A review of things you need to know before you go home on Monday; broad TD cuts, credit card turmoil, record new Auckland houses completed, swaps flatter, NZD unchanged, & more

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

MORTGAGE RATE CHANGES
Kiwibank cut its fixed six month rate, but only to 3.55% which these days is nothing very special.

TERM DEPOSIT RATE CHANGES
Kiwibank however cut term deposit rates across the board. And HSBC did so too.

SHARP PULLBACKS
Credit card balances are staying low. You may recall that they crashed lower in April, down -21% year-on-year to $5.8 bln. The May level rose slightly to $6.0 bln but that is still -17% lower than the same month in 2019. This is a category already under pressure from BuyNowPayLater schemes (BNPL), but COVID-19 has shoved the decline much harder. Credit card billings in May on NZ issued cards was down -20% from a year ago, a less-worse result than the -48% fall in April. Spending in New Zealand on cards issued overseas was down -55% in May.

USING CREDIT CARDS TO SURVIVE?
Updated credit card data for April shows an unusual jump in proportion of card balances incurring interest. In March it had fallen to a near-record-low of 58.7%. But in April it jumped back up to 61.9% and ending a long decline from 71.6% back in 2010. BNPL schemes get paid by credit card transactions so if the BNPL customer is in trouble, the amount due ends up with the banks on the underlying credit card.

STILL UP
The number of Code Compliance Certificates issued for new dwellings in Auckland took a dip in April but were still up on April last year. There were 910 CCCs issued in April as the level 4 restrictions began to bite in earnest, but that was still up by +15% on April 2019 and was also a record for the month of April. More than 14,000 new houses were completed in the past year in Auckland, about the level may analysts say is needed per year. But of course that doesn't catch up any of the prior shortfall.

UP SHARPLY
The RBNZ's balance sheet is on the move, principally due to the LSAP program. As at the end of May 2019 it had assets of about $28 bln, a similar level for the past ten or more years. But the COVID-19-induced LASP has added $+$27.2 bln in juts ten weeks to May 31 and taking the central bank's balance sheet up to $51.2 bln suddenly. This is a holding at 16% of GDP. (That compares with the US Fed's 33% equivalent level.) Since the end of May they have purchased another $3.5 bln of NZGBs and LGFAs, raising that level to 17.5% of GDP.

UNDERMINING NZ'S PRODUCTIVITY
The Government is screwing the scrum with some very large subsidies for NZ Post. First it bolstered its equity with a $150 mln injection. Then Budget 2020 included a taxpayer subsidy of $130 mln to keep its dying home letter delivery from failing. Now the company is starting a "10-year plan for parcel growth" costing $170 mln so that its network can double its parcel-processing capacity from 95 mln parcels to 190 mln parcels in ten years. The private companies who compete with this type of subsidisation probably aren't happy the taxes they pay being used to prop up a State competitor so they can deliver services below cost to compete with them.

SPECULATION SWIRLS
A2 Milk today confirmed it is talking to NZ dairy companies about buying in to their opertaions to boldster thei supply sources. The latest probably involves the Gore processor Mataura Valley Milk.

AUSTRALIA UPDATE
COVID-19 infections are rising faster in Australia. In Australia, there have been 7463 cases in total (+33 since this time om Friday), 102 deaths (unchanged) and a recovery rate of just over 93% (up). There are now 465 active cases in Australia (+47 from Friday).

GLOBAL UPDATE
The latest compilation of Covid-19 data is here. The global tally is now 8,926,100 and up +84,000 since when we checked this morning. This is a rising pace. (And a reminder, when this tally exceeds 10 mln, we plan to give up reporting the number daily. And at the current rate that may be by before the end of the week.) American cases have risen by +11,000 since we check this morning to 2,278,600. That is a larger-than-usual daily rise too. US deaths now exceed 120,000. Global deaths now exceed 468,000.

EQUITY MARKET UPDATES
The S&P500 futures trade which earlier suggested Wall Street will open tomorrow down -1.3%, now indicates just a -0.3% fall. Locally, the NZX50 Capital Index has started the week -0.5% lower in late trade. The ASX200 was down sharply at its open, but is back up +0.2% in midday trade. Shanghai (+0.3%) and Tokyo (+0.1%) have both opened flat, but Hong Kong is down -0.5% in early trade.

SWAP RATES UPDATE
Swap rates were likely flatter 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 up another +1 bp at 0.30%. The Aussie Govt 10yr is holding at 0.87%. The China Govt 10yr is little-changed at 2.91%. The NZ Govt 10yr yield is marginally softer at 0.87%. The UST 10yr is holding at 0.69%.

NZ DOLLAR HOLDS
The Kiwi dollar is little-changed at 64.2 USc. Against the Aussie we are marginally firmer at 93.8 AUc. Against the euro we are also up slightly at 57.4 euro cents. That means the TWI-5 is holding at 69.2.

BITCOIN UNCHANGED
The price of Bitcoin is little-changed at US$9,379 and now day twelve in this very quiet period. 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 ».