Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to home loan rates today.
TERM DEPOSIT RATE CHANGES
BNZ have launched a 3.45% 'special' for an eight month term. That is a rise of +25 bps.
Professional analysts weren't impressed with the manufacturing data Stats NZ released today for the September quarter. At first blush this may seem a bit odd as manufacturing sales were up +7.1% year-on-year. But so were inventories and they were higher by a substantial amount with raw materials up +12.3% and finished goods up +11.3%. So a lot of work is going into unsold stocks and that is a worry. Worse, the volume data indicates that those sales values have been spruiked by price increases; sales volumes were actually unchanged year-on-year. You can see why the pros are unimpressed.
BNZ announced today that it will be starting a shared home ownership scheme with a "third party" who can take the place of the Bank of Mum & Dad for those who don't have access to that resource. It will launch in 2019 for first home buyers in Auckland as a trial. The idea is that the 'third party' shares in the equity gain as the house value rises, to be bought out over time. All the risks however are for the buyer, and the buyout obligation to the 'third party' is on top of the mortgage payment to the bank. There are no details yet of what the 'third party' requires to participate. These sort of schemes have been running for years in other markets - but implicit is the the underpinning of rising prices.
EQUITIES SLIDING AGAIN
Equity markets are lower again today. The NZX50 is down -0.9%, the ASX200 is -2.0% and Tokyo is down -2.2%. Shanghai has opened down -0.9% in mid-morning trading and Hong Kong is down -1.8%. These results today are building on a long string of prior declines and are not a good sign for Euro or American markets later tonight.
ANOTHER CORPORATE BOND ISSUE COMING
T R Group has mandated CBA and Westpac to engage wholesale debt investors on a potential 5 year New Zealand dollar bond issue, with an expected rating of Baa3.
A KEY CORNER IS WEAK
In a bit of a surprise, total dwelling finance in Australia pipped higher in October from September even though it was unchanged year-on-year. This is masking the dire position that new house builds are in however, down almost -2% month-on-month and down -12% year-on-year. Finance for resales is the thing keeping this market going. The Aussie housing mortgage markets may be in a tough place but almost all of that is because of new-builds.
And staying in Australia, the OECD has warned them to prepare for a house-price induced downward spiral that could end their very long run of growth. They say a soft landing is the most likely outcome but the odds for a hard landing, while small, are rising.
SWAP RATES SOFTER
Wholesale swap rates are a little lower today, down -1 bps for two years, down -2 bps for five years, and down -4 bps for ten years. The UST 10yr is now just under 2.84% which is down -2 bps in off-market trading today. The 2-10 curve is holding at just below +14 bps. The 2-5 curve is still negative however. The Aussie Govt 10yr is at 2.43% and down another -1 bp today, the China Govt 10yr is down -2 bps at 3.30%, while the NZ Govt 10 yr is at 2.46%, down -2 bps today. The 90 day bank bill rate is down -1 bp to 1.98%.
The bitcoin price is now at US$3,512 and down -3% from where we started today.
The Kiwi dollar is also little changed and still at 68.7 USc. On the cross rates we are similar at 95.3 AUc and down at 60.2 euro cents. That leaves the TWI-5 at 73.3.
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