A review of things you need to know before you sign off on Friday; consumer sentiment rises, Westpac seeks T1 bond funding, farm sales very low, households pile in to TDs, swaps jump, NZD low & stable, & 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
Nothing to report here today.

TERM DEPOSIT/SAVINGS RATE CHANGES
None to report here either.

CONSUMER SENTIMENT RISES
Hard on the heals of yesterday's news of improving business sentiment, today we got a similar report of improving consumer confidence even if remains at relatively low levels. Both reports are a notable contrast to prior declines in sentiment.

FHBs HAVE MARKET TO THEMSELVES
The latest mortgage activity data shows that FHBs seem to have much of the home-buying market to themselves. We analyse this data here.

NON-BANK DEPOSIT TAKERS WELCOME MARKET STUDY, DEPOSIT TAKERS ACT
A group of 12 non-bank deposit takers (NBDTs) is cheering both parliament's passing of the Deposit Takers Act, and the Commerce Commission's market study into banking competition. Daniel McGrath, CEO of Xceda Finance and spokesman for the group, says by including NBDTs in the same supervisory regime as banks the Act allows customers to have confidence in a wider range of financial institutions, not just the main banks. On the market study, McGrath says it's only going to be a good thing for customers and the industry as a whole.

"UP TO" BUT "UNLIMITED"
Westpac is the next into the bond market for floating rate Notes which it want to use to bolster its T1 capital. It says it is seeking "up to $100 mln with unlimited over-subscriptions at the discretion of Westpac NZ". The term to maturity of 3 years. These Notes will pay the 3 mth bank bill rate plus a margin of about 0.73%. Recently the base 3 month rate was 5.69% so that suggests investors will be looking at about 6.40%. This is expensive money given that these Notes would be converted into shareholder capital in the even of financial stress by the bank - and then there would be questions about the repayability of the principal amount.

CLOSER MONITORING
The FMA said it has been doing Audit Quality Reviews at audit firms every two years for the big four auditing firms and at least once every three years for the other registered firms. But now it says, starting from the 2023/24, they are gearing up to review each licensed firm every year. They say they will review fewer audit files more frequently, so the overall burden will be unchanged. But it will enable them to spot issues faster, they hope.

WAITING FOR GLOBAL APPROACH
The RBNZ says it is 'not proposing a regulatory response' to cryptocurrencies and stablecoins 'at this point'. Rather it is holding out for the 'real advantages' to harmonising crypto asset regulation globally.

FAR FEWER ARE BUYING (OR SELLING)
The REINZ says farm sales volumes were down -39% in May compared to a year ago. Dairy farm sales down -47% they note.

DELAY FOR WEATHER HIT PROPERTY OWNERS
Finance Minister Grant Robertson says agreement between the Government and councils on how to share the cost of buying out high risk properties following this year's North Island extreme weather events is yet to be reached. “We had expected to have details of the cost-sharing arrangements resolved in June. Although we are making progress with negotiations, this is taking longer than we hoped. We are aiming to have agreement on these arrangements by the end of July. I want to reassure people who want certainty so they can relocate or rebuild their home, that this is a priority for the Government,” Robertson says. At the start of June it was announced the Government and councils would share costs for those in Category 3, along with working together on supporting Category 2 interventions. Councils are engaging with affected property-owners. Robertson says more time is required to work through the policy and parameters, and to make final decisions on how properties will be categorised. This includes which homeowners will be offered a voluntary buyout.

A STUNTED MARKET
Lending for housing rose only +$799 mln in May from April, the ninth month in the past 12 that it hasn't even reached +$1 bln. That is a low benchmark because it has averaged +$1 bln/month in every year since 2014. Banks are doing a bit better than non-bank lenders because their combined May rise was +$931 mln and those non-bank lenders shed volume (in fact the most in May 2023 since December 2012). No sign of green shoots in this data.

TDs ARE BACK IN FAVOUR
Households added +$2 bln to their term deposit holdings in May from April. But part of that was because they shifted $700 mln from their transaction accounts, and another $500 mln from their savings accounts. Even though term deposit interest rates are still lower than inflation (especially after inflation and after taxes), higher TD rates is proving attractive for household savers. In fact at $114.6 bln, term deposit balances are now at record-high levels again.

A FIVE YEAR HIGH
Also back in favour with banks is lending to dairy farmers. This lending jumped +$377 mln in May from April which dominated the +$407 mln lift in overall rural lending in May. That is pretty unusual. It was the biggest monthly increase in lending to dairy farmers since June 2018. In contrast, lending to any other type of farmer took a noticeable break in May, all up only abounting to +$30 mln and continuing the pullback that started in July 2022.

A QUARTER SOLD SO FAR
In response to the pandemic the RBNZ added its Large Scale Asset Purchase program that bought $62.3 bln of bonds to help the financial industry weather the liquidity storms during a very uncertain period. They started in March 2020 stopped funding this program in July 2021. Then in April 2022 they started quitting these holding back into the regular financial markets. They have shed $14.5 bln of these holdings through May 2023 with still $47.8 bln to go, with the pace of the selloff picking up sharply recently.

GOING BACKWARDS SLOWLY
China released its official PMIs for June today and they make concerning reading. Factory activity stayed in a mild contraction but it is now three months in a row it has contracted. Services is expanding but at their slowest pace in six months. Still, neither is severe, only lackluster. The Caixin versions will come on Monday. The private Caixin versions have recently tended to reflect slightly better results over the past few months.

SWAPS PRESSED HIGHER
Wholesale swap rates are possibly ending today sharply higher on a combination of local and global trends. 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 +2 bps at 5.714% and still +19 bps above the 5.50% OCR. The Australian 10 year bond yield is up +8 bps from this time yesterday at 3.99%. The China 10 year bond rate is little-changed at 2.70%. And the NZ Government 10 year bond rate is now at 4.69%, and up +8 bps which is still higher than the earlier RBNZ fix which jumped +16 bps to 4.67%. The UST 10 year yield is now at 3.85% and up +12 bps from this time yesterday and shows no signs of doubting the overnight jump.

EQUITIES CALM AT QUARTER END
The NZX50 is unchanged today close to end of month trading. That might mean a weekly rise of +0.5% but it is ending June at about the same level as it started the month. Since the start of the year, it is up +2.0%. Over the past year it is up +8.7%. The ASX200 is also unchanged from yesterday in Friday afternoon trade. If that holds it will be up +1.3% for the week, +1.5% for the month and up +3.6% since the start of 2023. It would be up +9.5% over the past year. Tokyo is down -0.7% in early trade today and if that holds will end the week up +1.1%. Hong Kong has opened up +0.5% and heading for a +1.0% weekly rise. Shanghai has opened up +0.4% and is looking at a +0.6% weekly gain. On Wall Street. the S&P500 ended its Thursday session up +0.5% to book a net weekly gain so far of +1.0%. If that holds it will end the month with a creditable +4.5% rise, taking its 2023 rise to +15%. Of course, that have one more days trading to go.

GOLD STEADIES
In early Asian trade, gold is at US$1908/oz and up +US$5 from yesterday. Earlier it closed in New York also at US$1908/oz and earlier still it closed in London at just under US$1900/oz.

NZD HOLDS AT EOM
The Kiwi dollar is holding at 60.7 USc. Against the Aussie we are little-changed at 91.8 AUc. Against the euro we are firmish at 56 euro cents. That means the TWI-5 is little-changed at 69.4 with little end-of-month action so far.

BITCOIN HOLDS
The bitcoin price has risen marginally today and is now at US$30,363 which is up a minor +0.8% from yesterday. Volatility has remained modest at just over +/- 1.2%.

This soil moisture chart is animated here.

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