A review of things you need to know before you go home Monday; TD rate changes, new rating values in Akl, food prices up, MTF reports, Gem changes terms, services expanding, swaps and NZD slip, bitcoin up strongly

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

MORTGAGE RATE CHANGES
No changes to report here today.

DEPOSIT RATE CHANGES
Kiwibank has cut -10 bps from its 1 year rate, taking it to 3.50%. Heartland Bank has changed all rates from 4 months to 5 years, cutting their five month and 9 month rates but raising all others. Of note is their new 12 and 18 month rate at 3.60% and their new 2 year rate at 3.70%. ASB has raised their nine month TD rate by +15 bps to 3.50%.

WEALTH EFFECT RISES (THEN SO DO RATES SHARE)
New Zealand's largest council released its new rating valuation data today. And these show that rating valuations have tended to rise the most in the cheaper parts of town, which will probably also face the heftiest rates increases when they are released in 2018. First home buyers are the ones who may be hit hardest.

FOOD PRICES UP +2.7%
Statistics NZ released its food price data today and it has made a big thing about the high butter price, and high vegetable prices. But actually food prices overall are 'only' +2.7% higher than the same month a year ago. They have been rising at about +3% pa since May 2017. Our grocery price monitoring suggests the increases are running out of steam, however - even at this level. Stats NZ's butter anecdote is just that; it does not reveal a trend.

GROSS UP, NET DOWN
Motor Trade Finance (MTF) today reported strong sales gains of +36% to $567 mln, but its underlying profit after tax fell -7.5% to $7.3 mln.

CARD TERMS CHANGED
Latitude Financial Services (who took over GE Money in New Zealand and who offer their services under the Gem brand) notified customers of some Conditions changes. They say that if you miss a full payment, interest will be charged for that month and the next one as well, even if payment in full is made in that second month. They also now say any changes in interest rates, fees and charges will be notified in future by a notice on their website and a "press announcement" - rather than by a personal communication.

ANZ, FMA MUM ON COURT CASE
Neither ANZ nor the Financial Markets Authority are commenting on a court case brought by the bank against the regulator. NBR's Tim Hunter reported today that the High Court daily list was amended, with mention of the case removed, after he queried the two parties about a scheduled teleconference. An ANZ spokesman told interest.co.nz; " This was a meeting in chambers before the judge on a procedural matter. We can't comment further at this stage." And an FMA spokesman said; "We can't comment on this."

CO-OP MONEY WINS APPEAL
Co-op Money NZ, the industry body for co-operatively owned credit unions and mutual building societies, says it has won its appeal against the decision of the Registrar of Friendly Societies and Credit Unions. The successful appeal in the High Court means Co-op Money can continue to provide wholesale banking and other services to both its member credit unions, and also to associate members and third parties. 

A JOBLESS SERVICE EXPANSION?
The service economy is still expanding strongly. In October that expansion softened up just a tad, but given the post election uncertainties it is clear these had minimal impact of service businesses. If there is a weakness in today's data release from BusinessNZ it is in the employment area. As BNZ has observed: "It is interesting to see the PSI demand side indicators like sales and new orders remain robust, while the supply side indicators like employment and inventories have eased. It may represent productivity gains. Or it may be reflecting some building up of excess demand. Which bears thinking about as the consequences for inflationary pressure would be very different."

PAYBACK?
A banking Royal Commission is getting more likely in Australia with conservative National Party members threatening to cross the floor of Parliament to vote with the Australian Labor Party to make it happen. Some see this as payback for Prime Minister Turnbull championing the Same Sex Marriage referendum which won 62:38 recently. (Some key Labor seats voted No as well.)

WHOLESALE RATES SOFT
Swap rates fell -1 bp across the board, 2 to 10 years. That continues the lower trend that we had for most of last week. The 90 day bank bill rate is now down to 1.92% and briefly on Friday it fell below 1.90%, and new record low.

NZ DOLLAR DOWN, BITCOIN AT NEW RECORD
The NZ dollar has fallen more than ½c since Friday. It is now at 68 USc. On the cross rates we are at 90 AUc and at 57.9 euro cents. The TWI-5 is down to 71.1. But the bitcoin price is back in record territory today, up to US$8,099 but currently it is back to US$7,996.

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Daily exchange rates

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USD 
NZD
End of day NY time
Source: CoinDesk

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6 Comments

Zimbabwe, where the price of bitcoin spiked to double the international rate after this week’s military takeover, shows Jamie Dimon, Axel Weber and other cryptocurrency skeptics where the real-world use of bitcoin, and possibly its future, lies. It’s becoming the preferred way for residents of failing economies to transfer money without dealing with banks, protecting their savings from political turmoil, and avoiding the local currency when its value declines due to inflation.

What Local Currency ?! Zimbabwe doesn't have one...
"In place of the Zimbabwean dollar, currencies including the South African rand, Botswana pula, pound sterling, Indian rupee, euro, Japanese yen, Australian dollar, Chinese yuan, and the United States dollar are now regularly used."

In Australia, the party is in full swing.

With just five weeks to go until Christmas the annual spending bonanza has well and truly started and it’s expected keen shoppers will rack up $56 billion on credit in November and December or a whopping $3342 per person.

Financial services firm Canstar said this is a $1 billion extra than for the same period last year and with credit card interest rates as high as 25 per cent this can hit customers’ hard.

The nation is already buried in severe plastic debt — Reserve Bank of Australia figures show Australians have $51.4 billion owing and more than $31.4 billion is accruing interest.

http://www.dailytelegraph.com.au/moneysaverhq/australians-are-being-warn...

It's all just numbers, isn't it...

In total, financial institutions have paid more than $320bn in penalties since 2008...
(Banks) can avoid a fine if they are the first to report a cartel. The whistleblowers avoids substantial costs: Barclays did not have to pay a €690m fine in the investigation into rigging the euro interest rate, while UBS dodged a €2.5bn penalty on the yen interest rate cartel.

https://www.ft.com/content/860f43c4-cacc-11e7-ab18-7a9fb7d6163e

(NB: The Banks HAVEN'T PAID A CENT !!! We, their 'customers' have, one way or another...)

When credit card companies are charging 25 - 29% Interest, are they in the category of payday loans? Or is this excessive in an era of low inflation?
Smart consumers can avoid the charges and interest, but the vulnerable get hit with the high interest charges, and this segment is no doubt predicted and targeted. E.g. say 20% or more of gemvisa customers may keep balances running at 25-27% interest.

Gold down nearly $30 in NZ$ terms. Nervousness...everywhere...