A review of things you need to know before you sign off on Tuesday; truckometer weaker, electricity stress coming, BNZ bolsters its capital, not a good idea to ignore the FMA, swaps move up again, NZD firm, & 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
Unity Money has raised its floating rate to 8.29% which is a +34 bps increase.

TERM DEPOSIT/SAVINGS RATE CHANGES
ICBC has raised their term deposit offers, and are the next bank to offer 6% for a one year term. Update: ANZ has raised most of its rates for terms less than 1 year. Their new 6 month rate is now 5.55%.

Q2 STARTS WEAKER THAN Q1
ANZ's Truckometer monitoring shows that the Light Traffic Index (cars) fell -2.8% m/m in April, while the Heavy Traffic Index (commercial) fell -2.2%. This comes after the March quarter data suggests a small lift in activity in the quarter, "consistent with our forecast". They also noted that "falling traffic volumes in April marked a weak start to Q2, but weather could again be playing a role".

BROWNOUTS COMING?
Transpower says it is working closely with the electricity sector to manage potentially tight supply during cold snaps this winter - and warns consumers may be asked to cut back on power use at peak times. They say: "These tight supply situations during short periods of peak demand are a result of increasing electricity demand as well as New Zealand’s transition to a future with a decarbonised economy powered by renewable electricity generation."

TOWER BOLSTERS REINSURANCE
Insurer Tower says it has purchased an additional $100 million of reinsurance reinstatement cover for the remainder of its September financial year. This covers the increased estimate for the ultimate cost of February’s Auckland and Upper North Island extreme weather events. Prior to this Tower says it had protection for a potential third catastrophe event up to $889m in the financial year. This additional purchase of $100m of cover reinstates protection for a fourth catastrophe event up to $889m in the financial year.

ESSENTIALLY EQUITY BUT WITH BOND YIELD & WITHOUT FAT BANK DIVIDENDS
BNZ said that it is "considering making an offer" of up to $250 mln of perpetual preference shares and will accept unlimited oversubscriptions at its discretion. This paper will constitute Additional Tier 1 Capital for BNZ’s regulatory capital requirements and to have a credit rating of BBB from S&P. The shares will not have a fixed term and will remain on issue indefinitely if not redeemed by BNZ. If certain conditions are met, BNZ may redeem the PPS after 6 years and on each quarterly scheduled distribution payment date thereafter, or at any time for tax or regulatory reasons.

WILLFUL FORGERY?
The FMA hit an alleged financial advice forger with four charges after ignoring their stop order. Wisdom House Investment Partners director Paul Loo faces up to 10 years jail for this forgery.

A JUICY MONOPOLY
The TAB, which has a virtual monopoly in the local market on sports betting, has contracted out its position to a giant British betting operation, Entain, in return for a commitment to 'invest' $900 mln in the local horse racing industry over five years. For that they get a 25 year exclusive (ie monopoly). Minister for Racing, Kieran McAnulty, approved the deal with the London-listed giant today, two months after Entain was selected as the preferred bidder. Cabinet also agreed to extend the TAB’s monopoly over sports and racing betting to the online environment, following a lobbying campaign from Entain, which offered to make an additional and upfront payment to prevent unlicensed offshore competitors from wagering here. (This will now be negative for our current account deficit in a way it wasn't when the TAB ran it.)

"SAVE THE PLANET"?
ResearchIP's May 2023 Sluice edition includes a link to how quantum computing might "save the planet". Quantum computing could bring about step changes throughout the economy that would have a huge impact on carbon abatement and carbon removal, including by helping to solve persistent sustainability problems such as curbing methane produced by agriculture, making the production of cement emissions-free, improving electric batteries for vehicles, developing significantly better renewable solar technology, finding a faster way to bring down the cost of hydrogen to make it a viable alternative to fossil fuels, and using green ammonia as a fuel and a fertiliser. Only very much faster computing can do the work to optimise these sorts of benefits, they say.

SLIPPING ACROSS THE DITCH
While not strong in the first place, the latest PMIs for Australia indicate a further softening of activity. They services PMI fell to 51.8 (now only just expanding) in May. Their manufacturing PMI didn't change from its contraction, holding at its weakest level since May 2020.

EXITING STAMP DUTIES ... REPLACED WITH LAND TAX
In Victoria, their state government has said it will abolish stamp duty for commercial and industrial properties and replace it with an annual property tax in a move it says will inject AU$50 bln to the state economy. From July 1 next year, commercial and industrial properties will transition to the new system as they are sold, and the annual property tax will be payable from 10 years after the transaction. South Australia has abolished transfer duty on commercial or industrial property deals, it has not introduced an annual property tax. The ACT has removed stamp duty on transactions below AU$1.7 mln, although it still imposes land rates. The Northern Territory retains stamp duty, but does not have a land or property tax. In NSW they are more focussed on reforming their stamp duty on residential properties sold. Queensland don't seem to be changing their stamp duty taxes any time soon.

ON THE MOVE UP IN JAPAN
It's the opposite in Japan. Their flash May PMIs have come in strong, in fact the strongest rise in private sector activity in almost ten years. Their services sector expanded faster at 56.8, and their factory sector shifted from a contraction in April to a modest expansion in May.

SENTIMENT ON THE RISE IN SOUTH KOREA TOO
Their central bank's Composite Consumer Sentiment Index came in at 98 points in May of 2023, up from 95.1 points in the previous month. It marked the highest figure since May a year ago as easing inflation expectations led to a rise in "living conditions".

SWAP RATES HIGHER
Wholesale swap rates are moving back up today after yesterday's slight pause. 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 up +1 bp at 5.83% and 58 bps above the OCR. The Australian 10 year bond yield is now at 3.64% and up +5 bps from this morning. The China 10 year bond rate is down -2 bps at 2.72%. And the NZ Government 10 year bond rate is now at 4.47% which is up +3 bps, and still above the earlier RBNZ fix at 4.40% which is down -2 bps from yesterday. The UST 10 year yield is now at 3.71% and up +4 bps from this time yesterday.

EQUITIES MIXED AGAIN
In New York, the S&P500 ended its day unchanged on Wall Street as markets awaited progress from the politicians on the debt limit. They are going to have toi suffer through more theater, but confidence is still there that a resolution will come. Tokyo has opened its Tuesday session up another +0.6% and a new all-time high. Hong Kong is down -0.3% in their early Tuesday trade. Shanghai is down -0.8%. The ASX200 is up +0.3% in afternoon trade todat. The NZX50 looks like it will close out today's trading down -0.3%.

GOLD FALLS
In early Asian trade, gold is down at US$1961 and down -US$17 from this time yesterday. That takes this benchmark price back to late March levels. Earlier the gold price closed at US$1972/oz in New York, and earlier still at US$1970/oz in London.

NZD HOLDS
The Kiwi dollar is little-changed from this morning at 62.8 USc. Against the Aussie we are also unchanged at 94.3 AUc. And against the euro we are still at 58 euro cents. That means the TWI-5 is little-changed at 71.3.

BITCOIN FIRMS SLIGHTLY
The bitcoin price is a lower today, now at US$27,045 and up +1.6% from this time yesterday. Volatility over the past 24 hours has been low at just over +/- 0.9%.

This soil moisture chart is animated here.

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