A review of things you need to know before you go home on Monday; SBS Bank cuts mortgage rates, used import registrations stable, commodity prices rise, Westpac wins big, swaps slip, NZD holds, & more

A review of things you need to know before you go home on Monday; SBS Bank cuts mortgage rates, used import registrations stable, commodity prices rise, Westpac wins big, swaps slip, NZD holds, & more
ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
SBS Bank has set all its home loan rates at 3.99% for terms between one and three years, and 4.49 for four and five years.

TERM DEPOSIT RATE CHANGES
The Police Credit Union trimmed between -5 an d-15 bps from some key term deposit rates.

BACK TO WHERE IT WAS THREE YEARS AGO
Registrations of used car imports are stable, at 10,883 in April, almost identical to the same month a year ago. It looks like it might be ending a long term decline as it has been three months now where the annual rate of these registrations is holding at about 145,000. This is some ways below the 166,000 annual rate it reached in January 2018. The last time it was at 145,000 was in the year to July 2016.

AT $300 MILLION WOULD YOU KEEP OR SELL?
Fonterra looks like to will be flogging off its Tip Top ice cream business. Lining up are three Aussie private equity buyers, plus one UK private equity candidate. Fonterra is selling assets to concentrate on its 'core business'. But remember, Fonterra purchased this business back in 2001 from Peters Ice-cream. (Tip Top's current EBIT is about $25 mln/year.)

COMMODITY PRICES RISE
The ANZ World Commodity Price Index pushed up a strong +2.5% month-on-month in April, following a revised +4.1% rise in March. This puts the index +2.1% ahead of this time last year. The NZD index lifted even more as a result of the lower New Zealand dollar.

BACK TO THE FUTURE
Today, the Government's IR 'reforms' take effect, essentially reverting back to some positions that were in effect a decade ago. The main changes are: removing flexible workplace meal and rest breaks; strengthening collective bargaining and union rights; restoring protections for vulnerable workers, such as those in the cleaning and catering industries, regardless of the size of their employer; and limiting 90-day trials to businesses with fewer than 20 employees.

SHORT-TERMISTS
Bank customers have 96% of their deposits due to mature in less than one year, according to March data (L3) released by the RBNZ today. That is how it has been for the past eight years since this RBNZ L3 series started. Professional investors aren't as conservative, with bank wholesale funding having 61% of this funding due to mature in one year or longer. Banks need this wholesale support to ensure that their maturity profile remains sensible and within regulator tolerances, somethimng it can't rely on retail customers for. Wholesale funding represents 27% of all bank funding.

NOT AN ATTRACTIVE TREND
Accountants PwC today issued a report that highlights declining discretionary incomes in New Zealand cities, and rising ones in key Australian cities. It is a shift that they say makes it very hard to attract key staff to New Zealand.

RISING PROFITS
Westpac today posted a record first half profit (even without a special gain from the sale of its share in Paymark). This means that for the twelve months to March, Westpac NZ probably earned more than $1 bln in "cash earnings".

LOCAL SWAP RATES
Local swap rates are soft today. The two year tenor is down -2 bps, the five year down -3 bps and the ten year is down -4 bps. The UST 10yr rate is unchanged at 2.53% (Wall Street isn't open yet and offshore this market hasn't yet priced in the China trade risk). Their 2-10 curve is still at +20 bps and their negative 1-5 curve now at -8 bps. The Aussie Govt 10yr is down again today to 1.74% (down -5 bps in expectation of an RBA rate cut tomorrow), the China Govt 10yr is also down at 3.39%, down -3 bps, while the New Zealand Govt 10yr is also down -3 bps at 1.89%. The 90 day bank bill rate is unchanged at 1.79%.

NZ DOLLAR HOLDS
The NZ dollar is unchanged at 66.1 USc compared with this time on Friday. Against the Aussie we are fractionally firmer at 94.8 AUc. We are still at 59.1 euro cents. The TWI-5 is now at 71.

BITCOIN HOLDS
Bitcoin is little-changed at US$5,627. Bitcoin is tracked in the chart below.

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

Daily exchange rates

Select chart tabs »

The 'US$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
Loading...
USD 
NZD
End of day UTC
Source: CoinDesk

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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.

15 Comments

Comment Filter

Highlight new comments in the last hr(s).

You might also like to read:

The rate of return on everything (1870 - 2015):
https://economics.harvard.edu/files/economics/files/ms28533.pdf

Reform capitalism or face revolution, billionaires are told at Milken Conference:
https://www.latimes.com/business/la-fi-milken-conference-ray-dalio-20190...

Most businesses for sale have a EBIt to price ratio of somewhere between 2 and 5 . Tip tops is over 10 .

House prices still falling in Sydney, in line with 20% fall forecast. Anz says 5% their loans now underwater, and admits it is getting worse. I dont hear much about this in NZ media but its big news in aussie.
https://www.smh.com.au/federal-election-2019/house-sales-tumble-to-level...

I think you're confusing number of houses sold with prices falling, here's the quote from your link:

"UBS senior economist George Tharenou said the number of home sales had now fallen by 20 per cent over the past year to its lowest level since early 1996."

(no doubt though, that values in OZ are also heading south)

Not 20% yet.

In Sydney, house values dropped 0.8 per cent in April to be down by 11.8 per cent over the past 12 months while in Melbourne they fell by 0.7 per cent last month to be down 12.6 per cent over the past year.

Thats in the last 12 months.

"In the past year alone, the citywide median house price was down 11.5 per cent to $1,027,962, according to Domain’s latest quarterly house price report, released this week. Since the peak in 2017, it has fallen 14.3 per cent."

So not 20% , not yet anyway.

And its starting to ripple outwards :
"House prices in regional NSW’s two biggest cities have reflected Sydney’s falls but other areas have recorded strong growth, according to new data."
https://www.domain.com.au/news/wollongong-newcastle-house-prices-dip-but...

Keep reading, you will find:
"Overall dwelling values in Sydney dropped by 0.7 per cent to be 10.9 per cent lower over the year. Since their peak in September 2017, Sydney dwelling values have fallen by 14.5 per cent."

So indeed not a 20% fall

Some bedtime reading. Interesting article on cryptos (keep away)..

https://octavianreport.com/article/nouriel-roubini-cryptocurrency-blockc...

Is it the end of the crypto bubble or has it only just started? Most people don't realize that the most recent "peak to trough" is not the largest in magnitude in the history of bitcoin. Furthermore, I have used XRP for crossborder payments. I notice Roubini makes no mention of that functionality.

Disclaimer: I own XRP, BTC, ETH, and BCC. I am under no illusion that all could not fall to zero in fiat.

The link only talks about older crypto. What about "3rd Gen" such as EOS which is much faster transactions/free and apparently able to scale. people need to stop thinking alot of these "alt coins" are currency. its not what some are made for.
The Technology is still very young and they are getting better and faster all the time. My guess is most of the Top 10 cryptos wont be there in 5 years time but somthing better. Hardest trick is trying to keep up with what is going to be better..
Huge Risks, Socialists Govt feel threatened, cant control it or tax as easily.
Disclaimer... I own 12 different cryptos but mostly in EOS.

My question is what are you actually buying? Technology, currency or an asset?

To clarify, yes I am refering to price, from 2017 highs, they are currently down 14.6% in Sydney, and forecast to be 20% by the end of this year. Melbourne is currently about 10 % down. These figures are in the article. So the average sydney house (1 million 2017) drop is 200k by end of year (from 2017 highs). The current Sydney median is now 740k.

Over the weekend, the average price achieved in Sydney auctions was down 50% yoy on strong volume. The median price of houses was down 20%.

50% down is the opposite of 100% up.