A review of things you need to know before you go home on Tuesday; Co-op reduces some TD rates, house sale volumes fall, CPI up modestly, insurance premiums jump, swap rates recover, NZD stable

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

MORTGAGE RATE CHANGES
Update: The Co-operative Bank has advised that it will reduce its one year fixed rate to 4.24% tomorrow, a -5 bps reduction.

TERM DEPOSIT RATE CHANGES
The Co-operative Bank has reduced all its term deposit offers for terms of 18 months and longer. The reduction is about -10 bps.

WINTER BITES, ESPECIALLY IN THE NORTH
Housing’s mid-winter dip has arrived on schedule, with lower sales and higher prices nationally. Sales volumes dropped -1.6% in June compared to a year earlier across the country, with several regional centres seeing even larger drops. Because of the constrained supply of houses for sale, prices increased +3.8% year on year across New Zealand. There was even faster price growth, of +7% recorded outside Auckland. In Auckland prices slipped marginally.

ONLY MODEST PRICE PRESSURE
At +1.5% higher in June that at the same time a year ago, that official consumer inflation reading was only slightly below what markets were expecting (+1.6%). It was bang on the May 2018 RBNZ MPS forecast, and who see it rising steadily from here. As at June 2018, non-tradable inflation is running at +2.5% (a level it has been at for two years) while tradable inflation at just +0.1% which has generally been declining since the beginning of 2017. If our currency falls further, that decline could be arrested. But we should note that we have already had more decline than what the RBNZ assumed in May. The main components moving are fruit and vegetables (down -5.6% in the year), cigarettes (up almost +11%), fuel (+7.2%), telecom equipment (-8.8%), tertiary fees (down -16% on a new Government policy move). We should note that the Auckland regional fuel tax jump (+11.5c/ltr) didn't happen in this period - it will be felt the September review. Some are saying our CPI will be at +2% by year-end at least.

INSURANCE PREMIUMS JUMP
The CPI survey also tracks insurance premium costs, and these are up +5.7% in a year. Leading the way is house insurance at +17.9%, followed by contents insurance up +5.9%. Car insurance is up +5.7%. In a market dominated by one provider (AIG) it hardly seems unusual that they are taking advantage of their position and maximising returns. What is unusual is that the public isn't upset - nor the regulators. Also covered in the CPI survey are health insurance premiums and life insurance.

DAIRY AUCTION PREVIEW
It seems unlikely that there will be any major moves in tomorrow morning's dairy auction. The derivatives market is signaling much of the same again - in USD at least.

MORE DEBT, LOWER INTEREST
Genesis Energy has redeemed its $200 mln 2018 Capital Bond which had a coupon of 6.19%. And it has replaced it with a new $240 mln issue maturing in 2048. This new bond will have a coupon of 4.65%.

EYES ON SHANGHAI SIGNALS
Most equity markets have been uninspiring so far this week. The S&P500 was down -0.1% earlier today. But both Hong Kong and Shanghai have just opened sharply lower, each down more than -1%. Worth keeping an eye on. Markets are seeing concerning signals in yesterday's soft growth data.

NEXT CHANGE, UP
The release of the RBA minutes of their July 3 meeting reinforces market expectations that their next move will most likely be up. This is despite their concerns record household debt, much of it borne by low income earners, remains a potential source of destabilisation in the Aussie financial system.

AUSSIE BENCHMARK
New data out today shows that 'labour's' share of GDP is slowly slipping in Australia. Comparing 2017 data with equivalent 2010 data (the earliest available in this format), what employees are paid has slipped from 12.2% of GDP to 12.0% over that period. Income from self-employment has remained steady at 1.2% of GDP. We don't have equivalent NZ numbers.

SWAP RATES FIRM
Local swap rates gave up -1 or -2 bps yesterday. But today they seem to be recovering those same falls. The UST 10yr is up +3 bps at 2.86%. The Aussie Govt 10yr is at 2.65, up +1 bp, the China Govt 10yr is at 3.51% (up +2 bps), and the NZ Govt 10 yr is at 2.87%, up +4 bps. The 90 day bank bill rate is unchanged at 1.93%.

BITCOIN UP
The bitcoin price is now at US$6,721 which is +6% higher than this time on yesterday.

NZD UNCHANGED
The NZD is unchanged at 67.7 USc. Neither the housing or inflation data moved any needles today. On the cross rates we are a little firmer at 91.5 AUc and 57.9 euro cents. That keeps the TWI-5 at 71.1.

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