A review of things you need to know before you sign off on Thursday; many retail rate changes again, another dip into the FLP, core funding record, swaps streak higher, NZD depreciates, & 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
Heartland Bank raised its floating rate by +39 bps to 4.99%. They raised their reverse equity rate by another +25 bps to 7.75%. Wairarapa Building Society raised their floating rate by +46 bps to 6.95%. Pepper money raised their floating rate by +70 bps to 5.99%. The Police Credit Union raised theirs by +49 bps to 6.34%, and they raised their fixed rates as well, for terms 1, 2, and 3 years.

TERM DEPOSIT RATE CHANGES
The big news today is the raising on the one year Kiwi Bond rate by +25 bps to 3.50%. Their six month rate is unchanged at 3.00%. These effectively set the risk-free rate boundary for term deposits. Why would you take less from a lower-rated bank than the high-rated NZ Govt?. But many institutions are still offering below these levels. Today ANZ raised its six month rate to 3.10%. The Cooperative Bank raised their six month rate to 3.00%. Meanwhile, the Police Credit Union raised some short-term rates.

SAVINGS ACCOUNT RATE CHANGES
ASB raised all their savings account rates, by between +15 bps and +50 bps, including their bonus saver. The Police Credit Union raised its bonus saver rates too, but by +55 bps. TSB raised their Websaver account rate by +50 bps to 2.10%.

A DIP BELOW $1 MLN
CoreLogic says our housing market slump is now almost as bad as in the Global Financial Crisis. They say the average value of NZ homes drops below $1 million for first time in 9 months.

OMINOUS
There are twice as many homes on the market for sales compared to this time last year says realestate.co.nz. It is an ominous sign for the spring housing market as the stock of homes for sale grows as prices fall.

THINKING BIG
NZX heavyweight Fisher & Paykel Healthcare (FPH, #1) today said is its paying $275 mln for a 105 ha site in Karaka, Auckland, to construct a second manufacturing campus to complement its existing 45 ha location at Highbrook in East Tāmaki, Auckland.

STRESS SIGNALS
Credit cracks are starting to emerge for Kiwi consumers, Centrix says. A simultaneous increase in demand for credit, and in arrears, points to people being under pressure to meet repayment obligations, they report.

ANOTHER $100 MLN
Another bank took $100 mln from the Funding for Lending program (FLP), taking the total accessed to $14 bln so far. We don't know who took this funding but it unlikely to have been one of the big four Aussie banks. (They don't get out of bed for less than $500 mln usually, from this source.) So a back of the envelope calculation suggests $100 mln will fund about 200 transactions? The whole FLP program is now only scheduled to run for another 90 days, so we might see a flurry of final activity in this space.

RECORD HIGH CORE FUNDING IN BANKING SYSTEM
The banking system core funding ratio rose from 89.9% in June to 90.1% in July. (L2) This is the highest aggregate core funding ratio on record since this data collection began in April 2010. Compared to July 2021, CFR was up 3.0 percentage points from 87.1%. There is $459 bln of core funding value in our banking system, also its highest ever.

STRONG BIDDING BUT ONLY FOR MUCH HIGHER YIELDS
There were three NZ Government bond issues out for tender today, and the yields investors demanded jumped significantly from two weeks ago. All up $860 mln was bid for the $400 mln on offer, attracting 102 bids of which 42 were successful. The April 2027 $200 mln went for a yield of 3.97%, up from 3.36% two weeks ago. The May 2032 $150 mln went for a yield of 4.07%, up sharply from the 3.43% two weeks ago. The $50 mln May 2041 offer went for 4.38%, up from 2.98% seven months ago.

STRANGE BUT TRUE
The RBNZ has revealed that it minted 10 mln 20c coins in 2022 and 8 mln $2 coins. This is after not minting any in 2021. I haven't seen a coin in a transaction since the 2020 pandemic (although I am sure a few sock drawers will hold a lot). Just who uses coins these days?

APRA REMOVES WESTPAC ADD-ON LIQUIDITY REQUIREMENT
The Australian Prudential Regulation Authority (APRA) has removed a 10% add-on to the amount of cash Westpac must keep in hand imposed on the bank in 2020.  However, an A$1 billion capital add-on to reflect Westpac’s heightened operational risk profile remains in place. APRA took action against Westpac in 2020 in response to material breaches it said demonstrated weaknesses in the bank’s risk management and oversight, risk control framework and risk culture in its liquidity risk management and reporting. These issues in part related to Westpac NZ. APRA says Westpac has completed a program to remediate findings from an independent review into liquidity risk management to APRA’s satisfaction.

THE DEATH COST OF COVID DENIAL
In the US, they reported that their badly mishandled pandemic response killed an outsized number of them, so much so that the average life expectancy of Americans fell precipitously in 2020 and 2021. It was the sharpest two-year decline in nearly 100 years for them and a stark reminder of the toll exacted on the nation by awful public policy decisions and denial.

AUSSIE HOUSING DOWNTURN
The CoreLogic report for August is sober reading. Every capital city apart from Darwin is now in a housing downturn, with a similar scenario playing out across the rest-of-state regions, where only regional South Australia recorded an increase in housing values for the month. Sydney continued to the lead the downswing, with values falling -2.3% over the month, however weaker conditions in Brisbane accelerated sharply through August, with values falling -1.8%. Observers see this as just the start of a housing price retreat. Their banks clearly were worried a month earlier. See next item.

A WHIFF OF FEAR?
Aussie lending for housing retreated in July at a fast rate. In fact lending to investors fell at its fastest pace since mid-2015, and lending to owner-occupiers fell at its fastest pace since 2008. Bank lending to their construction industry dived a startling -35% in July from June. There's more than a whiff of fear in these figures.

SWAP RATES STREAK UP
Wholesale swap rates are probably pushing sharply higher today in a steepening curve. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 3.47%. That is its highest since July 2016. The Australian 10 year bond yield is now at 3.74% and suddenly up +12 bps from this time yesterday. The China 10 year bond rate is at 2.66% and down another -2 bps. The NZ Government 10 year bond rate is now at 4.10% and up +12 bps from this time yesterday and back threatening the late June levels, and now above the earlier RBNZ fix for this bond which was up +8 bps also at 4.06%. The UST 10 year has now streaked up to 3.21% and up +10 bps from this time yesterday.

EQUITIES WEAKER
The S&P500 fell another -0.8% in Wednesday trade, with a sharpish final dip. Tokyo is down -1.7% in early Thursday trade. Hong Kong is down another -0.7%, but Shanghai is up +0.3% in early trade. The ASX200 is down a sharp -2.0% in afternoon trade taking the weekly loss so far to -3.7%. But the NZX50 is only down -0.2% with its week-to-date fall only -0.5%, so bucking the worldwide trend.

GOLD FALLS FURTHER
In early Asian trade, gold is down -US$19 from its level this time yesterday, down to US$1,703/oz. That is its lowest since mid July.

NZD DEPRECIATION GROWS
The Kiwi dollar is now back down at 60.9 USc and another dip of nearly -½c from this time yesterday. Against the AUD we are at 89.5 AUc. Against the euro we are at 60.8 euro cents and softer. That all means our TWI-5 is now at 70.3 and down -20 bps since this time yesterday. Against the USD we have depreciated -3.1% in August alone, and -10.8% so far in all of 2022.

BITCOIN SLIPS
Bitcoin has been moving around today, now at US$20,152 and down -1.1% from this time yesterday. In between it got as low as US$19,895. Volatility over the past 24 hours has been modest at +/- 1.5%.

This soil moisture chart is animated here.

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