A review of things you need to know before you go home on Thursday; no rate changes, food prices stable, MPB on lifestyle blocks now, investors confident, swaps slip, NZD holds lower

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

MORTGAGE RATE CHANGES
No changes today.

TERM DEPOSIT RATE CHANGES
None here either.

FOOD PRICES STABLE
Higher prices for takeaway foods and restaurant meals pushed the food price index up +0.2% in the year to June 2018. Prices for restaurant meals and ready-to-eat food increased +3.0%. Lunch meals (up +3.8%) led the way, along with a wide range of takeaway food options. Food is currently not putting pressure on our CPI. Our own grocery price monitoring confirms that.

SCHEDULED
For those readers who follow house prices, the REINZ has advised that their June data will be released on Tuesday, July 17, at about 9am.

NEW 10 YEAR
Today’s tender for NZGB 2029s for $250 mln offered (the first time this duration has been offered) brought a weighted average yield of 2.86% and a modest coverage ratio of 1.85x. This is a good reference for the NZGB 10yr yield.

GETTING AWAY
Mycoplasma bovis is being identified on lifestyle blocks now (Canterbury, Southland, Taranaki). These owners are quite unprepared and under-resourced for appropriate bio-security control. They are a very weak link in the system of control of the disease.

CONFIDENT BUT NOT KNOWLEGEABLE
An FMA survey
of investors shows that most investors have confidence in our financial markets, but it is not unanimous. 66% of investors said they were confident in them, slightly down from 69% a year earlier. The score remains higher than the surveys carried out from 2013-2016. Confidence was highest among investors who have a managed fund or shares at 82% and 77% respectively. The data also shows that investors, particularly KiwiSaver members, have a long way to go to be regarded as knowledgeable about their investments.

DEFIANT
Wall Street closed down sharply today in reaction to the trade war over-reaction by the US Administration. The S&P500 was down -0.7%, the Dow down -0.9%. Hong Kong was down -1.3% yesterday and Shanghai down -1.8%. Early trading today has all these key exchanges trading higher with the Shanghai up +1.6% in their mid-morning session.

IRRIGATION ESSENTIAL
New data out in Australia shows that a quarter of all their agricutural production relies on irrigation. For dairy, the proportion is 44%. For sheep it is less than 4%. For beef it is 5.6%. All up, Aussie agricultural production was worth AU$60 bln and that is only 4% of their economy. (NZ equivalent data is 6% of GDP.)

GOING UP
And staying in Australia, AMP is the latest lender there to lift mortgage rates, noting it can no longer wear the impact of soaring funding costs.

SWAP RATES SLIP
Local swap rates have slipped back -1 bp for some key terms today. The UST 10yr is now at 2.86%, up +2 bps. The Aussie Govt 10yr is at 2.63, up +1 bp, the China Govt 10yr is at 3.56% (unchanged), and the NZ Govt 10 yr is at 2.90%, up +4 bps, although this is likely to revert to the 2029 soon (as per above). The 90 day bank bill rate is unchanged at 1.95%.

BITCOIN HOLDING
The bitcoin price is now at US$6,345 which is little changed from this time yesterday.

NZD HOLDS LOWER
The NZD fell by more than -½c last night after the Trump tariff extensions but has stabilised at the lower level today and is now at 67.5 USc. On the cross rates we are at 91.6 AUc and 57.9 euro cents. That has the TWI-5 at 71 even.

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