A review of things you need to know before you sign off on Thursday; retail expansion hard to find, Crown accounts show embedded deficits, construction in a funk, borrowers go longer, swaps stable, NZD firm, & more

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
SBS Bank trimmed most of its fixed home loan rates today. All rates are here.

TEST RATES START TO FALL
Both ANZ and ASB lowered their mortgage test rates today. You can see the current levels of most retail banks here. Banks are [rightly] sensitive that these rates don't become a competitive tension between them. After all, test rates are actually only important in edge cases. They only really come into play if you are trying to max out your borrowing capacity. Hopefully most borrowers are not like that.

TERM DEPOSIT/SAVINGS RATE CHANGES
There are no changes to report here, so far. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

A MINOR UPTICK?
Worldline/Paymark said consumer spending nationwide continued its recent modest upward trend in May, with the Auckland/Northland region seeing a year-on-year lift in spending for the first time in nine months, which persisted over the King’s Birthday long weekend. Consumer spending through all Core Retail merchants in Worldline's payments network in May reached $3.8 bln, which is up +1.8% on May in 2024 (after adjusting for merchants coming and going from the network). This data isn't inflation-adjusted.

RBNZ PROMOTION, CONSULTATION ON POSSIBLE CHANGES
The Reserve Bank has promoted Kate Le Quesne to the new role of Assistant Governor for Enterprise Service from a role as Director of Financial Markets. It says this completes the new executive leadership team announced on May 7. Sarah Owen, former Assistant Governor and General Manager of Risk, Compliance, and Legal Services, departed on May 23. The Reserve Bank will consult with staff about potential organisation changes in late June.  

WHAT ONLINE SHOPPERS WANT
Staying in the world of retail, NZ Post released its e-commerce Market Sentiment Report today and it contains many insights, some gems. For example it claims 38% of shoppers in their survey said Temu was the online retailer they used the most in the last year. And "free delivery" is important to most online shoppers (well, NZ Post would say that). They claim "nearly seven in ten shoppers have abandoned their cart because delivery was too expensive."

MAKING NO REAL PROGRESS
The Crown accounts for the ten months to April show an OBEGAL deficit of -$11.7 bln, or an Operating Balance deficit of -$6.7 bln. Both are similar to "forecast" benchmarks, but are worse than a year ago. And that was despite Core Crown Tax Revenues coming it +0.7% higher than forecast, and Core Crown Expenses -0.1% lower than forecast.

MEASURING THE CONTRUCTION SECTOR'S FUNK
Stats NZ said that in the March quarter total building volume was flat compared with the December 2024 quarter on a seasonally adjusted basis. Within that, residential building completed rose +2.6%, and non-residential fell -3.9%. Both new residential building work and new warehouse projects took big hits over the last year. On a value basis, overall building work completed in this quarter was down -10% from the same quarter in 2024.

WIDESPREAD VALUE DIPS
According to Cotality (CoreLogic) median housing values dipped in May in all NZ main centres except Hamilton. Anyone expecting notable increases in property values as we push further into 2025 continues to be disappointed, they say.

COMMODITY PRICES RISE FURTHER
May commodity prices continued their gradual rise. The ANZ World Commodity Price Index was up +1.9% in May from April, up more than +15% from a year ago, with dairy and aluminium prices lifting the index. The NZD Commodity Price Index rose +0.5% May from April, up almost +20% from a year ago.

TWO GROUPS EMERGE
About 60% of new mortgage holders 'go long' but there's still plenty waiting for lower interest rates. The latest monthly RBNZ figures show that in April those taking up new mortgages had a clear split between two strategies - with some prepared to wait for further OCR cuts while others were happier to fix for longer terms.

NZX50 RISES AGAIN
As at 3pm, the overall NZX50 index is up +0.4% so far today and rising. It is up +1.5% for the past week, down -4.0% since the start of the year, but up +4.6% from this time last year. Ryman, Argosy, Stride Property, and EBOS are the top gainers with Kathmandu, Serko, Fletcher Building, and Vulcan Steel the main decliners. Also note, we have updated our profiles for both Argosy Property (ARG, #30), and Kiwi Property Group (KPG, #23) following the release of their annual reports.

NEW AVANTI CFO
Fast-growing Avanti Finance has appointed Brad Lang as CFO. Previously Lang was 'chief strategy officer' at Partners Life.

BIG BOOST IN COVER
The Natural Hazards Commission (EQC) says it has secured a "significant boost" in reinsurance protection from June 1, 2025, with $10.3 bln locked in to help protect homeowners from the impact of natural hazards. This is a +12.5% or +$1.15 bln increase from last year’s total reinsurance cover and includes $225 mln from a multi-year catastrophe bond placed in 2023. NHC/EQC is a crown agency that had more liabilities than assets when it submitted its last annual report (for June 2024).

STRONG DEMAND
$450 mln was tendered today in three maturities for more NZ Government bonds. Overall these attracted 127 bids worth almost $1.8 bln. There was very little change in the yields achieved compared to the prior equivalent tenders.

TRADE SURPLUS SHRINKS
Australia's exports rose +2.1% in April from the same month a year ago. Their imports were up +3.5% on the same basis. The result was a sharp weakening in their merchandise trade surplus, as you might have expected. It would have been worse if their gold exports had not come in +48% higher than year ago levels in April. The longer term view of the year to April 2025 compared to the year to April 2024 saw exports down -5.2% and imports up +2.7% showing the balance is tightening over the longer term too.

MORE FUN, LESS FASHION
Household spending in Australia in April was flat. But spending on recreational and cultural activities, health, and dining out contributed to a +1.5% rise in services spending, while spending on goods fell by -1.1%, with households buying less clothing and footwear and new vehicles.

A TIMID RISE, BUT AT LEAST AN EXPANSION
The Caixin China General Services PMI rose in May from April’s seven-month low and in line with market forecasts of only a very modest expansion. This survey show a small uptick in new business and activity, despite a renewed decline in new export orders. New export orders fell for the first time in 2025, dampened by Trump's tariffs. The official Chinese services PMI also showed a modest expansion, one weaker than this Caixin version.

SWAP RATES HOLD
Wholesale swap rates are probably little-changed today. Keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was unchanged at 3.32% on Wednesday. The Australian 10 year bond yield is down -1 bp at 4.24%. The China 10 year bond rate is little-changed at over 1.70%. The NZ Government 10 year bond rate is down -2 bps at 4.58% and was down -8 bps to 4.51% in the earlier RBNZ fix today from yesterday. The UST 10yr yield is still on 4.37%, down -8 bps on growing risk aversion.

EQUITIES MIXED
The NZX50 is up +0.6% so far today, but the ASX200 is down -0.1% in afternoon trade. Tokyo is down -0.2% in early Thursday trade. Hong Kong is up a full +1.0% at its open while Shanghai is unchanged. Singapore has opened up +0.1%. Wall Street ended its Wednesday trade unchanged, giving up a +0.3% rise on the S&P500 it held for most of the day.

OIL HOLDS
The oil price is marginally softer, down -US$1 at just over US$62.50/bbl in the US, and just little-changed at US$65.50/bbl for the international Brent price.

CARBON PRICE FIRMS SLIGHTLY
The carbon price is marginally firmer today, up +50c at NZ$55.50/NZU on more transaction volume. The next official carbon auction is on Wednesday, June 18, with a $68 floor price. So it will fail. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.

GOLD HOLDS
In early Asian trade, gold is up +US$4/oz from this time yesterday at US$3369/oz.

NZD FIRMS
The Kiwi dollar is up +40 bps from this time yesterday, now at 60.4 USc. Against the Aussie we are unchanged at 92.9 AUc. Against the euro we are up +10 bps at 52.9 euro cents. This all means the TWI-5 is now just under 66.5 and up +30 bps from yesterday.

BITCOIN DIPS SLIGHTLY
The bitcoin price is now at US$105,034 and down -0.5% from this time yesterday. Volatility has again been quite low at +/-0.8%.

This soil moisture chart is animated here.

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