A review of things you need to know before you sign off on Thursday; more TD increases, house values fall, EQC gets a cat bond away successfully, NIWA sees cold and wet, swaps stable, NZD unchanged, & much 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
TSB Bank raised its floating rate from 8.39% to 8.64% today, a +25 bps rise matching the OCR change.

TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ has raised many TD rates. Their new 6 month rate is now 5.55% (matching ANZ) and their new one year rate is 5.75% (matching ASB). SBS Bank and the Co-operative bank have raised rates too. Of note is the Co-op's new one year 5.80% rate. [Although announced a week or so ago, the ANZ's new bonus saver rates became effective today.]

A DEPRECIATING ASSET
CoreLogic reports that the average home values continued to fall in May. The average value of Auckland homes declined by -$333 a day, while the national average declined by -$200 a day.

CLEARER LANGUAGE
A new 'de-jargoning money' guide aims to simplify language used for money matters. The new Retirement Commission (Sorted) guide suggests use of 'debt' instead of 'credit' & 'end date' instead of 'maturity'.

CAT BOND A FIRST FOR NZ
EQC issued a $225 million catastrophe bond in the first such cat bond transaction originated out of New Zealand. This is just a first test to assess appetite, and it was successful. With that, it means that EQC has secured a record level of reinsurance for homeowners of just under $8.2 bln, up from $7.4 bln last year. Reinsurance only kicks in if the EQC scheme needs more than $2 bln to pay claims. Before reinsurance kicks in, any EQCover claims are funded from the Natural Disaster Fund and the Crown Guarantee, which EQC can access once the NDF has been exhausted. The cat bond market opens up resilience because traditional reinsurance has to be renewed each year, while catastrophe bond agreements are typically for three to five years.

A NEW GOVT SPENDING CATEGORY
Meanwhile, the Government said it will fund the buyout of 700 flood risk homes. It is a precedent that will only grow and compete for taxes. Under the scheme, central government will help fund local councils to buy homes in high flood risk areas hit by cyclones and floods. The Insurance Industry likes the support. Combined, the two 2023 events (Auckland Anniversary Weekend floods and Cyclone Gabrielle) have already resulted in more than 100,000 insurance claims with an estimated value to date of over $2.8 bln.

KATE JORGENSEN JOINS KIWIBANK BOARD
Kiwibank says Kate Jorgensen has joined its board as an independent director. Jorgensen also serves on the boards of Chorus and Suncorp NZ, and has held senior positions as CFO of Vodafone NZ, KiwiRail, and Fletcher Building's infrastructure division. She's also an impact coach with the Springboard Trust and was a member of the Sustainable Business Council Advisory Board. Jorgensen's a Chartered Accountant of Australia and New Zealand, and a Chartered Member of the Institute of Directors.

THE WINTER WEATHER OUTLOOK
NIWA says winter is unlikely to be colder than average, but will probably be colder than recent winters which were record-warm. We should expect heavy rainfall, snow, and strong winds through June. Then higher than normal air pressure is forecast to develop in the Tasman Sea during July and/or August, leading to periods of below normal rainfall, particularly in the north and east of both islands.

MILLION DOLLAR FRAUD CHARGE
A former charitable trust employee, Iesha Warren, who is alleged to have stolen more than $1 mln of funds intended for social support services in Porirua, is facing Serious Fraud Office charges. She has pleaded not guilty. The SFO allegation is that while she had access to the Te Roopu Awhina Ki Porirua Trust, she directed $1.17 mln into bank accounts she controlled by creating false supplier invoices or making payments directly from the trust account.

CONDUCT & CULTURE REVIEW TURNS UP 'ERRORS'
The FMA has filed High Court proceedings against Medical Assurance Society (MAS) and its subsidiaries for fair dealing breaches under section 22 of the Financial Markets Conduct Act 2013 (FMC Act). MAS self-reported these issues when it became aware of them. Between 2014 and 2022, they failed to apply the correct inflation adjustments on its customer policies, failed to apply multi-policy discounts and no claims bonuses, and underpaid life and disability claims to eligible clients, the MAS review found.

EV's COME UP AGAINST ABILITY TO PAY RESISTANCE
There were 9568 new cars sold (registered) in May, the lowest for a May in three years and down -10% from the same month last year. But there were 9589 used imports registered, almost a 40% gain in a year, an unusual surge because most of 2022 and 2023 so far these used import sales levels have been sagging badly. The growth in new electric and hybrid car sales didn't rise, probably because the subsidy support was scaled back. At the same time demand for utes and other commercial vehicles rose. The clear-car penalty isn't hurting sales yet. EV's are suffering from sticker shock/affordability.

HIGH DEMAND FOR NZGBs. LOWER YIELDS
There was another Government bond tender today, again three maturities for $400 mln on offer. Eighty nine bids were made with $1.164 blon offered. Yields fell for all tranches from the equivalent tenders for these maturities. An unusual feature is that only one offer was accepted for the $50 mln May 2051 tranche, and at 4.39%. A week ago this maturity went for 4.51%.

TAKE YOUR PICK
In a bit of a surprise, the private Caixin factory PMI actually expanded in May, in contract to the official version which said the sector contracted further. No analysts picked the Caixin OPMI reversal. Certainly, the Beijing stats masters aren't gilding anything this month.

BIG, BIG UNEXPECTED CUT
The central bank of Sri Lanka caught markets off guard by cutting its key rates by -250 basis points earlier today (Thursday). It said inflation is falling much faster than expected and the price outlook turning more benign. They cut their two benchmark rates to 13% and 14% respectively.

DEBT DEAL COMPROMISE OK'D
In Washington DC, the House of Congress has approved the Biden-McCarthy debt deal compromise. It is unlikely to fail in a Senate vote soon. The Biden Budget is largely unaffected in the end. All eyes will now turn to the bond markets as the US Treasury races to raise the necessary funds to avoid default. They will come at a higher cost than it these theatrics hadn't played out.

SWAP RATES UNCHANGED
Wholesale swap rates are likely little-changed today. 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 5.68%. The Australian 10 year bond yield is now at 3.62% and down -1 bp from this time yesterday. The China 10 year bond rate is down -2 bps at 2.72%. And the NZ Government 10 year bond rate is at 4.32% and down -1 bp, and that is still higher than the earlier RBNZ fix which by +1 bp to 4.28%. The UST 10 year yield is now at 3.65% and another -3 bps lower from this time yesterday.

EQUITIES STOP FALLING
Wall Street closed with the S&P500 down -0.6% in its Wednesday session. Tokyo has opened up +0.3% after yesterday's retreat. Hong Kong has opened with a +0.7% bounce after yesterday's large drop. Shanghai has opened up +0.4% also after their prior day fall. The ASX200 is up +0.4% in afternoon trade today, while the NZX50 is up +0.6% in late trade.

GOLD FIRM AGAIN
In early Asian trade, gold is at US$1965/oz and up +US$9 from this time yesterday. Earlier in New York it closed at US$1962/oz and London closed at US$1964/oz.

NZD UNCHANGED BUT LOW
The Kiwi dollar has held since this time yesterday at it low level of 60.1 USc. Against the Aussie we are also holding at 92.5 AUc. And against the euro we are little-changed at 56.3 euro cents. That means the TWI-5 is still at 69.1 unchanged.

BITCOIN SETTLES LOWER
The bitcoin price is softer again today, now at US$27,072 and down -2.2% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.5%. Binance says the Ontario Securities Exchange served them with an investigation order on May 10, 2023.

This soil moisture chart is animated here.

Keep abreast of upcoming events by following our Economic Calendar here ».