A review of things you need to know before you go home Friday; no rate changes, consent levels rise but not by enough, SMEs pay bills fast, Warminger fine set, swap rates zoom higher

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

MORTGAGE RATE CHANGES
No changes today.

DEPOSIT RATE CHANGES
No changes today.

A LIFT, BUT …
May data brought a rise in dwelling consents nationally, but they still lag well behind the growing demand in Auckland where their housing shortage continues to worsen. However, the Auckland data is showing a preference towards denser dwelling types.

MAY DATA TURBOCHARGES Q2
Infometrics is reporting: “There was a solid lift in non-residential building consents in May, with consent values coming in at a respectable $605 mln for the month. A total of $6.5 bln non-residential consents have been issued over the past year, owing to strong growth in Auckland and other parts of the country outside Canterbury.”

HEROS & VILLAINS
Dun & Bradstreet are reporting that the vast majority of businesses pay their bills on time. In fact, they say the high (80.5%) rate that do this suggests the overall economic environment “remains solid”. And the average late payment period is less than six days. But their detail shows it is large businesses that are the laggards, paying on average 20 days late (an abusing their dominance on the trade payment relationship. It may be that our large businesses tend to be Aussie-owned, which has a real culture problem with on-time payment.) Auckland businesses are the slowest of all main regions, although they are improving the quickest. (Rural businesses pay the quickest. Utilities take the longest to pay.)

JUDGE HITS WARMINGER HARD
The penalty has been imposed on Mark Warminger, the ex Milford Asset Manager found guilty of market manipulation. The High Court has fined him $400,000 for two contraventions of the Securities Markets Act 1988. The judge found that the starting point for the two contraventions was a penalty of $500,000 and applied a reduction in penalty of $100,000 “to recognise Mr Warminger’s personal circumstances”. Warminger has also automatically received a 5 year management ban. Both Warminger and the FMA are each appealing the original court result.

THE NEXT BIG THING?
A major report
released today highlights the investment opportunities available in horticulture. Apples and avocados show meaningful potential. But the report says the Zespri single-desk system is holding that industry back.

WHERE THE CORRECTION STARTS?
Hong Kong has the most overpriced housing in the world, certainly when benchmarked against incomes. Now local analysts are calling the top of their market, with one of them predicting a -30% fall from here.

A TAX THAT DOESN’T WORK
In Vancouver, tax data there is showing that their foreign buyer tax is not deterring foreign buyers. Tax collections from it are high, so many are just paying it. Plus, local real estate people say there are “a number of creative ways to get around the tax”.

WHOLESALE RATES JUMP
Local rates have raced higher and gotten steeper today in a major move up. The 2 year rate was up +5 bps to 2.33%, 5 year was up +8 bps to 2.87% and 10 year was up +9 bps to 3.36%. The 90 day bank bill rate is up +2 bps to 1.98%. (But this shift higher only puts the two year back up the level that we had for the Mid-March to mid-May period, and to be frank, it won’t really be meaningful until the two year rate goes back up to 2.50% or above. And to be meaningful, the 90 day bank bill rate will need to rise to above 2.10%.)

NZ DOLLAR RESILIENT
The bond market changes initially hurt the Kiwi currency but it has since shrugged off the depression. In fact, we are now back to about the same levels we had at this time yesterday. The NZD is back at 73.2 USc. On the cross rates we are trading at 95 AUc and at 64 euro cents. That takes the TWI-5 to 76.9.

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