What happened Monday

A review of things you need to know before you go home on Monday; Kiwibank cuts a key mortgage rate, ANZ gets cheaper funding, fewer farm sales, fewer lifestyle block sales, swaps unchanged, NZD stable

24th Sep 18, 3:59pm by David Chaston

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

MORTGAGE RATE CHANGES
Today, Kiwibank changed its 2 year fixed rate to 4.19%, matching HSBC Premier and SBS Bank, and opening up a -16 bps advantage of all its main rivals.

TERM DEPOSIT RATE CHANGES
No changes to report here today, but we should note that SBS Bank's TD rates are now available with a $1000 minimum deposit, down from $5,000.

COUPON RESET
Some market funding just got cheaper for ANZ today. Its traded $300 mln floating rate note issue, which mature on 22 March 2019, just got reset to yield 2.92% which is a drop from 3.03% from their previous reset.

MORE FOR LESS
Farm sales prices are up +4% on last year but dairy farm prices are down -13.2% with Fonterra 'volatility' taking a toll. Farm sales volumes were -7% lower to just 85 units, the lowest August since 2010. (The average sales in August over the previous four years was 109 units.)

LOWER JUST ABOUT EVERYWHERE
Lifestyle block sales were also low, and at 555 properties sold nationally, that was the lowest in four years. It was a -10% drop year-on-year. There were declines in all provinces except Wellington and Canterbury.

SELF-FULFILLING?
In Australia, their central bank is starting to keep a close eye on bank lending to bricks and mortar retailers, and retail shopping centre owners. Their watch has been triggered by the rising risk traditional retailing faces from the fast-growing online sector. They don't see an immediate threat to banks because of their diversified exposure to the general commercial property sector - yet. But the speed of the shift to on-line retailing has caught their attention. It is tough enough being a traditional retailer, but a regulator-induced pullback by banks from the sector could become self-fulfilling.

BIG CORRECTION?
After rising a spectacular +2.5% on Friday, the Shanghai stock exchange is closed today for the national Mid-Autumn Festival. But the Hong Kong market is open. It rose +1.7% on Friday but is down -1.2% in early trading today. Other Asian markets are lower today as well but nowhere near as much as Hong Kong.

SWAP RATES UNCHANGED
Swap rates are virtually unchanged today. The UST 10yr is also unchanged at 3.07% with the UST 2-10 curve now just on +26 bps. The Aussie Govt 10yr is at 2.71% (up +1 bp), the China Govt 10yr is at 3.71% (up +1 bp), while the NZ Govt 10 yr is at 2.69%, and down +1 bp. The 90 day bank bill rate is up +2 bps at 1.91%.

BITCOIN FIRM
The bitcoin price is marginally higher today at US$6,716.

NZD LITTLE CHANGED
The NZD is little changed at 66.8 USc. On the cross rates we are similarly unchanged at 91.8 AUc, and at 56.9 euro cents. That puts the TWI-5 at 70.4 and up marginally.

This chart is animated here. For previous users, the animation process has been updated and works better now.

Daily exchange rates

Select chart tabs

Source: RBNZ

Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

14 Comments

by Cowpat | 24th Sep 18, 4:29pm 1537763371

Trivia, the average mortgage of an owner occupied dwelling 2008-2018 up 49.5 percent to 185K, 2 year fixed in same period down 49.5 percent.
One for Professor Brady, the use of high altitude drops for hypersonic weapons testing in China the past week. Well we did allow the Chinese to test their balloons here. John Key signed over the airspace and Shanghai Pengxin were happy to provide the dairy farms.
Speaking of Shanghai Pengxin,the Crafer farm owners its mining arm Pengxin International mining returned to the stock market having spent 6 months "restructuring" to no joy. Promptly closed limit down Wednesday Thursday and another 9 percent last Friday. Following this 'private' company in the coming months as US denominated debt starts to ramp up should be quite revealing., given its dwindling sources of income and the trevails of soybeans copper and indeed dairy..

by Mark L | 24th Sep 18, 4:50pm 1537764612

Petrol (91) $2.409 at BP/Caltex Adelaide Road Wgtn today.

by Nic Johnson | 24th Sep 18, 9:48pm 1537782507

Sshh Mark. The Reserve Bank need to turn a 'blind eye' to inflation this Thursday, the banks need low interest rates to get by without the foreign capital injection ofr foreign buyers and the exporters desperately need a weaker dollar. Are you trying to rock the boat with your protestations on fuel prices?

Good man, keep it up.. I just spent $8 on a bag of spuds tonight in New World and it was their cheapest option. No inflation though for the Reserve bank to recognise just yet. Just extend and pretend.

by custard | 24th Sep 18, 10:22pm 1537784558

I think it's termed "look through"....

by J.C. | 24th Sep 18, 5:03pm 1537765426

Nice to see the link to the RBA and their focus on retailing. From the report, "international retailers tend to have lower cost bases, greater economies of scale and ‘just-in-time’ production models that allow rapid changes to inventories to keep up with trends."

The big Achilles heel for Aussie and NZ. The shift to lower cost (non-)discretionary spend is almost impossible at the moment. This is a classic phenomenon with bubble econonics. We don't have the ability to make the shift like Japan, Europe, and North America.

by Nic Johnson | 24th Sep 18, 6:37pm 1537771061

'Some market funding just got cheaper for ANZ today. Its traded $300 mln floating rate note issue, which mature on 22 March 2019, just got reset to yield 2.92% which is a drop from 3.03% from their previous reset.'

Trading 18 month funding for 30 year exposure.. That'll last, until it doesn't!

by mja | 24th Sep 18, 6:47pm 1537771651

You may be surprised, but you are more likely to find a moa than a 30 year fixed rate mortgage in NZ. The average duration of fixed rate lending in NZ would be about 18mths, matching mortgage lending with funding.

by Nic Johnson | 24th Sep 18, 7:00pm 1537772411

not surprised at all mja..

Like I said, 'that will last until it doesn't!'

Northern Rock were posting record mortgage sales until shortly before they went pop. 125% mortgages (which is the same as not having regulatory measures on valuations for lenders) and 6-7 times interest only debt as the alternative. It was all great and 'it will last until it doesn't!'

http://ig-legacy.ft.com/content/2abdeb34-fda8-11e1-8e36-00144feabdc0#ax…

by Andrewj | 24th Sep 18, 6:53pm 1537772016

As Bloomberg reports, a shock jump in Hong Kong’s currency is signaling a decade-long liquidity party is coming to an end. That may be bad news for the city’s housing market.

Interbank rates from overnight to 3-months, have exploded higher as banks scramble for liquidity... overnight rates are now four times as high as they were last week...

“The short-Hong Kong dollar carry trade has come to an end,” said Ken Peng, an investment strategist at Citi Private Bank in Hong Kong. “Friday’s move suggests borrowing costs in Hong Kong have tightened a lot and will tighten further.”

https://www.zerohedge.com/news/2018-09-23/hong-kong-money-markets-explo…

by Andrewj | 24th Sep 18, 8:52pm 1537779166

Hong Kong, China, And The Nightmare of Forex Piles
http://www.alhambrapartners.com/2018/04/13/hong-kong-china-and-the-nigh…

by Andrewj | 24th Sep 18, 8:54pm 1537779251

What we know about what’s going on in Hong Kong is limited. That’s a real shame because I have no doubt what has been transpiring is important for a lot more than Hong Kong and the short run. The connections are too obvious for it to run any other way.

I’ve been asked several times to diagram or further explain what I think is happening. There’s just no way to do so, no matter how much anyone might want to. I certainly do, believe me. Information is at best highly limited, and more likely than not the transactions will never come to light.
http://www.alhambrapartners.com/2018/02/16/a-rough-sketch-for-hong-kong…

by rastus1 | 24th Sep 18, 7:21pm 1537773715

Butter today 500g $6.30 at countdown. I think this should be added to the daily market reports. Opted for marg.

by Wilco | 24th Sep 18, 7:22pm 1537773778

Talk about unintended consequences. As we know the reserve bank sets the capital requirements of each asset class the banks lend on. My bank manager offered a lower interest rate if we changed one of our 5 year loans to a 2 year one. This is not the fixed or floating interest term of the loan but the complete term upon which it becomes repayable. This in turn reduced the bank's capital requirement with the RB..Their assurances that 'no worries we'll roll the loan over at maturity' scares the hell out of me.Buying a commercial or farming property is a long term commitment of say 10 to 20 years, to only be able to fund it for 2 years at a time makes the purchaser really vulnerable. As a comparison back when I started bank loans were for 20 to 25 years. If widespread this move by the banks must raise our risk profile hugely.

by ngakonui gold | 24th Sep 18, 7:45pm 1537775138

Good to see SBS offering a reasonable rate for sums of 1k.HBL another and some of the Credit Unions.
Big banks seem to require 5 to 10 k to get even close.