8/9/2019 Westpack JUL 21 Mornng Report

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Morning Report

Westpac Banking Corporation ABN 33 007 457 141 incorporated in Australia (NZ division). Information current as at 21 July 2010. All customers please note that this information has been prepared without taking account of your objectives,financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs. Australian customers can obtain Westpacs financial servicesguide by calling +612 9284 8372, visiting www.westpac.com.au or visiting any Westpac Branch. The information may contain material provided directly by third parties, and while such material is published with permission, Westpac acceptsno responsibility for the accuracy or completeness of any such material. Except where contrary to law, Westpac intends by this notice to exclude liability for the information. The information is subject to change without notice and Westpacis under no obligation to update the information or correct any inaccuracy which may become apparent at a later date. Westpac Banking Corporation is registered in England as a branch (branch number BR000106) and is authorised andregulated by The Financial Services Authority. Westpac Europe Limited is a company registered in England (number 05660023) and is authorised and regulated by The Financial Services Authority. 2010 Westpac Banking Corporation. Pastperformance is not a reliable indicator of future performance. The forecasts given in this document are predictive in c haracter. Whilst every effort has been taken to ensure that the assumptions on which the forecasts are based are reasonable,the forecasts may be affected by incorrect assumptions or by known or unknown risks and uncertainties. The ultimate outcomes may differ substantially from these forecasts.

Wednesday 21 July 2010

NZ Domestic Market (Previous days closing rates)

Govt Stock

Nov-11 3.77%

Apr-13 4.26%

Apr-15 4.72%

Dec-17 5.13%

May-21 5.38%

Cash Curve

Cash 2.75%

30 Days 2.97%

60 Days 3.08%

90 Days 3.23%

180 Days 3.44%

1 Year 3.77%

Swap Rates (Qtrly)

1 Year 3.81%

2 Years 4.22%

3 Years 4.47%4 Years 4.66%

5 Years 4.81%

7 Years 5.08%

10 Years 5.35%

World Bourses and Indices

USD

Fed Funds

3 Mth Libor

10 Year Notes

30 Year Bonds

CRB

Gold

Copper Fut.

Oil (WTI)

NZ TWI

AUD

Cash

90 Day

3 Year Bond

10 Year Bond

NZX 50

S&P/ASX200

Nikkei

FT100

S&P500

4.50% 0.00

4.84% -0.01

4.73% +0.12

5.23% +0.11

2995.4 +30.8

4403.6 +45.3

9300.5 -107.9

5139.5 -8.8

1082.2 +10.9

0.00-0.25%

0.51% -0.01

2.95% -0.02

3.98% -0.01

261.5 +0.3

1191.7 +8.3

299.95 +6.05

77.30 +0.79

67.33 +0.80

Foreign Exchange Market

Previous Range Todays Open Expected

Asia Overnight 8.00am NZD cross Range Today

NZD 0.7046-0.7130 0.7079-0.7161 0.7158 0.7100-0.7200

AUD 0.8668-0.8786 0.8712-0.8835 0.8833 0.8104 0.8760-0.8860

JPY 86.66-87.19 86.70-87.3287.48 62.62 87.00-88.00

EUR 1.2927-1.2975 1.2839-1.3029 1.2889 0.5554 1.2840-1.2940

GBP 1.5212-1.5270 1.5154-1.5310 1.5274 0.4686 1.5220-1.5320

News and views

US equities were initially stung by weak US housing starts and adisappointing Goldman Sachs earnings report, the S&P500 gapping lowerat the physical open but rebounding thereafter to be up 1.1% currently. Therebound was attributed to rumours the Fed may embark on a new quantitativeeasing program by reducing the interest payment on excess reserves from 25bpto zero, effectively channeling those funds into the market. CNBC later quashedthe rumour. Commodities are little changed overall, although fast moversoil (+1.2%) and copper (2.6%) outperformed after equities turned. US 10yrtreasuries are unchanged on the day at 2.95%, although they did reach a yieldlow of 2.89% in line with the early equities weakness.

Commodity currencies outperformed on the day. The US dollar index is littlechanged having gained during equities weakness and softened on the laterbounce. EUR peaked around the Sydney close at 1.3029 and plunged to 1.2839before risk appetite stabilized it around 1.2900. USD/JPY rose from the 0.8700area to 87.50. CAD is a cent stronger on the day at 1.0480, and formed a bullishoutside day despite the earlier 40 pip selloff on the Bank of Canadas growthdowngrade accompanying its widely expected 25bp hike to 0.75%.

Outperformer AUD left Sydney around 0.8800 and declined to 0.8713 until riskmarkets turned, currently at the days high of 0.8839.

NZD fell to 0.7080 but followed sentiment higher to 0.7164. AUD/NZD nudgedhigher from 1.2300 to 1.2350.

US housing starts fall 5.0% in June, beyond market expectations for a 2%fall but not as far as Westpacs expectations of -8%. Markets were expecting afall in housing starts, following the end of the tax credit earlier this year. The fallhasnt been in line with home sales, and we anticipate further weakness into thesummer months.

UK public sector net borrowing 14.5bn for June. After improving relative toanalyst forecasts over the past two months, the June figures exceeded marketexpectations of 13.0bn. The May figures were also pulled higher from 16.0bnto 17.1bn but after adjusting for monthly gyrations the trend of greater monthlyborrowing requirements looks to have steadied.

UK mortgage approvals fell to 48k from 51k in June. Mortgage approvalseased relative to market expectations and there has been no growth in approvalsfor all of 2010. That said, monthly approvals remain elevated relative to theirtrough of 35k in January 2009.

Bank of Canada raises overnight lending rate by 25bps to 0.75%, asexpected. The decision was not contentious for the markets yet the relatedstatement may have been a surprise to some. The BoC statement was lesshawkish in tone than in April it noted that the domestic economic recovery wasmore gradual than was expected at the April review and pointed to rebuildingof balance sheets as reasons for a slower global growth. The BoCs inflationforecasts were not materially changed. The bank reiterated that considerablemonetary stimulus remains and restated that taking away of this stimulus willdepend on domestic and globaldevelopments.

Outlook

AUD/USD and NZD/USD outlook next 24 hours: The strong US equitiesclose should be initially supportive. AUD resistance today lies overhead in the0.8850-60 area. NZD should similarly be capped by the 0.7160-00 area.

Imre Speizer, Senior Market Strategist, NZ, Ph: (04) 470 8266

With contributions from Westpac Economics

Upcoming Events

Date Country Release Last Forecast

21 Jul NZ Jun External Migration Ann. 17,970 16,900

Jun Credit Card Transactions s.a. 1.9%

Aus May Leading Index, annlsd 7.6%

US Feds Bernanke semi-annual testimony

UK BoE MPC MinutesCan May Wholesale Sales 0.3% 0.4%

22 Jul US Initial Jobless Claims we 17/7 429k 445k

Jun Existing Home Sales 2.2% 15.0%

Jun Leading Indicators 0.4% 0.3%

Jpn May All-Industry Activity Index 1.8% 0.4%

Eur Jul PMI Manufacturing Adv 55.6 56.0

Jul PMI Services Adv 55.5 55.0

May Industrial New Orders 0.6% 0.3%

Jul Consumer Confidence Adv 17 18

UK Jun Retail Sales W/Auto Fuel 0.6% 0.5%

Can May Retail Sales 2.0% 0.5%

BoC Monetary Policy Report

23 Jul Aus Q2 Export Price Index %qtr 3.8% 15.0%

Q2 Import Price Index %qtr 0.3% 2.4%

Eur Committee of Euro Banking Supervisors