Here are the key things you need to know before you leave work today.
TODAY'S MORTGAGE RATE CHANGES
HSBC have announced reductions to their three year Premier home loan rate, down -20 bps to 5.79%, and their five year rate is down -30 bps to 6.49%. These changes are effective tomorrow. RESIMAC has also announced reductions which are effective today. Their changes are across the board and involve a flattening of their offer.There is now only 43 bps difference between their one year rate of 6.03% to their five year rate of 6.50%. Heretaunga Building Society have also reduced a home loan rate.
TODAY'S DEPOSIT RATE CHANGES
HSBC have announced reduced term deposit offers which also involve a significant flattening. Their one year rate has been reduced by -10 bps, which their 5 year offer is down by -50 bps. TSB Bank also reduced term deposit rates today.
A SIZEABLE EXPORTER
The international education industry in New Zealand has grown to be a sizeable industry, according to new data out today. It is now valued at almost $3 bln per year to the local economy. twelve percent more students in 2014 than the previous year generated 13% more fee income for education providers. The Private Training Establishment sector, with student numbers up 21% and Institutes of Technology and Polytechnics, up 16% led the increases.
WHITE GOLD TARNISHED
The latest dairy auction early this morning saw prices rise for the third event in a row, but only up by +1% in US dollar terms. The key whole milk powder product was up by +3.8%. This is when many industry experts were expecting increases, but they are just not strong enough to support Fonterra's payout forecast and there is now widespread expectations that this will be cut again.
INFLATION IS DEAD
Today's December quarter CPI data shows that we have little inflationary pressure. In the quarter prices went down. Actually, as BNZ has pointed out, we have the opposite of 'stagflation'; instead of high inflation and no growth (= stagflation), we have good growth and no inflation. That has to be better than the alternative. Pay packets now can buy more. You would think that would give the opportunity to pay down debt. But with the cost of debt being cheap, I doubt that will happen. What the RBNZ thinks will be revealed Thursday week.
CONSUMER POWER
One of the sectors where prices are falling the fastest is telecommunications. Today Vodafone confirmed it is well on the way to shedding 250 staff, mimicking Spark's moves. In this area, New Zealand consumers choose 'cheaper' over local jobs.
A QUICK $10 BLN
The value of houses in New Zealand rose +$10 bln in the quarter to September, according to data released by the RBNZ today. All up they are now 'worth' $745.0 bln, a +5.2% rise over the year.
WHOLESALE RATES
The local swap rates fell -3 bps today across the curve. The 90 day bank bill rate is back up +1 bp to 3.67%.
NZ DOLLAR FALLS
Check our real-time charts here. The NZ dollar lost about a cent today which started overnight before the dairy auction. It is now at 76.4 USc, at 93.5 AUc, and the TWI is now at 78.7.
You can now see an animation of this chart. Click on it, or click here.
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3 Comments
Is the RBNZ fight against inflation still necessary? How much damage is the high interest rate policy and hiking bias doing to the general economy?
Is an OCR increase really going to dampen demand for Auckland housing by immigrants and off shore buyers?
Who is going to compensate non Auckland home owners for the decline in their home value while paying high interest rates?
Is the damage to farmers, SMEs, and householders intentional?
If deflation really sets in, it may be too late to fix it with a couple of minor cuts to interest rates.
Its the drop in demand thats worrying me. Hows China going to cope with the big drop in demand occuring in the West?
Is the drop in demand just deflation in action?
Been talking to a farming friend who tells me he is on a crazy cost management drive, its cut,cut,cut, but all those cuts are someone elses income. He tells me that he can no longer rely on a stable income, he has no choice but to generate profits by cutting costs.
http://angelachaoblog.com/2015/01/20/dry-bulk-market-recovery-is-a-no-s…
Your friend is wise. If you missed it, here is an interesting piece on the effect and timing of the Aussie FTA with China on dairy product demand http://www.bbc.com/news/world-australia-30705467.
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