Here are the key things you need to know before you leave work today:
MORTGAGE RATE CHANGES
No changes here today.
TERM DEPOSIT RATE CHANGES
TSB has reduced its 18 mnth and 2 yr interest rates from 3.65% and 3.85% to 3.50% and 3.65% respectively.
NZ GDP
Economic growth for the fourth quarter of last year has come in under market expectations after hot and dry weather played on the agricultural sector. The average market expectation for GDP growth in the final four months of 2017 was 0.8%, but figures from Statistics New Zealand put growth at 0.6%. Economic growth for the year was 2.9%, down 1.1% on the year prior. The size of the economy in current prices was $283 billion. GDP per capita is down on the September quarter, coming in at just 0.1% growth, compared to 0.2% in the quarter before.
FAIR DEALING IN ADVERTISING
The Financial Markets Authority (FMA) today published guidance on fair dealing in advertising and communications for licensed crowdfunding services, peer-to-peer lenders and the companies that offer financial products on these platforms. The fair dealing provisions of the Financial Markets Conduct Act 2013 ban misleading and deceptive conduct, false or misleading representations, unsubstantiated representations and offers of financial products in the course of unsolicited meetings. The guidance sets out the FMA’s expectations for marketing and promoting these offers and platforms to consumers. A copy of the guidance can be found here.
CHILD POVERTY REDUCTION
Treasury said its December projection that the Families Package would lift 88,000 children out of poverty by 2021 had been corrected to 64,000. The corresponding figure for the Budget 2017 Family Incomes Package was a fall from 49,000 to 33,000 children lifted out of poverty by 2021 – a proportionate fall for the two packages. This has not changed the Government’s target, to reduce the proportion of children in poverty from 15% now to a world-leading 5% within ten years, Prime Minister Jacinda Ardern says.
MINGINUI
Included in Hon Shane Jones announcement of $5.8 million from the Provincial Growth Fund (PGF) is a contribution towards covering the costs to bring the cellphone service to Minginui village in the Whirinaki Forest which will be up and running shortly. Establishing cellphone services will support the scaling up of the Minginui nursery from commercial to industrial size for the production of native forestry grade seedlings. The cellphone coverage will enable the nursery to function effectively and efficiently in a modern competitive business environment and support this community. The lift in staff at the nursery from nine employees to 90 creates opportunity for locals, many of whom will require training and skills development in order to be ready for employment. Having technology solutions to support training will be vital.
ROYAL BANKING COMMISSION
Mortgage brokers are in the spotlight on day three of the financial services royal commission, with the Commonwealth Bank (CBA) the first to front, followed by its subsidiary Aussie Home Loans. CBA acknowledged that there was a conflict of interest for the mortgage brokers as their commission was related to the size of the loan and trailing payments were related to the length of the loan. CBA analysis found broker-originated loans were reliably associated with higher leverage, a higher prevalence of interest-only repayments, higher debt-to-income levels, higher loan-to-value ratios and higher incurred interest costs. They have, however, not made any changes to their remuneration structure for brokers as it would put them at a disadvantage against other lenders. One would guess New Zealand banks have similar practices.
PIMCO
Pacific Investment Management Co. (PIMCO), one of the world's largest bond managers who oversees about US$1.75 tln in investments, is cutting its investments in Australian bank debt because of lofty valuations. It's also trimming holdings of real estate and retailers' bonds. On cutting its long dated bank debt, PIMCO said that there wasn't much of a buffer left to provide protection for any unexpected negative news in the market. Pimco favours debt sold by infrastructure and energy companies.
WORLD'S LARGEST JET ENGINE
General Electric (GE) has begun flight trials for the world's largest jet engine. A special Boeing 747 test aircraft flew on Tuesday from Victorville, California, with the new E9X engine mounted under its left wing, dwarfing the plane’s three other engines. The huge powerplant - as wide and tall as the fuselage of a Boeing 737 - is being built for the latest version of Boeing Co’s long-haul 777, the 777X, which is due to enter service in 2020. GE feels “very confident” it will meet a 2019 target date for safety certification.
BENCHMARK INTEREST RATES LOWER
Wholesale swap rates are higher at the short end of the curve and lower at the long end with the 1 yr up +3 bps and the 3yr and 4 yr rates were down -1 bps, 5yr down -2 bps and the 7 yr and 10 yr down -3 bps. The UST 10yr is down to 2.80% today (-4 bps). The Aussie Govt 10 yr is down -4 bps to 2.72%. The China 10 yr is flat bps at 3.86% while the NZ Govt 10 yr is down -5 bps to 2.90%. The 90 day bank bill rate is up to 1.91%.
BITCOIN LOWER
The bitcoin price is has trended lower to US$7,906.
NZ DOLLAR SLIGHTLY LOWER
The NZD has traded slightly lower today to currently trade at 73.2 USc. On the cross rates we are at 92.9 AUc and at 59.1 euro cents. That puts the TWI-5 at 74.0.
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6 Comments
Child poverty is very contentious matter. While its tragic to see children trapped in a poverty cycle most of the time its driven by parental neglect and poor life choices. This is made worse by intergenerational welfare recipients (parents who have no intention of ever working and think its fine to lead their children down a similar path). How can the children ever escape this cycle - when the generous hand-outs by a well intentioned government will just get squandered and lead to no meaningful change. I don't know the answers and invite comment - though its clear that the current approach isn't working.
Nah way me old cobber. This is what kiwis do for each other. These poor buggers didn't have cell phone coverage, let alone got out to vote. They will usher in a new forestry class of native trees which will be of direct benefit to generations of New Zealander's for many years to come. What are ya!? The Boy done good!
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