What happened Wednesday

A review of things you need to know before you go home on Wednesday; more rate cuts, higher home loan values approved, regions stage a comeback, swap rates rise

20th May 15, 4:00pm by David Chaston

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

TODAY'S MORTGAGE RATE CHANGES
The Cooperative Bank changed one rate today, dropping its one year fixed rate to 5.29% from 5.59%. Their new rate is a very good low standard rate for a fixed one year term and the best among banks, but not as low as Sovereign's one year 'special' of 5.10%.

TODAY'S DEPOSIT RATE CHANGES
UDC today cut between -5 and -10 bps from all its term deposit offers for the terms of 6 months to 5 years. As UDC is 100% owned by ANZ perhaps this is a signal that ANZ will be shaving similar amounts off their term deposit offers soon too. But we have no inside knowledge on that.

HIGHER AVERAGE APPROVAL VALUE
The number of new home loans approved last week was showing their first signs of a winter slowdown. The the values approved are not.

'VERY CHALLENGING'
Despite some signs of stabilising dairy prices, economists see any chance of a sharp rebound in returns as a 'distant prospect'.

REGIONAL COMEBACK I
ANZ's nationwide measure of composite economic activity increased 1.1% q/q (3.5% y/y), with the North Island economy expanding 1.2% in the quarter and the South Island growing 1.0% q/q. All but one region reported an increase in economic activity in the March quarter. That’s a broad-based economic expansion in operation. Regional New Zealand grew at a faster pace than the three main urban centres in the March quarter, catching closer to the better growth reported in big centres in earlier quarters.

REGIONAL COMEBACK II
Supporting today's ANZ report, rents on Trade Me Property are rising faster in the regions, less in the main centres.

EFTPOS ADDED TO BNZ'S PAYCLIP
BNZ says it has upgraded its PayClip product, that attaches to smartphones enabling SME owners to use their mobile phones as credit and debit card payment machines. The bank says a wider range of cards are now able to be used including EFTPOS. It already accepts Visa and MasterCard. Available since September 2013, BNZ says 1,200 of its customers are using PayClip. In 2013 Mint Wireless, the Australian provider of the PayClip product, said BNZ had ordered 4,000 of the card readers.

WHOLESALE RATES RISE
Wholesale swap rates rose today following Wall Street's moves higher. There was a further steepening bias. Rates for up to three years were +1 bps higher, for 4 year +2 bps higher, for 5 and 7 years they are +3 bps up, and for 10 years are up +4 bps from yesterday. However the 90 day bank bill rate slipped back today by -1 bps to 3.49%. Yields on NZGBs in secondary markets rose about +4 bps erasing all of yesterday's reductions.

NZ DOLLAR RANGEBOUND
The New Zealand dollar suffered slightly from a stronger USD today and gained from a weaker euro. As of late this afternoon it is at 73.7 USc, 92.9 AUc, 66.1 euro cents, and the TWI-5 is at 77.2. Check our real-time charts here.

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

Daily exchange rates

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Source: RBNZ

Source: CoinDesk

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12 Comments

by iconoclast | 20th May 15, 4:09pm 1432094941

The silence of the New Zealand lambs

Big Business can't manage buying multiple residential houses

The Business of Profit Shifting

How McDonald's dodged half a billion dollars in tax
Everytime you eat at MacDonalds the profit ends up in Luxembourg - via Singapore
http://www.smh.com.au/business/the-economy/how-mcdonalds-dodged-half-a-…

Hockey's $5 billion Big Pharma budget saving evaporates
Capital stripping
Cost of selling pharmaceuticals 4 times more expensive in AU than US
Profits are shifted to Singapore via cost-loading and intellectual property and royalties
Consider this analysis from University of NSW accounting academic Jeff Knapp
http://www.theage.com.au/business/comment-and-analysis/pfizer-is-a-tax-…

by KH | 20th May 15, 4:29pm 1432096156

Well Icon. We could just slap the a 15% (like GST) on each and every payment going out of the nation.
Wriggle and twist as they like sooner or later they will have to move their cash. We don't have to worry if it's called a profit or called an intellectual property payment.
A howl will go up of course. Because it will also cost me everytime I download to my kindle for US$3.99 or duck over the ditch for a concert. But is that a bad thing. No.

by Kate | 20th May 15, 9:48pm 1432115332

No it is not a bad thing - I agree - given the amount that would be collected from these uber profitable multinational corporates would mean my PAYE could go down CONSIDERABLY.

We (the world) don't really have a problem paying for the modern welfare state (i.e., free health care, free education, social housing etc.) - we have a problem collecting from those entities who can afford to pay for it.

Elizabeth Warren nails it in the US.

by iconoclast | 20th May 15, 4:21pm 1432095698

All the supply-siders and crisis-deniers have gone quiet

Ever since JK did a half-pike and triple-twist from the 3 metre board and landed on the 12 metre platform

by Kumbel | 20th May 15, 5:14pm 1432098853

If you are referring to advocates of supply-side reform to fix NZ house prices, I am still puddling away here. It's a lot harder to get a word in edgewise these days but let me assure you that nothing JK has done has convinced me that affordable housing is just around the corner. It may take a few months but we will all wake up soon enough to the fact that tinkering with demand is just not going to cut it.

by cowboy | 20th May 15, 5:18pm 1432099109

I notice that a development subdivision at Summerheights (near Massey University) in Palmerston North has been ongoing to six months. Lots of expensive equipment just sitting around, now just a lot of empty sections sitting around. Can't imagine that's giving good returns, and six months at least still not a single house to sleep in.

And here we were thinking you just click the little Green Square and move the icon of a bulldozer over the squares you want the houses to pop up on. fancy that the real world takes more than that...

by Kate | 20th May 15, 9:57pm 1432115878

Must pop up the hill to see it. But six months isn't a long time in terms of developing a sub-division. I think you're referring to this one;

http://www.realestate.co.nz/2554765

Plenty of sections already sold. And from purchase to start of a build would normally run to another 6 months (sometimes longer if your having architectural plans drawn up).

by iconoclast | 20th May 15, 6:06pm 1432101979

Tinkering at the edges with do nothing

Slam the door shut UNTIL supply catches up

Plus the infrastructure, and schools, and hospitals, and roads, and utilities

by sharetrader | 20th May 15, 6:05pm 1432101907

nothing JK has ever done has convinced me of his financial prowess, hes a very good salesman though

by Kate | 20th May 15, 9:52pm 1432115525

A credit crisis will fix NZ house prices.

by profile | 20th May 15, 9:23pm 1432113826

Time to invest in the mattress market. "HSBC has become one of the biggest global banks to say it will begin charging clients on deposits in a basket of European currencies."

http://www.ft.com/cms/s/0/6ad3f99a-fe16-11e4-8efb-00144feabdc0.html

by Kate | 20th May 15, 9:41pm 1432114897

Or safe deposit box market - which amounts to I suppose paying for holdings as well but at least your out of the system (i.e., OBR and all that jazz).