K62 Finance

‘Savers the big losers’ from rate rises

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Original article by Myriam Robin
The Australian Financial Review – Page: 31 : 6-Jul-17

Data from Canstar shows that just 15 out of 75 Australian lenders have increased their term deposit interest rates since the last official interest rate cut in August 2016. Steve Mickenbecker of Canstar says term deposit rates have fallen to an unprecedented low, and he warns that rates are unlikely to rise while inflation remains low. He adds that savers can adopt a number of strategies to obtain higher term deposit rates, but this requires a lot of effort. Meanwhile, banks are increasing their rates on interest-only and investor mortgage loans.

CORPORATES
CANSTAR PTY LTD, RESERVE BANK OF AUSTRALIA

RBA douses talk of rate rises

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Original article by David Rogers, Adam Creighton
The Australian – Page: 17 & 25 : 5-Jul-17

Financial markets have priced in a nine per cent chance of a rise in Australia’s cash rate before the end of 2017 in the wake of the Reserve Bank’s July board meeting. The chances of a rate rise in the next 12 months have fallen from 84 per cent to 76 per cent. The central bank’s monetary policy statement was largely unchanged from May, although the Reserve Bank noted that a gradual strengthening of the Australia economy is likely. It also highlighted the need for the Australian dollar to remain low as the domestic economy completes its transition from the mining investment boom.

CORPORATES
RESERVE BANK OF AUSTRALIA, CAPITAL ECONOMICS LIMITED, JP MORGAN AUSTRALIA LIMITED, EUROPEAN CENTRAL BANK, BANK OF ENGLAND, BANK OF CANADA

Barnaba quits Macquarie for RBA board

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Original article by Julie-anne Sprague
The Australian Financial Review – Page: 24 : 30-Jun-17

Federal Treasurer Scott Morrison has announced that Mark Barnaba will replace John Akehurst as Western Australia’s representative on the board of the Reserve Bank. Barnaba will step down as the head of global resources at Macquarie Capital to take up the central bank role. Macquarie Group CEO Nicholas Moore has praised Barnaba’s contribution to the investment bank. He is also chairman of Macquarie’s WA division.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, MACQUARIE CAPITAL PTY LTD, AUSTRALIA. DEPT OF THE TREASURY, RESERVE BANK OF AUSTRALIA, UNIVERSITY OF WESTERN AUSTRALIA, BLACK SWAN THEATRE COMPANY LIMITED, WESFARMERS LIMITED – ASX WES, AUSTRALIAN FOOTBALL LEAGUE, HIGH COURT OF AUSTRALIA, FORTESCUE METALS GROUP LIMITED – ASX FMG, WEST COAST EAGLES FOOTBALL CLUB

ANZ to take lead in state levy fight

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Original article by Michael Roddan
The Australian – Page: 21 : 29-Jun-17

ANZ Bank CEO Shayne Elliott says the South Australian Government’s bank levy is "unfair", as it will apply to bank customers in other states. He warns that the will adversely affect the state’s economy, when the government should be pursuing policies that encourage investment in SA. Elliott held talks with Premier Jay Weatherill and Treasurer Tom Koutsantonis on 28 June. Elliott also says the Federal Government’s bank levy is "wrong".

CORPORATES
AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, SOUTH AUSTRALIA. DEPT OF THE PREMIER AND CABINET, SOUTH AUSTRALIA. DEPT OF TREASURY AND FINANCE

CBA joins peers in raising rates

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Original article by Michael Roddan
The Australian – Page: 26 : 28-Jun-17

The Commonwealth Bank will increase the interest rates on its owner-occupier and interest-only mortgage loans by 30 basis points. This follows a similar move by its major rivals, while interest rates on principal-and-interest loans for owner-occupiers will be reduced by three basis points. Commonwealth Bank hopes the rate adjustments will prompt more customers to switch from interest-only loans to principal-and-interest loans.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, WESTPAC BANKING CORPORATION – ASX WBC, AMP LIMITED – ASX AMP, BANK OF WESTERN AUSTRALIA LIMITED, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY

Fed can’t afford to delay rate hikes: Williams

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Original article by Adam Creighton
The Australian – Page: 21 : 27-Jun-17

Federal Reserve Bank of San Francisco president John Williams says there should be a third rise in US interest rates in 2017, given that the nation now has low inflation and full employment. He warns that failure to increase interest rates could risk overheating the economy, which could in turn result in higher inflation. Williams adds that the Federal Reserve should also begin reducing its balance sheet, which has risen to $US4.5trn.

CORPORATES
FEDERAL RESERVE BANK OF SAN FRANCISCO, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. FEDERAL OPEN MARKET COMMITTEE, RESERVE BANK OF AUSTRALIA, UNIVERSITY OF TECHNOLOGY, SYDNEY

Views diverge on Macquarie Group earnings

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Original article by Joyce Moullakis
The Australian Financial Review – Page: 21 : 26-Jun-17

Karl Siegling of Cadence Asset Management does not think the federal and South Australian bank levies will have too great an impact on Macquarie Group’s earnings. On the issue of taxes, Morgan Stanley predicts that Macquarie will benefit from President Donald Trump’s plans to reduce US corporate taxes, while Bloomberg notes that analysts expect Macquarie to record a 2018 profit of $A2.3 billion.

CORPORATES
MACQUARIE GROUP LIMITED – ASX MQG, CADENCE ASSET MANAGEMENT PTY LTD, MORGAN STANLEY AUSTRALIA LIMITED, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, QUADRANT ENERGY PTY LTD, BROOKFIELD ASSET MANAGEMENT INCORPORATED, BLOOMBERG AUSTRALIA, CITIGROUP PTY LTD, WESFARMERS LIMITED – ASX WES, AMB HOLDINGS PTY LTD, NUIX PTY LTD, ENDEAVOUR ENERGY LIMITED

BIS sounds warning on our debt levels

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Original article by Myriam Robin
The Australian Financial Review – Page: 20 : 26-Jun-17

Data from the Reserve Bank shows that Australia’s household debt-to-income ratio is currently at a record 189 per cent. Meanwhile, the Bank for International Settlements notes that the Australian economy is one of several that have high levels of household debt which would be vulnerable in the event of a sharp rise in interest rates. The BIS report also notes that the cost of servicing this debt is already having an impact on economic growth.

CORPORATES
RESERVE BANK OF AUSTRALIA, BANK FOR INTERNATIONAL SETTLEMENTS

Rate hikes starting to take a toll on borrowers

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Original article by Michael Roddan
The Australian – Page: 19 & 23 : 21-Jun-17

The proportion of Australian home loan customers that are in arrears rose by five basis points to 1.21 per cent in April 2017. Erin Kitson of Standard & Poor’s says moves by lenders to raise mortgage interest rates independently of the Reserve Bank in recent months was a major contributor to this trend. The rate rises have been prompted by a regulatory crackdown on interest-only mortgage loans. Meanwhile, Australian Securities & Investments Commission chairman Greg Medcraft has stressed the need for responsible lending.

CORPORATES
STANDARD AND POOR’S FINANCIAL SERVICES LLC, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, AUSTRALIAN PRUDENTIAL REGULATION AUTHORITY, RESERVE BANK OF AUSTRALIA, WESTPAC BANKING CORPORATION – ASX WBC, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, CANSTAR PTY LTD, ST GEORGE BANK LIMITED, MOODY’S INVESTORS SERVICE INCORPORATED, SOCIETE GENERALE SA

Stocks fall on banks’ failure to alter levy

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Original article by Richard Gluyas
The Australian – Page: 23 : 21-Jun-17

Shares in Australia’s four major banks and Macquarie Group were sold down on 21 June, in response to the passage of the Federal Government’s bank levy through Parliament and credit ratings downgrades by Moody’s. The Senate economics legislation committee made a number of recommendations concerning the levy, based on the suggestions of the five banks that will pay it, but they were rejected by the Government. Meanwhile, Deutsche Bank does not expect banks’ funding costs to be affected by the ratings downgrades.

CORPORATES
COMMONWEALTH BANK OF AUSTRALIA – ASX CBA, WESTPAC BANKING CORPORATION – ASX WBC, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, MACQUARIE GROUP LIMITED – ASX MQG, DEUTSCHE BANK AG, AUSTRALIA. DEPT OF THE TREASURY, AUSTRALIA. SENATE ECONOMICS LEGISLATION COMMITEE, AUSTRALIAN COMPETITION AND CONSUMER COMMISSION