A review of things you need to know before you sign off on Thursday; more majors raise mortgage rates, business sentiment improves, a hot & humid summer coming, swap rates fall, NZD rises, & 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
Both BNZ and Kiwibank raised some fixed home loan rates. Details here.

TERM DEPOSIT RATE CHANGES
Kiwibank raised most term deposit rates and of note their one year rate is now 4.20%, the highest of any main bank. And the Nelson Building Society (NBS) raised its 6 month rate - to an unusual 4%. No bank has gone there yet, and only Xceda as a finco has so far.

CREEPING UP
The widely-watched ANZ business sentiment survey for September is generally positive. It shows an overall lift in business sentiment - but activity indicators in residential construction have hit a fresh low.

DEBT ROLLOVER
Air NZ is planning on making a new 5½ year bond issue where the funds will be used to pay off an existing $50 mln bond (AIR020) that matures on October 28, 2022. The maturing issue had a coupon of 4.25% but recently have yielded 5.34%. A final coupon is payable for holders of record on October 18, 2022.

HOT & HUMID
NIWA says the La Niña weather pattern strengthened over the last two months and is very likely to continue over the October-December period. This will likely culminate in the third La Niña summer in a row, a "triple dip". While no two La Niña events are the same, there may be some similarities with last summer, which featured widespread hot and humid conditions, a marine heatwave, drought in the lower South Island, and several ex-tropical cyclones passing near New Zealand’s coasts.

A POSITIVE START
The FMA today published findings from its inaugural annual review of how well Catalist is meeting its licensed market operator obligations, covering 21 June 2021 to 31 March 2022. The review noted Catalist had suitable governance arrangements, technological capability and processes and policies. Catalist operates Catalist Public Market, a ‘stepping stone’ market aimed at small and medium-sized businesses seeking liquidity or seeking to raise capital of up to $20 million, with a view that once these entities reach a certain scale and size, they would transition on to the next phase of growth, which may be listing on the NZX. It was designed to fill a funding gap for SMEs by providing a lower-cost and simplified financial products market, offering trading by way of an online auction platform with periodic (rather than continuous) trading and disclosure.

TWEAKING RISK WEIGHTS
The RBNZ is proposing changes to how banks should apply risk weightings to their exposures under bank capital adequacy rules. They are in the process of phasing in the Capital Review decisions from December 2019 which are "designed to make the banking system safer by reducing the likelihood of bank failure, lifting financial stability and protecting people from the economic and social impacts associated with the failure of a bank". They now want feedback to proposals to lower the risk weighting on First Home Loans underwritten by Kāinga Ora, and to reduce the risk weighting of bank equity exposures to the Business Growth Fund. You can comment here.

NOT SO POPULAR
At today's NZ Government bond tender there was a worrying absence of bids. Although 106 bids were tabled worth $825 mln for the $400 mln on offer, they were mostly concentrated on the April 2027 $200 mln offer. That went for a yield of 4.16% compared to 3.92% two weeks ago. But the $150 mln May 2032 bond only got $200 mln bid, a surprising light coverage. It went for a yeild of 4.20% and up from 4.01% two weeks ago. And the May 2041 $50 mln on offer only attracted bids with $57 mln, an even lower coverage. The yield was 4.52% on this one up from 4.35% two weeks ago. The Treasury Debt Management Office won't want demand this soft at any future tenders.

POSITIVE SURPRISE
In Australia their Federal Government reported a sharply improved fiscal performance in the year to June 2022. It was a significant positive surprise. Their underlying cash deficit* came in at -AU$32 bln, representing -1.4% of their GDP. That was almost $48 bln less than the forecast in their 2022/23 March Budget. It's a deficit that narrowed sharply from the record deficit for the 2020/21 year of -AU$134 bln, -6.5% of GDP. The New Zealand Government results for the same period are due to be released on Wednesday, October 5 (and may get drowned out by the RBNZ MPR release the same day). [Note: the concept of an "underlying cash deficit" is a very old fashioned public reporting concept. New Zealand uses proper accounting standards. The nearest we come to a comparative figure is our OBEGAL and that is expected to come in at a -NZ$8 bln deficit for the year or -2.3% of GDP.]

ANOTHER CHINESE DEVELOPER WOBBLES
Investors dumped shares and bonds of Chinese property developers yesterday after a media report that CIFI Holdings (Group) Co had defaulted added to worries over the crisis-stricken real estate sector. Hong Kong-listed shares of CIFI Holdings plunged 32% to a record low as of the market close yesterday, after credit intelligence provider Reorg reported that the Chinese developer had missed payment on certain non-standard debt. The company itself is remaining staunch.

A NEW TRADE WINNER
The movement of business out of China is on full display in Vietnam. The the July-September quarter they say their GDP was almost +14% higher than the same quarter a year ago. And that was on top of an almost +8% surge in Q2. Exports to the US are a key driver. But a sharp rise in personal consumption also contributed materially.

SWAP RATES RETRACE
Wholesale swap rates are probably very much lower today as global forces reverse, maybe by as much as -10 bps. But the key action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is down -1 bp at 3.82% settling in as we are only three business days away from the RBNZ OCR review. The Australian 10 year bond yield is now at 3.90% and down -22 bps since yesterday. The China 10 year bond rate is up +2 bps from yesterday at 2.75%. The NZ Government 10 year bond rate is now at 4.22%, and down -9 bps and now above the earlier RBNZ fix for this bond at 4.18% which was down -13 bps from yesterday. The UST 10 year is now at 3.76% and down a very sharp -23 bps from this time yesterday.

THE EQUITIES ALL RISK-ON
Wall Street ended its Wednesday trade up almost +2.0% on the S&P500 and with a building rise. Tokyo is up +0.9% in early trade today. Hong Kong is up +1.7% at today's open. Shanghai is also up +0.9% at its open. The ASX200 is also up +1.7% in early afternoon trade today. And the NZX50 is up +1.1% near the end of trade.

GOLD RISES
In early Asian trade, gold is at US$1656/oz and a rise of +US$27 from this time yesterday. But it is -US$4 for where it closed in New York earlier in the day.

NZD RECOVERS SOMEWHAT
The Kiwi dollar has recovered a full +1c from this time yesterday to be just over 57 USc. Against the AUD we are up +40 bps at 87.8 AUc. Against the euro we are now at 58.9 euro cents and up +200 bps. That all means our TWI-5 is at 67.6 and up +60 bps from this time yesterday.

BITCOIN FIRMS
Bitcoin has risen today and is now at US$19,565 and up +2.5% from this time yesterday. Volatility over the past 24 hours has been high at just over +/- 3.4%.

This soil moisture chart is animated here.

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