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
There are only rate cuts by smaller institutions announced so far today, and only one by a bank, the Cooperative Bank. Given the cut was well signaled, this is something of a surprise. Update: The ANZ has passed through -20 bps to its floating rate. You can track them here as they come in. WBS and Unity Money cut fixed rates. All rates are here.
TERM DEPOSIT/SAVINGS RATE CHANGES
There were term deposit rate cuts announced by Unity Money and General Finance, and savings account rate cuts by the Coop Bank. But no changes so far from the majors. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.
EXPECTED CUT AFTER SPLIT VOTE
Today's big news is that the RBNZ cut its OCR by -25 bps to 3.00% and while that may have been expected, it came with a split vote. One of the two dissenters favoured no cut, the other a -50 bps. They week the potential for two more OCR cuts by early next year. Overall this is a slightly more dovish policy update that markets had priced in.
FINANCIAL MARKET REACTIONS
Immediately after the decision, the equity market built on its earlier momentum, the benchmark bond yields for NZGBs fell sharply on the dovish tone of the MPS, and the NZD fell a full -70 bps to 58.3 USc on the same interpretation.
DAIRY PRICE DIP LESS THAN FEARED
Today's full dairy auction revealed better demand from a wider range of markets than was expected so the declines anticipated were much less, in fact just -0.3% overall. Good buying of WMP and not only from China saw this rise slightly and that limited any overall downside. But there were lower prices for cheese, butter and SMP - lower, but about what was expected for these categories.
STRONG MILK FLOWS
Update: The release of July data on milk collections reveals that it is a third straight month of record volumes, even if it is in the offseason. July is +2.2% higher than year-ago levels.
CLIMATE RISKS BRING PREMIUM PRICING
General insurer Tower has extended its risk-based pricing to include landslide risks and sea surge risks, meaning rising premiums for some customers. Unfortunately for land owners in those zones, there are no climate-change denier insurance companies out there ready to rush in, to take these risks.
NZX50 JUMPS
As at 3pm, the overall NZX50 index is up +1.3% so far today, gaining momentum after the OCR cut. It is now up +2.6% over the past five days and up +0.2% year-to-date. It is still sitting +4.3% higher year-on-year. Market heavyweight F&P Healthcare is up an impressive +3.2% so far today. Kathmandu, Contact Energy, Vulcan Steel, and Heartland all lift the NZX50 while Tourism Holdings, Oceania, Gentrack, and Stride Property decline.
LOSSES TO BRING SELLOFFS
Fletcher Building lost over $400 mln in trading last year according to its annual accounts. It has taken a $700+ mln hit on writedowns. and given the clearest indication yet that it is going to sell its residential and development unit, in addition to the troubled construction business.
PROFILE UPDATES
We have updated both the Fletcher and Spark profiles in our NZX50 coverage.
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JAPANESE MACHINERY ORDERS RISE
Japanese machinery orders are rising, more so for large items than the core industrial output.
TARIFFS CRIMP JAPANESE EXPORTS & IMPORTS
But Japanese exports are not rising, according to the July trade data released today. Nor are their imports. American tariff actions are getting the blame.
CHINA HOLDS RATES AT RECORD LOWS
China held its two Loan Prime Rates unchanged at 3.0% and 3.5% for a third consecutive time, remaining at record low levels.
SWAP RATES DROP SHARPLY
Wholesale swap rates are will probably be down very sharply today by at least -15 bps across the maturity bands. Keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was down -1 bp at 3.13% on Tuesday. The Australian 10 year bond yield is down -4 bps at 4.29%. The China 10 year bond rate is unchanged at 1.77%. The NZ Government 10 year bond rate is down a massive -20 bps at 4.43% and up +3 bps at 4.50% in the earlier RBNZ fix today before the OCR cut. The UST 10yr yield is down -3 bps from yesterday, now at 4.31%.
EQUITIES LOWER, EXCEPT LOCALLY
The local equity market is now up +1.5% in late Wednesday trade, the best of the markets we follow. The ASX200 is however up only +0.4% in afternoon trade. Tokyo has opened down -1.5%. Hong Kong is also down -0.3% at its open but Shanghai is up +0.1%. Singapore has opened up +0.3%. Wall Street ended its Tuesday session with the S&P500 down -0.6%.
OIL SOFT
The oil price in the US is -US$1 today, now just under US$62/bbl and the international Brent price is now just under US$66/bbl.
CARBON PRICE STAYS SOFT
There have been few trades today with the price holding down at $56. 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 SOFTER
In early Asian trade, gold is down -US$21 from this time yesterday at US$3315/oz.
NZD DIVES
The Kiwi dollar is down more than -1c from yesterday at this time, now at 58.2 USc. Against the Aussie we are down -80 bps at 90.5 AUc. Against the euro we are also down -80 bps at just on 50.1 euro cents. This all means the TWI-5 is down -80 bps at 66.6.
BITCOIN RETREATS
The bitcoin price is now at US$113,429 and down more than -2.0% from this time yesterday. Volatility has been modest at just on +/-1.3%.
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26 Comments
Interesting we were a vote away from a 0.5% reduction, that would have set keyboards aflutter.
What would have happened if there were 3 votes for a 0.25% cut , and 3 for a 0.50% cut ?
The gov would make the call, surely.
paper scissors rock
too serious for that, they would flip a coin.
The stars are moving into alignment for the election year property increases.
Coincidentally I'm in Nth Canterbury looking at houses today....
Prices may well rise, which is all good unless you want to buy an imported good or go on a holiday abroad in which case you are no better off.
Quite clear, crash the currency and boost property prices. Landlords very happy, thanks for coming......
Not looking likely here in Auckland. Very much in the doldrums.
Given what southern Europe is enduring at the moment, I'm unsurprised there are no climate-denying insurance companies.
They have to always deal in the real; unlike others who can keep a low profile when required.
Correct. Mate sells insurance and he has said for years if you want absolute concrete belief in climate change you should go to an insurance conference and hear from the people who are paying for it.
I’m assuming profile isn’t in insurance
Of course I'm in insurance! Where else can you get double digit returns and get your premium ramped up by climate cry babies?
“Global reinsurer capital rose by $5 billion to $720 billion in the first quarter of 2025, surpassing the previous record of $715 billion set in 2024, despite the financial impact of the California wildfires.
According to Aon, this growth was driven by strong retained earnings among established players, with two-thirds reporting double-digit annualised returns on equity."
https://www.artemis.bm/news/reinsurance-capital-outstrips-demand-at-mid…
The one year swap rate has just decisively broken through the 3.00% support, down to 2.86%, the lowest rate since April 2022, when rates were rising significantly.
Any comments Mr Kraken ?
Not stealing RBNZ's thunder, but the FedWatch Tool currently has assigns a 83–87% probability that the Fed will cut rates at the September 2025 FOMC meeting. This figure reflects recent market sentiment following weaker labor market data and downward job revisions, which have increased expectations for monetary easing. The odds have fluctuated in response to both softening economic indicators and inflationary concerns, but traders overwhelmingly expect at least a 25 basis point rate cut in September.
https://finance.yahoo.com/news/the-fed-is-expected-to-cut-rates-dont-ex…
What a time to be alive.
"Thus, we can conclude with some confidence that the first half of 2025 has seen the fewest deaths related to extreme weather of any January-June this century.
I’d go so far as to suggest that it is likely that the first half of 2025 has seen the fewest deaths related to extreme weather of any half year in recorded human history
...
You probably haven’t heard much, if anything, about this very good news.
One reason for that is a climate advocacy industry who views their mission as scaring us about the weather to motivate political change."
https://rogerpielkejr.substack.com/p/human-progress-versus-climate-evan…
“the first half of 2025 has seen the fewest deaths related to extreme weather of any half year in recorded human history”
seems unlikely given the difference in population.
Here is a post for inflation adjusted land falls of US hurricanes from Bjorn Lomborg
Normalised New Zealand Natural Disaster Insurance Losses: 1968–2019
"More frequent losses due to extreme weather, notably storms of tropical, sub-tropical and extra-tropical origin, when combined and after adjusting for changing societal factors, show no trend over the record length. "
https://www.tandfonline.com/doi/full/10.1080/17477891.2021.1905595#abst…
Seems likely given the difference in technology and the fact we have never had more food, more energy and more communcations. 2,200 deaths is a pretty low number.
https://ourworldindata.org/grapher/decadal-deaths-disasters-type
Fair enough.
Must admit, I’m more in your camp than I was a few years back. When we had the floods in Auckland there was a chart that showed extreme weather events, and while that was the worst ever, there seemed to be a lot more extreme rainfall events in the 80s and 90s than now. It’s always easy to pick statistics to suit your agenda, whatever your agenda happens to be.
this brings back (not) fond memories of chats with anti-vaxxers during covid.
oh the blogs, so many blogs.
Although to be fair they probably were right in the end. Right for all the wrong reasons.
That we should have let the virus in to "let rip" from day 1?
Erm, no.
In my opinion yes.
That the rushed and untested vax wasn’t necessary because it was always going to mutate and become less effective. I read someone predicting that right at the start, given a year or so it would be less effective.
I got the vax, I don’t lose any sleep over it, but in hindsight I wouldn’t have.
There was always the option to only lock down the vulnerable. Anyone under 70 that was healthy was very low risk.
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