A review of things you need to know before you go home on Friday; more TD rate rises, higher inflation expectations, greenies says CCC not tough enough, swaps rates fall at long end, NZD soft, & more

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

MORTGAGE RATE CHANGES
No more changes to report today - yet.

TERM DEPOSIT RATE CHANGES
ASB matched its main rivals with term deposit increases for terms 1 to 4 year terms. The NZCU Baywide set of brands raised all their TD offers from 5 months to 5 years.

BUYING NOW BEFORE EXPECTED SHARP PRICE JUMPS
The ANZ-Roy Morgan consumer confidence index was unchanged at 114 in June. The proportion of people who believe it is a good time to buy a major household item, a key retail indicator, rose +3 points to +22 and this is the single best retail indicator in the survey. Inflation expectations cracked an unheard-of 5%, while house price inflation expectations were little changed at 5.8%.

INSULATED SO FAR
Regular readers will know that we monitor grocery prices weekly. This monitoring shows that New Zealand prices are relatively stable. But the same items at the same supermarket chain in Australia are rising and quite quickly now. Those Aussie prices are now higher than NZ prices (in NZD).

LAWYERS LODGE LEGAL CHALLENGE AGAINST CLIMATE CHANGE COMMISSION'S ADVICE
Lawyers for Climate Action New Zealand have filed High Court proceedings seeking judicial review of the Climate Change Commission's advice to Minister for Climate Change James Shaw. Led by President Jenny Cooper QC, the group alleges:

• the recommended emissions budgets do not meet the Commission’s own calculation of what is consistent with limiting warming to 1.5°C, as required by the Paris Agreement;
• the accounting methods are inconsistent with the Climate Change Response Act, and make the budgets look more ambitious than they really are;
• the calculations for the country’s nationally determined contribution under the Paris Agreement make a logical and mathematical error - and understate the required reductions in greenhouse gases;
• the Commission is relying on the uncertain prospect of Aotearoa New Zealand being able to pay other countries to reduce their emissions, instead of making domestic reductions at the level required to meet the Paris Agreement obligations.

The Climate Change Commission says it has received a copy of the proceedings and its board will meet on Tuesday, July 6, to discuss the issues.

NEW CEO FOR FIRST MORTGAGE TRUST
First Mortgage Managers, which manages First Mortgage Trust, has appointed Paul Bendall as its new CEO. Bendell, who joined First Mortgage Trust in August 2020 as general manager, will succeed Tony Kinzett as CEO in September. First Mortgage Trust has more than $1 billion of funds under management and says it has recently surpassed $1 billion in loans for the first time. Kinzett is staying on the Board.

RUNOFF FOR LSAP
ANZ says it seems likely the RBNZ will wind down its Large Scale Asset Purchase program quite deliberately from here, reducing it by -$20 mln per week until purchases cease during the last week of August/first week of September. That will give it some space before the OCR starts to rise on November 24 (just an guesstimate at this time).

UNEXPECTED DIP
The May core funding ratio for all banks slipped to 85.7%. Although this is miles higher that the regulatory minimum 75%, it is the lowest in almost five years. Which bank(s) caused the dip won't be known until the next Dashboard data is released, on August 25, 2021.

NEAR RECORD SURGE
In Australia, bank mortgage lending to investors hit a six year high in May, up a startling +13% from April, and up +90% above May 2019 (May 2020 was pandemic affected). This is its strongest rise in six years. Falling vacancy rates and improvements in their labour market (which generally leads to more demand for rental property) are both green-light signs for investors. Overall housing lending was up +4.9% in May from April, and up +97% from May 2019.

FAST CHANGE HARD TO HANDLE
Staying in Australia, the energy regulator reported that wholesale electricity prices fell below zero a record 3662 times last year as solar power generation surged, threatening the profitability of coal power plants. (see page 9) This situation also drove fast-tracked new rules to prevent wind and solar generators deciding to switch off to curb losses.

MORE TROUBLE FOR WESTPAC
Westpac in Australia says is taking court action against its former partner Forum Finance because it has discovered "a significant potential fraud" with a potential AU$200 million exposure by the bank. Westpac's institutional bank customers were referred to Forum Finance for equipment leasing. No customers suffered loss. It says the NSW Police, ASIC and APRA have been notified.

PRICE WATCH
Internationally, we got CPI data from South Korea and India today. The South Korean index was essentially unchanged in June but remains well above their central bank's 2% target at 2.4% pa. In India, price data was for May and it was up over +6% pa with the drivers being much more than lockdown-related.

GOLD FIRMER
Compared to this time yesterday, the gold price is up +US$7/oz to US$1777/oz in early Asian trading.

EQUITY MARKETS MARKING TIME
The S&P500 ended its Thursday session up +0.5%. The very large Tokyo equity market has risen in early trade to be up +0.3%. But both Hong Kong and Shanghai are down a sharp -1.1% in early trade there, not good form as the CPC celebrates its centenary. The ASX200 is up +0.3% in early afternoon trade, while the NZX50 Capital Index is flat in late trade.

SWAP & BONDS YIELDS SINK
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 at 1 and 2 years and down a sharp -5 bps at the long 10 yr end. The 90 day bank bill rate dipped -1 bp to 0.35%. The Australian Govt ten year benchmark rate is down -5 bps at just on 1.44%. The China Govt ten year bond is back up +2 bps at 3.12%. The New Zealand Govt ten year is down a sharp -8 bps at 1.71% and now below the earlier RBNZ fix of 1.72% (-5 bps). The US Govt ten year is unchanged at 1.47%.

NZ DOLLAR SOFT
The Kiwi dollar has been slipping slightly further, now at 69.6 USc. Against the Aussie we are unchanged at 93.3 AUc. Against the euro we are marginally softer too at 58.8 euro cents. That means the TWI-5 is little-changed at 72.5.

BITCOIN MUCH LOWER
The bitcoin price is now at US$32,840 and down another -5.9% from where we were at this time yesterday. Volatility in the past 24 hours has been moderate at +/- 2.7%.

This soil moisture chart is animated here.

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