Here are the key things you need to know before you leave work today.
MORTGAGE RATE CHANGES
No changes today. Update: ANZ has updated its one year fixed rate by +5 bps to 2.55%, its two year fixed rate by +5 bps to 2.95%. And it reduced its three year rate by -9 bps to 3.15%.
TERM DEPOSIT RATE CHANGES
Kiwibank raised its nine month one year offer to 1.25%.
BIGGEST WINNER
Barfoot & Thompson's July sales reach a six year high with stock levels hitting a new low leaving buyers with little to choose from
BIGGEST LOSER
Air New Zealand now expects to lose up to $530 mln in the 2022 year, on top of about $450 mln in the financial year just gone - and it will need to tap more into the Govt's standby loan facility.
HOT LABOUR MARKET ► HIGHER OCR SOONER
Statistics New Zealand says unemployment dropped in the June quarter to 4.0% from 4.6% in March, 'under utilisation' also dropped sharply, seemingly pointing the way for Reserve Bank interest rate increases - maybe as early as next week. And some bank economists are saying the OCR could go from its 0.25% to a full 1.00% by the end of 2021.
PEAKED?
The ANZ World Commodity Price Index has stayed near its record level, easing just a minor -1.4% in July. Dairy continued to lose ground and they also recorded lower prices for logs this month. In NZD there was even less of a change from its record high.
SEEKING INVESTOR INTEREST
Westpac is seeking investor interest in a $350 mln parcel of mortgages originated by Avanti Finance in an RMBS transaction. About 94% of these mortgages will support investment grade rating.
WOBBLY
Dairy prices at the overnight auction fell -1.0% in USD terms, and earlier today we noted that in NZD terms they were down -2.3% from the prior auction, creating downside risk for the farmgate payout forecasts. But by the end of today, that decline in ZD has jumped to -3.2% adding to those risks. WMP is the weakest commodity, and Fonterra is reducing its offerings at future events, reinforcing the weak outlooks. Westpac has now cut its 2021/22 payout forecast by -25c to $7.75/kgMS.
WEAK RECENTLY, ROLLING BACK YEAR-ON-YEAR GAINS
Last week, the eight companies in the NZX50 energy sector fell more than the overall market, down -1.2%. And they are overweight on a year-on-year basis too rising +8.7% vs the overall market +7.6%. Just last week Vector shone (VCT, #30), rising +5.4%, but Mercury (MCY, #11) was down -3.1% and Contact (CEN, #7) down -2.5%. Overall, this 'energy' sector makes up 19.1% of the overall NZX50 capitalisation and a slight upweighting in a year from 18.7%.
NOT AS TOUGH AS FIRST INDICATED
In something of a surprise, the private Caixin services PMI for China reported a strong bounce for July, better than the official version.
PRESSURE IN NSW REMAINS INTENSE, EXTENDS TO QLD
There were 233 new community cases in NSW today with another 130 not assigned to known clusters, so still going backwards there. Victoria is reporting just zero new cases. Queensland is reporting 19 new cases so starting to grow there. Brisbane's snap lockdown has been extended. There were two new case in New Zealand at the border, but still none in the community.
GOLD MOVES FURTHER UP
Compared to where we were this time yesterday, the gold price is up +US$2/oz at US$1815/oz in early Asian trading.
EQUITIES TURN POSITIVE
The S&P500 kept on rising in today's Wall Street session, ending up +0.8%. Tokyo has opened down -0.1%, but Hong Kong has opened up a strong +1.3% and Shanghai has opened up +0.4% all in very early trading. The ASX200 is up +0.2% in afternoon trade. And the NZX50 Capital Index which is up +0.6% again in late trade today and in a further rising trend.
SWAP & BONDS RATES JUMP
We don't have today's closing swap rates yet and if there are significant ongoing changes we will note them here. They are probably sharply higher with the one year up +14 bps and the 2 year up +13 bps. The 90 day bank bill rate is up +5 bps at 0.55%. The Australian Govt ten year benchmark rate is up +1 bps at 1.16%. The China Govt ten year bond is also up +1 bp at 2.85%. The New Zealand Govt ten year however is up +8 bps at 1.62% and pushing on well above the earlier RBNZ fix of 1.58% (+7 bps). The US Govt ten year is now at 1.18% and down -1 bp today.
NZ DOLLAR JUMPS IN SYMPATHY
The Kiwi dollar has been firmer as well so far today and now at 70.7 USc following the labour market data and OCR rise expectations. Against the Aussie we are higher at 95.4 AUc. Against the euro we are up sharply at 59.5 euro cents. The TWI-5 is up to 73.4 and a +60 bps rise.
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BITCOIN SLIPS YET AGAIN
The bitcoin price is now at US$38,070 and another down another -2.2% from this time yesterday. Volatility in the past 24 hours has been low at +/- 1.7%.
This soil moisture chart is animated here.
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