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A review of things you need to know before you go home on Wednesday; TD rate changes, catastrophe bonds issued, Councils score 7% more revenue, factories struggle, swap rates fall, NZD rises

A review of things you need to know before you go home on Wednesday; TD rate changes, catastrophe bonds issued, Councils score 7% more revenue, factories struggle, swap rates fall, NZD rises

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

TODAY'S MORTGAGE RATE CHANGES
No changes today.

TODAY'S DEPOSIT RATE CHANGES
Both Asset Finance and Heartland cut some term deposit rates today, although Asset actually increased its five year rate - to 6.3%.

BIG CHEESE
Fonterra opened its expanded cheese facility at Eltham in Taranaki today. From this plant it can now make enough cheese for 3 bln cheeseburgers per year. (But as impressive as that is, McDonalds makes 25 bln of them alone, worldwide. And they have 'only' a 17% market share.) So by my calculations, this Eltham plant makes about 3% of the cheese used in the world's burgers.

BUYER BEWARE
IAG announced today that it has issued $350 million of unsecured, subordinated, convertible notes at a rate of 5.15% pa. I just hope investors know what they are getting into with these things. If IAG gets into trouble, these bonds could well become essentially worthless and will be compulsorily converted into 'equity' just at the time their 'equity' has vanished. They do not rank as a bond in the usual way you think about these things; they are subordinated to everything. Make sure your 'professional manager' did not load your fund up with them, KiwiSaver or otherwise.

BIG 'INVESTMENT'
The Government has launched a 15 year program to modernise the Defence Force. The expected cost is stated to be almost $20 bln.

3 MORE TOURISM PROJECTS
Three more regional tourism projects were funded today by the Government. Today's projects included $250,000 to Wildwire Wanaka for the extension of a climbing route equipped with fixed ladders that will soar to the top of a 700m twin waterfall based in Wanaka; just over $320,000 for the establishment of night-time light show, suspended among trees in Rotorua’s iconic Redwood Forest; and $150,000 for Queenstown Resort College to expand its Ambassador Program to a further 10 regions beyond Queenstown and Wanaka. This brings the total to 25. The Government has seeded $15 mln in total to support $45 mln contributed by the private sector.

ASIC SUES NAB OVER ALLEGED RATE RIGGING
The Australian Securities and Investments Commission has launched legal proceedings against BNZ's parent National Australia Bank alleging "unconscionable conduct and market manipulation" in relation to NAB's involvement in setting Australia's bank bill swap reference rate (BBSW) between June 2010 and December 2012. ASIC alleges NAB traded in a manner intended to create an artificial price for bank bills on 50 occasions. NAB's chief risk officer David Gall said the bank does not agree with ASIC's claims. NAB is the third bank targeted by ASIC this year over alleged rate rigging, following ANZ and Westpac.

A GOOD BUSINESS (MONOPOLIES)
Local Authority revenues from rates and 'regulatory income' (ie fines and fees) were up +7% in the year to March, according to data released by Statistics NZ today.

TOUGHER IN THE COMPETITIVE SECTOR
In contrast to the rise in Council revenues, factory sales were down -0.9% in the same period, led by a fall in meat and dairy product manufacturing. Apart from those two, overall factory sales were up +0.7%.

OUCH !
Residential home lending fell -1.8% in April in Australia. For "investment housing" the decline was a steep -5.0%.

JAPAN GROWS
Japan published its Q1 2016 GDP growth data today and that rose +1.9%, which is a creditable result and maybe a surprise given the usual narrative of "Japan is in the dumps".

SWAP RATES STEEPEN, SORT OF
Today brought a small steepening of our wholesale rate curve. One, two and three year terms fell -2 bps while five years fell -1 bp and ten years rose +1 bps. NZ swap rates are here. The 90-day bank bill rate fell -1 bp to 2.36%. Essentially, the markets have no idea about the stance the RBNZ will take tomorrow. Just one day out they are only pricing in a 35% chance of a cut; most money is on a hold.

NZ DOLLAR FIRMS
The currency markets seem more certain about 'no-change' tomorrow bidding up the Kiwi dollar slightly today. Is now at 69.8 USc, at 93.7 AUc, and 61.4 euro cents. The TWI-5 is now at 72.9. Check our real-time charts here.

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Source: CoinDesk

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14 Comments

"Japan published its Q1 2016 GDP growth data today and that rose +1.9%, which is a creditable result."

GDP (YoY) Q1 was +1.9%, but GDP (QoQ) Q1 was only up +0.5% from +0.4% the previous quarter.

Creditable result? Barely, considering all the interventions and manipulations by the BOJ.

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"It's A Seismic Shift" - Japan's Biggest Bank To Quit As JGB Primary Dealer Read more

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A Good Business

And just to complete the picture: income from investments and dividends dropped 10% while subsidies and grants went up 11%. Overall, revenues lifted a total 5.2%.

It looks like councils expected the investment income drop but there is no obvious explanation for this shift.

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Another thing that happen today was Bernie Sanders just finishing up his speech 10mins ago in California making it quite clear he intends to go all the way to the convention in Philadelphia.

He even told Obama, "thanks very much for your concern" after Obama called him to say step down.

No. he's finishing the race because until the super delegates actually vote he's still in with a chance.

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don't ya love that Bernie. I hope he pulls it off. The big trouble the Americans have is the probable horrible choice is between Hilary and Donald.

amerians

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Honestly KH, he's their only chance at having a better future and getting some respect back internationally.

If the establishment stick Hillary up against Trump then i have a gut feeling she will lose. Bernie supporters will not cross over to her as they know what she represents is just more of the same. War, poverty & incompetence.

Everyone knows Trumps an idiot but he's like that naughty gamble you take sometimes when you want just to see what happens out of curiosity. He's a protest vote and could well become the protest vote of both sides that Hillary would definitively bring about. IMHO

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I know it marks me as a cynic, and I know very little about his particular ideas other than they are socialist in nature (appealing to those who have an interest in mercy) -- but -- unless he is the politician of a lifetime, then I think history shows the chances he is the answer to anyone's future or respect. Is zero.

We live in the age of entitlement and moral failure.

The American public will get exactly what they vote for and it will most probably be a surprise to them.

But hey, if the guy has personal integrity he's a step up from the other options.

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I mean, Trump tells whoppers as large as a fish I caught a moment ago - and Clinton appears to have been forced to sell her soul along the way. Take your pick, the tragedy or the comedy.

I might vote for Trump - at least I would be laughing as the boat went down!

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Trump is humanity's last chance.

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I would like to think that you are being ironic, but scarily, I think you mean it.

I am not going to ask for your carefully thought out reasons for believing this, but that would be pointless. You support a bigot, a racist, a liar and much else besides, none of it positive.

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At least he is his own man. The Thump has not killed anybody, so he is the best choice !
I do think we are sleepwalking to a Great Depression and WW3, if Thump can stop that great, I don't know if he is good or bad or both ! Hillary will continue the Obama-Bush-Clinton foreign policy will continue = death to the foundation of our free civilization, there are many example of this ! Maybe we are not ready to realise we must take our individual rights into our own hands , because they don't can !?

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1. Good and bad are mutually exclusive in absolute terms (i.e. leaving aside personal benefit or ill).

2. The death of free civilisation is not caused by foreign policy.

3. You can't build anything on lies. They aren't true.

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I don't blame you Ralph for feeling that way. They really have blown so much trust over the decades. Bernie however I believe has some real integrity in him and I'm not just saying that to keep my American partner happy. He's been on the right side of history for a very long time. Hillary not so much.

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What would have happen if Henry Wallace had been president instead of Harry Truman....

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