A review of things you need to know before you go home on Wednesday; big mortgage rate hikes, some TD rises, BIG RBNZ signals, migration dead in the water, virus spreads in Australia, swaps jump, NZD rises, & more

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

MORTGAGE RATE CHANGES
ASB has kicked off a round of mortgage rate hikes, labeling them as "adjustments ... as the economic outlook improves". More here.

TERM DEPOSIT RATE CHANGES
Both Kiwibank and ASB raised some term deposit rates today. More here. WBS also raised rates.

GET READY FOR OCR HIKES
The RBNZ shed their dovish feathers today, replacing them with hawkish ones (although as Kiwibank has suggested, some may be pigeon feathers). It has set the scene to raise the OCR relatively soon by announcing the end of some major stimulus programs. Market pricing now suggests more than a 50% chance of a hike as early as August 18. But it is wise to be careful with these financial market signals. However, some bank economists (ASB, ANZ) are also lining up behind an expectation of an August OCR rate hike.

BECAUSE ...
One thing to note about why the RBNZ has gone hawkish, is that they have significantly upgraded their assessment of economic activity, in keeping with the recent flow of data (" ... in the absence of further economic shocks.")

A TRICKLE OF KIWIS ONLY
Returning NZ citizens accounted for 92% of all immigrants in May. The net migration gain of just +5743 in year to May, is down from 87,473 in the previous 12 months.

NOTICEABLY HIGHER BUT STILL VERY LOW
But short term travel activity across the Tasman perked up in May with the re-opening of two-way quarantine-free travel. There were 91,300 arrivals and 98,200 departures in the month for a total of 189,500 border crossings but still well down on May 2019 which had almost 1 million.

RISKIER THAN FIRST THOUGHT
The IRD has closed its central Wellington office and sent staff home after a new seismic assessment put the Asteron building at a lower level than previously assessed. They occupy seven floors of the Asteron building on Featherston St, with up to 1,000 staff working from the building. Staff will work from home until remediation to bring the building up to standard is in place. The Asteron Centre is Wellington’s largest single office building at 48,000m². This 17 storey "premium grade commercial building" was built in 2010, designed by Warren & Mahoney.

AUSSIE VIRUS UPDATES
There were 97 locally acquired cases in NSW yesterday and another 20 in ICU over a very wide age range. Their lockdown has been extended another two weeks until July 30. And sadly, there is a new outbreak in Melbourne now, spread at an MCG AFL game. You probably should assume another Melbourne lockdown will be announced soon. The Trans Tasman bubble is toast for some time now, you would think. 26% of Aussies now think 'normal' is more than a year away.

SINGAPORE STUMBLE
Singapore said its economy contracted at a -2.0% annual rate in Q2-2021 after it rose +3.1% in Q1-2021. (Their year-on-year only looks 'good' because of the base effect.)

GOLD FIRMS FURTHER
Compared to where we were this time yesterday, the gold price is up +US$2/oz to US$1812/oz in early Asian trading.

EQUITIES MOSTLY WEAKER
Earlier today the S&P500 ended down -0.4% on Wall Street and giving up all their Monday gains. In Tokyo today, their equity market is down -0.2% in early trade after yesterday's rise. Hong Kong has opened down -0.6%. Shanghai is down -0.9% in their early trade. The ASX200 is up +0.2% in early afternoon trade, and the NZX50 Capital Index is down -0.2% in late trade.

SWAP & BONDS RATES JUMP
We don't have today's closing swap rates yet. There are significant ongoing changes with rates much higher. At this time, the two year is up +11 bps, the five year is up +10 bps. The 90 day bank bill rate was unchanged at 0.33% at 1pm but is now up to 0.40% and +7 bps. The Australian Govt ten year benchmark rate is up +2 bps at just on 1.36%. The China Govt ten year bond is down another -2 bps at 2.96%. The New Zealand Govt ten year is up a sharp +11 bps so far at 1.64% and still below the earlier RBNZ fix of 1.59% (up +4 bps). The US Govt ten year is up +3 bps from this time yesterday at 1.40%.

NZ DOLLAR FIRMER
Following the RBNZ OCR review, the Kiwi dollar has climbed sharply today, up to just on 70.2 USc. Prior to the announcement it had fallen to 69.4 USC so from there it is a big move. Against the Aussie we are up nearly +½c to 93.9 AUc. Against the euro we are up at 59.4 euro cents. So the TWI-5 is much firmer compared to where we were this time yesterday at just under 73.

BITCOIN SAGS FURTHER
The bitcoin price is now at US$32,508 and down -1.9% from where we were at this time yesterday. Volatility in the past 24 hours has been low at +/- 1.8%.

This soil moisture chart is animated here.

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