A review of things you need to know before you sign off on Tuesday; housing market stays weak, visitor arrivals up but still weak, bonds in hot demand, inflation perceptions high at the margins, swaps and 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
Nothing changed today.

TERM DEPOSIT RATE CHANGES
Heretaunga Building Society raised some TD rates.

UNWINDING THE 2020/21 SURGE
REINZ housing transaction data for October shows this market remains weak but prices may be stabilising after almost a year of falls. Sales volumes are very low for this time of year but the national median price edged up in October. 

FRAUD VICTIM ANALYSIS
ANZ is reporting that younger people are falling victim to a surprising amount of online fraud. Their data shows younger people are more likely to fall victim to email or text phishing scams that target their digital banking, whereas retirees are more likely to fall victim to scams that start with a call to a landline. The data shows that 60% of digital banking phishing victims are under the age of 40, and in many cases, the fraud originates from a text message.

MIGRATION DATA STILL CONFUSING, BUT TRENDS RE-EMERGE
The latest data from Stats NZ on migration is very hard to interpret with much confidence, given they continue to make large monthly revisions. We will focus our reporting on monthly Immigration NZ data. But Westpac says this latest Stats NZ data shows the outflow of people that we have seen since the start of the pandemic looks to have come to a halt. "September saw around +2,200 more people coming into the country on a long-term basis than those who departed. Since the phased reopening of the border began at the end of February, we’ve seen a gradual improvement in the balance, and this was the third month in a row that arrivals have exceeded departures."

OPEN, BUT NOT AN ESPECIALLY STRONG RECOVERY YET
Overseas visitor arrivals aren't yet back to even the levels we had pre-pandemic in the depths of our off-season. But they are recovering even if not especially quickly. Arrivals were 151,300 in September, recalling we had virtually none in the same month a year ago. The biggest changes were in arrivals from Australia (up 104,100) and more than 10%+ of all Aussies going on overseas holidays, United States (up 7,300), United Kingdom (up 5,200), and Singapore (up 2,800). In August 2022 129,800 visitors arrived.

GOT LONG-TERM FUNDS? BUY BANK BONDS, NOT BANK TDs
Separate from the FLP, another big bank is going to the bond markets for long-term funding. BNZ said it wants $100 mln in unguaranteed unsecured unsubordinated fixed rate 5 year bonds (that rank the same as ordinary depositor customer funds, with the ability to accept unlimited oversubscriptions at its discretion. Offers like this have been wildly popular with oversubscriptions usually running at about $500 mln. The are to pay about +110 bps over the 5 year swap rate, which is currently about 4.62%. If it stays like that, this money will cost BNZ about 5.75% pa. BNZ currently offers retail term deposit investors 4.60% pa for a five year TD. (Currently BNZ will lend to home owners at 6.29% for five years. You would think offers like this won't last much longer.)

HOT DEMAND
The NZ Government 'green bond' we noted yesterday has been wildly successful. More than $7.5 bln was bid, and the acceptances hit the maximum they wanted at $3 bln. In the end they paid only 4.355% pa for these 12 year bonds. There are apparently plenty of funds unrequited here, for BNZ to mop up.

INFLATION PERCEPTIONS DIVERGE
As at September, actual CPI inflation was running at 7.2%, according to Stats NZ. The RBNZ surveyed consumers and they thought it was running at 7.0% (median) and 7.6% on average (meaning quite a chunky minority thought it was quite a bit higher). The RBNZ has rerun this survey three months later and now the median response is 7.5% and the average response is a whopping 9.3%, the highest ever in a quarterly survey series that goes back to 1995. That outlier group thinks inflation is hitting them at crisis levels to distort the median/mean variation that much. For the record, the expected inflation in one year is still 7.0% (median), in two years 5.0% (median) and in five years just 2% (median). So inflationary expectations are not anchored high for the long term, which the RN=BNZ will be pleased about. But they do have an immediate issue on their hands.

JAMES WINS CURTIN'S GIG
Tower's Michelle James has been appointed to replace retiring CEO Chris Curtin at Suncorp-owned AA Insurance. Curtin retires in December with James starting in February.

NORMAL MAY BE BORING, BUT IT IS GOOD
Readers who are following the horrendous floods in eastern inland Australian regions will be probably surprised to note that our soil moisture charts below are disarmingly normal, and have been that way for many years now.

JAPAN SURPRISE (A NOT-SO-GOOD ONE)
The Japanese economy unexpectedly contracted -1.2% on an annualised basis in Q3-2022, missing market forecasts of +1.1% growth and shifting from an upwardly revised +4.6% expansion in Q2. This Q3 result was their first contraction in a year.

SWAP RATES LITTLE-CHANGED
Wholesale swap rates may be little-changed today, but the real action comes near the close. Our chart will record the final positions. The 90 day bank bill rate is up +1 bp at 4.16%. The Australian 10 year bond yield is now at 3.74% and down -2 bps. The China 10 year bond rate has zoomed up to 2.85% with further +37 bps jump. That takes it to a new four month high. The NZ Government 10 year bond rate is now at 4.30%, and down -6 bps and now below the RBNZ fix for the NZGB 10 year which up +6 bps at 4.33%. The UST 10 year is now at 3.86% and down -4 bps from this time yesterday.

EQUITIES UNSURE WHICH WAY THIS WEEK
The S&P500 ended its Monday trade on a sudden weak note, dipping -0.8% for the day on the late weakness. Tokyo has opened little-changed. Hong Kong has opened up +3.0%. Shanghai has opened up +0.9%. The 'failure' of authorities to lock down Beijing as the pandemic spread they worsens is being taken that they have in fact changed their strict lock-down policies. The ASX200 is down -0.4% in early afternoon trade. The NZX50 is up +0.2% late in the Tuesday session.

GOLD FIRM
In early Asian trade, gold is at US$1770/oz and up +US$6 from this time yesterday.

NZD DIPS SLIGHTLY
The Kiwi dollar is slightly lower at 60.9 USc slipping -10 bps from this time yesterday. Against the AUD we have dipped to 91.1 AUc. Against the euro we unchanged at 59.1 euro cents. That all means our TWI-5 is now at 69.9 and unchanged.

BITCOIN FIRMS
Bitcoin is now at US$16,567 and up +3.3% from this time yesterday. Volatility over the past 24 hours has been very high at just over +/- 4.2%.

This soil moisture chart is animated here.

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