What happened Monday

A review of things you need to know before you go home on Monday; Westpac cuts some TD rates, air goes out of migration, petrol prices jump, farm sales drop, swap rates down, NZD holds

21st May 18, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
Westpac has dropped five selected term deposit rates for particular terms from 3 months to 18 months. The cuts are a combination of -5 and -10 bps. They are touting their existing 3.50% nine month rate, pointing out they will give the helicopter trusts $10 for each TD signup. If you that motivates you, just know that the break-even between their 3.50% offer and ANZ's 3.55% eight month offer is a $38,000 deposit. If you have more than that, you will be better off taking ANZ's offer and donating $10 to the Trust of your choice. But less than that, the Westpac offer is the more generous.

VISITOR NUMBERS SLIP
Because of the way holidays fell in March and April this year and last, April 2018 visitor arrivals fell -8,000 to 283,900 compared with the same month last year. The numbers fell for the majority of countries except China, with the most significant changes to Australia which was down -20,800 to 109,800, Britain which was down -3,400 to 12,700, and the United States (down -2,600 to 22,300). Chinese visitor numbers were up +7,200 to 46,500 in April 2018.

MONTHLY MIGRATION GAIN SMALLEST SINCE 2104
Rising numbers of non-New Zealanders are continuing to leave, pushing net migration down from high levels to an annual gain of 67,000 in April, down nearly 5000 from a year earlier.

ANZ BONDS OFFERING 3.71% TO 3.76%
ANZ says it'll pay a margin of 1% to 1.05% on an impending five-year bond issue. Based on Monday's five-year swap rate, that's an interest rate for investors of 3.71% to 3.76% p.a. The bank's seeking to borrow at least $100 million through the issue of unsecured unsubordinated fixed rate bonds, but has given itself the option of accepting unlimited oversubscriptions. The bonds are expected to be issued on May 30.

FASTER COST INCREASES
The price of petrol is rising fast. In Wellington and the South Island, prices are now over $2.30/L for UL91. This price was under $2/L less than four weeks ago.

MPB HITS FARM SALES HARD
Farm sales are down -28 in April 2018 from April 2017. That is 45 fewer transactions, and the lowest in eight years. The biggest drop is in finishing farms. The region with the biggest fall is Otago, followed by Northland. The unresolved risks surrounding microplasma bovis will be weighing on this market, and it is likely to get worse.

TOWNIES STILL BUYING
Sales of lifestyle blocks are actually improving year-on-year, up to 643 in April. That was bolstered by very strong sales in the Waikato and Manawatu regions.

RETAIL DOES IT TOUGH
Retail sales growth hit a five year low in the March quarter, coming in at only +3.4%. Most sectors posted skinny growth, the exceptions being food (+7.0%), supermarkets (+41%), and electronics (+9.4%).

BENCHMARK INTEREST RATES DOWN
Local swap rates are down -2 bps for two years, down -3 bps for five years and down -4 bps for 10 years. The UST 10yr yield has risen to 3.06%, unchanged today. The Aussie Govt 10 yr is now at 2.87% (down -7 bps). The China 10 yr is at 3.74%, down -1 bp. And the NZ Govt 10 yr is down -2 bps at 2.86%. The 90 day bank bill rate is down -2 bps at 1.98% and the first time below 2% in over a month.

BITCOIN RECOVERS
The bitcoin price is now at US$8,473 which is up +6.2% from this time yesterday on Friday.

NZ DOLLAR UNCHANGED
The NZD is now at 69.1 USc and unchanged since the opening today. We are also little changed against the Aussie at 91.7 AUc, or at 58.8 euro cents. That has the TWI-5 at 72.1.

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Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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8 Comments

by Advisor | 21st May 18, 4:15pm 1526876144

Immigration high, retail spending low - turns out even relentless increases in raw headcounts can't save the economy from tanking. This very much is the inevitable repercussion of choosing the low-hanging fruits (pun intended) of tourism and agriculture over investment in productivity and infrastructure.
What we now have is a whole lot of unproductive businesses with low-skilled workers in employment who will all be out on the streets when it hits the fan.

by RickStrauss | 21st May 18, 4:32pm 1526877128

Also,

Pharmac became the unlikely focus of attention on Thursday after what was initially reported as a massive $200 million cut delivered by Finance Minister Grant Robertson’s Budget.

But, despite shouted claims to the contrary by Simon Bridges in Parliament, Pharmac is actually receiving a tidy boost in funding.

The "cut" that caught the eye of those scanning the Budget documents is a saving that the health system will reap as a result of Pharmac taking greater control of pharmaceutical purchasing for DHBs.

Whoops. Embarrassing.

Were National being financially illiterate, can they not read a budget, or were they trying to intentionally mislead the NZ public?

Pharmac has calculated that its model has saved the health system over $5.9 billion over the last decade.

If Pharmac were forced to buy the same number of medicines it used in 2017 at the price it paid in 2007, it would require a budget of $2.4 billion. Bargaining and competitive tendering over the decade meant that it paid just $849.6 million.

If only Labour would be prepared to use such purchasing power for KiwiBuild, that would help. The bleating that would arise from Fletchers at the undermining of their virtual monopoly powers, though...

by David Chaston | 21st May 18, 7:45pm 1526888733

Actually, transparency in this Budget is problematic. In the last one, it was easy to see where the Pharmac funding is. There were line items. But in this one we can't find it at all. We have asked Treasury for guidance for its location. It is obviously in there somewhere, but the Budget 2018 papers don't refer to it al all. Using the search functions doesn't help.

When it is explained we will separate it out so our tables reveal it. In the meantime, we will just have to rely on Ministers press releases, like all the other media. We like to see the actual detail; we never like to just rely on partisan assurances - this Govt or the last one.

by gordon | 21st May 18, 4:33pm 1526877206

Wow Trade Me acknowledged today that rents in Christchurch have not increased since 2013. The cost of items such as rates insurance and maintenance have certainly increased since then. No wonder he is so grumpy these days.

by waymad | 21st May 18, 4:45pm 1526877927

The Fletcher/Carter Duopoly gets another boost, as with the Gubmint's underwriting of off-the-plan buying for KB, the unit sell price for the factory output noted here, is guaranteed.

House construction giant Fletcher Building will announce further details of a new high-tech fast house-building Auckland panelisation factory next month.

Steve Evans, chief executive of residential and land development at Fletcher, said his company would soon unveil a new Auckland panelisation factory which would speed house construction.

“We have a panelised factory that’s being negotiated now. We’re in the process of negotiating a lease and it will be in Auckland,” he said referring to faster construction techniques after Fletcher unveiled its two-houses-in-four-days video last year at Hobsonville Point.

Crony Capitalism gallops away again....$650K a ride, check in the mirror to see who's doing the Guaranteeing.....double joy if'n yer an FHB, because it's You who is being ridden.....

by JB | 21st May 18, 5:14pm 1526879683

Would pay to look at the long history of factory built housing operations that have failed miserably in not so distant times.

So this time its different !

Can't address the huge costs and delays of land acquisition and preparation. The massive and very successful Tamaki redevelopment initiative is taking years to redevelop properties they already owned. When I recently drove past the land was a right mess with drainage / roading / services completion still many months away with wet weather now constraining construction I would think for some months.

Kiwibuild is going to quickly run up into the same old barriers and same delays meaning the modified targets of Treasury are IMHO still grossly optimistic.

Unless they go for a flat level Takanini type approach with cookie cutter designs housing factories are going to struggle as they always have done.

The successful Lockwoods of this world of course are set up to deliver already - but they are probably going to be too expensive.

by Cowpat | 21st May 18, 7:36pm 1526888206

Monthly migration gain smallest since 2104.Have I been away that long.
Trade Me rental listings Auckland continue to surge

by MortgageBelt | 21st May 18, 9:16pm 1526894207

Internal migration out of Auckland continues - to avoid high house prices and to obtain superior lifestyle for families.
http://nzh.tw/12055772
But regions house prices also becoming unaffordable for families.