A review of things you need to know before you sign off on Monday; Heartland raises fixed home loan rates, businesses borrowing more again, household deposits rise faster, swaps stable, NZD stable, & 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 raised its fixed home loan rates today.

TERM DEPOSIT RATE CHANGES
No changes here today. Update: ANZ has moved its term deposit offers to the top of the range for large NZ banks. More here.

TURNING UP?
After four consecutive quarters of downward trend, overall business credit demand was up +3.2% year-on-year in the September quarter, according to credit bureau Equifax. Business credit demand has been relatively soft since the August 2021 lockdown, however commercial lending appetite has been steadily improving since the start of 2022 and is slowly nudging towards pre-pandemic levels. Business loan enquiries decreased by -3.8% (vs September 2021 quarter). Trade credit enquiries increased by +9.9%). Asset finance enquiries up by +2.3%.

"RESILIENT SOLVENCY"
The 2022 Bank Solvency Stress Tests by the RBNZ found the local banking sector is well placed to withstand a ‘stagflation’ scenario where high inflation is paired with negative economic growth. "Our annual stress testing programme enables us and banks to better understand the implications of current and emerging risks to bank balance sheets and overall financial stability by investigating severe, but plausible scenarios", the regulator says.

HOUSING DEBT RISES SLOWER, BUSINESS DEBT FASTER
RBNZ data shows that housing debt rose its slowest since June 2015 (but matching early 2018 levels), up just +5.7% year on year (and rising slower than CPI inflation). It is up at just +3.3% at an annualised rate in September from August. In contract. lending to businesses rose at an +8.9% rate from a year ago and at a rising +15% pa pace since August. More here.

TINY RENT RISE
Barfoot & Thompson recorded an average rent growth of just +3.3% in the year to September in Auckland, a rise of just +$20/week. This is not only much lower than inflation, but also far less than the rise in mortgage interest rates. Landlords have lost their pricing power in the Queen City.

HOUSEHOLD DEPOSITS GROW FASTER
RBNZ data also shows that household deposits rose +7.6% from a year ago, although only at a +6% pace in September from August. Term deposit growth was very much faster, up +21% from a year ago, and maintaining that pace in September from August.

INFLATING I
Australian retail sales rose more than expected, and that is the 9th month in a row of gains. However, almost all of the recent monthly gains are likely due to higher prices rather than volumes. Fashion and dining led the uptick. But year-on-year the gain was more than +17%, mainly because of a very weak base.

INFLATING II
Japanese retail sales rose by 4.5% in September 2022, compared with an expected +4.1%. This was the seventh straight month of increase in retail trade and the steepest pace since May 2021, and interestingly higher than CPI inflation.

SIGNIFICANT PRICE RETREAT
Iron ore prices hit their lowest level since early 2020 at near US$80/tonne as hopes fade of a rebound in Chinese steel demand, and supply of the raw material picks up.

OVERSUPPLY SHRINKS MARGINS
Also falling is the price of infant formula in China. A major Aussie supplier, Bubs, says a significant number of brands there have oversupplied that market, including local Chinese brands, which has created a major decline in margin across all channels.

SWAP RATES LITTLE CHANGED
Wholesale swap rates may be little-changed, possibly firmer. Our chart will record the final positions. The 90 day bank bill rate is up +4 bps at 4.10%. The Australian 10 year bond yield is now at 3.78% and unchanged so far. The China 10 year bond rate is down -3 bps at 2.66% and back near the lows of August. The NZ Government 10 year bond rate is now at 4.27%, and down -3 bps from this morning and because of some internal issues at the RBNZ, their data was late, but the 10 year was up +4 bps to 4.26%. The UST 10 year is now at 4.05% and up +4 bps from this morning.

EQUITIES UP EXCEPT IN CHINA
After last week's strong +3.2% rise in capitalisation value, the NZX50 is adding another +1.0% to that today. Pushpay, Kiwi Property, SkyCity and Fletcher Building are all leading the rises. The ASX200 is +0.6% in early afternoon trade. Tokyo is up +1.2% in early Monday trade. Hong Kong has started the week down another -1.2% in an extension of their rugged recent trend. Shanghai is down another -0.8%. The S&P500 futures suggests Wall Street might open slightly soft.

GOLD SLIPS SLIGHTLY
In early Asian trade, gold is at US$1641/oz and down -US$5 from this morning.

NZD LITTLE-CHANGED
The Kiwi dollar is unchanged at 58.1 USc. Against the AUD we are marginally softer at 90.5 AUc. Against the euro we unchanged at 58.3 euro cents. That all means our TWI-5 is at 68.4 and also little-changed.

BITCOIN DIPS
Bitcoin is little-changed today, now at US$20,558 and down a mere -0.3% from this morning's open. Volatility over the past 24 hours has been low at just under +/- 1.0%.

This soil moisture chart is animated here.

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