A review of things you need to know before you go home Friday; FEI raises some TD rates, businesses confident, building consents stagnate, big balance sheet, APRA & ACCC rule, employment confidence slips, butter soars

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

MORTGAGE RATE CHANGES
No changes to report today.

DEPOSIT RATE CHANGES
FE Investments have a new 5.80% eight month special. They have also changed their one, two and three year offers.

‘ANAEROBIC THRESHOLD’
ANZ’s monthly business confidence report shows businesses have less spring in their step. ANZ reports “a net 11% of businesses are optimistic about the year ahead. That’s down 6 points on February and takes sentiment back to average levels. Sentiment dropped sharply in retailing and construction, and turned negative within the agriculture sector. Businesses are striding out nonetheless. A net 39% of businesses expect better times for their own business. This series has a long-run average of +28. Sentiment is well above that. Details of the survey were generally still full of endorphins.” 

STAGNATING
New housing consents in February might have risen +14% from the previous month, but were still only +1.6% above February 2016’s total. Weakness in the previous months meant there were -3.6% fewer new dwelling consents in the three months to February compared to the previous year. Although this apparent revival in growth is encouraging, the housing stock will remain well short of what is required to meet market demand unless there is continued meaningful growth in consents year-on-year.

SOFTENING
The value of non-residential building consents slipped -2.5% between January and February but were still up 10% from February last year. Waikato, Wellington, and Otago saw strong increases in consent levels relative to last year due to lifts in consents for commercial buildings and, in the case of Otago, a weak result in February 2016. However, the lack of growth elsewhere suggests a softening during 2017.

A BIG BALANCE SHEET
Statistics NZ today released its first set of reports of the National Balance Sheet, covering the years from 2007 to 2015. They say rising property values helped lift New Zealand’s net worth to just over $1.39 tln at 31 March 2015, up +9% on 2014 covering Government, Companies and Households. While comprehensive and interesting, the data for the ‘Household” category is slightly different to what the RBNZ publish in their C22 series. The difference is essentially that Stats NZ classify residential property investment by households as a business activity while the RBNZ leaves it as a household asset.

HEARTLAND SEEKS A$20M FROM SUBORDINATED NOTE ISSUE
Heartland Bank is looking to borrow about A$20 million through a 10-year subordinated note issue to Australian and New Zealand wholesale investors. The notes are being priced at an indicative margin of 415 bps over bank bills. The notes include a non-viability conversion trigger and will contribute to Heartland’s total regulatory capital ratio being tier 2 capital. Fitch Ratings has assigned the notes a BBB- credit rating, one notch below Heartland’s BBB rating. Early redemption by Heartland after five years is possible.

AUSSIES IMPOSE THEMSELVES ON MAJOR NZ BANKS
Aussie regulator APRA is tightening the mortgage lending reins on parents of NZ’s big 4 banks. They want heightened oversight of banks’ interest-only mortgages, property investor lending, serviceability metrics and mortgage securitisation.

DOWN BUT NOT OUT
Westpac has released its quarterly employment confidence index today, and it has fallen but off a nine-year high. New Zealand workers have become a bit less optimistic about the state of the labour market, with increased concern about job security and opportunities. However, this recent easing in confidence follows a solid lift in the back half of 2016, and leaves employment confidence at levels that are still well up on what we were seeing this time last year. Despite the increased concern around job opportunities, expectations for earnings growth remain resilient.

BUTTER DEMAND SOARS
The USDA has updated its dairy price tracking today, and things are pretty much as we see in the GDT auction results. However, their latest report shows the price for butter racing higher recently. At over US$5,200/tonne, butter has never been higher since we started tracing it in 2003. In NZ$ it is now up to a remarkable $7,400/tonne. Going the other way, SMP seems to have taken a recent skid.

TAX DODGER DEFEATS OLIGOPOLISTS
In Australia banks including the parents of ASB, BNZ and Westpac NZ were looking for an exemption to jointly negotiate with Apple over ApplePay. But the ACCC, their competition authority, has blocked this push and restrained them from collectively boycotting ApplePay. Apple wins again. So the winner is the non-tax paying entity here, the loser the tax paying ones.

WHOLESALE RATES STEEPEN
Wholesale swap rates rose +1 bp for the two year, rose +2 bps for the five year, and rose +3 bps for the ten year today. The 90 day bank bill also rose, by +1 bp and is now at 2.00%.

NZ DOLLAR UNDER 70 USc
The NZD is now down to 69.9 USc today, slipping below 70 USc for the first time in twelve days. On the cross rates, against the AUD and EUR we now trade at 91.5 AUc and 65.5 euro cents respectively. Against the whole basket we are down marginally compared to this time yesterday with the TWI-5 now at 75.

You can now see an animation of this chart. Click on it, or click here.

Daily exchange rates

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for(i=0;i

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