates may have been a bit too far.

Not far enough for banks operating in Australia.

“The RBA has made some pretty brutal downgrades to their inflation forecasts and that just means you’ve got to try and run growth stronger than it otherwise would be,” said Sally Auld, the head of fixed-income and currency strategy for Australia at JPMorgan. “It’s probably not correct to say that the RBA is going to stop at 1.5 percent, they might have a bit of a breather after they get there, but with these forecasts the risk is that we head toward 1 percent.” Read more

I have yet to read a rational course of action the RBA should undertake other than that which has failed to resurrect economic growth recovery, which in turn is apparently tied to inflation - the glaring result to date is bulging budget deficits as far as any dare project. Does that count? And of course the unmentionable residential property ponzi scheme and the consequential government bond buying frenzy - I will never get a rest at this rate.

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When is someone going to call this for what it is ..........Aussie is facing deflation , massive over-capacity particularly commodities , low interest rates pushing up asset prices , huge Government spending to stimulate , combined with people unwilling to spend

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The collective majority are not earning enough to spend. View graphs

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so another sign of success, government spending more of our taxes to house homeless or families that can not afford increasing rents, and this is paid too?

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Ambulance at bottom of cliff policy that enriches a certain population at the expense of everyone else and........our productive economy, whats left of it.

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Are Stocks 80% Overvalued? New Evidence Shocks Wall Street

http://thesovereigninvestor.com/exclusives/stocks-economy-on-verge-of-c…

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Buy property then?
Seems nothing is 'safe'. Bank deposits, stocks, property...

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Justice,

Give yourself a break and stop reading that crap. I have been involved in the stockmarket since the early 70s(though long retired) and I have seen doomsters like this come and go.
There is always an audience for merchants of catastrophe just round the corner. If, and it's a big if, he did anticipate the 2007 crash, it was probably 10 years before it happened.
Of course there will be another crash/major correction, but he has no more idea when it will happen than you or I do. He wants to sell you something.

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I share some of your skepticism about 'doom merchants'
Bernard Hickey predicted, what a 25% drop in property values back in the day? That was really on the money...
Also, every few months over the past few years there have been doom and gloom stories about how China was about to crash....
the list goes on and on

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David, your claim sheep production is up is out of context. What the table shows is that it is up 1.1% season to date. What it doesn't show is there are estimated to be 1.7mil fewer lambs to slaughter for the remainder of the season, which means those figures are going to fall off a cliff this winter.

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Chinese sharemarket down another 3% (live index.org) today, that's 10% in last week. What's happening out there?

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