A review of things you need to know before you sign off on Wednesday; no retail rate changes as RBNZ releases a dovish review, new borrowers hang out there with floating rates, rents lower, swaps stable, NZD lower, NZX lower, & 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
No changes to report today here either. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

HELD - AS EXPECTED, BUT A CUT IS COMING
In a clear contrast to the RBA, which didn't do (cut) what financial markets and analysts had expected, today the RBNZ did exactly what those same market observers expected - hold the OCR at 3.25%. But it came with a decidedly dovish commentary. A signaled cut is coming in August. The RBNZ sees imported inflation risks ahead and a global economy that will only deliver a slow expansion with much tariff-induced realigning. That added a small bump to the NZD (vs USD = +10 bps, vs AUD = +10 bps). But it hasn't stuck. Unlike in Australia, there was little market pricing reaction to the RBNZ decision.

BAD BET?
Latest monthly RBNZ figures show that in May, a third of the new mortgages taken out were on floating terms, suggesting homeowners are still waiting for more OCR cuts. The herd mentality of mortgage brokers may have led some borrowers down this path. The penchant for floating rates started in August 2024 "in anticipation fixed rates would fall". But in 2025 they essentially haven't, so at some point there will be a reckoning. In August 2024 the variance between floating and a one year fixed rate was -170 bps. At the end of January it was -165 bps. Now it is -135bps. These are large costs for households to bear on the bet "rates will fall", worse when the benefit doesn't appear to justify the front-end cost.

STILL EXPANDING
The 'working aged population' (15-64) is expanding at the rate of about +50,000 per year in the year to June, the same rate it has for the past four quarters. That contrasts with the +120,000 pa expansion in the 2023/24 year. This population metric is a key reference point for the Q2-2025 labour market data which will be released on August 6. There are now a record 4,314,300 people in this cohort, up +1.2% from a year ago. Obviously it is more than that because many people 65 and over are still working. So the load of workers to the retired isn't quite at the level the standard measures show.

RENTS FOLLOW HOUSE PRICES LOWER
The latest data from realestate.co.nz shows the national average rental price was $636 in June this year, down -2.7% from $653 in June 2024. And it's the capital's average rental price which is leading the way down, dropping a hefty -10.9% to $625 per week compared to $701 per week at the same time last year.

NZX50 IN SHARPISH DIP
It's a down day on the NZX. As at 3pm, the overall NZX50 index is down just -0.9% so far today, now down -0.3% for the past week. It is now down -2.5% since the start of the year although up +7.5% from this time last year. The Warehouse, Vulcan Steel, Spark, and Mainfreight edge higher, while a2 Milk, Kathmandu, SkyTV, and The NZX decline.

HOOKED
This isn't a good look.

NO INFLATION
China said its consumer inflation level was little-changed in June, still hovering at about 0% from a year ago and similar to what they have reported for the past four months. Within that, food prices were also little-changed but beef prices are up +2.7% from a year ago, lamb prices down -1.8%, and milk prices down -1.1%.

DEEPER DEFLATION
China also reported producer price changes for June and that was more deflationary, down -3.6% from a year ago and the largest deflation since mid 2023. Some industries are seeing much more than this, like steel production.

SWAP RATES LITTLE-CHANGED, MOST RATES FIRMER
Wholesale swap rates are likely marginally softer today at the short end after the OCR review, although probably firmer at 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 unchanged at 3.27% on Tuesday. The Australian 10 year bond yield is up +11 bps at 4.34%. The China 10 year bond rate is holding at 1.65%. The NZ Government 10 year bond rate is up +2 bps at 4.61% and was also up +2 bps at 4.57% in the earlier RBNZ fix today. The UST 10yr yield is now up +3 bps from this time yesterday at 4.41%.

EQUITIES MOSTLY LOWER
The local equity market didn't react to the upcoming OCR cut signaled today but it held its -0.8% earlier fall. The ASX200 is down -0.3% in Wednesday afternoon trade. Tokyo is unchanged in early Wednesday trade. Hong Kong is down -0.9% at its open while Shanghai is up +0.2%. Singapore has also opened up +0.2%. Wall Street ended its Tuesday session with the S&P500 down -0.1% on worries about commodity price tariffs.

OIL HOLDS
The oil price in the US is up +50 USc at just over US$68/bbl and just on US$70 for the international Brent price. US crude oil inventories surged by 7.1 million barrels in the week ending July 4, following a 680,000-barrel build the previous week. This was the largest increase in US oil stockpiles since February and the second consecutive weekly gain after five straight weeks of draws. Supposedly, the US is in its summer "driving season" when demand is elevated. But maybe not this year. The sharp rise surprised markets, which had expected a 2.8 million-barrel fall.

CARBON PRICE HOLDS
The carbon price has hovered around NZ$58/NZU on few trades today. 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 SEASES LOWER
In early Asian trade, gold is down -US$34/oz from yesterday, back at US$3302/oz.

NZD DEPRECIATES
The Kiwi dollar is down a net -40 bps from this time yesterday at 59.8 USc in a volatile 24 hours that was more volatile over the OCR announcement. (It is now lower than the RBNZ fix in the chart below.) Against the Aussie we are down -60 bps at just under 91.8 AUc and this also includes the RBA volatility. Against the euro we have dipped -10 bps to 51.1 euro cents. This all means the TWI-5 is down a net -20 bps from this time yesterday at 67.5.

BITCOIN HOLDS
The bitcoin price is now at US$108,628 and up +0.8% from this time yesterday. Volatility has been low again, now at just under +/-0.7%.

This soil moisture chart is animated here.

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