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A review of things you need to know before you go home on Friday; many retail interest rate changes, PMI rises impressively, debt stress low, first Tiwai Point, now Glenbrook?, swaps dip, NZD stable, & more

A review of things you need to know before you go home on Friday; many retail interest rate changes, PMI rises impressively, debt stress low, first Tiwai Point, now Glenbrook?, swaps dip, NZD stable, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
Kiwibank has adopted the 2.55% one year fixed rate that most other banks have already moved to.

TERM DEPOSIT RATE CHANGES
BNZ has cut its TD rates today. Co-operative Bank changed TD rates, some up (surprise!), some down. They also cut at-call rates. SBS Bank and ICBC also both cut term deposit rates.

IMPRESSIVE TURNAROUND
Our factory sector is now expanding solidly, and for the first time since February. This index is now at 56 when "50" is neither expanding nor contracting. It was under 40 in May and under 30 in April. The strength of the expansion is better than you may have expected. Only the 'employment' sub-sector remains weak, so perhaps that indicates this is more of a bounce-back than can be sustained. But by any measure it is very positive. For example, the equivalent June result is Australia is 51, in the US it is under 53, in China it is 51. The New Zealand result is its best since April 2018 and is bolstered by very strong production and, importantly, new orders data. It is also powered by Canterbury and Auckland expansions.

DATA CURIOSITY
Despite the pandemic, the level of personal bankruptcies and No Asset Procedures are at an all-time low. No doubt this is due to the loan deferral schemes, and the payroll support scheme. But even so, it does seem that household debt stress is at unusually low levels given the economic circumstances. This stress is very different this time around than in the GFC. We have matched this data with the unemployment rate. We would welcome any insights as to why we aren't seeing extreme household stress in this, arguably much bigger, crisis. See the chart here.

STEELING FOR A CLOSURE
Bluescope Steel has place the New Zealand specialty steel mill at Glenbrook "under review". It manufactures high-class specialty stainless steels but New Zealand's carbon and energy pricing policies " are making it harder to justify". It will write down the New Zealand mill by $200 mln. If closed, these products will be made in jurisdictions with much worse climate mitigation policies (thereby increasing the world's emissions). The Glenbrook plant employs 1400 staff and indirectly employs another 2500 people. If it is closed, it will be a double blow with Tiwai Point.

CLIVE CAUGHT
Aussie billionairre businessman and one-time (failed) politician Clive Palmer is facing dishonesty charges brought by regulator ASIC.

EQUITY UPDATES
On Wall Street, the S&P500 ended its session earlier down -0.3% and this was less than the losses the earlier European markets posted which were down about -0.5%. Shanghai however has opened up +0.8% today. Hong Kong is also up +0.8%. Tokyo is unchanged in early trade. Locally the ASX200 is also unchanged in mid-afternoon trade, which if it holds will be a weekly gain of +1.5%. The NZX50 Capital Index is up +0.5% in late trade and also heading for a weekly gain of +1.5%.

SWAP RATES UPDATE
Swap rates probably shifted a little lower today. We don't have final 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 down by -1 bp at 0.30%. The Aussie Govt 10yr is marginally lower at 0.88%. The China Govt 10yr is down by -3 bps to 3.04%. The NZ Govt 10yr yield is down -3 bps at 0.91%. The UST 10yr is unchanged at 0.62%.

NZ DOLLAR LITTLE-CHANGED
The Kiwi dollar has changed little today, now at 65.4 USc and in a quiet phase. Against the Aussie we are little-changed at 93.7 AUc. Against the euro we are holding at 57.5 euro cents. And that means the TWI-5 is still just over 69.9.

BITCOIN SOFT
The price of bitcoin is a little softer today at US$9,129. 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 ».

Daily exchange rates

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Source: RBNZ
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End of day UTC
Source: CoinDesk

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15 Comments

The UST 10yr is unchanged at 0.62%.

The UST 3 month bill is down at 0.10%

The secured overnight financing rate has popped above IOER to 0.13%

There must be some as yet undisclosed financial dislocation in US financial markets to cause a more than concerted need to be in possession of 4 week to 3mth US Tbills ~10bps via outright purchase or repo at negative return rates.

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DATA CURIOSITY. Interesting chart but the labeling on the x-axis needs a second look.

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It manufactures high-class specialty stainless steels but New Zealand's carbon and energy pricing policies " are making it harder to justify"

Too bad Jacinda's team can no longer offer more tourism investment to regions losing hi-value industries due to policy changes like they did back when they put a ban on new O&G offshore exploration.

Also, it seems Boris is turning out to be a better leaders than Jacinda against climate change.

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"Also, it seems Boris is turning out to be a better leaders than Jacinda against climate change." Not quite so good when it comes to covid 19, though.

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If Tiwai Point aluminium output is aircraft quality, it maybe a combined problem of collapsing aircraft build demand and a move to composite construction techniques?

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sounds like a job for the taxpayer

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ACT campaign gets under the way with:

"Labour is gambling our future on a $140 billion pile of debt. ACT has a smarter way of getting us back on track"

I wonder how that ties in with National wanting to add another $31 billion to that pile? Will that upset its tame partner in politics? Maybe, it doesn't matter anyway.....10 seats + 1 doesn't = Government.

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Yes, I wonder if PG will stand aside again - or is Epsom so used to it that they don't even need a 'cue' anymore?

Went to check out National's most recent List (i.e. since JC's second announcement) and their website is obviously in a 'hold' pattern - they didn't even do a new leader news item for Judith - the last one of that sort was for Todd;

https://www.national.org.nz/news

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Perhaps they're hedging their bets, waiting for the next upheaval.

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OH ON, not again, what's Labour mismanaged this time?

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We really need some sort of environmental tariffing on imports we'll just end up importing all of the same high energy input items (aluminium, steel etc.) from countries with worse environmental records. Sort of the environmental equivalent of shoving everything under the bed.

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Nice idea and I would be keen. Om guessing that it would e hard to get buy in in a global scale.
Unfortunately the Greens are still busy taking a stabe at a tax strategy.... I know, you can,t make this kind of stuff up. Crazy times.

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The stainless steel making part of the mill is under review , not the whole mill ???

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Yeah that is the thing which confused me.
Sounds like people with no idea what they are talking about are making assertions.

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