A review of things you need to know before you go home on Wednesday; minor retail rate changes, Bonus Bonds to be wound up, incomes fall, trade surplus, hot mortgage market, long swap rates rise, NZD stable, & more

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

MORTGAGE RATE CHANGES
We have added non-bank lender CFML Loans to our mortgage rate table today. They have a 4.95% floating rate. Paraloan cut its 3 years fixed to 2.99%. First Credit Union cut its 1 and 2 years fixed rates.

TERM DEPOSIT RATE CHANGES
Update: The Cooperative Bank has trimmed all theri TD rates for terms of 6 mths and longer.  And be aware, there will be more cuts announced tomorrow.

END OF AN ERA
The Bonus Bonds Scheme is to be wound up by ANZ, with the bank blaming low interest rates reducing the investment returns of the scheme, and thus hitting the size of the prize pool.

MUCH WORSE THAN THE GFC
For the first time in their records, Statistics NZ says incomes fell on average in the June quarter, down -7.6% year-on-year, revealing the size of the pain at the household level. On average it is -$54/week. But that masks some very big shifts. Median weekly earnings rose +4.3% to $1060 but the number of people with no income at all increased from 72,600 to 127,300, a +75% leap. People in upper quartile earnings brackets were hurt hard too. Median weekly earnings for self-employed people decreased -$96/week or -12.5%. This is the largest percentage fall since the series began, with the second largest in 2008, when earnings fell -$58/week or -8.6%.

A RARE SURPLUS AS WE STOPPED SPENDING (ON OIL)
In July, exports fell a marginal -$10 mln from the same month a year ago. But imports fell a full -$1 bln. That brought a +$282 mln trade surplus for the month. It is unusual to have a trade surplus in a July. We had one in 2012 and again in 2017, but there haven't been any others in the past 20 or so years. The key import drop was for crude oil. Our trade surplus with China took an unusual dip in July, but that may only be a timing issue - for the year to it rose to +$3.7 bln in favour of us. About 27% of all our exports go to China (and that compares with the almost 50% of Australian exports that go to China).

HOT MARKET
New residential mortgage lending was a strong $6.6 bln in July, up an impressive +11% above the July 2019 levels. This was the highest July figure since the survey began in 2013. The new mortgage commitment growth was driven by the increases outside Auckland. In Auckland, new mortgage commitments were up +3.9%, while new commitments outside of Auckland rose +17.6%.

HARVESTING THEIR SME CLIENTS WITH AN INSIDERS LOOK
Online accounting platform Xero is to buy an Australian finance company which it will use to offer its SME customers access to invoice financing. Invoice financing can be a very high margin finance product. Convenience will come at a cost.

BANKER PRESSURE?
There are reports that Synlait Milk is looking to raise up to $250 mln from equity investors to pay down its debt load. As at June 30, Synlait Milk had total debt of $451 mln. Perhaps its bankers want it to reduce risk as its main customer, A2 Milk said it is buying Mataura Milk in Southland. Synlait doesn't disclose who its bankers are.

THE EASY WAY TO CHECK BANK FINANCIALS
Our tool that uses the RBNZ Dashboard is now updated to June 2020 with the latest data. This Key Bank Metrics data allows you to inspect and compare all the data in the RBNZ Dashboard revealing how each retail bank is faring in the pandemic.

STORM COST
Almost 1100 people claimed on their insurance for the June tornado storm damage in the upper North Island. The payout is almost $11 mln, so an average of almost $10,000 per claim.

'PLAUSIBLE'
In Australia, their reserve bank says a -40% fall in house prices is an "extreme but plausible" scenario in a discussion paper on household debt (see page 18). They also say "banks appear resilient to a severe downturn" and that most household debt is held by those who can afford it.

BRIGHT SPOT
South Korea's export sector is feeling better with export-oriented order levels a bright spot in their economy.

EQUITY UPDATES
In Australia, the ASX200 is down more than -1.0% in early afternoon trade. The NZX50 Capital Index is down -0.3% in late trade as it still battles DDoS attacks. Earlier, Wall Street closed higher, up +0.4% in a steady afternoon gain. At the opening, Shanghai is flat, Hong Kong is up a marginal +0.1% and Tokyo is down a marginal -0.2%.

SWAP RATES UPDATE
Swap rates were basically unchanged yesterday. Update: But today the long end turned up sharply following international trends with the 10 year up +8 bps to 0.58%. Short end rates were little-changed. Today's swap rates aren't available yet. We will update this note if there is a significant movement. The 90-day bank bill rate is unchanged at 0.28%. The Aussie Govt 10yr is up +4 bps at 0.94%. The China Govt 10yr is unchanged at 3.04%. But the NZ Govt 10yr yield is down again by another -2 bps to 0.55%. (It's all-time low was 0.49% reached in mid-May.) The UST 10yr is up +4 bps at just under 0.70% (although it did reach 0.72% two hours ago).

NZ DOLLAR FIRMISH
The Kiwi dollar is marginally firmer than at this time yesterday at 65.5 USc. Against the Aussie we are unchanged at 91.1 AUc. Against the euro we are little-changed at 55.4 euro cents. That means the TWI-5 is up marginally at 68.6.

BITCOIN SOFT
The price of bitcoin is down -2.4% today at US$11,409. 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 ».