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.
10,000 NEW DWELLINGS
The huge economic news today is that the Housing Minister announced plans to build 10,000 homes in Mangere – including 3500 new KiwiBuild homes, 3000 new state homes and 3500 new ‘market homes’. That is a project that is worth at least $6.4 bln. The timeline is from 2018 to 2033. This project is now listed in our tally of major Auckland projects and pushes up the tally totals above $60 bln on ongoing or future work. The Mangere project involves replacing 2700 existing properties described as ‘worn out’. As with the Greys Avenue project (replacing 80 dwellings), it is not clear what where the displaced residents go in the meantime, or where the additional workforce for all these projects will be housed during construction.
The FMA has revealed more about its investigation into insurer CBL. It says it has concerns about the insurer’s directors and the disclosures made when it first listed on the NZX. It is also investigating CBL’s auditor, Deloitte and their reports.
FACTORY WARNING SIGNS
New Zealand’s Performance of Manufacturing Index (PMI) slowed further in June. In fact, at an index level of 52.8 s.a. that is the second lowest reading since May 2015. On an actual basis (not seasonally adjusted), the PMI of 51.2 is barely expansionary. The separate production, employment, and inventory sub-categories are all contracting. It is the employment contraction that will worry any policy makers who care to look.
For readers who are convinced they know the economic future, you may wish to test your guesses with a recent OECD “Long View” study. That takes estimates out to 2060 in some detail for the world’s major economies. Essentially they see growth rates shifting lower as both China and India complete their transitions as “emerging markets”.
Other than for secured housing purchases, most lending in Australia is either not growing, or declining. That’s on a year-to-May basis comparing 2018 with 2017. Lending for housing is up only +4.5% on that basis with data for the month of May 2018 itself only up +2.5%.
And staying in Australia, NAB economists have downgraded their property price forecasts and say sentiment toward property has dropped to a two-year low. The move comes three weeks after rival bank ANZ cut its own property price forecasts.
SWAP RATES SLIP AGAIN
Local swap rates are down another -1 or -2 bps across the board. The UST 10yr is unchanged at 2.86%. The Aussie Govt 10yr is at 2.64, up +1 bp, the China Govt 10yr is at 3.54% (down -2 bps), and the NZ Govt 10 yr is at 2.88%, also down -2 bps. The 90 day bank bill rate is down -1 bp again at 1.94%.
The bitcoin price is now at US$6,237 which is -1.7% lower than this time yesterday.
NZD HOLDS MARGINALLY FIRMER
The NZD is marginally firmer than at this time yesterday and is at 67.8 USc. On the cross rates we are little changed at 91.5 AUc and 58.1 euro cents. That has the TWI-5 up at 71.3.
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