A review of things you need to know before you sign off on Thursday; housing sales slump in April, food costs jump in April, less concrete poured, NZGB bond yields rise, swaps lower, NZD higher, & more

Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).

MORTGAGE RATE CHANGES
Kainga Ora/HNZ raised its floating mortgage rate today by +50 bps to 8.25%. They also raised rates on some short fixed rates, and trimmed them on some long fixed rates. Update: ANZ has trimmed their 6 month and 1 year fixed rates by -4 bps and -9 bps respectively, taking their one year rate down to 6.74%.

TERM DEPOSIT/SAVINGS RATE CHANGES
Unity Money raised its term deposit rates for its TD terms for terms to 5 months and reduced terms for 1 year and longer. (Note this is a correction from an earlier update. We apologize for the wrong earlier summary.).

NO GREEN SHOOTS
Housing sales slumped to a record low last month with prices still falling, REINZ says. April was a disastrous month for the housing market with lowest sales volumes for that month, excluding 2020, in more than 31 years. But it hasn't stopped industry spokespeople repeating "we are at the bottom".

FOOD COSTS HURT
Food prices were up 12.5% in the year to April 2023 - which is the highest annual rate of increase seen since 1987; National's Willis says household budgets have 'nowhere to hide'.

RENTS MIXED
But rents are not up as aggressively. Nationally they rose +3.8% in April, similar to the +3.9% rise in March. That is on a 'stock' basis, or for all rented properties. For new properties (the 'flow' increase) the rise was only 2.8%. So existing renters have the option now to move to win a smaller increase. But that may not work in Auckland where the the 'flow' rise was up +5.4% in the year to April but worse, up at rates well over +10% pa in 2023.

LESS CONCRETE
Ready-mixed concrete poured in the March 2023 quarter was -12.5% lower nationally than the same quarter a year ago. In Auckland it was -18% lower. Some of this decline will have been weather-affected of course. But apart from the pandemic-affected quarters, this was the lowest volume sold since the March 2018 quarter.

HOT DEMAND, HIGHER YIELDS
Bidders fronted up with $1.275 bln in 128 bids for the $400 mln of NZ Government Bonds at tender today. But only 32 of those bids were accepted. The $200 mln for the May 2028 bond was won by 10 bids, averaging a yield of 4.06%. Two weeks ago the same maturity went for a yield of 4.01%. The $150 mln of the April 2033 offering went for 4.14% yield, up from 4.06% two weeks ago and 21 of 53 bids were accepted. But the May 2051 $50 mln was keenly sought by one bidder who took the lot at a yield of 4.39% beating out 31 other bidders who wanted a higher yield. Two weeks ago this maturity went for 4.20%.

CHEAP CAR FUNDING
Toyota Finance raised $100 mln in a three year bond issue today, and for these A+ rated bonds the pricing was good for them, just +85 bps above swap. Given the likely 3 year swap rate today, they probably got this funding at about 5.5% pa., not bad for unsecured, unsubordinated bonds.

HIGHER INFLATION EXPECTATIONS
In Australia, their inflation expectations ticked up slightly to 5.0% in May from 4.6% in April. It is not something the RBA will be pleased about. Some think the federal Budget will be inflationary too, so the tide is challenging the RBA.

NO CONSUMER INFLATION IN CHINA
In China, they don't have an inflation problem. But they might be facing a deflation problem. In April, consumer prices were only +0.1% higher than a year ago, much lower than the minor +0.7% in March and also below the expected +0.4%. That is at a two year low, down to pandemic levels. The annualised rate between March and April was a deflationary -1.2% pa (although that is not a seasonally-adjusted result). Lamb and beef prices are falling but milk prices are rising. However none of these changes are large.

CHINESE PPI DEFLATING
And staying in China, their producer prices are definitely deflating. They were down -3.6% in April from a year ago and falling at an annualised -6.0% rate in April from March. No hiding deflation there.

FRENEMIES?
In Beijing, the Aussie Trade minister is visiting and involved in an odd set of 'negotiations'. He wants the trade sanctions removed on a range of goods they export. But China says there are no trade sanctions to remove, that they never existed in the first place. Sanctioned Aussie exports are starting to move again. And all this is despite Australia joining AUKUS and the new Labor Government recommitting to it, buying nuclear subs, and being part of a concerted effort to challenge China's assertive push in the region. It just looks like Beijing as folded its hand, acknowledging it needs Australia more than Australia needs it. Unexpected.

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SWAP RATES SOFT
Wholesale swap rates are probably a softer again today on international influences. However, the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is down -1 bp at 5.61% and 36 bps above the OCR. The Australian 10 year bond yield is now at 3.42% and down -4 bps from this time yesterday. The China 10 year bond rate is down -5 bps at 2.71% which is a big drop for them and now down -13 bps over the past two weeks. Not sure why. And the NZ Government 10 year bond rate is now at 4.16% which is down -2 bps from yesterday, but still just above the earlier RBNZ fix at 4.12% which down -5 bps from yesterday. The UST 10 year yield is now at 3.43% and down -8 bps from this time yesterday.

EQUITIES LOWER
In New York, Wall Street ended up +0.2% on the S&P500 in its Wednesday trade. Tokyo has opened down -0.2%. Hong Kong is down -0.1% today in early trade. Shanghai has opened unchanged after yesterday's big drop. The ASX200 is down -0.3% in afternoon trade. The NZX50, is down -0.9% in late trade today.

GOLD LITTLE-CHANGED
In early Asian trade, gold is little-changed at US$2032/oz and up just +US$1 from where we were this time yesterday. That is above the earlier New York close of US$2030/oz but below the earlier London close of US$2037/oz.

NZD FIRMER
The Kiwi dollar is up +¼c from this time yesterday at 63.7 USc. Against the Aussie we are nearly +½c firmer at 94.1 AUc. And against the euro we are up a tad at 58 euro cents. That means the TWI-5 is now up above 71.3.

BITCOIN STILL STALLED
The bitcoin price is virtually unchanged from this time yesterday, now at US$27,548 and down a mere -0.5%. Volatility over the past 24 hours has been moderate at +/- 2.7%.

This soil moisture chart is animated here.

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