A review of things you need to know before you sign off on Wednesday; immigration impulse eases sharply, asking prices too, FMA tackles Booster but Booster hits back, tourism recovery weakens, swaps stable NZD firms, & 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/LOAN RATE CHANGES
No changes to report again today.

TERM DEPOSIT/SAVINGS RATE CHANGES
None here either today.

THE OUTFLOW SPEEDS UP
The net population gain from migration dropped dramatically in April to +2244 as New Zealand residents left the country in droves. (It was over +10,000 in April 2023.)

ASKING PRICES TUMBLE
The decline in asking prices on TradeMe Property suggests vendors are becoming more realistic in their price expectations.

A DAIRY DIP
The overnight dairy Pulse auction had prices retreating somewhat from last week's good full GDT event. But the lower levels probably aren't significant at this stage.

WATCHING FOR COMMERCIAL PROPERTY RISKS
There is a lot of attention on commercial property prices overseas, and that is shining a spotlight on banks' exposure to loans to that sector. Some expect a new round of regional bank failures in the US from commercial property-exposed banks (and there are many). So we should keep an eye on that sector here. One way to do that, is via investor pricing on New Zealand commercial property companies. Capitalisation of these listed sector companies has fallen -8.2% from the start of 2024, down -4.3% from the start of 2023, and down -15% from the start of 2022. Generally leverage levels are low here (under 50%). The most exposure is by investors with equity positions - but this may also include KiwiSaver funds. It doesn't look like New Zealand banks have any special reason to be thinking of loan write-downs at this point. Details of financial positions by specific commercial property companies are in links on this page.

SHARESIES PARTNERS WITH INSURER COVE
Wealth platform Sharesies announced it has partnered with digital insurance platform Cove to offer car insurance at discounted rates. Sharesies investors can now get insurance quotes, purchase insurance, and make claims directly through the Sharesies app, with the first month free and a 5% discount applied to the total price of the insurance policy for Sharesies customers. This is the first time Sharesies has offered insurance, adding it to their existing list of wealth management products. Sharesies co-founder Sonya Williams described the addition of insurance to the platform’s offering as a “natural evolution” for the app, which has over 670,000 users in Australia and New Zealand. The app received good feedback from an insurance beta testing phase which showed strong demand for competitively priced, easily accessible insurance. Sharesies now plans to further expand into what it’s described as the wealth protection space based on the good response.

FMA TACKLES BOOSTER, BOOSTER HITS BACK
The FMA has filed civil proceedings against Booster Investment Management, a wholly owned subsidiary of Booster Financial Services. The proceedings allege breaches of the Financial Markets Conduct Act (FMCA) and the following directors and senior managers of BIML: Allan Yeo (director), Paul Foley (director), Brendon Doyle (former director), David Beattie and Nicholas Craven (both senior managers). The details of the FMA's civil claim are here. But Booster has hit back, rejecting the allegations. They say the Tahi Fund at the center of the FMA's accusations has achieved the investment goals it set out and won't qualify as being "not in the best interest of Booster’s investors". They will be vigorously defending their position, they say.

THE TOURISM RECOVERY RUNNING OUT OF STEAM
Overall tourism arrivals in April totaled 225,024, up +1.7% from the same month a year ago. That makes them 73% of pre-pandemic levels, the weakest result relative to pre-pandemic levels in almost a year. But some of this weakness compared to pre-pandemic 2019 is due to when Easter fell in the comparison. Despite that we have some way to go to get back to pre-pandemic levels. One reason is visitors from China. Chinese arrivals continue to be mixed. After a strong February, reaching 74% of pre-pandemic levels driven by Lunar New Year travel, March numbers fell to 42% before bouncing back to 59% in April.  

CHINA, WHERE THERE IS NO INFLATION
China's CPI rate slipped -0.1% in May from April, to be just +0.3% higher than a year ago. Observers were expecting a stronger price gain than that, although not by much more. Low demand seems to be keeping prices close to deflation again. Beef prices were particularly soft. down -3.6% in the month to be almost -13% lower than a year ago. Lamb prices weer down -1.2% in May from April, down -7.5% in a year. These are far softer than overall food price changes (-1.0%) for the year). Milk prices were unchanged in May, down -1.7% for the year. Meanwhile, producer prices are still languishing in deflation, but less so. They were down -2.5% in April from a year ago, easing to -1.4% in May.

BUT THERE IS IN JAPAN NOW
Meanwhile, Japanese producer price inflation is rising, up +2.4% in May from a year ago, a nine month high.

TOURISM PROMOTION NOW IN CATCHUP MODE
Over the past ten years, New Zealand has been the destination Aussies visit most for their holidays - except now. At the end of 2023 Indonesia (ie Bali) has knocked us off the top spot. We still get 1.26 mln visitors annually from Australia, but now Bali gets 1.37 mln visits by Aussies. These annualised totals however haven't quite recovered to the peak levels of 1.48 mln at the start of 2020 just before the pandemic hit (1.43 mln for Indonesia).

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 almost 90 days. The Australian 10 year bond yield is down -3 bps from yesterday at 4.35%. The China 10 year bond rate is still unchanged at 2.32%. The NZ Government 10 year bond rate is down -1 bp at 4.79% from yesterday and the earlier RBNZ fix was at 4.78% and up +8 bps from yesterday. The UST 10yr yield is down -5 bps from yesterday at 4.40%. Their 2yr is now at 4.84%, so the curve is now at -44 bps inverted.

EQUITIES MIXED
The NZX50 is up +0.2% in late trade today. However, the ASX is another -0.6% in afternoon trade so far. Tokyo has opened its Wednesday trading down -0.8%. However Hong Kong is down -1.2% and Shanghai unchanged today in early trade. Singapore is up +0.1% in early trade there. The S&P500 ended its Tuesday trade up another +0.3% on Wall Street earlier.

OIL FIRMER AGAIN
The oil price is +US$1 higher from this time yesterday, now just on US$78/bbl in the US, and just on US$82/bbl for the international Brent price.

GOLD FIRMER
In early Asian trade, gold is slightly firmer, up +US$10 from this time yesterday at just on US$2312/oz.

NZD FIRMER AGAIN
The Kiwi dollar is almost +¼c firmer again that this time yesterday, now at 61.5 USc. Against the Aussie we are little-changed at just on 93 AUc. Against the euro we are firmer at 57.2 euro cents. This all means the TWI-5 is now just over 71.

BITCOIN RETREATS AGAIN
The bitcoin price is down another -1.0% today from this time yesterday, now at US$67,408. Volatility of the past 24 hours has been modest at just over +/- 1.7%.

This soil moisture chart is animated here.

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