A review of things you need to know before you sign off on Monday; no retail rate changes, home loan (un)affordability stable, record-high exports, eyes on grocery prices, swaps and NZD on hold, & 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.

STABLE UNAFFORDABILITY
Mortgages are still unaffordable for first home buyers on average incomes, but at least it's not getting any worse. And the national average is hurt by Auckland. We are in a period of relative stability for home loan affordability. There are now five regions were the cost of a home loan is less than 40% of take-home pay for FHBs making a 10% deposit. For those able to make a 20% deposit (a tall order), every region other than Auckland is now affordable.

ALL-TIME HIGH
Early withdrawals from KiwiSaver accounts for home ownership ($149 mln) and financial hardship ($33 mln) jumped in May as members withdrew over $182 mln in the month. The May 2024 hardship withdrawal amount was an all-time high. But the first-home withdrawals in May 2024 was't a record. That was set three years ago in March 2021. Savings suspension are retreating now, down -15% in May from the same month a year ago.

RECORD EXPORTS
There was a trade surplus of +$204 mln in May and and exceeding forecasts for a +$155 mln surplus. Exports rose to $7.2 bln, a new all-time record high as shipments increased for wine (+38%), dairy products (+16%), and precious metals (+38%). Imports were little-changed, up just +0.6% from a year ago.

CHANGING OF THE GUARD?
The top export markets in order of total annual goods were China, Australia, USA, EU and Japan, while the main import sources are China, EU, Australia, USA and South Korea. But, and it could be a significant 'but', China is not longer our most valuable trading partner (if you measure that by what drives our trade surplus). The USA is. In the year to May 2023 our surplus with China was +$1.14 bln, but this shrank to +$950 mln in the year to May 2024. For the US we ran a deficit of -$420 mln in the year to May 2023. But in this past year that switched to a surplus with the US of just shy of +$1.5 bln. That is a very impressive turnaround.

GOLD A WINNER
Gold exports are unusually high. For the year to May, that probably topped $1.1 bln ("probably" because the data we looked at is in a category of exports labeled "Precious stones, metals and jewellery".) For May alone, these exports were up +38% above year-ago levels, continuing a strong run of gains that started in February. In a month when we exported $7.2 bln, perhaps the $102 mln in gold may not seem much. But if it keeps rising like this, it will quickly become important. Recall, the gold price was up a touch less than +20% in the same May year, so that means the volume increase in gold exports has been +18%.

PROFIT RECOVERY BUT FINE YET TO BE SET
TSB's annual profit jumped to $34 mln as a drop in expenses outweighed lower income levels as housing lending competition bit. They are yet to face the CCCFA court date with the Commerce Commission, and they have made a provision for that, but aren't declaring how much it was.

OUT OF FAVOUR
More users are forsaking credit card use with balances falling -0.7% in April from March, and that meant they were lower than a year ago too. May billings on these cars fell to $3.8 bln, far below the high-water mark of $4.3 bln in December 2021. A year ago in May 2023 it was $4.0 bln. Despite the obvious pressures, card holders are are not using the interest-bearing debt options any more that they have for a long time, still at 53% of the balances outstanding.

WHEN SHOULD YOU USE A VPN?
We have released an explainer on virtual private networks (VPNs). There are good reasons in some circumstance, and others that don't hold up in many common circumstances.

GROCERY PRICES TRANSITIONING LOWER?
With Infometrics reporting that Foodstuffs has costs from suppliers rising less than +3% in May, there is a sense that this part of the household inflationary pressure is easing. And it might be easing rather fast now. Our own Woolworth's monitoring has our tracking list of healthy groceries now down more than -8% from a year ago and back to levels of two years ago. But that was high back then. Still the pace of the price retreats seems to be gathering pace. If pay trends keep going up, and grocery prices keep going down, the pressure on household budgets will ease off fast (if you retain your job). (The next stress point will be grocery suppliers complaining that the prices they get are unsustainable.)

SWAP RATES ON HOLD
Wholesale swap rates are likely to be little-changed. Our chart below will record the final positions. The 90 day bank bill rate is up +1 bp at 5.62%, a level it has hovered around for 110 days now. The Australian 10 year bond yield is up +1 bp from this this morning at 4.26%. The China 10 year bond rate is staying up at 2.27%. The NZ Government 10 year bond rate is down -3 bps at 4.65% from today's open and the earlier RBNZ fix was at 4.59% and down -3 bps from Friday. The UST 10yr yield is up +1 bp from yesterday at 4.26%. Their 2yr is now at 4.74%, so the curve is a bit less inverted at -48 bps.

EQUITIES MOSTLY LOWER
The NZX50 is down -0.4% today in late trade. The ASX200 is down -0.7% in afternoon trade. But Tokyo has opened up +0.2%. Hong Kong has fallen another -1.2% at its open, Shanghai is also down -1.2% which is a sharp retreat for them. Singapore is down -0.1%. But Wall Street is eyeing a strong opening to Monday trade later tonight. The S&P500 futures point to a full +1.0% rise.

OIL ON HOLD
The oil price is still just under US$80.50/bbl in the US, and just over US$84/bbl for the international Brent price, both little-changed from this morning's open.

GOLD FIRMISH
In early Asian trade, gold is slightly firmer, up +US$4 from this morning at just on US$2324/oz.

NZD LITTLE-CHANGED
The Kiwi dollar is only marginally softer from this morning, at 61.1 USc. Against the Aussie we are unchanged at 92.1 AUc. Against the euro we are also unchanged at 57.2 euro cents. This all means the TWI-5 is also little-changed at 70.9.

BITCOIN SOFTER
The bitcoin price is down -1.4% from this morning's open, now at US$63,193. Volatility of the past 24 hours has been modest at just on +/- 1.3%.

This soil moisture chart is animated here.

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