A review of things you need to know before you sign off on Wednesday; a key TD rate change, dairy prices slip, carbon auction shunned, current account deficit fell, farmers happy yes/no, swaps unchanged, NZD slips

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
BNZ launched a 6.15% 6 month TD offer. More here. The Co-operative Bank also tweaked two rates.

DAIRY PRICES SLIP
Today's dairy auction brought an overall -0.5% slip in prices although no change on a NZD basis. The event was fairly mixed with WMP down -2.5% and cheddar prices down -1.0%. But butter rose a sharpish +6.2% to a record-high price. Chinese buyers were noted for their relative absence. and relativce lack of influence in the market. Volumes offered and sold were low however.

30% OVER-VALUED? OR 30% UNDER-VALUED?
There was an official quarterly carbon market auction today. But no one participated and no units were traded. The floor price for today’s auction was $64/NZU which is substantially higher than the $49/NZU price units have recently been trading at in the secondary market.

COMCOM FILES PROCEEDINGS AGAINST FOODSTUFFS NORTH ISLAND
The Commerce Commission has filed legal proceedings against Foodstuffs North Island for allegedly using anti-competitive land covenants to block rival supermarkets in the lower North Island. ComCom said in an announcement on Wednesday that a settlement has been reached, and the Wellington High Court would soon make a decision on the case. Despite the historical nature of the issue, Commission Chair John Small said ComCom viewed it as “serious enough to warrant proceedings under the Commerce Act”. The investigation followed a 2022 market study revealing that land covenants by major retailers restricted competition.

IMPROVING BUT STILL NOT SUSTAINABLE
The Q1-2024 annual current account deficit fell $200 mln with goods exports up +$1 bln and service exports shrinking -$900 mln.

STEADY LONG-TERM PROGRESS
At March 2024, New Zealand’s international assets were $385 bln, +$23 bln more than at December 2023. International liabilities were $584 bln, +$12 bln more than at December 2023. That means our net international investment liability position was -$199 bln (48.7% of GDP), $11.2 bn narrower than at December 2023. Since 1987 when this 'modern' series of data started to be collected, if has only been since early 2023 that the net IIP has fallen below -50%. It has steadily improved from its worst position of -84% in March 2009. Progress, even if it is slowish.

CLIMATE PRESSURES RENTS
Median national rents rose $25 a week in the year to April, but the biggest rent increases have come in cyclone-affected Gisborne and Hawke's Bay

'WE ARE NOT FACING STAGFLATION'
RBNZ chief economist Paul Conway says the country is in a 'slow-to-no-to-negative' growth environment, but the outlook is slightly more positive for the future and the outlook is also for continued declines in inflation.

WE'RE OK, YOUSE AREN'T
While the main farmer lobby group (Federated Farmers) is talking down it's industry state, the latest Rabobank survey on farmer sentiment paints a much more optimistic picture. In the June quarter, farmers have improved confidence in the performance of their own operations, even if they are more pessimistic about the prospects for the broader agri economy.

ELECTRICITY/WATER UPDATE
Despite the unusual and painful winter dry in Canterbury, most rainfall is normal nationwide. Last week saw above average hydro inflows in the North Island but below average inflows in the South Island. As a result, North Island storage increased from 63% to 72% of average while South Island storage decreased from 78% to 77% of average. Auckland water supply dams are slightly fuller than 'normal' for this time of year. Total electricity demand increased marginally last week (+1%) but remained lower than this time last year. Demand peaked on Wednesday evening, 12 June and the Tiwai Point aluminium smelter reduced its take after a demand response call from Meridian.

JAPAN'S EXPORTS SHINE 
Japanese exports surged in May, up from ¥7290 bln in May 2023 to ¥8277 bln in May 2024, a +13.5% jump. The jump was expected, but it came in better than anticipated. Meanwhile Japanese imports rose too but by less than expected.

'ACCURATE PRICE SIGNALS ALLOW USERS TO MAKE EFFICIENT CHOICES'
In Australia, the RBA has been looking at the Buy-Now-Pay-Later and doesn't like what it sees. Their key concerns are not so much on the unregulated credit side, rather on the fee side. That say BNPL fees average 3.5% of the transaction cost, compared to 0.4% for debit cards, 0.8% for credit cards. BNPL makes Visa and Mastercard lood good (!). A crackdown is coming, allowing retailers to pass on those costs to customers (until now the BNPL industry has prohibited that. But the RBA needs now powers to make that change.

SWAP RATES HOLD
Wholesale swap rates are likely to be a little-changed today. Our chart below will record the final positions. The 90 day bank bill rate is up +1 bp at 5.61%, a level it has hovered around for 110 days now. The Australian 10 year bond yield is up +5 bps from this this time yesterday at 4.21%. The China 10 year bond rate is staying down at 2.27%. The NZ Government 10 year bond rate is down -8 bps at 4.59% from yesterday (an interesting reaction after the Conway speech) and the earlier RBNZ fix was at 4.58% and down -5 bps from yesterday. The UST 10yr yield is down -5 bps from yesterday at 4.22%. Their 2yr is now at 4.72%, so the curve is a bit more inverted at -50 bps.

EQUITIES MOSTLY HIGHER, EXCEPT THE NZX50
The NZX50 fallen -0.7% today. The ASX200 is unchanged in afternoon trade. Tokyo has opened up +0.6%. Hong Kong has taken off, up +2.1% at its open, Shanghai is down -0.2%. Singapore is up +0.3%. The S&P500 ended up +0.3% in its Tuesday trade on Wall Street.

OIL UP
The oil price is up +US$1 from this time yesterday, now just over US$80.50/bbl in the US, and now just over US$84.50/bbl for the international Brent price.

GOLD FIRMER
In early Asian trade, gold is slightly firmer again, up +US$7 from yesterday at just on US$2331/oz.

NZD SLIPS ON AUD SURGE
The Kiwi dollar is only marginally firmer from this time yesterday, at 61.4 USc. Against the Aussie we are more than -½c lower at 92.1 AUc. Against the euro we are up +10 bps at 57.2 euro cents. This all means the TWI-5 has slipped to 70.5.

BITCOIN HOLDS
The bitcoin price is up +0.7% today from this time yesterday, now at US$65,285. Volatility of the past 24 hours has been modest at just on +/- 1.4%.

This soil moisture chart is animated here.

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