A review of things you need to know before you go home on Friday; Westpac cuts mortgage rate, factory PMIs rise, petrol prices fall, NZ #1 in Aussie, swaps rise, NZD holds, & more

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

MORTGAGE RATE CHANGES
Westpac has cut its one year fixed rate offer to 3.99%, matching HSBC Premier as the lowest in the market for any term. Other banks lowering rates to this level wouldn’t surprise us.

TERM DEPOSIT RATE CHANGES
No changes here.

FACTORY SIGNALS IMPROVE
The NZ factory PMI ended 2018 on a robust note. BNZ says its seasonally adjusted reading, of 55.1, was confidently back above its long-term norm (53.4). And it was well above the December 2017 level of 50.8. This extended a broad recovery, from the PMI having looked very weak at the start of 2018, and a bit vulnerable back in July, down at 51.3. The pickup has been underpinned by production. This accelerated to 55.7 in December, from 51.9 in November. Employment was agreeably expansive at 52.2, while new orders stayed encouraging with an index reading of 56.1. This helps allay concerns that the big jump reported in stocks of finished products in December (to 58.6, from 55.3) was a sure sign of weakening demand. The Aussie factory PMI for December was 54.0 and that was a rise too.

PETROL PRICES BACK TO 2010 LEVELS
Petrol prices are back below $2/L on a discounted basis in Auckland, and back to levels last seen in the six month period November 2016 to April 2017 which was before the 11.5c Auckland regional fuel tax was imposed. But for taxes they would be lower. In the rest of the country they are back to levels we had in the six month period May to November 2010 (not a typo). They were lower than that in the 18 month period 2016 to mid 2017). But for tax hikes, these would be lower too. You can hardly blame the oil companies for petrol prices; the Government is grabbing about ~$1/L, more in Auckland (54% of the price), slightly less in the rest of New Zealand (51% of the price).

BEST MATES AGAIN
In November, New Zealand regained the #1 spot (from Bali) as the favourite destination for Australian travelers, up +5.1% from November 2017. Bali beat us in October. Climate might be a factor. New Zealand captures 13% of all outbound travel by Australians (as measured by returning citizens after a short trip). For the twelve months, we were also numero uno. But Aussie trips to the USA are rising fast (up +10%), as is Indonesia (Bali) up +13%, so that is where the tourism competition is coming from.

GOING DOWN
In Australia, December sales of detached new-built house sales fell by -6.7% year-on-year, according to industry sources. Sales during the final quarter of 2018 were -15% lower than last year.

SWAP RATES RISE, STEEPEN
Local wholesale swap rates are retracing today, up +2 bps for the two year duration, up +4 bps for the five and ten durations. The UST 10yr yield rose strongly today and is up +4 bps to 2.75%. Their 2-10 curve is just under +18 bps. The Aussie Govt 10yr is at 2.33% and up +4 bps, the China Govt 10yr is down -1 bp at 3.12%, while the NZ Govt 10 yr is at 2.39% and up a sharp +8 bps. The 90 day bank bill rate is holding at 1.90%. (The record low is 1.86% in December 2017.)

BITCOIN HOLDS
The bitcoin price is holding its level at US$3,624, only a very minor rise change from this time yesterday.

NZD HOLDS LOWER
The Kiwi dollar is a bit firmer today at 67.7 USc after yesterday’s fall. On the cross rates, we lower against the Aussie at 94 AUc and holding at 59.4 euro cents. That puts the TWI-5 unchanged at 71.8.

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Daily exchange rates

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NZD

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Source: CoinDesk

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