K62 Finance

Record debt levels to keep RBA on hold

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Original article by Myriam Robin
The Australian Financial Review – Page: 25 : 12-Jul-17

PIMCO Australia Robert Mead notes that a rise in the nation’s household debt-to-income ratio to a record high has coincided with a downturn in household debt in other developed countries. He warns that it will be hard for the Reserve Bank to increase the cash rate in the near-term, given the growth in household debt and residential property prices. With little prospect of a local rate rise for some time, US interest rates could potentially soon return to parity with Australian rates for the first time in 15 years.

CORPORATES
PIMCO AUSTRALIA PTY LTD, PACIFIC INVESTMENT MANAGEMENT COMPANY LLC, RESERVE BANK OF AUSTRALIA, UNITED STATES. FEDERAL RESERVE BOARD

NAB acts to reduce riskiest lending

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Original article by Michael Roddan
The Australian – Page: 22 : 7-Jul-17

National Australia Bank will begin assessing the ability of interest-only mortgage borrowers to repay their loan when deciding whether to approve such applications. NAB already takes into account a customer’s loan-to-income ratio when assessing all loan applications, but it will reject applications from people with high loan-to-income ratios from 8 July. The major banks have increased the interest rates on interest-only loans in recent months.

CORPORATES
NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, RESERVE BANK OF AUSTRALIA, AUSTRALIAN SECURITIES AND INVESTMENTS COMMISSION, BENDIGO AND ADELAIDE BANK LIMITED – ASX BEN, ING DIRECT

Party over with bondcano ready to erupt

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Original article by David Rogers
The Australian – Page: 27 : 6-Jul-17

The yield on 10-year US Treasuries peaked at 2.35 per cent in early July 2017, compared with a record low of 1.32 per cent in mid-2016. Credit Suisse forecasts that the yield will reach 2.8 per cent by the end of 2017, as some of the world’s leading central banks begin tightening monetary policy. Hasan Tevfik of Credit Suisse warns that Australian-listed "bond proxy" stocks in particular are vulnerable to rising bond yields.

CORPORATES
CREDIT SUISSE (AUSTRALIA) LIMITED, SYDNEY AIRPORT – ASX SYD, APA GROUP – ASX APA, WESTFIELD CORPORATION – ASX WFD, DEXUS PROPERTY GROUP – ASX DXS, ASX LIMITED – ASX ASX, SONIC HEALTHCARE LIMITED – ASX SHL, MEDIBANK PRIVATE LIMITED – ASX MPL, TATTS GROUP LIMITED – ASX TTS, AUSNET SERVICES LIMITED – ASX AST, HEALTHSCOPE LIMITED – ASX HSO, TABCORP HOLDINGS LIMITED – ASX TAH, MACQUARIE ATLAS ROADS GROUP – ASX MQA, CHARTER HALL GROUP – ASX CHC, INVESTA OFFICE FUND – ASX IOF, BWP TRUST – ASX BWP, COMPUTERSHARE LIMITED – ASX CPU, AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED – ASX ANZ, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO, FORTESCUE METALS GROUP LIMITED – ASX FMG, SOUTH32 LIMITED – ASX S32, QANTAS AIRWAYS LIMITED – ASX QAN, CALTEX AUSTRALIA LIMITED – ASX CTX, GRAINCORP LIMITED – ASX GNC, ECLIPX GROUP LIMITED – ASX ECX, UNITED STATES. FEDERAL RESERVE BOARD, UNITED STATES. EXECUTIVE OFFICE OF THE PRESIDENT, ORGANISATION OF PETROLEUM EXPORTING COUNTRIES, EUROPEAN CENTRAL BANK, BANK OF ENGLAND, BANK OF CANADA, INSTITUTE FOR SUPPLY MANAGEMENT

‘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