A review of things you need to know before you go home Friday; HSBC shuffles mortgage rates; inflation expectations rise; some DHBs under pressure; global productivity lower; local rates rise; NZD up from this morning

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

MORTGAGE RATE CHANGES
HSBC has adjusted some of its mortgage rates today. The 1 yr and 2 yr rates have been decreased by -10 bps and the 18 mnth rate is up +10 bps. The 1 yr, 18 mnth, and 2 yr rates are at 4.09%, 4.09% and 4.29% respectively.

DEPOSIT RATE CHANGES
No changes to deposit rates today.

INFLATION EXPECTATIONS RISE
In the RBNZ Survey of Expectations released today, inflation expectations have risen to +1.92% and +2.17% for the coming one and two years respectively. Quarterly inflation for the Jun-17 quarter is expected to be +0.41% and in the Sep-17 quarter, prices are expected to rise by +0.53%. Interest rates and unemployment are expected to increase in the coming year and GDP and exchange rates are expected to decrease.

DISTRICT HEALTH BOARD  PERFORMANCE
Analysis of District Health Boards’ (DHBs) performance across New Zealand, up to the financial year ended 2016, shows that even though Government spending on health has increased in real terms, changes in the demographics have resulted in a number of DHBs showing signs of financial pressure and some are having difficulty meeting financial targets. Rising personnel costs in hospitals have been the key cost driver. Capital expenditure at some DHBs is also strained. Of the major centres, Auckland seems to be meeting most KPIs but Canterbury and Wellington seem to be under some pressure. The KPIs in Wellington have worsened in 2016.

COLLAPSE OF GLOBAL PRODUCTIVITY GROWTH
As per a report from Moody’s, a combination of factors, including weak investment after the financial crisis, business pessimism and political uncertainty have resulted in a decline of productivity globally. This decline, along with lower corporate profitability and government tax base, remains a significant risk to economic growth. Moody’s expects productivity to rebound this year, but if it remains at the average level from 2011 to 2016, global growth could be as low as 2.5% or 3%, compared to the expected 3.5%.

DOUBLE IN TEN YEARS
Latest statistics from Australian Bureau of Statistics value the natural resources in Australia at AU$6.14 bln as at June 2016. This is up AU$302 mln from last year and up AU$3.1 bln from 2006. Although not all elements of the environment can be captured in this analysis, a large proportion is captured. Land was the primary environmental asset in Australia, making up 83% of the total value.

C919 MAIDEN FLIGHT
A passenger jet built by a Chinese state owned company is set to take its first official flight today. This is an important milestone in China’s bid to compete in a jet market dominated by Boeing and Airbus and expected to be worth over $2 tln over the next 20 years. While manufactured in China, the plane relies on a number overseas suppliers for engines and other components.

APPLE LARGEST CORPORATE BOND INVESTOR
According to Apple’s latest company filings, it has $148 bln invested in corporate bonds, which is more than the total assets at the world’s largest fixed-income fund – Vanguard Total Bond Market Index Fund, which has $145 bln invested in all fixed income securities. In addition to the corporate bonds, Apple has $53 bln in Treasuries and $21 bln in mortgage backed securities.

WHOLESALE RATES EDGE HIGHER
Local swap rates are up 1 – 2 bps across the curve. The 2 yr rate is at 2.33% and the 10 yr rate is at 3.42%. The 90 day bank bill is unchanged at 1.98%.

NZ DOLLAR BENEFITS FROM HIGHER INFLATION EXPECTATIONS
After underperforming against most majors overnight, the NZD traded sideways for most of the day until it benefited from increased inflation expectations and jumped 20 points against the USD to be 68.8 USc. Against the AUD we are trading at 93.2 AUc. Against the EUR we are at 62.7 euro cents. The TWI-5 is now at 73.6, which is down from at the same time yesterday.

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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