A review of things you need to know before you sign off on Monday; more retail rate rises, service sector still healthy, Vero faces court, Air NZ to borrow more, eyes on CPI, swaps up, NZD holds, & 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
HSBC raised its floating rate today by +50 bps to 7.29%. The Cooperative Bank raised a set of key fixed rates each by +10 bps.

TERM DEPOSIT RATE CHANGES
HSBC also raised most term deposit rates out to those for a two year term.

EXPANSIONS EXTEND
The local services sector was still expanding at a healthy clip in September, just not as fast as in August. This is according to the BusinessNZ/BNZ PSI. New orders and activity levels were the parts that kept this index up. Employment was flat. There is a wide variation between sectors in this survey and generally it is a lot more positive than either the NZIER's QSBO or StatsNZ's electronic card data. This services expansion more than makes up for the slower expansion in the factory sector.

'SCALE OF CUSTOMER HARM SIGNIFICANT'
The FMA has filed High Court proceedings against Suncorp's Vero Insurance for failing to apply multi-policy discounts, which led to affected customers being overcharged approximately $8.7 mln in premiums. The FMA claims Vero contravened the fair dealing provisions of the Financial Markets Conduct (FMC) Act by incorrectly stating the premiums owed by customers who were entitled to the discounts. The false and/or misleading statements were made in periodic invoices issued to affected customers in relation to house and contents, vehicle and boat insurance. Multi-policy discounts apply when a customer has more than one risk or cover insured under one policy, or under multiple policies. Vero has reimbursed almost $10.3 mln in overcharges to affected policyholders. The issue dates back to 2009 but the FMA’s claim only applies to Vero’s conduct from April 2014 onwards, which is the date the FMC Act came into force.

DOUBLING UP DEBT
Air NZ is making a unsecured, unsubordinated, five year fixed rate bond offer for up to $100 mln. "The proceeds of the Offer will be used for general business purposes including to fund repayment of the AIR020 Bonds on maturity." The AIR020 bond is for $50 mln and matures on October 29, 2022. It had a coupon of 4.25%. It isn't priced yet, but the new bond will probably have a yield of about 6.25% when it is issued on October 27, 2022. Moody's rates it Baa2 (like BBB) and one notch above the lowest investment grade).

BETTING ON MORE UPWARD PRESSURE
Tomorrow, all eyes will be on the NZ CPI data out at 10:45 am and that is likely to confirm high inflation is embedded even if it has fallen a little bit. But as others have noted, those 'falls' are more due to oil prices, a component that is always volatile. Money markets have priced in +59 bps for the next OCR review on November 23, and now expect the OCR to top out at 5.0% in May 2023, staying at that level for most of the period through mid 2024.

SWAP RATES FIRMER AGAIN
Wholesale swap rates are firmer yet again, even though tomorrow's September CPI data is expected to record a fall from the June levels. The key real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up another +3 bps at 4.01% and back at its highest since January 2009 when it was on its way down from 8.89%. Prior to that is was never as low as 4%. The Australian 10 year bond yield is now at 4.06% and little-changed from this morning. The China 10 year bond rate is little-changed at 2.72%. The NZ Government 10 year bond rate is now at 4.58%, and up +6 bps and now well above the earlier RBNZ fix for this bond at 4.53% which was down -2 bps from this time Friday. The UST 10 year is now at 3.99% and down -3 bps from this morning.

EQUITIES MOSTLY LOWER
The NZX50 is ending its Monday session down about -1.1% and slipping. The ASX200 is down -1.5% in early afternoon trade. Tokyo is also down -1.5% in their early trade. Hong Kong is down -1.0% in very early trade. Shanghai has opened -0.2% lower. The S&P500 futures suggests Wall Street will open tomorrow up +0.7%. But a lot can change before then, and probably will.

GOLD HOLDS
In early Asian trade, gold is at US$1648/oz and up +US$3 from this morning.

NZD FIRMISH
The Kiwi dollar has firmed +¼c from this morning to be just on 55.9 USc. Against the AUD we are little-changed at 89.6 AUc. Against the euro we are also little-changed at 57.3 euro cents. That all means our TWI-5 is at 66.7 and up +20 bps from this morning.

BITCOIN LITTLE-CHANGED
Bitcoin is firmer today, now at US$19,251 and up a mere +0.6% this time morning. Volatility over the past 24 hours has been low at just over +/- 0.8%.

This soil moisture chart is animated here.

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