A review of things you need to know before you sign off on Wednesday; RBNZ does its thing but banks yet to move, Crown accounts confirm Gov't dominant presence in economy, farmers more confident, spending holds, swaps uncertain, NZD up, & 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
None to report for floating rates so far following the RBNZ's +50 bps hike of the OCR to 3.50%. But the SBS Bank raised fixed rates, as did Heretaunga Building Society.

TERM DEPOSIT RATE CHANGES
Nothing yet from the main banks but ICBC, Heretaunga Building Society and General Finance all raised rates today. Given the RBNZ's explicit signal to banks we will be watching for special TD rate changes. SBS Bank also raised TD rates and their new 4.50% one year offer deserves special mention as the highest for this term from any bank.

NOT LETTING UP
The Reserve Bank makes it five-from-five for +50 point Official Cash Rate hikes, taking the rate up to +3.5%. Remember, we started 2022 with the OCR at 0.75%. Today's increase came with a hawkish Statement, and a noticeably different tone to yesterday's RBA dovish positioning. Markets now expect our OCR to top out at 4.75% later in 2023. (For reference, the US Fed rate is currently 3.25% and the RBA rate is currently 2.6%.)

THE DOMINANT FORCE IN THE ECONOMY
The Treasury released its Crown Accounts today, recording a 2021/2022 year end deficit of -$16.9 bln. The OBEGAL was a deficit of -$9.7 bln. For reference, these are both much larger deficits than in the 2020/21 year of a +$16.3 bln surplus and a -$4.4 bln deficit respectively. Crown net debt is only +17.2% of GDP but it is up from 10.5% a year ago. The Crown revenue took 39.4% of the county's GDP (up from 37.8% of GDP last year). They spent a massive 42.0% of GDP on their programs, a rise from a high 39.1% last year. Crown spending rose +12.9% in a year. Crown income rose +9.5%.

WHERE THE MONEY CAME FROM
The Crown results come after the tax on individuals (Source deductions etc.) rose +14.6%. GST rose just +2.2%. And taxes on companies rose +26.2%.

A CHANGE IS INDICATED
The latest Roy Morgan political poll is out and it shows no sharp changes, just enhancing previous trends, perhaps with the exception of the Greens who rise to 12.5% support after a long stagnant period. Labour sank further in a longish trend (but down from a small rise last month). National rose minorly in a shorter trend. Act rose again but faster, now also at 12.5% support in this poll.

FARMERS MORE CONFIDENT
Farmer confidence crept higher in the last quarter, but remains at net negative levels overall according to the Rabobank survey. Rising demand and higher commodity prices were the two major reasons for optimism. Rising farm input costs continue to be the main source of concern, cited as a key reason for pessimism by more than two-thirds of farmers with a negative outlook on the 12 months ahead. Government policy and labour shortages were also concerns.

STILL SPENDING FREELY
Consumer spending is not as weak as feared according to the Worldline NZ (Paymark) data. While recent consumer confidence surveys have forecast a drop in consumer spending, but this data shows that spending growth is actually rising, and well above the inflation rate. This data says core retail activity was $2.92 bln in September, up +16% from the same month last year. (This data excludes hospitality spending.)

SWAP RATES PRESSED BOTH WAYS
Wholesale swap rates are should probably up on the surprising hawkish RBNZ review. But they aren't, in fact may even have fallen on global trends. The key real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is down -4 bps at 3.83% but this move was before the RBNZ OCR review release. The Australian 10 year bond yield is now at 3.73% and down -18 bps from yesterday just ahead of their RBA announcement. The China 10 year bond rate is up +1 bp from Friday at 2.77%. The NZ Government 10 year bond rate is now at 4.05%, and down -10 bps and still below the earlier RBNZ fix for this bond at 4.07% which was down another -13 bps from this time yesterday. The UST 10 year is now at 3.62% and down -2 bps from this time yesterday.

EQUITIES EVEN HIGHER
Wall Street took off even higher today in its second October session with the S&P500 ended its Tuesday session up +3.1% after yesterday's +2.6% rise. Tokyo has started its Wednesday session up +0.2% in early trade. Hong Kong is up a sharp 4.7% after yesterday's holiday. Shanghai is still on holiday. The ASX200 is up +1.6% in early afternoon trade. The NZX50 is up +0.6% near the close.

GOLD RISES
In early Asian trade, gold is at US$1721/oz and a rise of +US$24 from this time yesterday. It closed in New York earlier at US$1726/oz.

NZD IN FURTHER FIRMING
The Kiwi dollar has firmed from this time yesterday to be just over 57.7 USc and a gain of more than +½c after the RBNZ OCR announcement. Against the AUD we are up almost +1c at 88.8 AUc. Against the euro we are now at 57.8 euro cents and down -½c. That all means our TWI-5 is at 67.6 and up a net +30 bps from this time yesterday.

BITCOIN FIRM
Bitcoin is firmer today and is now at US$20,224 and another +3.4% rise.. Volatility over the past 24 hours has remained moderate at just on +/- 2.4%.

This soil moisture chart is animated here.

Keep abreast of upcoming events by following our Economic Calendar here ».