A review of things you need to know before you sign off on Wednesday; global forces reset rates, local wallets close, migration touches new record, inflation expectations turn more realistic, swaps fall, NZD rises, & 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
BNZ raised some fixed rates, but only up to those already applying at their rivals.

TERM DEPOSIT/SAVINGS RATE CHANGES
None here today.

ONE BIG INFLUENTIAL OVERLAY
The main influence over the global economy is the same as over the New Zealand economy today: bond benchmarks have fallen sharply following the US CPI result that suggests the US Fed will probably not raise rates again. Inflation in the world's largest economy has proven to be transitory. NZ benchmark bond yields are falling in sympathy. At the same time the USD has fallen and the NZD is rising, which will help limit local imported inflation (while it lasts). Equity prices are up sharply.

WALLETS CLOSED
Stats NZ figures show that total card spending fell by -0.3% in October, while retail spending dropped by -0.7%; 'the softness in spending is notable as it comes as population growth is continuing to surge'

RECORD HIGH
The rate of migration-driven population growth has more than doubled compared to pre-Covid levels. Statistics NZ estimates that this country had a record net migration gain (long term arrivals minus long term departures) of 119,000 people over the 12 months to the end of September this year

ENCOURAGING RETURN
September brought a further recovery in inbound tourism, notably from China, which rose to more than 19,000 in the month. Overall we are back to more than 85% of pre-pandemic levels which is up from 82% in August. Most tourists are coming from Australia, which is usual, and these levels are almost back to 90% of 2019 levels. Tourists from China are still less than 70% of pre-pandemic levels but that is a huge jump from the 53% in August. All this increase will encourage the tourism sector because the base a year ago included a surge from the US following their women's football team.

WHAT THE PEOPLE THINK
In a survey taken for the RBNZ, those consumers surveyed said they felt inflation was running at 7.0% in which was down from 7.2% in the same survey in August. These perceptions are important because the RBNZ is battling to get consumers to think realistically, and expectations of high inflation can become self-fulfilling. But those same people thing inflation will fall to 5.0% in one year, to 3.0% in two years and 2.0% in five years. All this levels involve shifts lower from three months ago, so the RBNZ will take encouragement from that trend. But the same survey shows that more than half now think house prices will rise, up from 30% in September and only 4.5% in March. That is a fast shift. And fewer people now say they will have trouble making the mortgage payment, but those renting don't show the same improvement in making their rent payment. More here.

WESTPAC NZ SETS NET ZERO TARGETS
Westpac NZ has set emissions intensity targets for its dairy, sheep and beef lending portfolios, as part of its Net Zero Banking Alliance commitment. They are a 10% reduction in financed emissions intensity (tCO2-e/t of Fat and Protein Correct Milk) for the dairy sector by 2030, from a 2021 baseline. And a 9% reduction in financed emissions intensity (tCO2-e/t of fresh weight/carcass weight) for sheep and beef by 2030, from a 2021 baseline. The bank says the targets aim for improvements in the emissions intensity of the bank’s lending, rather than outright reductions. (See more on the Net Zero Banking Alliance here).

AUSSIE WORKERS SLIP BEHIND
In Australia, wages rose +4.0% in September from a year ago, the highest rate since 2008. A large part of this was because their Fair Work Commission annual wage review decision of +5.75%, rises in their aged care sector affecting about ¼ mln workers, and ratchet clauses in many wage and salary contracts. There were some chunky public wage settlements as well. In the same year, Australia had 5.4% CPI inflation. (For reference, NZ CPI was 5.6% in the same period and the QES reported weekly gross wages up +5.5% - so holding their own in New Zealand).

THE SOURCE OF THE OPTUS MELTDOWN - ITS PARENT
Optus has confirmed the software upgrade that triggered its nationwide meltdown last week was from the network of its parent company, Singtel.

JAPAN STUMBLES
In Japan, their economy shrank -0.5% in Q3-2023 from Q2, worse than market forecasts of a -0.1% decline and after a +1.1% growth in Q2, a flash figure showed. This was the first quarterly GDP contraction since Q4-2022. It was sluggish private consumption that caused the pullback and that was a surprise because intervening data didn't signal such a drop.

VOTED IN BY REPUBLICANS, SAVED BY DEMOCRATS
In the US Congress, the Republicans installed a new leader in the House of Representatives and his first big test was shepherding a budget funding bill through that body. He succeeded, but only with overwhelming Democrat support. 93 Republicans voted against his measure! Don't bother learning his name (Mike Johnson), he may not be around long. But the net impact of today's vote is that shutdown pressures have evaporated - till the next time, probably in early February 2024.

SWAPS FALL
Wholesale swap rates have probably slipped today as part of the global reset. The real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is up +1 bp at 5.63% and now just +13 bps above the OCR. The Australian 10 year bond yield is down -13 bps from yesterday to 4.55%. The China 10 year bond rate is up +1 bp at 2.68%. And the NZ Government 10 year bond rate is down -14 bps at 5.12% from yesterday, and the earlier RBNZ fixing was at 5.18% which was also up +1 bp today. The UST 10 year yield is now at 4.45% and a -20 bps dive from this time yesterday. The UST 2yr is now at 4.86% so that key curve inversion is little-changed at -41 bps.

EQUITIES RACE HIGHER
The NZX50 is up +1.3% in late trade today. The ASX200 is up +1.6% in afternoon trade. Tokyo has opened up +2.0%. Hong Kong has opened +2.4% higher and Shanghai has opened up +0.7%. Singapore has also opened +0.7% higher. The S&P500 ended up +1.9% in Tuesday trade, energised by the US CPI result and that vide has extended world-wide.

GOLD UP
In early Asian trade, gold is now at US$1961/oz and up +US$16 from where we were this time yesterday. Earlier in New York it was at US$1963/oz and earlier still in London at US$1947/oz.

NZD JUMPS
The Kiwi dollar has moved up by more than +1c today, now just on 60 USc. But against the Aussie we are +30 bps higher at 92.5 AUc. Against the euro we are also a little firmer at 55.2 euro cents. That means the TWI-5 is up +70 bps at 69.3.

BITCOIN FALLS AGAIN
The bitcoin price is weaker again today, now at US$35,511 and down another -2.4% from where we were this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.5%.

This soil moisture chart is animated here.

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