Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).
MORTGAGE RATE CHANGES
Bank of China and ICBC both cut their floating rates. NBS (Nelson Building Society) cut both its fixed and floating rates. And ICBC, the Police Credit Union, and WBS all cut fixed rates. All rates are here. Update: ANZ has trimmed its fixed rates. More here.
TERM DEPOSIT/SAVINGS RATE CHANGES
Update: ANZ has trimmed its TD rates. Rabobank trimmed its savings rates today following the OCR reduction. Bank of Baroda also cut TD rates. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
A 68 YEAR HIGH
Although the price/cost of our exports and imports have been rising (since the end of December 2023), the pace of increase for both has picked up. Fortunately the prices for our exports has risen faster that the cost of our imports. That saw our terms of trade improve, to the best since this series started in 1957 (apart from the unusual twists during the pandemic). As 'good' as this result is, it isn't quite as good as analysts were expecting for the quarter. Of course, these benefits are flowing evenly. The rural community will be smiling, but consumers will be feeling the cost increases.
A SURPLUS IN SERVICES
Today's Q1-2025 trade data gives us an updated look at the trade in services (the goods trade data comes in a related monthly release which we got on May 21 for April). We exported $9.6 bln in services in Q102025, a quarter to the US and a fifth to Australia. But we paid $8.1 bln in services (imports) in the same quarter, more than a quarter to Australia, an eighth (12.5%) to the US. Yes, that is correct, we had more than a +$1.5 bln surplus in services trade in the quarter. But that is not so unusual for the March quarter when inbound travel spikes. International freight costs, and 'business services' roll on more evenly.
AN 11 YEAR HIGH
Housing market remains overstocked heading into winter - and asking prices were flat in May. House buyers still have the upper hand with stock for sale at an 11 year high according to data from realestate.co.nz.
TRACK TO CONVERGENCE
We should probably note that the wholesale money markets are now not pricing in the next full -25 bps rate cut from the RBNZ until October. That would mean the year end OCR would then be at 3.00%. In contrast, the same markets are pricing in three rate cuts in Australia, so the year end cash rate target there has come down to 3.10%.
KIWIBANK PARTNERS FOR OPEN BANKING LAUNCH NEXT YEAR
Kiwibank says it's partnering with local tech company Wych to provide open banking, starting from May 30 next year. Wych will provide the integration capability to connect accredited third parties with Kiwibank, with Kiwibank saying it won't charge accredited third parties to make standard API requests.
LIVESTOCK PRICES ARE RISING
Lamb export prices should rise further over the coming year, reflecting demand in key markets. Lamb demand in China has eased with the warmer weather, while demand continues in the EU and UK. Mutton prices in China are firm as they look towards plans for soft fourth-quarter production, while tight supplies are also leading to stronger demand in other markets. For beef Chinese prices remain below those in the US due to continued weak consumption. Overall, beef shortages in key export markets are likely to persist and demand remains strong. For example UK buyers are in the market for more beef, driven by forecasts of a potential -5% decline in their domestic production this year. (H/T PRM, and PC.) You can find schedule prices for a number of processors in our database here (RH sidebar).
MIXED SIGNALS
There is a full dairy auction tomorrow. Prospects are that SMP prices will rise about +3% from last week's Pulse event, but that the WMP prices will fall back a rather outsized -7% and maybe to levels we had at the start of the year. At least, these are the signal in the dairy futures market today, although they don't always behave as an accurate signal about what is to come.
NZX50 STARTS THE WEEK LOWER
As at 3pm, the overall NZX50 index is down -0.3% so far today and easing lower. It is down -1.3% for the past week, down -5.2% since the start of the year, but up +4.2% from this time last year. Port of Tauranga, F&P Healthcare, Ryman, and EBOS lead market gains, with a2 Milk, SkyCity casino, Kathmandu, and Oceania the big decliners. Also note, we have updated our profiles for Manawa Energy (#20, MNW), and Ryman Healthcare (#18, RYM).
STUFF MODELS ITSELF ON NZME
Today TradeMe bought 50% of Stuff Digital (and staying clear of the troubled legacy print business, and other under-performing elements). That will make Stuff more like NZ Herald, a promotional funnel for the property listing portals, OneRoof and TradeMe Property. Prepare to be even more assaulted by spruiking 'real estate novelists'. And don't forget in the background, the long-delayed NZME annual meeting is today (2pm), to anoint Canadian Jim Grenon's effective control.
MINIMUM WAGE RISE
In Australia, their Fair Work Commission’s Expert Panel announced the National Minimum Wage and award wages will increase by +3.5% from 1 July 2025, following the 2024-25 Annual Wage Review. That means their National Minimum Wage will increase by +AU$0.85 to AU$24.95 per hour. (NZ$26.90/hr) The New Zealand adult minimum wage is currently $23.50/hr.
MISLEADING COMPARISONS ALLEGED
And staying in Australia, regulator ASIC is suing insurance comparison provider Choosi for allegedly misleading prospective customers through its funeral and life insurance comparison services.
UNEXPECTED CONTRACTION
In China, they have delivered something of a surprise. The May Caixin China factory PMI unexpectedly dropped to 48.3, down from April’s expanding 50.4 and missing market forecasts of a faster expansion (50.6). This was the first contraction in the sector in eight months and the steepest since September 2022. Output shrank alongside a renewed drop in new orders, with foreign sales declining at a faster pace. The official factory PMI came in at 49.5, a small improvement (lesser decline).
SWAP RATES STEEPEN
Wholesale swap rates probably little-changed at the short end but rising for longer durations. Keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was up +1 bp at 3.32% on Friday. The Australian 10 year bond yield is up +4 bps at 4.31%. The China 10 year bond rate is unchanged at 1.70%. The NZ Government 10 year bond rate is up +10 bps at 4.67% and was up +3 bps to 4.61% in the earlier RBNZ fix today from yesterday. The UST 10yr yield is on 4.45%, up +4 bps.
EQUITIES MIXED AGAIN
The NZX50 is down -0.2% so far today, but the ASX200 is up +0.5% in afternoon trade. Tokyo is up +0.2% in early Friday trade. Hong Kong is up +1.4% at its open while Shanghai is up +0.5%. Singapore has opened up +0.1%. Wall Street ended its Monday trade with a +0.4% gain on the S&P500.
OIL FIRMISH
The oil price is marginally firmer at just under US$63/bbl in the US, and just on US$65/bbl for the international Brent price.
CARBON PRICE FIRMISH
The carbon price is up +50c today at NZ$55/NZU on modest volume. The next official carbon auction is on Wednesday, June 18, with a $68 floor price. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.
GOLD RISES
In early Asian trade, gold is up +US$66/oz from this time yesterday at US$3373/oz.
NZD FIRMS MARGINALLY
The Kiwi dollar is up +20 bps from this time yesterday, now at 60.2 USc. Against the Aussie we are up +10 bps at 93 AUc. Against the euro we are down -15 bps at 52.7 euro cents. This all means the TWI-5 is now at just over 66.2 and little-changed from yesterday.
BITCOIN MARGINALLY FIRMER
The bitcoin price is now at US$105,725 and up +0.6% from this time yesterday. Volatility has been modest again at +/-1.2%.
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