Days to the General Election: 26
See Party Policies here. Party Lists here.

A review of things you need to know before you go home on Friday; few rate changes, house rates jump, PMI up, rents slip, hydro lakes low, China stumbles, eye on swap rates, NZD slips, & more

A review of things you need to know before you go home on Friday; few rate changes, house rates jump, PMI up, rents slip, hydro lakes low, China stumbles, eye on swap rates, NZD slips, & more
ID 22702269 © Daniaphoto | Dreamstime.com

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
ICBC, a bank that regularly offered higher rates to savers, has trimmed them today.

JULY HOUSE SALES REBOUNDED
Housing market was on a high with July's sales at their highest level in 5 years, according to the REINZ data released today. Winter weather and economic uncertainty did not holding back the real estate industry in that month with residential sales surging to be up by a quarter above the same month in 2019. National median prices rose +3.4% from June. In Auckland, volumes sold were +30% higher than in the same month a year ago, but prices slipped slightly from June. But it is anyone's guess what the August lockdown will do to this rebound.

EVEN BEFORE THE AUGUST LOCKDOWN, SUSTAINABILITY QUESTIONS
Factories also expanded faster in July. The BNZ-BusinessNZ PMI rose to an impressive index of 58.8 and an expansion we haven't seen since March 2017. Of course it comes as a bounceback from some very weak recent months. Especially encouraging was the rise in new orders. But not encouraging was the contraction in employment. Apparently, factory managers weren't convinced the July rush was going to be sustained. Factory employment has contracted in every month of 2020. The latest virus developments will not help in this regard.

RENTS NO LONGER RISING
Yesterday we reported the StatsNZ rental index data. Today we can go further with the MBIE tenancy bond data. Rents for 3 bedroom houses are falling, and have been for a few months. But the slip in Auckland is minor. The slippage of 2 bedroom flat rents is more. Check the charts here for more details for Auckland, Wellington and Christchurch.

RISING AT A COMPOUND ANNUAL RATE OF +125%
The Reserve Bank's balance sheet for July was released today, showing just how much and how fast their QE program has grown. They now have total asset of $58.4 bln, up from $24.9 bln a year ago. In fact, their balance sheet size has doubled in just seven months. They are not holding back in their supporting role in this crisis.

HYDRO LAKES LOW
Hydro lake storage is getting worryingly low for this time of year. This renewable energy source may give us real problems over the summer months. Auckland's drinking water storage is up over 60% now, but far below the normal of 87% for this time of year. This is another major potential summer risk.

GOLD SAGS
The price of gold sagged in New York at the end of their trading session. When we check this morning it was at US$1958/oz but ended at US$1953, down -US$5/oz. In Asian trading it is down a further -US$5 to US$1948/oz. Silver is falling relatively more.

MIDDLE KINGDOM WOBBLES
In good news for Australian iron ore demand, China's crude steel production jumped more than +9% cent in July to over 90 mln tonnes. But China also reported surprisingly weak retail sales in July, and unusual decline. Their electricity production fell more than -4.6% in July from June and was up only +1.9% year-on-year. In China's terms, these are very weak results.

EQUITY UPDATES
The S&P500 ended its session down -0.2%, showing a lack of direction all day. Shanghai is also slipping to end the week, down -0.5% on the day and Hong Kong is down -0.3%, Tokyo is up a marginal +0.1% after two strong days of gains and is heading for a weekly rise of +4.2%. The ASX200 is up +0.6% in early afternoon trade making back all of yesterday's loss. For the week it is heading for a +2.1% gain. The NZX50 Capital Index is down -0.3% after yesterday's big fall and is heading for a loss of -1.5%.

SWAP RATES UPDATE
Swap rates fell sharply for a second straight day yesterday, but we don't have today's change yet and will update it here if it is significant.The 90-day bank bill rate is unchanged at 0.29%. The Aussie Govt 10yr is up +4 bps to 0.93%. The China Govt 10yr is little-changed at 2.98%. And the NZ Govt 10yr yield fell another -5 bps to 0.68% as the RBNZ MPS implications sank in. The UST 10yr is up +5 bps from yesterday to 0.71%.

NZ DOLLAR SOFTER
The Kiwi dollar is down almost -½c today from this time yesterday at 65.3 USc. Against the Aussie we are unchanged at 91.6 AUc. Against the euro we are lower at 55.3 euro cents on the same basis. And that means the TWI-5 is softer at just under 68.6 and also softer from this morning as well.

BITCOIN FIRMER
The price of bitcoin is marginally firmer again today, now at US$11,738 and up +1.4% in the past 24 hours. 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

Select chart tabs »

The 'US$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'AU$' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'TWI' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥en' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '¥uan' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The '€uro' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'GBP' chart will be drawn here.
Loading...
Daily benchmark rate
Source: RBNZ
The 'Bitcoin' chart will be drawn here.
Loading...
End of day UTC
Source: CoinDesk

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

15 Comments

The price of gold sagged in New York at the end of their trading session. When we check this morning it was at US$1958/oz but ended at US$1953, down -US$5/oz. In Asian trading it is down a further -US$5 to US$1948/oz. Silver is falling relatively more.

Right. And silver is up 5.2% and gold is up 1.4% in AUD and NZD today. Losses from the 'crash' have been clawed back over the past 2 days. Not getting all defensive about PMs, but if you own them, it's important to add a little context that might be more relevant to you. Interest dot co's description is a little on the 'DGM' side.

Gold fairly much at it's all time high and silver not that shabby either.

Arguably, Gold and Silver falling is not DGM but signs of an improving wider market?
US$ stronger into a rising global market place and all that....

The recent drop and rise again is a great sign that they weren't in a bubble and will continue to rise from this stage base. The wider market still dosent look good IMO.

Nothing goes up or down in a straight line. People on here should know that. Same with Covid. But people rather prefer to remain emotional about both. Fine with me but don't sob when your world -and trading views are being challenged.

It's only funny money for me. In the long run very little chance of a sizable loss but a fairly good chance of a doubling of value in dollar or buying power.
Could sell now and be $10k in my pocket.

Good on you mate. I wish you best in investing.

It ain't profit until you've paid your taxes though.

DGM is necessary

We've got that in spades at present and had it before CV hit.

It would be interesting to have a HPI equivalent for rents. The reality of 2 bedroom rentals in Auckland is likely to be worse than those stats suggest.
The reason for this is the large supply of 2 bedroom townhouses and apartments that have hit the market over the last 2 years, which will be pulling the median rents up. For older flats, the median is likely to have dropped quite significantly.
But of course without the data this theory cannot be proven.

Data is increasingly valuable. Being the source of that data brings power.

Just been on TM property - have never seen so many new listings on the Coromandel in one day. Hmmm.

A sign that cash / less debt is needed to ride this out?

I have noted an uptick in Wellington listings too. Still slim, put for this time of year suprisingly high.

Sam Morgan heavily promoting his $100 million electronic-digital-tracking card system
Stuff Headline - Sam Morgan forecasts PM will announce nationwide move to level 3
https://www.stuff.co.nz/business/122454167/sam-morgan-forecasts-pm-will-...

Days to the General Election: 26
See Party Policies here. Party Lists here.