A review of things you need to know before you go home Wednesday; no rate changes, BOP underwhelms, good net debt gains, food price rises stir, house price gains slip, Three Kings project gets tick, swaps and NZD stable

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

MORTGAGE RATE CHANGES
Nothing to report today, again.

DEPOSIT RATE CHANGES
All quiet on this front as well.

WRONG DIRECTION
New Zealand reported a narrower-than-expected current account surplus in the first quarter while the annual deficit widened on the back of rising imports. Markets were expecting a +$1 bln surplus in the quarter, but result was only +$244 mln. That widening is faster than Treasury expected. The current account balance records the value of New Zealand’s transactions with the rest of the world in goods, services, and income. When we have a current account deficit, it implies foreigners earn more from New Zealand than we earn from overseas. However, that has been the situation for decades, and while it is chronic, it is not getting worse. In relation to GDP, the deficit is running at -3.1%, the same level it was in the same period a year ago, the same level five years ago, but less than half the -6.7% of ten years ago.

RIGHT DIRECTION
Our net external debt has now fallen to -54.7% of GDP. This was one of the many data points released with the current account data. What is special about this is that -54.7% is the lowest this ration has been since - well, ever. On the current basis, the data goes back to the beginning of 2000 and back then it was -68.7%. So we have made steady progress in the past 17 years, although we shouldn't forget this ratio ballooned out to -83.7% during the GFC. You should also note this is 'all external debt', and not just public debt. Another key aspect is that it is 'net' - that is net of what we owe less what foreigners owe us. At -54.7% it is probably much lower than many people realise.

STIRRING
Today, May food price data was released and that revealed a sharp rise, which in turn raises further questions about the Reserve Bank's benign inflation forecasts. Food prices are up +3.1% pa.

MOMENTUM EXHAUSTED
House price data from the REINZ today revealed lumpy results, with rises in 10 regions and declines in six, but flat overall. However, the May sales volume of 7,354 transactions was -19% below the same month a year ago. Reinforcing this is separate data on listings from Trade Me which shows asking prices falling, especially in Auckland and Christchurch.

LOWER DEMAND
There was another LGFA bond tender today for $190 mln but demand was weaker with the coverage ratio under 2x. The weighted average yield was 3.56%.

A DEAL, SO MORE HOUSES COMING
Fletcher Residential has got an agreement to proceed with their inner city Three Kings housing development. That will add another 1500 homes, on top of the 99 being currently constructed in the adjacent Special Housing Area. The $1.2 bln investment will provide hundreds of jobs and help maintain the momentum of Auckland’s largest-ever building boom. At that price, it suggests the average price of these houses will be $800,000. (If half of these houses are more than that, and half less, then the half less will be seen in the Auckland market by many buyers as 'less unaffordable'.

INSIDER SENTENCED
The insider trading case brought by the FMA regarding a manager at EROAD has seen the offender sentenced to six months home detention.

WHOLESALE RATES UNCHANGED
There are no changes again today. Even the 90 day bank bill rate is unchanged at 1.93%.

NZ DOLLAR REMAINS STABLE
Despite the slimmer current account result, NZD is unchanged at 72.2 USc. On the cross rates, against the Aussie we are up a little to 95.8 AUc, and we are at 64.4 euro cents. The TWI-5 is stable at 76.4. And bitcoin is now at US$2,789, which is +3.5% above the level it was at this time yesterday.

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