A review of things you need to know before you go home on Wednesday; many retail rate rises, 'advanced manufacturing' is 'in', debt pressures rise, Penlink ok'd, swaps up again, NZD soft, & 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 RATE CHANGES
Westpac has raised its floating home loan rate by +40 bps to a level that matches ANZ's new rate. Unity Savings raised their fixed rates. Avanti Finance raise their floating rate by +50 bps. Bluestone also raised its rates. The Cooperative Bank raised its floating rate by +40 bps to 5.85% and its one year fixed rate by +20 bps to 4.49%.

TERM DEPOSIT & SAVINGS RATE CHANGES
Westpac also raised its Bonus Saver by +50 bps as well as its 32-day Notice Saver by the same amount, but its Simple Saver account by only +20 bps. Unity Savings raised its TD rates across the board. The Cooperative Bank increased its Step Saver account by +50 bps to 1.70%, and +10 bps to their one year TD rate to 3.00%. ASB added +20 bps to its Headstart savings account, taking it to 1.25%.

EXPORT DRIVE #72
Ten percent of our annual economic activity is generated by the manufacturing sector. It accounts for almost three quarters of goods exports and just over half of total goods and services exports annually ($44.5 bln). It survives without protection, and prospers in its own way. But there is a sense that "advanced manufacturing" could provide a clear pathway to higher wages through a more highly skilled manufacturing sector, and in turn a pathway to greater prosperity for the country. To get there, industry and the Government are trying to get buy-in from a wider set of local constituencies. Hopefully they succeed, but some of the groups they are trying to get support from probably see it is a potential gravy train. The plan will only succeed with committed and driven industry leaders. The rest (including the Government) are along for the ride.

STRONG DEMAND FOR BNZ BONDS
BNZ will borrow $650 mln through the issue of unsecured, unsubordinated fixed rate bonds it announced on Monday. The margin for the five-year bonds has been set at 1.05%, the low point of the indicative margin range making the yield 4.985% pa (and well above what BNZ offers its TD customers for a 5 year term). The offer is open to local retail investors and certain institutional investors. On Monday BNZ said it was seeking to borrow up to $100 mln with the ability to accept unlimited oversubscriptions at its discretion. The bonds will be issued on June 7, and are expected to be quoted on the NZX Debt Market.

FEELING THE PINCH
Credit reporting agency Centrix is noting that the ongoing inflationary challenges facing Kiwis continues to impact consumer confidence and credit demand, with consumer credit demand was down -9% year-on-year in May 2022, while the demand for new mortgages was down -27% over the same period. And for those successfully applying for mortgages, the lending value was down -38% in April 2022 as confidence falls. Consumer arrears were up +12% year-on-year in April 2022 in tandem with falling credit demand as Kiwis start to feel the financial pinch of rising living costs.

MAJOR ROADING INVESTMENT APPROVED - 40 YRS LATE(R)
The Government has finally pushed 'go' on the $830 mln Penlink project, an arterial connector to unblock the rapidly developing Whangaparoa Peninsula with SH1, north of Auckland. The need for this project was first identified in the 1980s. It wasn't an $830 mln project when it was first identified as a priority.

WE ARE NOT SECOND BEST
A joint report comparing broadband services between Australia and New Zealand shows the performance of New Zealand's Ultra-Fast Broadband compares well to Australia’s National Broadband Network. Page six provides the key comparisons. NZ is faster except for wireless connections where our providers have work to do. We shine in very high speed fibre plans.

HEARTLAND COMPLETES STOCKCO AUSTRALIA ACQUISITION
Heartland Group Holdings says it has completed the acquisition of StockCo Australia, which was announced at the start of April. StockCo provides specialist livestock finance for Australian cattle and sheep farmers. The cost of the deal, including A$1.6 million of deferred consideration payable subject to performance hurdles, is A$154.4 million. Heartland says existing operational funding for StockCo has been refinanced through a new two-year committed securitisation warehouse funded by two major Australian financial institutions with additional capacity available for growth.

A SMALLER STEP FORWARD
In Australia, there were two factory PMI reports out for May today, (here and here) both reporting a slowing of their good expansion back to a more modest expansion.

STILL GROWING
Australia also reported its Q1-2022 economic growth rate today and it came in at +3.3% pa which was better than the +2.9% expected, but a step back from the Q4-2021 rate of +4.2%. Australia's economy reported AU$2.2 tln in annual economic activity in the year to March 2022 in nominal terms, up +12% from the same year in 2021, which in turn actually fell -1% in the same year from 2020. From the pre-pandemic equivalent 2019 year, this 2022 result is now +16% higher in nominal terms. New Zealand doesn't release its Q1-2022 GDP result until June 16, 2022.

A STEP BACK
The private Caixin PMI reported that China's factories contracted at a slower pace in May than April, essentially mirroring the official version.

SWAP RATES RISE AGAIN
We don't have today's closing swap rates yet but they have probably firmed yet again. (Update: actually they stepped down in the end, by a very small amount.) Our 1  2-5 swap curve is quite inverted. The 90 day bank bill rate is down -1 bp today at 2.46% and ending a string of quite big moves up. The Australian 10 year bond yield is now at 3.43% and up another +9 bps on global moves. The China 10 year bond rate is now at 2.81% and up +2 bps. The NZ Government 10 year bond rate is now at 3.64%, and up +4 bps from the same global pressures and the same as the earlier RBNZ fix for this bond which was up +5 bps, now also at 3.64%. The UST 10 year is now at 2.87% and up +3 bps in a continuing rise. That puts it back up to where it was two weeks ago.

EQUITIES MOSTLY UP
Although it made a few runs trying to extract a gain, in the end the S&P500 ended down -0.6% on Wall Street today in their first session back after their holiday break. Tokyo has opened up +0.6% today. Hong Kong has opened down -0.5% and Shanghai has opened down -0.3%, both following good Monday and Tuesday gains. The ASX200 is up +0.2% in early afternoon trade after yesterday's fall. The NZX50 is up another +0.2% in late trade today following yesterday's surprising gain that was helped by A2 Milk's rise on its US prospects.

GOLD DOWN
In early Asian trade, gold has fallen -US$14 from this time yesterday to US$1835/oz.

NZD SLIPS FURTHER
The Kiwi dollar is moving down marginally, now at 65.2 USc. Against the AUD we are softer at 90.8 AUc. Against the euro we are holding at 60.8 euro cents. That all means our TWI-5 has stayed just under 72.

BITCOIN RISES AGAIN
Bitcoin is now at US$31,890 and up another +1.1% from this time yesterday. Volatility over the past 24 hours has been modest at +/- 1.8%.

This soil moisture chart is animated here.

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