A review of things you need to know before you go home Thursday; no rate changes, Akl house prices drop, car sales fall, job ads slip, commodity prices slip, RBNZ hold its line, swap rates fall, NZD lower

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

MORTGAGE RATE CHANGES
No changes today.

DEPOSIT RATE CHANGES
None here either.

CONSISTENT DECLINE
Major Auckland realtor Barfoot & Thompson reported their median price is now down $90,000 from its peak. B&T's median Auckland price is now lower than 12 months ago, and they reported their weakest July sales volumes since 2010. 'Sellers need to be willing to set themselves realistic expectations & listen to what the market is telling them', they say. In fact, median prices have fallen in five of the past six months. We can't find any previous six month period going back to 2007 where this has been true before.

SURPRISE DECLINE
Car sales in July were much lower than in previous months, reversing the almost continuous gains we have seen since January 2013 (with one exception in January 2016). The July sales of 7,605 is actually lower than for July 2016 when they were 7,702 in the month. But sales of commercial vehicles did post a year-on-year rise. (The last time commercial sales fell year-on-year was in 2015).

JOB ADS SIGNAL CHANGE
"ANZ job ads fell -1.0% m/m in July (seasonally adjusted) off a record high. Looking through the monthly noise, job ads growth has slowed to just +0.5% q/q. That moderation is reflected in annual job growth easing from a peak of +19.6% in January to +12.2% in July (3-month average). That’s a turning point. Is labour demand coming off the boil or are workers simply becoming too difficult to find, with firms are giving up on advertising and looking at alternative means? With skilled staff the biggest problem holding back firms (according to ANZ's Small Business Monitor), it’s looking more like the latter. There is not a pool of suitable labour for most firms despite the unemployment rate being 4.8%. That’s a classic late-cycle challenge and signals pressure for wage growth to rise."

A BREATHER
"The ANZ Commodity Price Index slipped -0.8% m/m in July, but international prices remain +21% higher than July last year. Movements at the sub-category level were mixed. Eight of the sub-components rose, six fell and the remaining three were unchanged. The strong NZD/USD weighed further with local returns down -2.1% m/m, but they are still +18% higher than 12 months’ prior."

GROWING SOME
The RBNZ has doubled down on proposals to shake-up bank capital requirements. Grant Spencer has reinforced the RBNZ's tough messages for the big four banks in its capital adequacy review, and says their dashboard disclosure will go live early in 2018.

SOLVING A KIWI PROBLEM I
Kiwi Wealth has launched a new 'responsible investment' process for their global share index allocations. It is designed to get over problems with low-cost “passive” index trackers such as Exchange Traded Funds (ETFs) to remove indirect investment exposure in controversial weapons, tobacco and whaling industries. But it goes a step further by embedding responsible investment at the security selection level. Initially Kiwi Wealth will also implement in full the New Zealand Super Fund’s current exclusion list and will also exclude additional companies with poor track records in environmental, social and governance (ESG) indicators.

SOLVING A KIWI PROBLEM II
Local councils can now apply for co-funding from the new $100 mln Tourism Infrastructure Fund. The 2017 Budget measure provides for four years of funding for the development of visitor-related public infrastructure such as carparks, freedom camping facilities and sewerage and water works.

SOLVING A KIWI PROBLEM III
A month after the Waterview Tunnel opened to traffic, around 60,000 vehicles are using it each day, with more than 2 mln vehicles now having traveled through the twin tunnels between the suburbs of Owairaka and Waterview. I have used it a few times and give it a big tick. (In the same period about 140,000 cycle trips were made in all of Auckland vs 2 mln on one 3km road.)

UNINTENDED CONSEQUENCE?
Lending curbs to buy apartments in both Sydney and Melbourne are having an odd impact. Many projects are now on hold as demand falls, but in fact supply has fallen even faster. And that is apparently pushing up prices.

READ & WEEP
And the new increases in Stamp Duty in most Aussie states is having a big impact. The HIA reports that buyers face a AU$29,105 bill to buy in Sydney, AU$26,870 in Melbourne, and AU$12,145 in Brisbane, all on top of the buying price. They say that is making buyers borrow more to complete their purchase. And there seems to be little slowdown in house price rises in these Aussie big centres. The situation is much worse for foreign buyers; in Sydney, the HIA says these buyers would have to pay AU$93,865 for the same house (plus the buy price). It could well be that stamp duty just pushes prices up, rather than restraining demand.

AUSSIE SURPRISE I
In a bit of a surprise, online retail growth evaporated in June in Australia. This has been one segment that was showing double digit gains. It is still up +7.6% year-on-year. But the turn down in June is pretty unique.

AUSSIE SURPRISE II
The June trade balance in Australia was expected to be a +AU$1.8 bln surplus. But it came in at an +AU$856 mln surplus, missing expectations by almost AU$1 bln. That is a big miss, especially as it was an +AU$2 bln surplus in May.

WHOLESALE RATES FALL
Local rates curve is lower and flatter with the 2 year rate falling -2 bps, the five year down -3 bps, and the 10 year rate falling -4 bps. The 90 day bank bill rate is down -1 bps to 1.95%.

NZ DOLLAR LOWER
The NZD is down again, falling to 74 USc today. On the cross rates we are also lower at 93.3 AUc and at 62.5 euro cents. The TWI-5 is at 76.4. Despite the 'fork', the bitcoin price is still at US$2,740. Read this.

You can now see an animation of this chart. Click on it, or click here.