A review of things you need to know before you go home on Tuesday; higher TD offers, insurers hit, business loan demand falls, yields turn up, eyes on inflation expectations, swaps turn higher, NZD holds, & more

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

MORTGAGE RATE CHANGES
No changes to report today - so far at least.

TERM DEPOSIT RATE CHANGES
Kiwibank follows BNZ and Rabobank last week and raises term deposit rates. More here.

KIWIBANK OUTLINES PARTNERSHIP WITH ACI WORLDWIDE
Kiwibank says a strategic partnership with real-time digital payment software provider ACI Worldwide will see ACI provide and run Kiwibank’s payment hub, which is a software-as-a-service tool hosted in the Microsoft Azure cloud. Kiwibank says any service it requires is available on a secure cloud-based platform. The bank also says the ACI deal prepares and equips Kiwibank for when the NZ retail payment system is finally required to operate seven days a week, 365 days a year. Currently settlements between banks occur at regular intervals between 9am and midnight on business days only.

DOUBLE HIT
Suncorp New Zealand is the owner of these insurance brands: Vero, AA Insurance, Asteron Life, AA Life, AA Money. It has announced an after-tax profit of $84 mn for the six months to 31 December 2021. This was down -35% from the same period last year "due to adverse investment market impacts" and "increased frequency and severity of weather events". More frequent climate events are going to make it tough to be a general insurer - well, it will be tough to either insure for climate losses, or afford the premiums if you can. And insurers investments generally are at risk of lower valuations as bond yields rise. These New Zealand results were part of parent company Suncorp Group announcing a 6 month after-tax result of AU$388 mln, down -21%.

SHARPLY LOWER LOAN DEMAND
Equifax says business credit demand fell by -7.3% during the December 2021 quarter as lockdowns continued to impact business confidence. The decline in demand for business credit was driven predominantly by an almost -15% drop in demand for business loans reflecting the sectors most impacted by the pandemic such as hospitality, retail, and education.

GOING TO THE BOND INVESTOR WELL AGAIN I
Westpac says it is about to launch a new NZD, 5 year fixed rate medium term note issue. No details yet of the size or pricing. Typically bank funding campaigns like this allow "unlimited oversubscriptions". Westpac offers its term deposit customers 3.20% for five years fixed (but term deposits aren't bonds and don't reprice with yield - and they are limited to $5 mln each customer).

GOING TO THE BOND INVESTOR WELL AGAIN II
Investore Property (IPL, #37) said today that it, too, is considering an offer of 5 year senior secured fixed rate bonds (Bonds) to New Zealand institutional and retail investors. It currently has $342 mln in debt, up +23% in a year. As at September 2021 it had a Liabilities:Assets ratio of 32%, up from 28% as at March 2021.

TURNING HIGHER FASTER
The RBNZ has been publishing bank yields on mortgages and business loans monthly since January 2017. The rise from November to December 2021 was the highest ever for both, with fixed mortgage yields rising +7 bps in the month, and +11 bps for business lending. They also track call and term deposit yields, and they are rising too, up +9 bps, and also the fastest since January 2017. Apparently the turn higher isn't happening with rising bank margins.

KEEP AN EYE OUT FOR THIS
The RBNZ will be releasing its updated inflation expectations survey data on Friday, and financial markets are a little nervous about what it will show. Those risks are creeping in to wholesale rates now.

NZX50 REVIEW
Last week the NZX50 had a very good session, with its overall capitalisation up +3.7% for the week. But that just limited its longth retreat to -5.8% and its year-ago retreat to -6.4%. Last weeks gains were across the whole board, with Fisher & Payrel (FPH, #1) up +5.8% for the week and ending a string of down weeks. AirNZ (AIR, #33) rose more than +11% for the week. In fact only seven of the fifty listed equities in this index fell, and those were Argosy (ARG, #25), Fletcher Building (FBU, #9), Pushpay (PPH, #28), ANZ (ANZ, #41), Pacific Edge (PEB, #35) NZX (NZX, #40) and Serko (SKO, #44). The Energy sub-sector rose +6.0% last week, although they have a long way back from the year-on-year drop of -16%.

DOWN BUT TO BOUNCE BACK
In Australia, the widely watched NAB business confidence survey for January is out today. That shows business conditions deteriorated in January as Omicron caused infections to reach unprecedented levels, triggering consumer caution and staff shortages. Profitability, trading conditions, and employment all fell, with the impact felt across almost all states and industries. But, businesses are looking past that and confidence rebounded in January with firms optimistic that the outbreak would be short-lived, and consistent with this, forward orders remained steady.

LOCAL PANDEMIC UPDATE
In NSW, there has been a drop to 9,690 new community cases reported yesterday, now with 76,465 active locally-acquired cases, and another 18 daily deaths. There are now 2,494 in hospital there, off their high. In Victoria they reported 9,785 more new infections yesterday. There are now 58,449 active cases in that state - and there were 20 more deaths there. Queensland is reporting 5,178 new cases and 12 more deaths. In South Australia, new cases have slipped to 1147 yesterday and five deaths. The ACT has 323 new cases and no deaths, and Tasmania 601 new cases and no deaths. Overall in Australia, about 26,700 new cases have been reported so far although not all counts are in yet. In New Zealand, there were 63 cases stopped at the border, plus 202 new cases reported in the community. But testing rates are falling sharply.

GOLD RISING
In early Asian trading, gold up at US$1822/oz and up +US$15 from this last week's close, and up +US$4 in today's trade.

EQUITIES SOFT AT END
The S&P500 ended on Wall Street today down -0.4% after wobbling around its opening levels. Tokyo has opened up +0.7% in morning trade. Hong Kong has opened -0.5% lower. Shanghai has opened -0.2% lower. The ASX200 is trading +1.1% higher in its early afternoon session. The NZX50 is up +0.4% late in its Tuesday session.

SWAPS FIRM
We don't have today's closing swap rates yet. They are likely to be sharply higher, by about +8 bps for 1, 2 and 3 year durations. If these new levels hold, that will change the recent 'flat' swap curves and put them on a new rising trend. The 90 day bank bill rate rose +2 bps to 1.18% and its highest since before the start of the pandemic. The Australian Govt ten year benchmark bond rate is up +5 bps from yesterday to 2.08%. The China Govt 10yr is still at 2.73%. The New Zealand Govt 10 year bond rate is now at 2.68% (up +8 bps from this morning) and now above the earlier RBNZ fix for that 10yr rate at 2.67% (up +10 bps). The US Govt ten year is now at 1.93% and unchanged from where we started this morning.

NZ DOLLAR LITTLE-CHANGED
The Kiwi dollar is little-changed today at 66.4 USc. Against the Aussie we are still at 93.1 AUc. Against the euro we are holding lower at 58 euro cents. That means the TWI-5 is holding at just under 70.8, marginally lower than at the end of last week, and marginally higher than where we opened today.

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BITCOIN UP
Bitcoin has risen to US$43,961, up +0.7% from where we opened this morning. Volatility over the past 24 hours has been high at just under +/- 3.1%.

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