A review of things you need to know before you go home on Thursday; RBNZ surprises market with gloomy assessment, Fonterra adds to uncertainty; concrete pour rises, swaps fall very sharply, NZD drops

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

MORTGAGE RATE CHANGES
No changes here.

TERM DEPOSIT RATE CHANGES
Nothing here either.

A GLOOMY OUTLOOK I
RBNZ Governor Adrian Orr open the gates to let the bears come out to play today with their MPS review. The central bank's perspective was unusually gloomy and is likely to compound falling business confidence.

A GLOOMY OUTLOOK II
And Orr wasn't to know that later in the day, Fonterra bears joined him, piling on the gloom. Fonterra called a trading halt, fueling speculation they are about to announce a poor financial result "below guidance".

POURING ON
Meanwhile in the real world, deliveries of ready-mixed concrete rose in the June quarter following a dip in the March quarter. The rise was enough to show a gain over the equivalent quarter a year ago, and it was noticeable that Auckland didn't achieve any year-on-year gain. But there were good rises in Wellington, up +12% on quake remediation work, while in Christchurch the retrenchment after their quake recovery projects start to wind down was -9.7% year-on-year. Still, Christchurch is still consuming +65% more concrete than before the 2010 earthquakes.

IT'S DRY OVER THERE
The NSW Government has declared the whole state in drought. This is more a declaration for the farming regions; Sydney water storage is currently at 66% of capacity, although usually they have more than 90% stored at this time of year. At least Sydney has an operating desalinisation plant to hold supply if things get worse in the City. It will go into full service when Sydney dam levels fall below 60%. But it won't aid the farming community which is in desperate times right now.

SUPER SENSITIVE
This is what happens when an all-powerful dictator has trouble controlling his subjects, taking no risks. 1984.

SWAP RATES DROP SHARPLY
Local swap rates have dived substantially lower across the whole curve today from the double effect of the RBNZ MPS and the Fonterra trading halt. The two year is down -10 bps, the five year is down -15 bps, and the ten year is down -11 bps. It's the largest single day move in any direction since March 2016. Meanwhile, international rates are on the move lower for other reasons too. The UST 10yr is weaker and now at 2.95%, down -2 bps from where it was this time yesterday and pushing their 2-10 curve lower. The Aussie Govt 10yr is at 2.65% (down -3 bps), the China Govt 10yr is at 3.54% going the other way and up +5 bps, while the NZ Govt 10 yr is at 2.69%, dropping a heavy -9 bps. The 90 day bank bill rate is up +1 bp at 1.91%; go figure.

BITCOIN DOWN
The bitcoin price is now at US$6,301, down -4.4% from where it was this time yesterday.

NZD DUMPED
The NZD slumped on the same news triggers. We are now at 66.7 USc, down more than -¾c. We are also lower on the cross rates and under 90 AUc for the first time in almost nine months at 89.9 AUc, and the euro at 57.5 euro cents. That leaves the TWI-5 up just under 70.2.

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USD 
NZD
End of day UTC
Source: CoinDesk

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17 Comments

'And Orr wasn't to know that later in the day, Fonterra bears joined him, piling on the gloom. Fonterra called a trading halt, fueling speculation they are about to announce a poor financial result "below guidance".'

It would surprise me if he didn't know that they were going to call a trading halt today, but maybe I'm being too cynical. They are after all the country's largest company and you would have thought that they would have had the Governor's ear.

Nobody should be told of an impending trading block , no matter their position.

Appreciated, maybe the exact detail of a halt is unlikely, but I would be surprised if the Reserve Bank weren't aware of anticipated 'trouble at the Fonterra mill'. It would be negligent of them not to be in close communication with such an important sector.

I thought the Governor did very well today, NZ desperately needs a weaker NZ dollar at this point but cannot achieve it through lowering the base rate, as that would risk further magnifying the imbalances in the economy. It's a bit of a tightrope really, no fault of Adrian's but he doesn't have a lot of policy option really as its a case of the devil or the deep blue Sea and for the time being words have to suffice as policy until the picture becomes clearer.

To all readers,
Please do click on the link "this is what happens" under the paragraph "Super sensitive"

Should we be surprised? He is nothing more than a dictator.

What did not happen today AGAIN

Overseas investment amendment bill not taken up.

After being with comittee in Parliment on 02 And 03 July should have been continued on next sitting - 07 July but was put last on agenda ...... Not on 08th July and Not even today.

If this is not delaying tactics what is it.

I have a feeling it won't be passed in July at all, lol

July 2021 is nearly 3 years away you just need to have some patience.

Just highlighting to ALL Labour supporters :)

Another promise that has been is symbolic and let down from what was promised to all Labour supporters is International student.Only change is no work visa for low level course in Auckland ONLY and for post graduate work visa for 3 years instead of 1 year.

National was right atleast they did not promise what they did not intent to do.

Lesson to all Left supporters.

National on not raising GST -> https://www.youtube.com/watch?v=E3-RYMwJiWA

There were discussions on legislations against forced marriages and dowry among Indian migrants in the Parliament in the past two weeks.
Of course the tens of Indian migrants who are affected by this very specific problem are to be prioritised over the hopes of hundreds of thousands of middle class Kiwis who do not have a fair shot at buying property in their own country!

Many here on this website does not know that comittees though a part of the process but can be misused by politicans with vested interest - Labour party in this case.

Richard 1965 is correct, it should be an eye opener for all Labour supporters but to be honest did not thought that Labour would be exposed so soon.

Sure you have a point but can you re-submit it in English.

Yes, Sydney has a desalination plant.

Trace the power and it's brown coal.

Putting out the fire with gasoline.

McDermott in afternoon interview picks up the paddle ,"we've been pushed nearer to that trigger point" of easing..

The rest of the world's currency markets have now woken up and NZ dollar is sliding against. pound, US dollar, Canadian loonie, Israel Shekel, Yuan, euro, Swiss Franc, Japanes Yen... AUD dollar.