A review of things you need to know before you go home on Thursday; NZCU South changes, NZGB yields fall, Banking Ombudsman fingers Kiwibank as the outlier, swaps unchanged, NZD higher

A review of things you need to know before you go home on Thursday; NZCU South changes, NZGB yields fall, Banking Ombudsman fingers Kiwibank as the outlier, swaps unchanged, NZD higher

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

MORTGAGE RATE CHANGES
No changes to report.

TERM DEPOSIT RATE CHANGES
NZCU Central have trimmed all their rates by -25 to -50 bps.

REACTION
More than a year after a disastrous fire in England partly blamed on a type of cladding of sandwiched PS insulation between aluminium facings, MBIE has suspended similar cladding products here. No New Zealand building has been constructed with the non-redundant fire resistant system used in the English case so the risks here are very much lower. (The English system was already illegal here.). But MBIE is now requiring the panel manufacturers to prove their products and related systems are safe.

LOWER YIELDS
The latest tender for $150 mln of NZGB 2025s (about a seven year duration) has brought a yield of just 2.44%. This is the lowest for this bond since September 2016. Bids covered the offer by 3.4 times, an average coverage ratio for this bond.

WHERE THE PROBLEMS ARE
The Banking Ombudsman's 2018 Annual Report has reported an outsized level of customer complaints at Kiwibank. According to the Report, Kiwibank complaints represented 14% of their caseload even though only 4% of banking system assets are held by Kiwibank. For comparison, ANZ represented 18% of the cases but for a weighting of 31% of all banking assets. All other major banks were underweighted as well.

SWINGS & ROUNDABOUTS
The same fuel price rise that caused our import values to rise yesterday and swell our trade deficit are working in Australia's favour. Their latest trade price index / terms of trade have improved on the back of higher energy prices exported.

EAT LOCAL, GO BROKE
In Australia, jingoistic nationalist Dick Smith has decided to close his "Aussie only" food business after he discovered that his consumers refused to the pay prices necessary to keep the business viable. He has discovered the 'customer is king' even if he doesn't think they are right, or meet his values.

YUAN STILL LOSING SHARE
The percentage of international financial transactions denominated in Chinese yuan has fallen from 1.90% in May to 1.81% in June. This maintains the long running decline.

SWAP RATES UNCHANGED
Local swap rates are unchanged today, except for the 10 year which is down -2 bps. This is following the UST 10yr which has risen strongly today to 2.97%, a +4 bps gain. The Aussie Govt 10yr is at 2.70, down -1 bp, the China Govt 10yr is at 3.58% up +2 bps, while the NZ Govt 10 yr is at 2.81%, down -4 bp. The 90 day bank bill rate is unchanged at 1.91%.

BITCOIN SLIPS
The bitcoin price is now at US$8,219 down -2.4% in the past day.

NZD FIRMER
The NZD is up +½c at 68.4 USc on a slipping US dollar. But it is holding on the cross rates at 91.8 AUc, and the euro at 58.3 euro cents. That puts the TWI-5 up a little at 71.6.

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13 Comments

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Highlight new comments in the last hr(s).

The Greedy Little Nation That Sold Its Soul For House Prices
https://www.zerohedge.com/news/2018-07-25/greedy-little-nation-sold-its-...

Woah!! , the comments below the zerohedge article get a little bit fruity.... but there's no mention of how the Aussie banks will try and make up future losses through interest payments from a neighbouring countries debt balloon and its OBR policy.

RBNZ OCR 2% ......... Westpac/ANZ 2 year fix 8.5%?

Conservatives? No – Brexit has shown us what they really are
They are no longer defending traditional values of national character and continuity, but rather catering to big business

https://www.theguardian.com/commentisfree/2018/jul/25/conservatives-brex...

They are a sad lot. Couldn't organise a piss up in a brewery. Very good at arguing amongst themselves whilst someone else runs off with their money. Those that can, leave.

Roger..

I don't think I've ever had cause to disagree with you before, but if there is one thing that the current Conservatives / NI coalition are capable of, it is to organise a piss up in a brewery.. Everything else, completely agree.

Nic

Australia set to become World Number One Gas Exporter? NZ has on field tantrum and says "Not Fair, I'm Telling".

Yes, well, sadly for them, we really are far better at government than the Aussies. They are so hopeless it beggars belief, the only reason they get away with it is because they are such a wealthy mining country. There is a theory that mining wealth causes poor government, as it is too easy for the parasites to feed on it. So you end up with a sort of corrupt patrimony. We share their delight in debt bondage, but don't like anyone being wealthy, preferring to desecrate thousands of hectares for new resident housing, instead of a couple of hundred earning our keep via mining. Sort of a contest as to which of us can stuff things up most miserably.

Interesting USD share of financial transactions down a %. I wonder if that is to do with the Iran oil going elsewhere, and what will happen over the rest of Trumps term .

US won't care... They're self sufficient again if it becomes necessary and they won't give a 'frack' about anyone else..

No New Zealand building has been constructed with the non-redundant fire resistant system used in the English case so the risks here are very much lower.

Really? There was a report from the council I browsed through months back that listed quite a few buildings (including the hapless Nautilus of Orewa, and one of the Takapuna towers) as having the PE variant, over and above the ones with fire-retardant filling.

Rick..

That sound quite inflammatory if you were able to dig up that report.. What? wool? blinkers?... eyes.

Nic...