A review of things you need to know before you go home on Friday; more TD rate cuts, sagging consumer confidence, KiwiSaver assets grow at home, US long bond rates jump, NZD firm, & more

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

MORTGAGE RATE CHANGES
No changes today.

TERM DEPOSIT RATE CHANGES
BNZ is the latest bank to cut term deposit rates. SBS Bank and the NZ Firefighters Credit Union also cut rates, including some savings account rates.

REALITY BITES
The latest ANZ RoyMorgan consumer confidence index shows a small slip in confidence, and it remains well below its historical average. We are back to 2009 levels. But given we went into L3 in Auckland this month, maybe this result was better than you might have expected. Still, by any measure sentiment is low (despite the house price bubble) and the view on whether it is a good time to buy a major household item is now negative.

UNCHANGED LEVERAGE, LOWER RETURNS
We have updated our bank leverage page, adding the June data from the RBNZ Dashboard. Bank shareholder returns have slipped below 10% for the first time since June 2011 as annualised profits have fallen to just on $4.0 bln, down from $5.8 bln at June 2019, so a -30% fall. Bank capital is rising and now at a record $44.5 bln (+5.6% pa) but their balance sheets are growing faster (+8.9%).

RURAL BOLTHOLES POPULAR
Lifestyle block sales in July were +43% higher than in July last year, the Real Estate Institute of New Zealand says.

GOVERNMENT & HOUSEHOLD ASSETS GROW, BUT BUSINESS LANGUISHES
Statistics NZ today released the national balance sheet for 2019, showing all assets in New Zealand are now worth $5.7 tln. Of these "non-produced non-financial assets" (that is property values) represent 21% of our asset base, up from under 19% ten years ago. The only financial asset rising faster than trend are our retirement savings. In the ten years to 2019, our collective assets rose +4.4% pa, of which property prices were up +5.7% and our retirement savings were up +9.4% pa over that ten year period. The growth of our business enterprises languished at just +3.5% pa. But central government assets rose at the rate of +5.1%, local government at +4.4%, and households at +6.4% - and within that their real estate component was up +7.9%. It hasn't been a friendly place for businesses to grow.

INVESTING AT HOME
June 2020 KiwiSaver assets almost hit $69 bln, a rise of nearly +16% in one year. Those assets are invested 52% in New Zealand and 48% offshore. The New Zealand portfolio rose +20% in a year, the offshore portfolio rose +11%. This observation wasn't in the data release, but the shift to more defensive investments over the year would probably have driven a move into bonds, including NZ Govt bonds (and as interest rates fell, there were capital gains to be had).

EXPECTED CREDIT LOSS PROVISION HELPS PUSH HARMONEY TO $15M LOSS
Harmoney, the licensed peer-to-peer lender turned on-balance sheet online lender, has posted a -$15.4 mln net loss for the 15 months to June 30 after shifting its balance date from March. Harmoney's impairment expense surged to $8.899 mln from just $830,000 in the March 2019 year, largely driven by an increase in its expected credit loss provision, made under IFRS-9 requirements, due to the impacts of COVID-19. Harmoney said it ended the 15 month period with finance receivables of $129 mln, cash of $35 mln and net assets of $29 mln. For the March 2019 year Harmoney posted a maiden after-tax profit, helped by adoption of a new accounting standard that boosted its after-tax earnings by $7.5 mln.

TEN MONTH SALES EXCEEDED 12 MONTHS IN 2019
Retailer Harvey Norman said its sales in New Zealand rose +2.7% in the year to June, despite a weak April-June quarter when stores were closed for almost two months.

CLAMPING DOWN HARDER
China has banned imports from another major Australian meatworks after relations between the two countries continue to deteriorate. That takes the total to five Aussie meat processors banned, plus the Chinese actions on barley and recently, wine. China has a wolf warrior ambassador in Canberra who whines loudly that Australia isn't kowtowing to Beijing in the right way. Expect more. The "lessons" being imposed on Australia are also intended for New Zealand. Meanwhile, the Chinese foreign minister is in Europe, and earlier today was in Norway trying to prevent the awarding of the Nobel Peace Prize to the Hong Kong protesters.

EQUITY UPDATES
Earlier today in New York, the S&P500 closed up a bit less than +0.2%. Shanghai has opened up +0.4%, Hong Kong has opened +0.9%, and Tokyo is up +0.4%. The ASX200 is down -0.6% and heading for a small weekly loss. The NZX50 was closed earlier for a fifth day as it battles a DDoS attack. But it is back up now although down a marginal -0.1% on the day. But it is heading for a weekly rise of +1.6%.

SWAP RATES UPDATE
Swap rates gave up some of the prior day's gains yesterday but it was a modest correction. 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 up +1 bp at 0.29%. The Aussie Govt 10yr has shot up +10 bps today to 1.02%. The China Govt 10yr is up +1 bp at 3.08%. An the NZ Govt 10yr yield is also back up by +1 bp to 0.59%. The UST 10yr is up a very sharp +10 bps at 0.78%.

NZ DOLLAR FIRM
The Kiwi dollar is firmer at 66.6 USc as the greenback sinks. But against the Aussie we slipped to 91.4 AUc. Against the euro we are now at 56.3 euro cents. That all means our TWI-5 is up to 69.5.

BITCOIN HOLDS
The price of bitcoin is little-changed today at US$11,396. 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 ».