Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today.
DEPOSIT RATE CHANGES
None here either.
BUOYANT
The April rural sales figures from the REINZ show farm sale numbers at healthy levels with the volume of sales up +12% on the same month a year ago. However overall prices ease slightly compared with a year ago, but prices for dairy units are up.
A SHARP PULLBACK
Sales of lifestyle blocks however fell sharply in April, compared with the same month last year. They were -21% lower at just 631 nationwide and apart from the sales level in Januarys, this is the lowest level of any month since February 2015. It mirrors the sharp fall in demand for housing where a -31% volume fall was recorded in April. Is property out of favour suddenly?
IT'S ALL GOOD
The ANZ-Roy Morgan consumer confidence survey for May was released today and that shows a pick-up in sentiment. ANZ says that at this level, this signals "good times ahead across the economy". Consumers’ view of their financial position lifted to the highest level since the global financial crisis; that’s positive for near-term spending momentum. The survey also showed that expectations of both inflation and for house price growth both eased back. Consumers think we are going to get growth without price rises, even for houses. That's being confident.
JUST ONE WINNER
Today's NZ Govt bond tender for $150 mln was a bit unusual. As signalled by Wall Street earlier, there is a rush to safety, so yields are falling and this tender was no exception. What was unusual here is that the total amount was allotted to just one bidder at a yield of 2.6950% (previous tender was 2.89%). The other twenty-nine bidders went home empty-handed from a tender where the coverage ratio was 3.4x.
A BIG PROPERTY BOND
The Government is not the only one going to the bond market. Goodman Property Trust is going after $100 mln for a seven year bond at swap plus 1.55-1.70% margin. At today's lower 7 year swap rate of 3.01%, that indicates a return could be in the 4.56-4.71% range.
AN IMPROVEMENT
Across the ditch, Australia's unemployment rate came in better than markets were expecting. The Aussie dollar got a small boost. The number of people employed increased by +37,400 in April 2017, but more impressively, over the full year that increase was more than +195,000. The jobless rate fell to 5.7%, and the participation rate remained steady at 65%.
BAD TIMING
The Government is touting its Urban Cycleway projects, a $330+ mln program nationwide. One of the highlights it noted was that the "Quay St Cycleway in Auckland has averaged nearly 800 cycle trips a day since it opened in July 2016." Because we can, I checked the Auckland Transport traffic counts for Quay Street and they show the Monday-Sunday average is over 22,000 cars per day*. Cycleway programs have a long way to go to make a dent in regular commute habits. And this data came out on a day of foul weather which would have had most cyclists choosing alternatives. (* Actually 22,823, so the rounding is actually more than the total cycle trips being counted at that point.)
CAUGHT IN NZ
Anthony Wilson, a former Registered Financial Adviser pleaded guilty at the Auckland District Court to two charges of making a false document for pecuniary advantage. A total of four charges were filed by the FMA under the Crimes Act. Wilson admitted that he submitted three applications for life insurance in circumstances where he had forged clients’ initials, and in one of those cases he had falsely amended the application form. The admitted conduct related to the disclosure of pre-existing medical conditions.
CAUGHT IN AU
A top Australian tax office official is to be charged in relation to a AU$160 mln fraud case - involving tax rorts. It has been described as one of the biggest white collar fraud investigations in Australian history.
CHEAPER, FASTER, BETTER
The latest Commerce Commission review of the New Zealand internet paints an improving situation. Around 74% of households now have a fixed-line broadband connection and there are 5.8 mln mobile devices in the country. Nearly all phones sold now are smartphones with internet connectivity, they said. The cost of internet use has dropped over the last year with up to four times the data included at the same price points. 100GB in a fixed-line voice and broadband plan can now be bought for $65, $10 less than a year before. At the high end, a 100Mbps fibre voice and broadband plan with unlimited data costs $90 per month, 19% less than the equivalent in Australia.
WHOLESALE RATES FALL, FLATTEN
Following the earlier Wall Street jitters, local swap rates have also fallen in a flattening tone. The two year is unchanged, the five years is down -2 bps and the ten year is down -4 bps. The 90 day bank bill rate is unchanged at 1.98%.
NZ DOLLAR UNCHANGED
The NZD is a little higher at 69.3 USc. On the crosses we are at 92.9 AUc, and 62.1 euro cents. The TWI-5 is still at 73.6 which is where we were at this time yesterday.
You can now see an animation of this chart. Click on it, or click here.
Daily exchange rates
Select chart tabs
4 Comments
TIC data confirms that “reflation” captured more than just pricing sentiment. It appears to have occurred in bank balance sheet activity, and related official sector UST transactions. As to the latter, official holdings of US$ assets did decline on net in March 2017, the latest figures, including more selling of UST’s. The scale of the decline was less than we had seen in previous months. In January 2017, for instance, total net “selling” was huge at almost $49 billion, but in the past two just $5.2 billion for February and $10.7 billion in March.
On a cumulative, rolling six-month basis, this method of ad hoc central bank measures intended (largely China but not just the Chinese) to try to offset private sector “dollar” retreat was at its lowest level since the six-month period ended June 2015. If there was an orthodox organization with the clout to declare officially an end to the “rising dollar”, they would likely have done so given these figures.
The reason for the lowered central bank pressure is undoubtedly a similar reduction in scale of bank balance sheet contraction. Read more
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.