A review of things you need to know before you go home on Wednesday; another TD cut, some rebounds, more diversified that some assume, vanishing customers, slipping demand, swaps stable, NZD up, & more

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

MORTGAGE RATE CHANGES
Update: The Cooperative Bank reduced two key home loan rates today. 

TERM DEPOSIT RATE CHANGES
SBS Bank cut its TD rates across the board. Update: Kiwibank has also cut and quite hard, taking -30 to -35 bps off most rate offers. The Cooperative Bank also trimmed some rates.

SLUMP & PARTIAL REBOUND I
As expected, Barfoot's Auckland house sales were low in May, just 396 units and down from just 552 in April. But the company, as always, is optimistic about sales volumes in June and going into Level 1.

SLUMP & PARTIAL REBOUND II
The number of new car sales rebounded in May from April, but it was still down -29% from the same month a year ago. Used imports rebounded better to be down "only" -22% year-on-year. Commercial vehicle sales were hit the hardest, down -37% on that basis. Car sales really missed orders from the car rental fleets which have dried right up. More than 70% of passenger car sales were SUVs in May, and that is back to the record high share first reached in January and February this year. (Australia's car sales fell -35% in May on the same basis.)

MTF's VIEW
Car finance specialist MTF is saying that the lockdown saw sales levels rapidly decline, with April’s volume down -90% on March 2020. They’ve experienced a gradual recovery through Level 3 and into Level 2, with May ending at around 75% of last year’s levels. They now don't anticipate a return to pre COVID-19 business levels for some time and are busy reviewing their business to align with a very different future.

NO NET CHANGE, BUT BIG INTERNAL SHIFTS
Rising prices for WMP (+2.1%)at the latest dairy auction "saved" the event because it also brought sharp falls for butter (-4.4%) and cheese (-5.3%). But after accounting for a rising NZD, the overall result in local currency was a fall of -3.9% and a tough way to head into the new season (which starts on July 1).

LESS INFLUENTIAL THAT THE COMMENTERS THINK
We all "know" that we run a large merchandise trade surplus with China (+$4.5 bln), but data out today shows that also run a large trade surplus with China in services (+$2.4 bln). Together we sold China $6.9 bln more than we purchased from them in the year to March. That is not the case with Australia where we ran a +$1.6 bln goods surplus but have a -$0.5 bln services deficit. With the US, its the reverse, a goods deficit and a services (tourism) surplus, and that nets to a smallish +$0.4 bln surplus overall. With Japan it is remarkably similar to our US trade relationship. The one area that sucks us dry is Europe where we run large goods deficits (-$5.9 bln) and only small (tourism-based) surpluses (+$0.4 bln). The net from everyone else in the year to March netted to a balance, involving $21 bln of each of goods and services exports and imports. In the end, our exposure to the two-way China trade is less than 20% of all our trade (actually 19.4%) - the China trade is just under $33 bln per year of our total two way trade of a bit more than $169 bln. With the US it's $19 bln.

GROWING
Investing platform InvestNow says it has broken through the $0.5 bln level for funds under management for its 26,000+ customers.

VANISHING CUSTOMERS
Air New Zealand reported today that its April passenger numbers fell -99% in April. The few flights they did run had a load factor of just 25% compared with 88% a year ago. They say "Prior to the outbreak of Covid-19, Air New Zealand was in a strong position with a resilient balance sheet and short-term liquidity of more than $1 billion. The airline has no financial covenants on new or existing debt facilities and no significant debt maturities until 2022. The airline has taken and will continue to take swift and decisive action to preserve and enhance liquidity and minimise cash burn."

SLIPPING DEMAND
Demand for electricity is slipping on a 7-day-on-7-day basis, and on a 14 day basis. The restart flush is weak as revealed by this electricity data.

NO LIQUIDITY ISSUES FOR BANKS
Banks overall core funding ratios in April were strong, a very strong 88.8% and a record high. The RBNZ minimum standard is 75%. It is being boosted by "non-market domestic" deposits - that is household and business bank deposits.

LOCAL UPDATE
There were zero new Covid-19 cases again today in New Zealand, so now only one person is left with it in the whole country. We are now at twelve days with zero new cases.

AUSTRALIA UPDATE
In Australia, there have been 7228 cases (+7 since this time yesterday), 102 deaths (unchanged) and a recovery rate of just under 92% (unchanged). 26 people are in hospital there (+5) with 4 in ICU (unchanged). There are now 501 active cases in Australia (-4).

GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 6,377,600 which is rising at a faster pace than recently. American cases rose by +20,000 since this time yesterday. Big rises in Iran, Mexico, Russia and Saudi Arabia are worrying. Some countries may avoid a 'second spike' solely because they never got over the first hit. US deaths now exceed 106,000. Global deaths now exceed 380,000.

EQUITY MARKET UPDATES
The S&P500 ended up +0.8% in their session earlier today. But that was tame compared to most European markets which saw gains for up to +3.8% (in Frankfurt, but only +0.9% in London). Shanghai has opened today up just +0.4% but both Hong Kong and Tokyo are each up +1.2% in early trade. The ASX200 is up +1.0% in mid-day trade; the NZX50 Capital Index is up +0.8% in late trade.

THE RECESSION THEY HAD TO HAVE
The Aussies reported Q1-2020 GDP today and it was down -0.3% in the quarter. Their Government says Q2-2020 will be much worse, so "we are in recession today". It is Australia's first recession in almost 30 years. 

SWAP RATES UPDATE
Update: There is little change at the short end, but 10 year rates rose +5 bps to 0.80%. Swap rates may have moved little today. We don't have wholesale swap rates movement details yet but we will update this later in the day if they show a significant movement. The 90-day bank bill rate is still unchanged at 0.26%. The Aussie Govt 10yr is up +7 bps at 0.97%. The China Govt 10yr is up +9 bps at 2.83%. The NZ Govt 10yr yield is up only another +3 bps to 0.86% but has now erased all its May weakness. The UST 10yr is up +5 bps to 0.70%

NZ DOLLAR UP SHARPLY
The Kiwi dollar has continued rising today against the greenback, up to just on 64.1 and that is nearly a +1½c gain since this time yesterday. Against the Aussie we are also holding at 92.5 AUc. Against the euro we are firmer at 57.2 euro cents and a +¾c gain. That means the TWI-5 is up at 69.

BITCOIN REVERSES
The price of Bitcoin is sharply lower after breaching US$10,000. It is down -5.6% from this this time yesterday to US$9,498. The bitcoin price is charted in the currency set below.

This soil moisture chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».