A review of things you need to know before you sign off on Thursday; BNZ ups floating rate, REINZ data suggests trough reached; food prices jump; factories in long slump, swaps fall, NZD rises, & more

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

MORTGAGE RATE CHANGES
BNZ has raised its floating rate by +35 bps tp 8.49% effective for both new and existing customers from July 19.  This is an unusual out-of-cycle change. But it only raises it to levels lower than its main rivals. TSB raised most fixed rates, but not their competitive 6.99% one year rate. China Construction Bank also raised most fixed rates. NBS raised their one and two year fixed rates. SBS Bank raised all their fixed rates for terms 6 months to 2 years.

TERM DEPOSIT/SAVINGS RATE CHANGES
TSB raised all their TD rates for terms 18 months to 5 years, but none went higher than their existing 6% one year rate.

MIXED MESSAGES IN HOUSING MARKETS
The REINZ reports that housing sales volumes were up and down in June, prices up slightly with fewer vendors, and buyers remaining hesitant. Despite the stunted activity most bank economists suggested this is "the bottom" and it will be up from here. Independent economic consultancy Infometrics noted: "Although a single month of data is not yet enough to say definitively whether house prices have bottomed out in New Zealand, the first positive result in 18 months indicates we are indeed approaching the trough." But they also said "Because of high debt-servicing costs, the support that net migration is providing to house sales activity is more likely to put a floor under house prices, rather than propel them upwards."

FOOD PRICE JUMP SHARPLY
Food prices rose again in June, up +12.5% from a year ago, Stats NZ reported today. But, fruit and vegetable prices charged on with 22% annual rise. This will be one component in the Q2-2023 CPI data that is released on Wednesday next week. Q1-2023 CPI rose +6.7%. Some analysts estimates are starting to come through for the expected Q2-2023 result. ANZ says the headline number will be 5.9%, Westpac also says 5.9%. Recall that at the last MPS, the RBNZ penciled in an estimate in May for Q2 to be of 6.1%. And don't forget, we do have some large base effects rolling through from a year ago, so that may make the heading numbers harders to read as an indication for what is coming up.

AVAILABLE RESERVES DROP SHARPLY
MBIE’s latest petroleum data shows the effect of the sharp change in investment signals, with gas reserves dropping below 10 years of remaining use for the first time. Some are warning that without change, our energy security is now threatened.

A ONE-OFF RISE?
A big petrol splurge ahead of the excise tax changes brought a June rise in retail spending via electronic cards. Stats NZ figures show that total card spending rose by +1.3% in June held up by that rush on petrol

RENT MOVEMENTS DIVERGE
Stats NZ released its rent index data today and overall the changes are modest on both a stock and flow basis, each just over +3% in June from a year ago. But there is wide regional variability. For Auckland, the flow is up +7.3% in a year and rising (+6.8% in May, +4.9% in March), but for Wellington things are going the other way, down -0.5% in the year to June (+1.9% in the year to March).

TOUGH TIMES FOR MANUFACTURERS
The BNZ/Business NZ PMI is contracting faster. It marked the fourth straight month of contraction in our factory sector and the steepest since last November as activity was held back by declining demand, cost increases and production/staffing issues. Sadly the new order component was one of the weakest elements. The overall contraction is its longest since 2009.

NZGB's VERY POPULAR
Today's NZGB tender was a little unusual. Rather than the usual $400 mln on offer, it was $500 mln in three tranches. But there was no lack of support; in fact $1.5 bln was bid in 129 bids. But only 21 won anything. The May 2026 was for $250 mln this time, going for a yield of 4.83% which was +14 bps higher than the equivalent tender two weeks ago (to 12 winners). The May 2031 $150 mln went for a yield 4.57% (it has been six months since this was last offered) to 5 winners. The May 2051 offer was for $100 mln and very well supported but for a winning yield at 4.80% to just 4 winners, up from 4.65% two weeks ago.

STUCK HIGH
Australian inflation expectations are not retreating. They were 5.2% in June are are also 5.2% in July the the Melbourne Institute survey.

SWAPS FALL AGAIN
Wholesale swap rates are probably noticeably lower again 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 -4 bps at 5.65% and now +15 bps above the 5.50% OCR. The Australian 10 year bond yield is down another -12 bps from this time yesterday at 4.05% although most of that fall happened last night. The China 10 year bond rate is little-changed at 2.70%. And the NZ Government 10 year bond rate has again fallen back, this time by another -17 bps to 4.63%, but still higher than the earlier RBNZ fix which also fell -12 bps to 4.62%. The UST 10 year yield has fallen back, and by another -11 bps, to just on 3.85%.

EQUITIES HIGHER AGAIN
The S&P500 ended its Wednesday session on Wall Street up another +0.7%. Tokyo has opened its Thursday session with a strong +1.3% bounce back. Hong Kong has risen even stronger at its open, up +2.5%. Shanghai is up +0.7% in their early trade. The ASX200 is up +1.5% in afternoon trade. The NZX50 has joined the party and is up +0.7% in late trade.

GOLD RISES STRONGLY
In early Asian trade, gold is up another +US$19 from where we were this time yesterday, now at US$1959/oz. It closed earlier in New York at US$1957/oz, and earlier still in London at US$1953/oz

NZD RISES
The Kiwi dollar is almost +1c firmer, now at just on 63.2 USc. Against the Aussie we are up +¼c at just over 92.7 AUc. Against the euro we are firm at 56.7 euro cents. That means the TWI-5 is to over 71.

BITCOIN SLIPS
The bitcoin price has slipped -0.9% today and is now at US$30,334. Volatility has been modest at just on +/- 1.2%.

HOLIDAY
Please note that Friday, July 14, 2023 is a public holiday in New Zealand, Matariki. It is a normal public holiday with most retail services open but most business and government operations closed. We will have holiday coverage tomorrow and return for normal weekend coverage following that.

This soil moisture chart is animated here.

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