A review of things you need to know before you go home Thursday; home sales volumes dive, food prices up, confidence high, 2040 linker shunned, OTC derivative margin limits coming, swaps fall again, NZD inches up

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

MORTGAGE RATE CHANGES
There are no changes to report today.

DEPOSIT RATE CHANGES
No changes here either.

HOUSE SALE VOLUMES DIVE
Winter's icy grip took hold of the housing market in June as prices and volumes fell. Auckland's house prices are now below where they were 12 months ago. But it is the drop in volumes that is most spectacular. Nationally, volumes in June are down -25% from June 2016 dropping from 7,864 transactions to 5,914 this June. In Auckland the drop is -35%, or from 2,737 to 1,769. Interestingly, Barfoots suffered less than most other Auckland realtors, pushing their market share up to 48% in June, and well above their usual 42/43% in June.

FOOD PRICES UP +3%, VEGETABLES UP +18%
Despite a monthly fall of -0.4% for fresh fruit and vegetables, annual vegetable prices kept food prices rising in the year ended June 2017. Overall, food prices increased +3.0% in the year. Vegetable prices increased 18% in the year led by higher prices for tomatoes, kumara, and lettuce. Grocery food prices rose +2.1% in the June year led by higher prices for dairy products. Spending on grocery food makes up around $35 of every $100 spent on food, compared with $15 for fruit and vegetables.

NO WORRIES
Consumer sentiment eased somewhat in July, but remains at a strong level overall. Once we adjusted for seasonality, confidence lifted to the highest level since September 2014. Both point to a healthy pace of spending-based activity. House price expectations cooled further, especially in Auckland.

OFF TO AN AVERAGE START
Treasury's Debt Management office had its first tender for its 2040 inflation indexed bonds today and they were received in a subdued manner. The coverage ratio was just 1.55 times, with a weighted average yield of 2.33%. The last 2035 linkers yielded 1.91% and had a coverage ratio of 4.7 times.

CAUGHT WITHOUT RULES
New Zealand has no official margin requirements for over-the-counter derivatives trading. And that is becoming an issue for our banks who might get caught up in other jurisdiction rules if we don't have them here. Financial derivatives are important for hedging and risk management, especially in international trade. The RBNZ and MBIE indicated today that they are moving to close this gap.

PULLING THEIR HEADS IN
In the year to May, there was actually zero growth in commercial fixed lending in Australia, and personal lending for purposes other than housing actually fell -3.1%. For housing, they were down -0.7% and for renos up +1.9%. There seems no evidence banks are lending aggressively in Australia - perhaps the opposite. And revolving loans to business for things like operating overdrafts actually fell -17%. A "credit squeeze" (aka a debt squeeze) is underway in the lucky country. (While banks are stepping back for safety reasons, "other lenders" are rushing in.

PROFIT FROM FAILED STRATEGY
ANZ is reported to be nearing the sale of its minority stake in the Malaysian bank AMMB - for NZ$1.25 bln. It is an institution caught up in the 1MDB scandals, and both senior managers and investigators have lost their lives in the issues swirling around the institution. ANZ probably paid about NZ$750 mln for its 24% stake.

CRIMINALS TARGET AUSTRALIA
In another item featuring ANZ, their head of financial crime has been highly critical over the lack of political will from successive Australian governments to extend money laundering laws to cover lawyers, real estate agents and accountants. He says that makes their property market is an attractive haven for criminals, with estimates that billions of dollars of dirty money is being laundered through residential property. ANZ's head of financial crime, Guy Boyd, is scathing of the failure of subsequent governments to extend the legislation. New Zealand's extended AML coverage is being used to contrast the Aussie inaction.

WHOLESALE RATES SLIP YET AGAIN
Wholesale swap rates are down again across the board, today by another -3 and -4 bps. The 90 day bank bill rate is unchanged at 1.98%.

NZ DOLLAR MOVES UP
The Kiwi dollar has risen in the past 24 hours to 72.7 USc. On the cross rates we are a higher as well, trading now at 94.6 AUc and at 63.6 euro cents. That puts the TWI-5 at 76.5. Bitcoin is sharply higher today, up +6.2% from this time yesterday to US$2,434.

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