A review of things you need to know before you go home Friday; Westpac changes TD rates, factory expansion continues, what should qualify as bank capital?, wool in doldrums again, swaps rise, NZD high but stable

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

MORTGAGE RATE CHANGES
There are no changes to report today.

DEPOSIT RATE CHANGES
Westpac has trimmed -5 bps from their 3 month rate, and added +15 bps to their 4 month rate, taking that to 3.15%.

HOLDING ON TO GAINS
New Zealand’s Performance of Manufacturing Index has largely maintained its solid momentum of recent months with the June data out today. While it was always going to struggle to match its 58.2 level of May, at 56.2 in June the PMI was still nicely above average. New orders (58.7) continue to push forward with healthy expansion, followed by production (58.0). However, one noticeable dip was for employment (49.5), which went into minor contraction for the first time since November 2016. NZ's PMI is now tied in to the global measures produced by Markit, and our data is all in the upper ranges compared with most major economies.

WHAT SHOULD QUALIFY AS BANK CAPITAL?
The RBNZ is seeking feedback on what it should allow banks to use as capital. It has some concerns about the types of hybrid instruments currently being used and want to tighten up on the definitions on what qualifies a regulatory capital. "Given the dominance of parent entities as Tier 1 contingent debt issued by the big four banks, contingent debt appears to have been used as a substitute for ordinary shares," they say. "The loss absorbing quality of ordinary shares is far greater than that provided by contingent debt, thus the quality of capital in the regime has arguably been harmed by as a result of accepting contingent debt as Tier 1 capital." You have until Friday, September 8 to tell them what you think.

GRIM READING
The latest South Island wool auction results continues the grim prospects for this industry, especially for the majority coarse (carpet) wools. Just look at this chart. This latest auction did see a higher clearance rate of 77% but that may just be because farmers are throwing in the towel on the product. Some won't recover production costs; others won't recover marginal costs. The much-vaunted Campaign for Wool is having no impact at all. Maybe it can't get traction because it uses an aged foreign fuddy as a patron. How that can help in the markets needed is hard to fathom.

STILL TOP DOG, JUST
We like going to Australia. In the past year, they counted 1.3 mln of us going through their airports - which if each of us visited just once is more than a quarter of the country. Obviously it is not nearly that high - so that means some of us must regard the hop over the ditch as just a commute. Our visits are up just +2.8% over the previous year, so there is little growth. Having said that, we are still the largest number of visitors showing up their of any country. Our numbers are still +9% more than visitors from China, who are their second largest group. We may not hold on to the top spot for long however as the number of visitors from China are growing at a +10% pa rate. (Kiwis aren't staying, however. The number of permanent arrivals from here has slowed to a trickle.)

WHOLESALE RATES TURN UP
Wholesale swap rates are up slightly today, ending a string of declines for most of this week. The 2 year is up +1 bp, the five year up +2 bps and the ten year is up +3 bps. However, the 90 day bank bill rate is down today by -2 bps at 1.96%.

NZ DOLLAR STABLE
The Kiwi dollar has risen in the past 24 hours to 73.2 USc although all of that move came last night. It has not changed in local trading. On the cross rates we unchanged as well, trading now at 94.6 AUc and at 64.2 euro cents. That puts the TWI-5 at 77. Bitcoin is has yawed lower today, down -4.1% from this time yesterday to US$2,333. That is a US$100 drop.

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