Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes to report today - so far. Update: Westpac has reduced its one year 'special' from 3.89% to 3.95%. It has also ended its 4.09% 18 month 'special', reverting for that term to its standard 4.79%.
TERM DEPOSIT RATE CHANGES
ICBC has tweaked its rates for terms 3 months though one year, some up +5 bps, some down -5 bps. Update: Westpac has cut all its term deposit offers for terms 9 months and longer to 3.00% even, all the way out to five years.
HIGHER TAXES GENERATE HIGHER SURPLUS
The eleven month Crown accounts were released today, updating the Governments accounts to May 2019. This is the last interim look we will get until the final audited results are released sometime in October. They show a year-to date operating surplus before valuation gains and losses (OBEGAL) of just under $7 bln. That is +$2.5 bln higher than estimated in their last fiscal update. The surplus represents 8.2% of all the tax revenue levied. Income taxes on individuals are actually +5.8% higher in 2019 than 2018, taxes on companies are more than +20% higher. GST collected is +6.2% higher, on a year-to-date basis. But for May 2019 vs May 2018 income taxes on individuals are up +8%, and GST is up just +3.7% suggesting that consumption is tailing off somewhat as the year develops. But taxes on income are intensifying. (These observations come from analysis of Note 2.) And, for the record, we have never ever had a two month surplus exceeding +$4 bln before - in just two months this surplus is more than 1.5% of annual GDP.
The details of the teacher pay settlement are now available. The current annual salary range of $36,692 to $75,949 depending on seniority moves to a range of $48,410 to $80,500 now and to $51,358 to $90,500 in two years. There are no pay-for-performance standards - everyone gets the same despite performance. And there is a kicker for union members. They not only get a one-off $1,500 'bonus', teachers not in the union are being forced to wait three months to get the new conditions.
BUSINESS CONFIDENCE SLIPS, MOMENTUM TURNS
Headline business confidence reversed May’s lift, down -6 points to net -38% in June’s ANZ Business Outlook. However, firms’ views of their own activity fell just -1 point to +8%. Other activity indicators were also fairly steady. Residential construction intentions bounced. However, the construction sector has the weakest employment and profitability scores across the economy. More here.
CHEAP & POPULAR
There have now been twenty tenders for the 2037 NZ Govt nominal bond. Today's tender follows the dive in yields elsewhere and at 1.89% is the first time this bond has yielded under 2%. Not that low yields are unpopular; this tender of $150 mln drew 63 bids totaling $593 mln, a coverage ratio of almost 4x and near the highest ever for this bond.
THE TABLES HAVE TURNED
The latest RBNZ data on new mortgage lending shows the rise of first-home buyers has now grown to exceed the levels of new lending to investors. Investors are taking a break while first home buyers are signing up in much larger numbers. More here. But that growth year-on-year is outside Auckland. It is not as though Auckland is retreating though, only holding at year-ago levels.
DON"T LOOK AT THE FACTS
A new update for New Zealand's carbon dioxide emissions shows that for the ten year to 2017, industry actual reduced its emissions by -2.9%. Over the same period household emissions rose +19% or +1473 kilotonnes. Agriculture also managed to reduce total CO2 emissions by -239 kilotonnes despite a huge rise in the value of rural output. Within agriculture only beef farming recorded an absolute increase. This data challenges the popular narrative, turning the spotlight back on urban communities rather than the traditional whipping-boys. But the problem for farmers is that there are many more votes in the cities and their representatives are unlikely to turn their focus on to their constituent culprits. Supermarket shoppers all think they are greenies because they take their own plastic bags and load their purchases into an SUV.
SWAP RATES JUMP
Local swap rates are up quite strongly today; for two years they are up +3 bps, five years is up +4 bps, and ten years is up +5 bps. The UST 10yr yield is up +5 bps from this time yesterday at 2.06%. Their 2-10 curve is a 'positive' +26 bps while their negative 1-5 curve is narrower at -16 bps. The Aussie Govt 10yr is up +9 bps to 1.37%. The China Govt 10yr is up +1 bp at 3.28%, while the NZ Govt 10 yr is up +5 bps at 1.62%. The 90 day bank bill rate is unchanged at 1.60%.
NZ DOLLAR UP
The Kiwi dollar is up further, now at 66.8 USc. On the cross rates we're unchanged at 95.5 AUc. Against the euro we are up to 58.8 euro cents. That pushes the TWI-5 up to 71.4.
BITCOIN IN WILD RIDE
Bitcoin has been on a wild ride in the past 24 hours. It is now at US$12,825 and up +8% from this time yesterday. In between, it rose to US$13,879 and fell to US$11,754, a range of +/-9%. This price is charted in the currency set below.
This chart is animated here.