A review of things you need to know before you sign off on Tuesday; DCS in effect, asking prices fall again, building consents low, QSBO weak, eyes on WMP, Watercare separates, 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
No changes to report today. All rates are here.

TERM DEPOSIT/SAVINGS RATE CHANGES
TSB trimmed its 9 and 12 month TD rates. Update: Westpac said it is trimming its TD rates for terms 5 months and shorter. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

DCS PROTECTION STARTS
The Depositor Compensation Scheme, which insures bank and finance firm deposits up to $100,000, takes effect today.

WILLIS ANNOUNCES RBNZ BOARD APPOINTMENTS - GRANT SPENCER RETURNS
Finance Minister Nicola Williss has appointed former Acting Reserve Bank Governor Grant Spencer to the RBNZ board. Board member Byron Pepper has been reappointed. Both are on five-year terms, beginning Tuesday. Spencer also served as Deputy Governor, Head of Financial Stability from 2007 to 2017 and was Acting Governor from 2017 to 2018. Willis acknowledged the contribution of Rawinia Higgins, who retired from the Board effective June 30. There remains one vacancy on the Board, "which will be filled in due course".

ASKING PRICES RETREAT
The levels of housing stock for sale is still very high, a third more over the past two years, but asking prices are down on the Realestate.co.nz portal in June. In Auckland they fell more than -4% in one month and the average is now back below $1 mln.

HOMEOWNER INSURANCE COSTS ZOOM
Going the other way, granular data on insurance comparison website Quashed shows that insurance premiums for house, car and contents are up by more than +50% over past three years. Interestingly, that confirms overall CPI monitoring for house and contents insurance, but StatsNZ reckons car insurance is 'only' up +35% over the same period. The value of the Quashed perspective is the regional differences; it is especially tough in high-quake risk Wellington.

STILL RETREATING
The value of building consents declined by just over $1 billion in year to May compared to previous 12 months. But despite the ongoing retreat there are signs the slump may be near the bottom.

TAXPAYER 'INVESTING' HOLDS UP NON-RESIDENTIAL CONSENTS
Non-residential consents were relatively good in May, underpinned by some large public projects. Notable among these were a $90 mln hospital consent in Christchurch, likely relating to an acute mental health facility at Hillmorton Hospital. Another was an $80 mln social building consent in Christchurch, which is likely to be for alterations to the Canterbury Museum. Wellington’s result was also boosted by a consent of around $80 mln relating to Te Papa’s biodiversity research centre in Upper Hutt.

NOT GRIM ENOUGH FOR A RATE CUT - YET
The business community is still hopeful of an improvement in the economy despite demand remaining weak. These views show up in the latest NZIER Quarterly Survey of Business Opinion. It's not great; growth may be on the mend but pricing activity and intentions tell of the tough conditions businesses are having to navigate to survive. But it isn't so weak that an imminent OCR rate cut will come next week. Most economists want to see one, but after this survey doubt there will be one. One reason seems to be that a wave of mortgage refixing should leave borrowers with more in their pockets. The central bank (and retailers) will want to see how that is prioritised - to faster debt repayment, or some more spending?

NZX50 RISES
As at 3pm, the overall NZX50 index is up +0.6% so far today, but up +0.4% for the past week. It is down -3.0% since the start of the year although up +7.5% from this time last year. Market heavyweight F&P Healthcare had a very good day today, up almost +3%. Fletcher, Skellerup and Chorus also rose, offset by declines in SkyCity casino, Kathmandu, Air NZ and Tourism Holdings

WMP PRICE AT RISK
There is another full dairy auction tomorrow. Fonterra reports that May brought increased milk flows in New Zealand, the US and the EU but decreased production in Australia. The derivatives market expects those higher supply levels to depress WMP prices, and sharply. The advance signal is for an outsized -7% drop in USD. For SMP the signals are for a hold. We will know soon enough if these market guesses are on the money.

BIG UTILITY, BIG FUNDING
July 1 also marks the separation of Watercare from the Auckland Council as part of the coalition government's water reforms. The separation involved Watercare raising in its own name $3.4 bln in commited bank debt via a $2.6 bln revolving credit facility and an $800 mln standby facility. All but $200 mln was jointly underwritten by Bank of New Zealand, Commonwealth Bank of Australia and Westpac NZ, with the $200 mln provided by Bank of China in a standby facility. Watercare is responsible for Auckland's wastewater and drinking water. It has a ten year $13.8 bln infrastructure investment program involving 1000 projects. Watercare has a Aa3 credit rating from Moody’s.

MORE ORDERS, BACK TO GROWTH
Yesterday we noted that the official factory PMI for China "improved" but was still showing a contraction. Today, the alternative Caixin factory PMI came in a little better than that, rising from May's tiney contraction to June's small expansion. These shifts don't mean a lot, but at least they are going in an improved direction. The Caixin survey noted "Higher new order inflows supported a renewed rise in production. That said, the rate at which new orders expanded was only marginal amid subdued exports." Trump's trade war may have kneecapped Chinese growth but it hasn't knocked them over.

CURRENCY PRESSURES
Spare a thought for those central bankers who are committed to a fixed exchange rate with the USD, or even one tied in a range. Things are getting tougher for them as they use reserves to hold the line as the USD depreciates. Markets are wondering how long they can hold out and are betting against them now, which makes the matters worse as they have to use increasing amounts of those reserves. This includes most ASEAN countries. It is suddenly very tough. A floating exchange rate can have its challenges, but nothing like an exchange rate crisis.

SWAP RATES FIRMISH
Wholesale swap rates are likely 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 up +1 bp at 3.29% on Monday. The Australian 10 year bond yield is up +3 bps at 4.18%. The China 10 year bond rate is holding at 1.65%. The NZ Government 10 year bond rate is up +5 bps at 4.57% but was down -2 bps at 4.51% in the earlier RBNZ fix today. The UST 10yr yield is now down -8 bps from yesterday at 4.21%.

EQUITIES QUITE MIXED
The NZX50 is now up +0.6% so far today. The ASX200 is up +0.1% in Tuesday afternoon trade. Tokyo is down -1.0% in early Tuesday trade. Hong Kong is down -0.9% at its open while Shanghai is up +0.2%. Singapore has opened up +0.8%. Wall Street rose in Monday trade with the S&P500 closing up +0.5% at a record high.

OIL PRICES DIP MARGINALLY
The oil price is softish at just under US$65/bbl and just under US$66.50 for the international Brent price.

CARBON PRICE ON HOLD
The carbon price has held at NZ$58.50/NZU but only because we can't find any trades. The next official carbon auction is on September 10, 2025. See our daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.

GOLD FIRM
In early Asian trade, gold is up +US$37/oz from time yesterday, now at US$3316/oz.

NZD FIRM
The Kiwi dollar is up +30 bps from this time yesterday at 60.9 USc. Against the Aussie we are down -10 bps at just on 92.7 AUc. Against the euro we are also down -10 bps at 51.6 euro cents. This all means the TWI-5 is now at 68.2 and up a bit more than +10 bps.

BITCOIN SLIPS
The bitcoin price is now at US$107,137 and down -1.3% from yesterday. Volatility has still been low, now at just on +/-0.8%.

This soil moisture chart is animated here.

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