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 here either.
NEW DROUGHT MONITOR
New Zealand now has an official scientific way to measure drought and its severity, by region. The New Zealand Drought Index (NZDI) combines four commonly-used drought indicators: The Standardised Precipitation Index (SPI); Soil Moisture Deficit (SMD); Soil Moisture Deficit Anomaly (SMDA); and Potential Evapotranspiration Deficit (PED) to show levels of dryness and when that turns into drought conditions. It will be updated daily, here.
INTERNAL ACCOUNTANT GET TOP JOB
NZ Post has a new chief executive following the retirement of Brian Roche. An extensive international search turned up no-one better than their existing CFO who gets the gig in a company that is struggling with mail volumes and related legacy costs, even as its parcel and courier business is healthy. It’s a typical issue for state-owned postal systems. Hopefully they have avoided this issue, but it never seems a good indicator of future confidence and growth when the top accountant takes the top job. Cost paring is the signal to the troops.
OFF THE BOIL
Investors’ confidence in the commercial property market has declined in most parts of the country and moved into negative territory in Christchurch, Whangarei and Palmerston North, according to the latest Commercial Property Investor Confidence Survey by Colliers International. Net confidence declined but remained in positive territory in the Auckland, Hamilton, Tauranga, Rotorua, Nelson, Dunedin and Queenstown markets, and rose in Wellington and Napier/Hastings. The biggest drop was in Dunedin where it declined from net positive of 25% in the December survey to a net positive of 10% in March, followed by Auckland where it declined from a net positive of 59% to 47%.
RECORD ANNUAL TRADE DEFICIT
Analysts were expecting a $180 mln trade surplus in February, but got a small -$18 mln deficit instead. The annual trade deficit for the year ended February 2017 was $3.8 bln, the largest since April 2009. The export of a large drilling platform in 2016 inflated annual exports and reduced the annual trade deficit over the period from February 2016 to January 2017. Drilling platforms, some worth hundreds of millions of dollars, are counted in goods trade as imports when they arrive in New Zealand and as exports when they leave, even though they are typically leased for the period they are in New Zealand. If the drilling platform export of 2016 is excluded, the annual trade deficit of March 2016 would have been $4.0 bln, just under the $4.1 bln deficit in April 2009, when the annual deficit was last over $4 bln.
A TOP ECONOMIST
RBNZ senior adviser Leo Krippner, has won a prestigious international economics prize for his work on yield curve modelling with a lower bound for interest rates. A London magazine hands out 17 separate awards and Dr Krippner won this year’s Economics in Central Banking award.
ANZ SAYS DAIRY FARMERS NEED TO REDUCE DEBT
ANZ has reduced its Fonterra 2016/17 milk price forecast, although it still remains above the co-operative’s own forecast. ANZ sees opening 2017/18 Fonterra milk price forecast in the high $5/kg range.
Yield and demand have both fallen in today’s 2037 Government bond issue. The tender of NZ$150 mln 2037’s received bids of NZ$421 mln at a coverage ratio of 2.8, the lowest since December; average weighted yield of 3.84%, 10 bps below the previous tender. It is a yield that has fallen for the past four issues.
In Australia, both ANZ and Westpac have raised their interest rates for interest-only loans, part of a crackdown on risky lending as concerns about their property bubble are rising. The changes will affect owner-occupiers and investors as well as self-managed retirees, with rates going up between +11 and +25 bps. At the same time as hiking rates for interest-only loans, Westpac has cut one-year fixed rates for owner occupiers by 40 basis points, to 3.99%.
A SET CLOSER
A Royal Commission into Banking in Australia is probably a step closer. One Government member in the Senate has said he will cross the floor and vote for it. It is likely to pass in their upper chamber, but the situation is less certain in the lower chamber. Still, Government members may cross the floor there too. It is an issue that binds the left with the far right in Aussie politics. The major banks are desperate to avoid passage.
WHOLESALE RATES HOLD
Rates for terms of are up +1 bp today. The 90 day bank bill is also up +1 bp and now at 1.98%.
NZ DOLLAR STABLE
The NZD is basically unchanged from this time yesterday at 70.3 USc. On the cross rates we are now at 92.1 AUc and 65.3 euro cents. The TWI-5 is still at 75.2.
You can now see an animation of this chart. Click on it, or click here.