A review of things you need to know before you sign off on Monday; banks shuffle in mortgage market stirrings, new car sales surge, building activity up, commodity prices soft, swaps and NZD on hold, & 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 was the first out of the blocks with spring home loan rate changes, flattening its offering to be competitive for terms of 3 years and longer. Kiwibank then followed with reprising its 1% cash-back offer.

TERM DEPOSIT RATE CHANGES
China Construction Bank raised all its term deposit rates. Its new 1 year rate is now 4.20%, the highest of any bank and matching the Bank of China.

BUSINESS LENDING RATES RISE
ANZ raised its key business lending rates today by +50 bps in response to the last OCR rate hike. Homeowners will be surprised how high these base rates have become (and making their housing deals look pretty attractive). ANZ raised its Business Bank Indicator Rate to 11.1%, its Business Overdraft Rate to 13.1% and its Agri Current Account rate to 9.3%. It is hard being profitable in business, even harder if you have to borrow money.

SUDDENLY MAINSTREAM
New car sales surged in August, let by surprisingly large gains in sales of EVs and hybrids

HOUSE BUILDING RISES
Building activity continued to increase in the June quarter even as rising costs started to bite. In the 12 months to June, residential building costs rose +17% while non-residential building costs were up +11%. Westpac noted "while the June quarter result was a little stronger than expected, estimates of building activity over the past year have been revised downward. On balance, that has left us with a picture of a flattening off in building activity over the past year. That reinforces our expectations that the peak in the construction cycle is fast approaching."

COMMODITY PRICES SLIP
The ANZ World Commodity Price Index fell -3.3% in August, with the pace of decline accelerating in the past three months. In NZD terms the decline was even greater. Falling dairy prices are largely behind the shift lower.

TOO DEPENDENT ON CHINA?
Is New Zealand too dependent on China as an export market? Gareth Vaughan talked to Stephen Jacobi on the importance of NZ's trade relationship with China, the risks to it, and the opportunities to diversify to other countries. Listen here.

TINY GAIN, BUT BETTER THAN THE REST
Although the NZX50 did ok last week when compared to the other major markets we benchmark ourselves against, it wasn't a terribly impressive gain from the week before, nor from a month before. But at least it was a gain. Fisher and Paykel Healthcare (FPH, #1) fell -2.0% for the week, Fonterra (FSF, #48) fell -5.5% and Restaurant Brands (RBD, #49) fell -5.9% for the week. Some of this was covered by the very large +17.9% rise by A2 Milk (ATM, #9). Most was covered by many much smaller gains.

PROPER SAFEGUARDS BUT PROPORTIONATE PENALTIES
In March 2022 the RBNZ sought feedback on the penalties and enforcement tools available to it when supervising insurers and on their powers to manage distressed insurers. There were eight companies and trade lobby groups that gave very detailed feedback. Among the feedback was a desire for the regulator to have a graduated and proportional set of penalties and enforcement tools responding to the severity of the breaches.

BATTLING NEGATIVE RETURNS
Research IP issued their August RIPPL Roundup, noting that aside from cash (bank bills), only the NZX50, ASX200, Emerging Markets and HFRX Global Hedge Fund index posted positive returns for the month. Commodities and cash were the only positive returning assets over the last 12 months. If inflation remains elevated at current levels, the real return on term deposits will be negative, they note.

INTEREST.CO.NZ RACKS UP "OF INTEREST" PODCAST EPISODES
Our 'Of Interest' podcast, through which we take a deep dive into a major economic or financial issue, has now been running since the start of June. Topics covered to date include the RBNZ's response to Covid-19, the housing market, China's economy, NZ's trade relationship with China, deposit insurance, central bank digital currencies, inflation, insurance & climate change and more. You can find all the episodes here, and keep an eye out for more to come.

INDONESIA UNDER PRESSURE
Indonesia regulates fuel costs, and the cost of that on public finances can't be sustained, especially as the cost of USD debt rises. Their government has raised key fuel prices by 16-32%, a move that will push average headline inflation to 4.5% in 2022 and 5.0% in 2023, above Bank Indonesia’s 2-4% target range. That means their central bank will raise its policy rate by +25 bps at each of its remaining four meetings this year, taking the policy rate to 4.75% by year-end. Next year it could go to 5.25%. (H/T ANZ.)

AUSSIE JOB ADS DEFY THE SLOWDOWN
There has been a set of international data released today but none of it is especially noteworthy - except perhaps Aussie job ads data which came in stronger than expected, rising +2%. Given other weakish Aussie data, it was expected this job ad metric will have fallen - but not yet, at least.

SWAP RATES PAUSE
Wholesale swap rates are probably little-changed today we all wait for the US to take its long weekend holiday. Our chart will record the final positions. The 90 day bank bill rate is up +4 bps at 3.52%. That is its highest since July 2016. The Australian 10 year bond yield is now at 3.66% and up +2 bps from this morning's open. The China 10 year bond rate is unchanged at 2.65%. The NZ Government 10 year bond rate is now at 3.99% and down -2 bps from this morning and now above the earlier RBNZ fix for this bond which was down -8 bps at 3.96%. The UST 10 year has now still at 3.20% and unchanged from this morning while the US is on its Labor Day long weekend holiday.

EQUITIES ON HOLD
The NZX50 has started this week down -0.3%. The ASX200 has started up a minor +0.1% after last week's dive. Tokyo is also down -0.2% in Monday morning trade. Hong Kong has opened much weaker in early trade, down -1.8%. Shanghai is unchanged at its open. None of these markets are closed for the typhoon yet. The S&P500 futures haven't given any signals yet for the upcoming week's trading, hovering at an unchanged level from Friday.

GOLD MEANDERS
In early Asian trade, gold is down -US$4 from its level where we opened this morning, down to US$1,709/oz.

NZD HOLDS
The Kiwi dollar is now down at 60.9 USc, lower than this morning by higher than this time Friday. Against the AUD we are unchanged from this morning's open at 89.7 AUc. Against the euro we are at 614 euro cents and also unchanged from this morning. That all means our TWI-5 is now at 70.6 and little-changed.

BITCOIN BECALMED
Bitcoin has been marginally softer, now at US$19,845 and unchanged from where we opened this morning. Volatility over the past 24 hours has been modest at +/- 1.1%.

This soil moisture chart is animated here.

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