A review of things you need to know before you go home on Wednesday; some TD hikes & cuts, inflation pressure intense, huge mortgage demand, other lending picks up finally, swaps stable, NZD slips, & more

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

MORTGAGE RATE CHANGES
No changes to report so far today.

TERM DEPOSIT RATE CHANGES
Kiwibank has ended its 1.1% pa 4 month special with that rate reverting to 0.45% pa. BNZ has raised most term deposit rates for terms 9 months and longer but only to levels already adopted by their main rivals. BNZ also cut -5 bps from the now ironically-named "Rapid Saver" account, taking the maximum potential rate to 0.15% pa.

"INFLATION PRESSURES INTENSE"
Latest ANZ Business Outlook Survey shows businesses see inflation rising well above the Reserve Bank's targeted 2% in the next 12 months. Retail pricing intentions look very high. And as is usual, businesses see their own prospects much more positively than they see the overall business environment.

DIVERSE BUYERS FOR DAIRY EXPORTS
Fonterra is reporting that despite some weather events recently, the end of season milk flows have been stronger than expected. New Zealand's dairy exports rose strongly, and they also note that other dairy exporting countries are getting similar, even larger, gains. All main importing regions are taking much more product than a year ago, perhaps except China where imports rose just +1.3% in May compared to May 2020. Fonterra reports that it sold 20,700 tonnes of product at the June 15 GDT auction. The auction operator reported it sold 21,522 tonnes at the event. That means Fonterra supplies 96% of the product offered on that platform.

COMMERCIAL PROPERTY OUT OF FAVOUR?
Last week, the NZX50 capitalisation for the eight companies in the property sector suffered a collective drop of almost -$100 mln (-0.85% for the week. All companies except Goodman Property Trust (GMT #16) shed value last week. For the past month however they are still up +1.1% (+$126 mln) which is most of the annual +$252 mln rise (+2.3%).

SHOVELLING IT OUT FAST TO ALLCOMERS
The combined mortgage books of all home loan lenders rose more than +$3 bln in May from April, the fourth month since November 2020 that this benchmark has been bested. For the year to May, the rise is +$32.3 bln (a record) or +11.4%, the largest proportionate jump since February 2008.

GOLD RUSH
ASB is reporting that it has committed to lending $2 bln for 3000 homes in just one month under its Bank by Build program, a very much larger response than anyone (including ASB) expected. With ANZ now out with a similar product, it looks like the new house build industry is getting all the financing support it needs, and that the Government's exemption of new builds from its expanded brightline test is diverting many more buyers away from existing housing deals to new houses. (ASB expected to do $1 bln under its program after one year.)

BANKS KEENER ON BUSINESS LENDING?
Bank lending to businesses picked up in May, rising +$461 mln from April and the largest rise since the start of the pandemic. One month doesn't make a trend, but a trend can't start without a turning point. Even lending to the rural sector rose in May from April, the second largest monthly rise since July 2019.

HERE COMES RISING CONSUMER SPENDING
Depositors withdrew almost -$1 bln from their bank accounts in May from April as they start to spend the money that built up quickly during the months prior to the onset of the pandemic.

CARBON PRICE INFLATES FAST
It's the last day of the month so it seems appropriate to note that the carbon price is up +5.5% in a month and up +74% in a year. A NZU is now market-priced at NZ$43.45. One NZU is 1 tonne of CO₂ equivalent.

NOT REALLY
The drop in wholesale electricity prices we noted yesterday may have been a false signal. They rose sharply again overnight to over $300/MWhr.

GROWTH SLOWING
In China, their official PMIs weren't so flash. The latest surveys suggest that growth softened in June. A slower improvement in services activity was mostly to blame. But supply shortages also continued to hold back output in the manufacturing sector. On a more positive note, the surveys point to an abrupt easing in price pressures recently.

PANDEMIC FRUSTRATIONS BOIL OVER
In Australia, relatively small increases in new cases are drawing relatively tougher lockdown regulations as their states shift into a serious fight mode with Canberra over access to vaccines.

GOLD FALLS
Compared to this time yesterday, the gold price is down -US$11/oz to US$1764/oz in early Asian trading.

EQUITY MARKETS MARKING TIME
The S&P500 ended its Tuesday session flat. The very large Tokyo equity market has given up some yearly gains in mid-morning trade to be flat. Hong Kong has opened flat too while Shanghai is up +0.3% in early trade there. The ASX200 is up +0.6% in early afternoon trade, while the NZX50 Capital Index is flat in late trade.

SWAP & BONDS TRACK SIDEWAYS
We don't have today's closing swap rates yet. If there are significant changes again today, we will update this item. They are probably unchanged. The 90 day bank bill rate is up +1 bp at 0.35%. The Australian Govt ten year benchmark rate is still down at just under 1.50%. The China Govt ten year bond is still at 3.11%. The New Zealand Govt ten year is unchanged too at 1.79% and above the earlier RBNZ fix of 1.77% (-2 bps). The US Govt ten year is still down at 1.48% but most of that happened two nights ago.

NZ DOLLAR SLIPS AGAIN
The Kiwi dollar has been steadily slipping over the past 48 hours, now at 70 USc although it has been lower in the past 24 hours. Against the Aussie we are holding at 93.1 AUc. Against the euro we are marginally softer at 58.9 euro cents. That means the TWI-5 is now down to 72.6.

BITCOIN FIRM
The bitcoin price is now at US$35,745 and up +3.0% from where we were at this time yesterday. Volatility in the past 24 hours has been high at +/- 3.5%. In Australia, ASIC is warning that exchange traded funds linked to crypto assets like bitcoin create the “real risk of harm to consumers and markets”. It is likely the FMA will follow suit here.

This soil moisture chart is animated here.

Keep ahead of upcoming events by following our Economic Calendar here ».