Here are the key things you need to know before you leave work today:
MORTGAGE RATE CHANGES
Westpac has reduced its one year fixed 'special' by -15 bps to 4.45%.
TERM DEPOSIT RATE CHANGES
Westpac has reduced four TD rates for one month, six and eight months, and two years. The reductions range from -5 to -25 bps.
A DECADE LOW
At 4.5% s.a. (4.4% actual), New Zealand’s unemployment rate is at its lowest since December 2008 and there are some promising signs wage inflation, now at +3.4% p.a. is beginning to pick up some steam. That is the highest in more than six years. And let's not forget our participation rate which inched up again to 71.3%, which is not only a New Zealand record, but about the highest in the developed world.
A STRONG PILLAR
ASB has posted another very strong profit result and is inching up to being material for parent CBA.
PREFERRED BY 50% MORE BUYERS
There were 13,179 new "used imported cars" registered in January 2018, the highest level ever for a January. That makes the annual used imports level a new record as well at 166,400. For reference, in the same period 109,300 new vehicles were registered. We buy used imports at the rate of 3:2 used:new.
A BOOST FOR FONTERRA SUPPLIERS
Somewhat surprisingly WMP prices at today's dairy auction were up +7.6% above the previous auction two weeks ago. This is in line with what the derivatives market signaled. Analysts are suggesting there may be upside to farm-gate milk prices. Offers on today's derivatives market have firmed their expectations.
'FALSE ALARM'
After yesterday's deep dive, equity markets around the world are staging recoveries. (How lucky were we to have scheduled a public holiday to avoid the carnage? Amazing what a new Government with Winston in it can achieve.) The ASX200 is up +1.2%, the Nikkei225 is up +3.1%, Shanghai is up +1.5%. Our own NZX50 is down just -0.6% having not suffered any Tuesday falls. "False alarm" is the message equity markets seem to be giving. We'll see. Don't forget the US needs to pass a 2017 Budget resolution to authorise the funding of the Federal Government by Friday NZT. The President isn't helping smooth the path.
THE REAL NEWS
This is actually the really big news today.
BENCHMARK INTEREST RATES SLIP
After opening sharply lower, local swap rate changes have mellowed during the day. The two year is now unchanged, the five year is down only -2 bps and the ten year is down another -3 bps. Meanwhile the UST 10 yr, which got up as high as 2.88 on Monday then crashed to 2.70% yesterday in the Wall Street wobble. But today it has now risen back to 2.80%. The trend of falling bond prices seems to be holding. The Aussie 10 yr is at 2.86%, down -3 bps bps since Monday. The Chinese 10 yr is at 3.94% (unchanged), and the Kiwi 10 yr bond is 3.00% (unchanged). The 90 day bank bill rate is unchanged.
CBL UNDER THE SPOTLIGHT
Specialist insurer, CBL, has revealed details of a RBNZ review into it. With confidentiality orders lifted, the company has told the market the RBNZ in July set its minimum solvency at 170% and in November directed it to consult on any non-business as usual transactions greater than $5 million. The review follows the collapse of large Gibraltar-based insurer Elite Insurance, which wrote policies for CBL until July last year. A.M. Best has today also downgraded CBL’s credit rating.
BITCOIN IN HEAVY VOLATILITY
Bitcoin is now at US$7,627 a mere -4.6% drop since Monday. In the meantime it did get down to US$5,975 at one point but has been firm for most of today. The central banker's banker has panned the risks related to cryptocurrencies, encouraging its members to stay well clear of them in their economies, using unusually strong language.
NZ DOLLAR FIRM
The Kiwi dollar is stronger today, helped by very good employment and wage growth data. It is currently at 73.3 USc, at 92.9 AUc and 59.2 euro cents. This puts the TWI-5 at 74.4.
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