A review of things you need to know before you go home on Thursday; many TD rate cuts, better affordability, smaller trade deficit, investor confidence up, rising yields, swaps flatten, NZ lower, & more

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

MORTGAGE RATE CHANGES
No more changes here today.

TERM DEPOSIT RATE CHANGES
ANZ has cut rates across the board, between -5 and -15 bps. The Bank of India has cut all its shorter term rates. TSB has also trimmed term deposit rates today, some quite aggressively.

IT'S NOT THE PAYMENTS, IT'S THE DEPOSIT
House prices at the bottom end of the market have declined -7.3% from their March peak, while mortgage interest rates continue to slide. That shift lower along with lower interest rates means that first home buyer affordability is improving. Our new analysis accounts for the interest rate premiums FHBs must pay if they don't have the full 20% deposit. Accumulating the deposit is now the key stress point.

BOUNCEBACK AFTER LOCKDOWN
Monthly mortgage borrowing shot up +57% in May compared with the lockdown month of April - but the figure of $4.3 bln advanced was still down by about a third compared with the same month a year ago.

SMALLER TRADE DEFICIT
Plunging imports are behind the biggest improvement in our annual trade deficit since 2014. Statistics New Zealand says low levels of imports in April and May have caused our deficit to 'quickly shrink' to just $1.3 bln for the year to May. Imports were down -26%, exports however were down just -6%.

NO LONGER A GOOD INVESTMENT
NZ Refining's Marsden Point refinery is looking like it will be scaled back severely or even closed to manufacturing as the justification for major capital spending on technology can no longer be justified. These sorts of commitments need long profitable payback periods ahead of them and fossil fuel demand looks set to shrink significantly now. Proponents now need "someone else" to pay - because they can't justify it any longer.

INVESTOR CONFIDENCE HIGH DURING PANDEMIC
The FMA's annual Investor Confidence Survey (which was conducted between 5 and 14 May, during Level 3 lockdown) has found two-thirds of investors (66%) were confident in New Zealand’s financial markets, in line with 65% of investors last year. This year the proportion of investors saying they didn’t know about confidence in the markets shrank from 15% to 8%, indicating that New Zealanders are taking more interest to form a view. The proportion of investors very confident is now at an eight-year high of 10%. You do have to wonder about the quality of general financial literacy in these circumstances.

RISING YIELDS
After reaching an all-time low in mid-May, NZGB bond yields rose again in today's tender, the third consecutive rise. $1.05 bln was on offer over three tranches (April 2023/April 2029/April 2037) and overall bids totaled $2.7 bln. Only 58 bids were accepted of the 153 that were submitted.

FALLING CONFIDENCE
According to the Westpac-McDermott Miller Regional Economic Confidence survey, regional economic confidence fell for the second consecutive quarter in June, with most regions seeing double-digit declines. Confidence fell in nine regions, was unchanged in one, and rose in another.

AUSTRALIA UPDATE
COVID-19 infections are rising faster across the ditch. In Australia, there have been 7557 cases, +36 since yesterday in a rising trend especially in Victoria. Their death count is up +1 at 104 deaths and their recovery rate is back down slightly to 92%. There are now 529 active cases in Australia (+26).

GLOBAL UPDATE
The latest compilation of COVID-19 data is here. The global tally is now 9,405,800 and up +168,000 since this time yesterday. 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 before the end of the week.) Total American cases have risen by +35,000 again today to 2,380,500. That is a larger-than-usual daily rise too. The number of active cases in the US is now 1,602,300 and up +25,200 in one day. US deaths now exceed 122,000. Global deaths now exceed 482,000.

GOING DOWN I
Australian job vacancies recorded their largest ever fall in the last three months and workers were laid off in record numbers.

GOING DOWN II
Compounding the income loss from job losses, average Australian household wealth fell -$9,982 or -2.3% to AU$428,585 in the three months to March 31 due to falling superannuation balances and share market losses. It was the largest wealth decrease since September 2011.

EQUITY MARKET UPDATES
At the end of the New York session, the S&P500 fell away and ended down -2.6% on the day. The Shanghai and Hong Kong markets are closed for the Dragon Boat Festival holiday. (Shanghai won't reopen until Monday, Hong Kong will reopen tomorrow.) Tokyo is down -1.3% in early trade. The ASX200 is down -1.6% and the NZX50 is down -1.1% in late trade.

SWAP RATES UPDATE
Swap rates were probably lower at the long end 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 staying up at 0.30%. The Aussie Govt 10yr is down -5 bps to 0.88%. The China Govt 10yr is down -2 bps at 2.91%. The NZ Govt 10yr yield is lower as well, down -3 bps to 0.94%. The UST 10yr is also lower, down -5 bps to 0.67% as the bond market also signals risk-off.

NZ DOLLAR FALLS THEN HOLDS
The Kiwi dollar dropped sharply overnight following the combination of the RBNZ OCR signal and the global risk-off tone, to 64.1 USc but has held that level in local trade today. Against the Aussie we are marginally firmer at 93.5 AUc. Against the euro we are softer at 57 euro cents but that too is a slight firming from this morning. That means the TWI-5 is lower at 69.

BITCOIN LOWER
The price of Bitcoin is a lot lower today, down -3.8% from yesterday at US$9,640. 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 ».