Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
Kiwibank has raised rates for most fixed mortgage terms. NZ Home Loans made similar changes.
DEPOSIT RATE CHANGES
Kiwibank has raised a range of term deposit rates today. F&P Finance raise 18m to 5yr rates today. NZCU Baywide raised their 18 m to 3.95% and their 2 yr rate to 4.10%.
WHEELER A ONE TERMER
First up, Graeme Wheeler said today that he won't be seeking a second terms as RBNZ Governor. Here is some reaction by the Government, and others.
BIG JUMP, BIG SURPRISE, BIG REACTION
Today's RBNZ Survey of Expectations has brought a dramatic surprise. Respondents have changed their tune and now expect inflation to rise significantly. This survey has been stable at a +1.6% for more than a year. Today it jumped to 1.92% surprising markets which promptly bid up the NZD on the expectation that the RBNZ will be forced to respond with a higher benchmark rate sooner.
HARD DRIVING
NZTA data out today revealed that 12,933 used imports were sold in January. So that means more than 30,000 new vehicles were sold in January, an unusually high number for a January (and actually a high number for any month - it was the second highest of any month on record). In the past year 150,000 used imports have been sold and you have to go back more than a decade (2005) to find a higher annual total.
BOND ROLL OVER
Contact Energy today announced that it is to make an offer of up to $100 mln of unsecured, unsubordinated fixed rate bonds to institutional investors and New Zealand retail investors. The Bonds are expected to have a maturity date of 15 November 2022. The Bonds are expected to have an investment grade credit rating of BBB from S&P. The funds raised will be used for the refinancing of a bond maturing on 13 April 2017 "and for general corporate purposes". The new bonds will be pushed into the market by Forsyth Barr, Westpac and Deutsche Craigs. The rate for this 5 year paper will be set early next week. The $100 mln bond they are replacing have a coupon of 7.86% but yield last yielded less than 4%.
CANTERBURY QUAKE COSTS TO INSURERS HIT $19.4 BLN
Private insurers say they have settled 86% of over cap residential 2010/11 Canterbury earthquake claims, according to new Insurance Council of New Zealand and Ministry of Business, Innovation and Employment data. They have also settled over 95% of commercial claims, altogether paying $19.4 bln for the event. In 2016 private insurers settled 3,860 over cap property claims and had 1,258 new over cap claims transferred from EQC. ICNZ CEO Tim Grafton is encouraged the number of properties trickling through from EQC fell sharply in the last quarter of 2016, yet says it is “critical to ensure the response to the Kaikoura earthquakes does not slow the pace of settlement of the remaining claims”.
PREPARE FOR A DAIRY AUCTION TUMBLE
We have another dairy auction tonight, but the derivatives market is losing faith. Prices are down sharply today on that platform for both WMP and SMP.
WHOLESALE RATES SLIP
Following Wall Street, local swap rates fell sharply today in a flattening trend. 2 yrs are down -4 bps, five years are down -7 bps, and ten years are down -8 bps. However (and maybe because of the Wheeler announcement) th e90 day bank bill rate is up today by +2 bps to 2.03%.
NZ DOLLAR LEAPS
On the RBNZ survey results,he NZD has jumped +50 bps to 73.7 USc. Similarly on the cross rates, we are now up at 96.3 AUc, and at 68.7 euro cents. The TWI-5 index is almost up to 79 and its highest level since May 2015, 20 months ago. Check our real-time charts here.
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Last week.
The Bank of Japan offered to buy an unlimited amount of bonds at a fixed rate in an unscheduled operation to reassert control over surging yields. The yen and yield for 10-year debt fell.
The central bank will buy five-to-10 year securities from the secondary market, it said in a statement Friday. It’s offering to buy the benchmark 10-year notes at 0.110 percent, it said.
The move comes after an earlier attempt Friday morning to cap yields by expanding bond purchases in a regular operation failed.
Governor Haruhiko Kuroda on Tuesday recommitted to his strategy to hold 10-year debt yield at around zero percent even as accelerating inflation and an improving outlook for some of the world’s biggest economies push up bond yields globally. Read more
The belated attempt to “rescue” the JGB 10s last week has appeared to have been recognized in JPY. For almost three weeks, the yen exchange had been stuck at around 112.60, but has now shot past that in trading so far today. As of last check, the exchange value is 111.80 and still climbing. Read more
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