A review of things you need to know before you go home on Thursday; no retail rate changes, REINZ flat, food price rises modest, insurers survive Hayne, swaps and NZD rise again, & more

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

MORTGAGE RATE CHANGES
No changes today.

TERM DEPOSIT RATE CHANGES
None here either.

DRIFTING, BECALMED, LOWER IN THE WATER
REINZ says there was a two-tiered property market in January, with prices down in Auckland and Canterbury but firmer elsewhere. Overall, median prices are up +5.8% year-on-year, a similar rise to most months since May 2018. But the recent trends are not as strong. In Auckland the situation is less positive with prices down -2.4% year on year and that is broadly similar to y/y tracking since July 2017. Auckland median prices are back to levels last seen in February/March 2016. The volumes of transactions are also tracking down.

NEW RENT DATA, NO SURPRISES
Statistics NZ is now tracking rental price movements by reference to the MBIE Tenancy Bond database – something we have been doing with MBIE for a few years now. They released their first set of data today, a series that starts in late 2006. There are no surprises in this release for interest.co.nz readers. Basically they report that rents (on a flow basis) are up +4.7% nationally in the year to January 2019, with Auckland rents rising the least of any region they cover, +2.6% pa. The strongest rises are in Wellington (+6.7%) and the “rest of the North Island (+7.3% pa). Canterbury rises were +2.6%. But as these ‘regions’ are very broad, this data is not as useful as the city/TLA data we have, so we will be sticking to our more targeted data series.

NEW ENVIRONMENT DATA
Statistics NZ also released the first of its new data on the environment. This adds to its “environmental economic accounts’ resource.

ASIC CONSULTING ON RESPONSIBLE LENDING
Hot on the heels of the final Royal Commission report, the Australian Securities and Investments Commission has issued a consultation paper to update its guidance on responsible lending. “The responsible lending obligations are an integral part of the regulatory framework for all consumer loans” said ASIC Commissioner and ex-FMA CEO Sean Hughes. “ASIC wants to ensure its guidance provides industry with certainty, including as a result of emerging technology and initiatives such as open banking and comprehensive credit reporting.”

NO PRESSURE FROM RISING FOOD PRICES
Fruit and vegetable prices continue to fall, and are down almost -4% from a year ago. This drop helped keep overall food price increases low, cancelling out most of the +2% rise in mmeat, poultry & fish, and the almost +1% rise in grocery prices. Only ready-to-eat meal prices (cafes and takeaways) show any price gains, up +3% in the year to January.

FAT PROFIT GROWTH. HAYNE CAN BE HANDLED
Suncorp Group today announced net profit after tax (NPAT) of A $250 million for the six months to 31 December 2018. The New Zealand business achieved NPAT of NZ$120 million, up +79% on the prior corresponding period. In New Zealand, Suncorp is an insurance business. It downplayed its exposure to regulatory risks in its life insurance business, suggesting it is business as normal even for its ‘intermediated’ distribution channels (brokers).

AMP STILL STANDING
AMP may have been battered by Hayne in Australia, but they still managed a profit even if it has fallen from AU$848 mln in 2017 to AU$28 mln in 2018, and will even pay a dividend. But it is not the insurance division that is holding it together; it is AMP Capital, and the AMP Bank. The New Zealand ‘wealth management’ division earned AU$53 mln. Their Australian wealth management business saw a funds outflow of almost AU$4 bln.

JAPAN GROWING AGAIN
Japan reported Q4-2018 GDP real growth of +1.4%pa. That contrasts with a Q3 decline of -2.5%.

SWAP RATES JUMP
Wholesale swap rates leaped back higher today following the RBNZ MPS by about +3 bps across the curve following yesterday’s +6 bps rise. The UST 10yr yield is holding at 2.70%. Their 2-10 curve is still at +17 bps. The Aussie Govt 10yr is down -2 bps at 2.13%, the China Govt 10yr is up +1 bp at 3.10%, while the NZ Govt 10 yr is up another +6 bps to 2.25% and extending the bull move. The 90 day bank bill rate is up +2 bps to 1.91%.

BITCOIN LITTLE CHANGED
The bitcoin price has hardly moved today, still at $3,579.

NZD HIGHER
The NZD is higher yet again after yesterday’s strong jump, now at 68.2 USc. We are up at 96 AUc, and are at 60.5 euro cents. That has the TWI-5 up to 72.9. That puts us back to levels we were at the beginning of February (and before the RBA queered the pitch).

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