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/LOAN RATE CHANGES
Kāinga Ora has trimmed its 1 and 2 year fixed rates, and dropped its three year fixed rate by -26 bps to 6.99% (same as its five year fixed rate).
TERM DEPOSIT/SAVINGS RATE CHANGES
None here today.
AUCKLAND HOUSING MARKET STARTS TO CLEAR
Dominant Auckland realtor Barfoot & Thompson said it had its highest May sales since 2021. Their sales volumes were up as vendors dropped asking prices to meet the market.
HOLDING WELL
Dairy prices held their own at the overnight GDT auction. (+1.7%) No farmgate payout forecast will be revised after this market event.
CHANGES TO HOLIDAYS ACT 2003 ON THE WAY
The government has announced changes they plan to make to the Holidays Act 2003. Consultation of their proposed changes will run until September and they want to hear especially from small businesses. The exposure draft will include a shift in how annual leave is calculated, moving from an entitlement system to an accrual system. The present law involved complex calculations that regularly stump payroll software leaving employers with potentially large exposures, they claim. The previous Labour government had put together a taskforce back in 2018 to look into issues around the complicated Holiday Act but no legislation was rolled out before they lost the election in late 2023.
A BETTER TAX TAKE
The Government's finances for the first 10 months of the year are some $1.7 bln better than was forecast in last week's Budget due to higher than expected tax revenue, the Crown accounts show. That is income taxes, and mostly company/trust tax gains, not GST which is clearly leveling off.
DE-RISKING?
March quarter data shows that, for both goods and services, our trade surplus with China is pretty static, while the trade surplus with the US is growing, and fast. In fact our surplus with the US now exceeds that with China. In March 2024 the China surplus for the quarter was +$1.3 bln, up from +$1.2 bln in the same quarter a year ago. But for the USA, it has about doubled from +$772 mln a year go to almost +$1.6 bln in the latest quarter. Over the same period our deficit with the EU has halved; with Australia however we have switched from balance to a more than -$300 mln deficit.
KIRK HOPE ON THE MOVE
Business NZ boss Kirk Hope has quit, and will move to the Financial Services Council as its new Chief Executive from September.
BEEF PROSPECTS LOOK GOOD
Rabobank is saying beef prices should remain at good levels in 2024. This is because lower production in Europe, the US and China should help ensure cattle prices continue to hold up strongly across key the beef production regions.
A $1 BLN INCREASE
EQC has secured a record level of reinsurance of $9.2 bln from 1 June 2024 to protect homeowners from the impact of natural hazards "and keep home insurance affordable". This includes $225 million that is in place from a multi-year catastrophe bond placed in 2023, and is close to a +$1 bln increase from last year’s total reinsurance cover.
MORE LOST FROM FEWER CYBER SCAMS
CERT NZ's Q1-2024 Cyber Security Insights report shows a decrease in the number of incidents reported for a second quarter in a row. But, money lost to scams almost doubled since the previous quarter.
GOING LOCAL
The Government is putting in $36 mln to support local catchment groups, $7 mln directly and the rest as beefed up MPI staffing. The goal is better land use to improve freshwater outcomes.
CAR SALES SHOW STEEP DECLINES IN MAY
Eighty per cent of new passenger car sales in May were SUVs, a level that seems to be embedding now. But only 6369 new cars were sold in the month, a full third less than in May 2023, and -40% less than in May 2022. NEVs have sunk back to only 37% of all car sales, far from the heady 81% in December 2023. For the last ten months, used car imports were a bit less than 9000 per month, and that too was almost -10% lower than year-ago levels (although higher than two years ago).
SERVICE SECTORS DRIVE MODEST EXPANSIONS
The private Caixin services PMI came in better than expected for May and a bit better than the official services PMI. Meanwhile the Japanese services PMI has raised in its final version from its flash result. It too is a similar and good expansion. The roaring Indian PMIs for May get updated late this afternoon.
JAPANESE PAY RISES FASTER
Meanwhile, Japanese pay rose +2.1% in April from a year ago, and well above the expected +1.7% gain.
SWAP RATES HOLD
Wholesale swap rates are likely to be little-changed today. Our chart below will record the final positions. The 90 day bank bill rate is unchanged at 5.62%, a level it has hovered around for more than 80+ days. The Australian 10 year bond yield is down -8 bps from yesterday at 4.28%. The China 10 year bond rate is unchanged at 2.32%. The NZ Government 10 year bond rate is down -8 bps at 4.74% from this morning and the earlier RBNZ fix was at 4.69% and down -3 bps from yesterday. The UST 10yr yield is down -7 bps from yesterday at 4.34%. Their 2yr is now at 4.78%, so the curve has shifted to be more at -44 bps inverted.
EQUITIES MOSTLY HIGHER EXCEPT TOKYO
The NZX50 is up +0.4% in late Wednesday trade. The ASX200 is up +0.5% in afternoon trade. Tokyo has opened its Wednesday trade down -0.8% but Hong Kong is up +1.1%. Shanghai is little-changed while Singapore is up +0.2%. Earlier, Wall Street closed with the S&P5000 up just +0.2%.
OIL SLIPS FURTHER
The oil price is -50 USc lower from this time yesterday, now just on US$73/bbl in the US, and down a bit less at just under US$77.50/bbl for the international Brent price.
GOLD SLIPS
In early Asian trade, gold has fallen -US$16/oz from this time yesterday, at US$2332/oz.
NZD RISES
The Kiwi dollar is unchanged from this time yesterday holding up at 61.9 USc. Against the Aussie we are up +¼c at 92.9 AUc. Against the euro we are up almost +¼c at 56.9 euro cents. This all means the TWI-5 is now over 71.1.
BITCOIN RISES
The bitcoin price has risen solidly today, now at US$71,117 and up +2.9% from this time yesterday. Volatility of the past 24 hours has been modest, at just under +/- 2%.
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