A review of things you need to know before you go home on Wednesday; few rate changes, giant Crown deficit, higher electricity bills for many, GHGs reduced, swaps slip, NZD slips, & more

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

MORTGAGE RATE CHANGES
Bank of Baroda cut their fixed mortgage rates today.

TERM DEPOSIT RATE CHANGES
None here, so far.

GIANT DEFICIT
In no surprise to anyone, the ten month Crown Accounts to April were a shocker. The largest deficit ever was reported of -$12.8 bln for the month and -$27.6 bln for the ten months to date. Gross debt rose more than budgeted to almost 30% of GDP. More here. In fact, they are borrowing so fast, tomorrow we will probably report that more than $100 bln is now owed by Government (and taxpayers of New Zealand).

FACTORY OUTPUT WEAK
One of the final pieces of data for the Q1-2020 GDP result due in a week was out today, manufacturing trade. It revealed weak growth of course. But it is 'positive' that finished goods inventories didn't blow out.

ABSOLUTE GHGs REDUCE
In a quiet release today, Statistics NZ revealed the latest update of our greenhouse gas performance. Households increased their emissions by almost +12% between 2007 and 2018 and that added +1033 kilotonnes of GHGs. But industry actually saved -1921 kilotonnes over the same period so the net national result was a -1.1% reduction in those eleven years. Emissions intensity (emissions related to GDP) fell by an average annual rate of -2.4%. Almost all those gains were from policy settings of the previous government.

VIRTUE POLICY
The Electricity Authority has decided on a new way to price the cost of transmission. This is very likely to sharply raise the cost of electricity to customers in the north of the North Island. The the regulated company, Transpower, is very opposed to the new method, not to mention customers facing the increases. The EA says the new pricing "encourage the right investment in renewable generation and transmission to respond to the electrification of transport and industrial processes", and "contribute to a low emissions economy at the least cost to consumers". But it will be very tough on low-income households north of Taupo.

GOOGLE FINDS A LITTLE MORE FOR NZ
Google New Zealand has filed its annual accounts for the year to December 2019, the first year in which it is applying a “new business model” – recognising more revenue generated from its New Zealand operations. This followed the NZ Government’s measures brought in during 2018 “to ensure multinational companies pay their fair share of tax”. Google NZ reported revenue of $36.2 million, up from $17.5 million the year before. Tax in the latest year was just under $2.5 million compared with under $400,000 the previous year. This left a tax paid profit for 2019 of $8.1 million compared with a loss of over $1 million previously. A Google NZ spokesperson said: “This is our first full year of operating under our new business model and we have worked constructively and collaboratively to ensure that we comply with New Zealand’s legislative requirements.”

NEW TRAINING FOR BNZ STAFF
BNZ's parent National Australia Bank has announced plans for a staff training programme, of education and accreditation, to be run in partnership with the Financial Services Institute of Australasia. A BNZ spokesman says the NZ bank will be rolling out the globally recognised formal qualification to all its staff in April 2021.

BORROWING PULLBACK
In Australia, mortgage lending to both investors and owner-occupiers has fallen sharply in March and April and economists say it is likely to fall further in coming months before it recovers.

CONSUMER PRICES SETTLE, FACTORY DEFLATION INTENSIFIES
China's consumer inflation eased to +2.4% in May, down from +3.3% in April as food price hikes, especially for pork, eased. Prices for lamb and beef also eased but only marginally. But Chinese factory deflation picked up sharply in May with prices falling -3.7% year-on-year and that is the fastest fall in more than four years.

AUSTRALIA UPDATE
In Australia, there have been 7270 cases (+3 since yesterday), 102 deaths (unchanged) and a recovery rate of just under 92% (unchanged). 19 people are in hospital there (unchanged since yesterday) with 2 in ICU (-1). There are now 448 active cases in Australia (-11).

GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 7,237,100 and up +124,000 from this time yesterday. This is still rising at a faster pace than recently. American cases rose by +19,000 since yesterday to 1,979,100. US deaths now exceed 112,000. Global deaths now exceed 412,000.

EQUITY MARKET UPDATES
Equity markets in our time zone region are all hovering at an almost unchanged level after a -0.8% fall on Wall Street and much larger falls in Europe.

SWAP RATES UPDATE
Swap rates may have fallen 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 slipped -1 bp to 0.25%. The Aussie Govt 10yr has retreated further today by -3 bps to 1.03%. The China Govt 10yr is up +1 bp to 2.86%. And the NZ Govt 10yr yield has slipped by -5 bps to 0.94%. The UST 10yr is down -2 bps since this time yesterday at 0.83%.

NZ DOLLAR SLIGHTLY SOFT
The Kiwi dollar has held its overnight slip to be still at 65.2. Against the Aussie we are still at 93.6 AUc. Against the euro we are down to 57.5 euro cents. That means the TWI-5 is still down slightly to 69.7.

BITCOIN HOLDS
The price of Bitcoin is little-changed from this time yesterday, but up +0.8% at US$9,765 which is only very marginally firmer. 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 ».