Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report.
TERM DEPOSIT RATE CHANGES
NZCU Baywide has trimmed -5 bps from its 9 month rate, taking it now to 2.55%.
AUCTION SALES STRUGGLE
It is mid winter and there are big variations in residential auction results. Auckland’s Barfoot & Thompson is an example. No sales were achieved at their Manukau auction but there was a 59% sales rate at an Auckland central suburbs auction.
SUMMER SURGE, WINTER BLUES
The early indications from equity market trading in Asia today is one of strong rises. Hong Kong and Shanghai are both up about +1%. Tokyo is up about +0.5% and Sydney is similar. However the NZX50 can’t seem to perform as well, barely moving.
Japan’s factory sector is expanding at a slower rate, according to the latest PMI reading for July out today.
CANADA GETS A TICK
The 2018 OECD Economic Survey of Canada finds the macroeconomic situation to be broadly favourable, with low unemployment, inflation on target and growth expected to remain solid over 2018-19..Canada is one of the OECD economies delivering the best outcomes for its citizens, they say and scores highly in all dimensions of the OECD’s Better Life Index, especially in regards to self-reported well-being, personal security and health status.
US GETTING ISOLATED
The EU is moving to tax profits as the result of economic activity, ignoring the vagaries of transfer pricing and other tax-dodging techniques. The issue is being highlighted by the way the big internet companies earn their income (and report their taxable income). This is putting them on a collision course with the US. Australia looks like it will be siding with the EU on this one.
THIS CYCLE IS COMING TO AN END
BNZ is warning that the main external risk to the New Zealand economy is the prospect of tightening global monetary conditions, especially as it affects asset prices which they say are “already looking fully (or over) valued”. They point out that tightening is on the cards at the US Federal Reserve who has already raised its cash rate seven times to 2.0%, and another four rate increases are penned in, the Canadians have raised rates four times, the UK has started its tightening cycle, the Europeans are talking about moderating QE, the Japanese are moderating QE, and the Australians have a tightening bias. Our official rate may be going nowhere, but that doesn’t mean rates will be unchanged here.
SWAP RATES TURN UP
Local swap rates are rising at the long end today. The two year is unchanged but the five year up +3 bps, and the ten year is up +4 bps. This is following the UST 10yr which is up to 2.95%, a +6 bps rise. The Aussie Govt 10yr is at 2.72, up +5 bps, the China Govt 10yr is at 3.56% also up +5 bps, while the NZ Govt 10 yr is at 2.86%. The 90 day bank bill rate is unchanged at 1.92%.
The bitcoin price is now at US$7,750 and up another +1.7% in the past day.
The NZD is down to 67.9 USc on a slightly stronger greenback. And it is holding on the cross rates at 92 AUc, and the euro at 58 euro cents. That puts the TWI-5 basically unchanged at 71.3.
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