Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
HSBC ended most of its low Premier specials, except its two year fixed offer which it cut dramatically to 3.69%, the lowest bank mortgage rate ever.
TERM DEPOSIT RATE CHANGES
No changes to report today.
AUCTIONS STILL ATTRACTING VENDORS
The sales rates ranged from 21% to 47% at major Auckland realtor Barfoot & Thompson’s main auctions last week. Overall just on a third of those auctioned were sold under the hammer, a success rate similar to most weeks in the past three or four months. Activity post auction pushes that up to nearer 50% (presumably after vendors get to ponder the new state of the market).
‘NEGATIVE’ CREDIT OUTLOOK
Ratings agency Fitch says Fonterra has structural issues it needs to address. It wants Fonterra to prioritise the strength of its balance sheet over payments to farmer shareholders. Meanwhile Mike Hurrell got the Fonterra CEO job permanently.
For the first time ever, the eleven active retail banks in New Zealand reported assets exceeding $½ tln as at December 2018. Ninety percent of these are in the books of the four big Aussie banks. This data is in our updated Bank Leverage page and it shows that leverage levels remain little changed, and returns on shareholder equity are at a high average of 13.6% after tax, and higher at most Aussie-owned banks.
CAR SALES STAY HIGH
February car sales remained at high levels. And this is despite a drought of rental car sales in the month. The contrast with house sales is somewhat surprising. SUV sales were slightly lower than usual, except for the small luxury category. 7,580 cars were sold in the month, a +2% gain above the same month a year ago. In fact it is only the second month in the past six where a year-on-year rise has been recorded, all the more impressive given the low sales to rental car companies. Sales of commercial vehicles stayed high, but were unchanged from February 2018. (In Australia, lower house sales are being blamed for declining car sales there.)
The ANZ World Commodity Price Index pushed up 2.8% m/m in February, continuing the upward shift that commenced in January. Positive price movements were recorded for most sectors but the +6.6% lift in dairy prices was the main driver.
A CANARY MOMENT?
In Australia, a $120 mln residential mortgage bond made up of Suncorp mortgages suffered defaults to a trigger level where investors may not get all their money back. It is being described as a ‘canary’ moment. But only time will tell. However, it is probably the first ever such event across all RMBS in Australia.
Asian equity markets are all down today, falling by about the same as Wall Street in early trading. Australia and New Zealand are lower too. Most of these falls are around about -½% on the day.
SWAP RATES FIRM
Local swap rates are also lower today, with the 2 year down -1 bp, the five year a bit more, and the ten year down -2 bps. The UST 10yr yield is little-changed at 2.73%. Their 2-10 curve is slightly lower at +18 bps while their 1-5 curve remains barely inverted at -1 bp. The Aussie Govt 10yr is up +2 bps to 2.17%, the China Govt 10yr is up +3 bps to 3.24%, while the NZ Govt 10 yr is down -1 bp so far today to 2.20%. The 90 day bank bill rate is up to 1.91%.
The bitcoin price is down to US$3,705, a fall of -2.6% today.
The NZD has firmed slightly to 68.2 USc. And we are even firmer against the Aussie at 96.3 AUc, but little-changed at 60.1 euro cents. That puts the TWI-5 up at 72.8.
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