A review of things you need to know before you sign off on Friday; real economy signals get tougher, butter at ATH, election accusations and bribery resolutions, swaps stable, NZD stable, & more

Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).

MORTGAGE/LOAN RATE CHANGES
SBS Bank has cut its 18 month fixed rate by -10 bps to 6.89%, its two year rate by -20 bps to 6.49%, and ended its unique three year 5.99% rate, raising it to 6.35%. That new three year rate is still market-leading but it now shares that with Heartland Bank.

TERM DEPOSIT/SAVINGS RATE CHANGES
SBS Bank has also added +15 bps to its six month TD rate taking it to 6.10%. And it has chopped its outstanding 9 month 6.40% rate back to 6.15%. But both remain 'good' rates compared to the main banks.

COPING BY NOT INVESTING
In the March quarter, wholesale trade shrank -1.1% from a year ago, the third consecutive quarter of shrinkage. The sector hardest hit is machinery & equipment (-10.3%). The sector still growing faster than inflation is the grocery sector (+5.9%).

ALSO TOUGH FOR MAKERS OF THINGS
It was also tough in the manufacturing sector where sales were down -2.2% in inflation-adjusted terms in Q1-2024 from Q1-2023. Manufacturers are coping by running down inventories (down -4.2%).

CONTROLLED SHRINKAGE
But managers in both sectors are being 'proactive' and making adjustments as their revenues shrink. The StatsNZ "business financial data" shows that profitability isn't being hurt as hard as the activity-sag, in fact it is being maintained. It is not easy to do that, and takes resolute skill. Responsive managers in downturns are ideally placed to benefit when the upturn comes. These sorts on businesses are surviving with enough resources to be ready on the upswing.

NATIONAL MP REFERRED TO POLICE
The Electoral Commission says it has referred National's New Plymouth MP David MacLeod to Police over the failure to report $178,394 of candidate donations. McLeod’s original candidate return for the 2023 General Election was filed on 13 February this year, with the total donations disclosed being $29,268 from seven donors. However, on May 20, the Commission received an amended return showing $207,662 from 24 donors. The Commission says it won't be commenting further because the issue's now with the Police.

SPENDING GROWTH FAR ABOVE INFLATION
We are still adding the gritty budget spending detail to our easy-lookup resources. We now have both the Welfare (or its euphemistic label "Social Development") (+6.1%) and Health budget (+6.3%) 'votes' covered, and the rest will be released next week. Looking at where the money actually goes can be an eye-opener. Those who benefit want 'more' of course; those who pay into the system aren't always so sure.

UNABLE TO COVER INFLATION
The large Worldline (ex-Paymark) payment network said spending through the Core Retail merchants on its system rose over May from April but the situation remains challenging overall for retailers with spending continuing to track below year-ago levels for most sectors. The year-on-year rise was less than +1%, so far less than inflation's effect.

BUTTER ATH
The news regarding some dairy products may be better than what we see via the GlobalDairyTrade auctions. The latest USDA review of "Oceania" butter prices has them now at US$7200/tonne. That is +5% higher than the last GDT auction price of US$6864. It is alos a new all-time high, eclipsing the last ATH in March 2022. And in NZD it is easily a new ATH, and +13% higher than that 2022 peak. The GDT platform is an important one, but it is far from a dominant part of the dairy trade marketplace. Our charts cover both the USDA published pricing, and the GDT.

WHINING
Federated Farmers are informally campaigning for a formal banking inquiry on the basis that banks charge 'farmers' higher risk premiums than average. The advocacy email releases from some regions are filling news inboxes. But it is just bluster. Their leaders know full well how the banking regulators apply risk requirements for capital (which directly affects loan rates). Riling up their membership on the issue may make good politics, but the facts that won't go away are that rural lending is risky, and bank depositors need to be protected from undue risks, especially when times get tough.

GUILTY OF BRIBERY
The SFO is noting that a roading subcontractor who admitted giving bribes in exchange for being awarded road maintenance work has today been sentenced to 12 months home detention, and will make a reparation payment of $300,000. They are the fourth person involved in the case to plead guilty and receive a sentence without going to trial.

CONFIRMED
The Australian Federal courts have confirmed the penalty imposed by AUSTRAC and SkyCity Entertainment of AU$73 mln for AML/CFT breaches we reports a few weeks ago. SKC will be pleased to have that issue behind it. That have many others to grapple with. SKC bounced back up +2% today in share market trading, although it remains more than -16% lower that where it started the year.

EYES ON THE RBI
The Reserve Bank of India (RBI) is having its second full monetary policy meeting today and many eyes will be on the rate signals they give when they report at about 4:30pm. This is a post-election meeting. Most analysts expect them to hold their policy rate at 6.5%. India's rapidly expanding economy is 'demanding' more attention and 'respect' in the global economy.

SWAP RATES HOLD
Wholesale swap rates are likely to be little-changed yet again today. Our chart below will record the final positions. The 90 day bank bill rate is down -1 bp at 5.62%, a level it has hovered around for almost 90 days. The Australian 10 year bond yield is up +3 bps from yesterday at 4.23%. The China 10 year bond rate is unchanged at 2.32%. The NZ Government 10 year bond rate is unchanged at 4.69% from this morning and the earlier RBNZ fix was at 4.69% and up +1 bp from yesterday. The UST 10yr yield is little-changed from yesterday, up +1 bp at 4.30%. Their 2yr is now at 4.74%, so the curve is little-changed at -46 bps inverted.

EQUITIES MIXED
The NZX50 is down -0.4% in late Friday trade. But if that holds the NZX50 will end up +3.2% for the week, a very good result for them. The ASX200 is up +0.4% in afternoon trade. Tokyo has opened its Friday trade down a mere -0.1% but Hong Kong is down -0.5% and Shanghai is down -0.3% at its open, while Singapore is up +0.3%. Earlier, Wall Street closed with the S&P500 essentially unchanged on the day.

OIL UP +US$1
The oil price is +US$1 higher from this time yesterday, now just on US$75.50/bbl in the US, and up a bit less at just under US$79.50/bbl for the international Brent price.

GOLD HOLDS HIGH
In early Asian trade, gold is little-changed from this time yesterday, still just over a high US$2370/oz.

NZD HOLDS
The Kiwi dollar is little-changed this time yesterday, still at 62 USc although its highest since mid-January. Against the Aussie we are down marginally at just over 92.9 AUc. Against the euro we are also down marginally at 56.9 euro cents. This all means the TWI-5 is still just on 71.2.

BITCOIN LITTLE-CHANGED
The bitcoin price is little-changed again today, now at US$70,828 and down -0.5% this time yesterday. Volatility of the past 24 hours has been modest at just +/- 1.1%.

This soil moisture chart is animated here.

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