A review of things you need to know before you go home on Thursday; minor rate changes, GDP growth scepticism, more gold exported, farmgate milk price forecast held, swaps fall hard, NZD rises, & more

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
The Bank of Baroda has cut -25 bps from its savings account, to 2.00%. NBS has trimmed -10 bps to most of their TD rates.

A GOOD RESULT VIEWED SCEPTICALY
GDP growth steady at +2.5% in March quarter compared with the same quarter a year ago and off the back of higher construction activity. These results are above what the RBNZ was assuming (which was +2.2% in the year to March). The +2.5% rise was on a 'production basis'; on the more internationally comparable 'expenditure basis' the rise was +2.9% and up from +2.5% for the December 2018 quarter. The household sector was up[ +3.5% real. While these results look better than the official release suggests, many analysts have played down the strength because a lot of it was driven out of strong results in both the construction and oil industries, both of which has been substantially undermined since by a variety of private and public choices. Most analysts don't think the construction sector can keep up the pace and there seems little to replace it. Still "gross capital formation" of residential buildings was up a strong +6.0% and exports were also strong (+5.8%) in the March quarter.

A GROWING PRODUCTIVITY CHALLENGE
One aspect that didn't shine was GDP growth per capita. It was up officially just +0.1% and continuing the trend of very small improvements. Official measurements of multifactor productivity won't be released until February 2020 for the March 2019 year, but our own monitoring of labour productivity (the number of hours worked to produce real outputs) indicates that productivity has improved very slightly in the March year - that is we got slightly more productive outputs for the labour inputs in the total economy. Encouragingly, the March quarter saw a pick yp to almost +1% compared to the March 2018 quarter. Not dealing properly with Auckland's transport issues isn't helping, and moves to move the Port of Auckland to Northland will create a major drag in the future. The One Billion Trees program is likely to undermine national productivity as well in a significant way. We seem to be moving a phase where we are adding more costs than getting productive outputs.

MORE GOLD EXPORTED
For the gold bugs: in the year to March 2019, New Zealand exported a record value of gold: $630 mln, according to data released deep in yesterday's balance of payment results, or 15.6 tonnes. That is +15% more than the 13.5 tonnes we exported in the equivalent year in 2018. Yes the latest GDP data was boosted by the oil patch, but it was also boosted by gold mining as well.

CRASHING LOWER
Almost $600 mln was bid for $150 mln of 18 year NZ Government bonds today. Only 20 of 63 bidders won anything and they pushed the yield down to 1.89% for a bond with a coupon yield of 2.5%. There have been 21 tenders for this maturity and this is the first time this yeild has fallen below 2%. At its peak in December 2016 it reached 4.06%.

OPTIMISM IN CHAOS
Even though the dairy auction brought a third decline in a row, Rabobank is sticking to its earlier forecast that the new season farmgate milk payout will start with a "7". Their update forecast is $7.15/kgMS and unchanged from their last review for the 2019/2020 season. Their view sees 'optimism in chaos' as other countries production comes under pressure and demand stays healthy.

SHORING UP A VISITOR SOURCE
Our Tourism Minister is off to China to try and drum up more visitors from the Middle Kingdom, a source that has been slipping recently. He announced it in a press release entitled "Our deepening relationship with China".

CONCENTRATION
Updated data in Australia shows that of their 25 mln population, 8 mln live in NSW, 6.5 mln live in Victoria and 5 mln live in Queensland. These three states account for almost 78% of their population, and are the fastest growing as well.

SWAP RATES DOWN HARD
Local swap rates have fallen hard today, down -5 or -6 bps across the curve following the GDP result. Aussie swpa rates are down even more, by -8 or -9 bps. The UST 10yr yield is down even more sharply, down -9 bps to just 1.98% and its lowest since November 2016. Their 2-10 curve is a 'positive' +26 bps while their negative 1-5 curve is at -21 bps. The Aussie Govt 10yr is down -5 bps to 1.29%. The China Govt 10yr is up +2 bps to 3.28%, while the NZ Govt 10 yr is down -7 bps at 1.55%. The 90 day bank bill rate is down -2 bps at 1.57%.

NZ DOLLAR FIRMER
The Kiwi dollar has jumped to 65.8 USc on the combination a 'good' GDP result and the US Fed's end of 'patience'. On the cross rates we're up to 95.4 AUc. Against the euro we are firmer at 58.4 euro cents. That puts the TWI-5 firmer at 70.6.

GOLD UP
The price of gold has jumped to US$1,360, a gain of +US$14 or close to +1% in about 24 hours.

BITCOIN UP
Bitcoin is up at US$9,328 or up +1.9% from this time yesterday, but really only back to its level of two days ago. This price is charted in the currency set below.

This chart is animated here.

Apologies for the delayed publishing today. It was written, but the 'publish' button wasn't pushed.