A review of things you need to know before you sign off on Monday; SBS leads with big TD offer, services stutter, tractor sales weak, settlement account balances fall, swaps slip, NZD holds, & 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
Kiwibank raised some key fixed rates today, by between +10 bps and +20 bps. The Police Credit Union also raised its one and two year fixed rates today.

TERM DEPOSIT/SAVINGS RATE CHANGES
SBS Bank launched an outsized one year TD offer of 6.5%, well above all other banks for this term (and probably above the CPI inflation level we will get on Wednesday for June - forecasted at 5.9%). More here. Kiwibank also raised many term deposit rates by +5 bps to +20 bps, taking their six month rate offer to 5.75% and their one year offer to 5.90%.

SLIDING LOWER
Evidence of the slowing in the service sector was clear in the June BNZ-BusinessNZ PSI. It contracted to a steady-state with the May expansion almost gone, and continuing a declining trend that started in October 2022. Perhaps the May result was an outlier. The local PSI has failed to match the resilience in the global PSIs, which is disappointing. New orders are still expanding however, but at levels well below 'normal'. If you are stretching for positives, this PSI is still better than what the QSBO recently reported for Q2.

"HAVE YOUR SAY" (BUT NOT TO UPEND PRIOR COMMITMENTS)
Auckland Council is reminding residents that they can comment on the draft Future Development Strategy. With half a million more people expected to live in the city by 2058, this is their plan to make sure homes, jobs and infrastructure are built in the right places, at the right time. (But previous commitments to halve greenhouse gas emissions by 2030 and reach net zero emissions by 2050 are key constraints to any option proposed.)

COMCOM TOUTS SUCCESS IN REINING IN HIGH-COST LENDERS
The Commerce Commission says a review of high-cost lenders following the 2020 introduction of new rules in 2020 shows they've either quit the lending market or reduced interest below 50%. Specific rules for high-cost lenders require them to cap interest and fees at 100% of the total loan amount; cap the interest rate charged per day at 0.8%; whilst lenders are restricted from making high-cost loans to some repeat borrowers; and lenders have additional disclosure obligations. Separately, ComCom is going after pecuniary penalties for the first time in High Court civil action, this one against Eagle MAN.

GOING WITHOUT
The number of new tractors sold in June was unusually low - only 174. That was even lower than immediately after the pandemic struck (188 in June 2020). In fact you have to go back to 2015 to find a lower level (158) and the ten year average for a June has been 194. In June 2022, there were 227 sold so this year is about a quarter less. In fact, the 12 month rolling sales levels are now lower in 2023 than 2022, and in fact - apart from the pandemic 2020 year - we haven't seen this level of long-term weakness since the shadow of the GFC in 2010.

LOWER BALANCES
Updated data shows Settlement Balances at the RBNZ lower for banks. They were under $45.4 bln and their lowest since August last year. (They are now -$11 bln lower than their December pear, down -20% from then.) The Crown Settlement Balance is now $21.6 bln and little changed from May. (It peaked in March 2021 at $42 bln.)

MORE REGIONAL BANKING HUBS
Three new regional banking hubs are to open from this week as part of the regional banking hub trial led by ASB, ANZ, BNZ, Kiwibank, TSB and Westpac. The three new hubs will be in Waimate, Whangamatā and Ōpōtiki. The first four regional banking hubs opened in late 2020 with banks deciding to extend and expand the trial last year. The hubs are designed to test community and customer demand for multi-bank services in towns that don’t have enough customer demand for bank branches.

LOW BASE EFFECT BOUNCE ...
China's economy expanded by +6.3% in the second quarter from a year earlier, fueled by recoveries in retail sales and the service sector, and partly thanks to a low base effect. This was lower than the expected +7.3% but was higher than the +4.5% rise in Q1-2023. Between Q1 and Q2, up just +0.8% (annualised at +3.2%) and emphasising the size of their challenge to regain momentum.

BUT JUNE WEAK I ...
Electricity production however only grew +2.8% from a year ago in June. Some use this metric as a more insightful indicator of actual economic activity in China. It rose +5.6% in May, and this June result is the lowest since February.

AND JUNE WEAK II
Retail sales were another weak point in today's data releases from China; there were up +3.2% from a year ago in June with the re-opening surge seemingly having passed through their economy now.

HOLDING PAT
Separately, their central bank did not change its 1-year Medium-term Lending facility rate at 2.65%.

A NEW PRIMARY ENERGY SOURCE?
Our eye was drawn to an article by AEP (a serial embellisher) to the potential of geologic hydrogen. That led to a USGS survey released in April that claimed: "The good news is, if even a small fraction of this estimated volume could be recovered, there would likely be enough hydrogen across all the global deposits to last for hundreds of years." Also see this. AEP might be right about something, sometime. Forget 'brown', 'blue' or 'green' hydrogen, or even ammonia; this is 'white' hydrogen'.

SWAPS SLIP AGAIN
Wholesale swap rates are probably 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 unchanged at 5.65% and now +15 bps above the 5.50% OCR. The Australian 10 year bond yield is down -3 bps from this morning at 3.97%. The China 10 year bond rate is unchanged at 2.69%. And the NZ Government 10 year bond rate has again fallen back, this time by another -7 bps to 4.55%, but still higher than the earlier RBNZ fix which also fell -10 bps to 4.52%. The UST 10 year yield has fallen back by -2 bps, to just on 3.81%.

EQUITIES MIXED
The NZX50 has started the week weak, down -0.5% near the close. The ASX200 is little-changed in afternoon trade. Tokyo has opened its Monday trade with little-changed from Friday. Hong Kong has opened up +0.3%. But Shanghai has started its Monday down a very sharp -1.2% with investors unimpressend by the data releases today. The S&P500 futures suggest Wall Street will open tomorrow virtually unchanged from Friday.

GOLD STABLE
In early Asian trade, gold is little-changed from this morning, still at US$1953/oz.

NZD ON HOLD
The Kiwi dollar is little-changed from this morning's open, perhaps a td softer and now at just on 63.6 USc. Against the Aussie we are unchanged at 93.2 AUc. Against the euro we are softish at 56.6 euro cents. That means the TWI-5 is little-changed at 71.

BITCOIN LITTLE-CHANGED
The bitcoin price has slipped -0.4% from this morning and is now at US$30,278. Volatility has been low at just under +/- 0.5%.

This soil moisture chart is animated here.

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