A review of things you need to know before you sign off on Friday; BNZ raises TD rates, factories struggling, tractor sales recover, insurers slow to pay up, swaps unchanged, NZD on hold, & 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/LOAN RATE CHANGES
No changes to report today.

TERM DEPOSIT/SAVINGS RATE CHANGES
BNZ made some minor changes (increases) today but none are market leading. But it has taken their 1 year rate to 6.00%. Of the main banks, only ANZ and Westpac now don't have a 6% one year rate offer.

'STRUGGLE STREET'
Manufacturing is struggling low, as reflected in the BNZ-BusinessNZ PMI results for August. The contraction of the sector is extending, with an almsot continuous downslide since August 2022. In fact, the contraction is now its deepest since the pandemic-induced pullbacks of April 2020 and August 2021. Outside of those two special events, you have to go back to 2009 to find a tougher environment for 'making stuff' in New Zealand. Of particular concern is that the 'new orders' component is also at its weakest level since 2009.

FEWER BUTTERFAT PRODUCTS AHEAD
Fonterra said it is cutting back product offered at the GlobalDairyTrade auctions in the next year, specifically for butter and AMF. They say weather conditions in the North Island, and farmer suppliers cutting back as costs weigh on them, are behind the shift lower, and are part of extended demand, product mix, and weather uncertainties.

WMP PRICE JUMP HESITATES
There was a GDT Pulse event this week where WMP is auctioned. That recorded a -1.7% fall in price to US$2,655/tonne from the $2702/tonne achieved at the full GST auction a week earlier. But at least it was +8.4% higher than the record low Pulse event price hit on both August 22 and 29.

TRACTOR COMEBACK
After a tough July, the number of new tractors sold in August bounced back to about the same level as a year ago. The 264 sold in August (vs 267 in August last year) is about the best since 2018.

SEVEN MONTHS & LESS THAN 60% OF CLAIMS PAID
Insurers say the latest estimate of the cost of general insurance claims for the twin climate disasters of the Auckland Anniversary Weekend floods and Cyclone Gabrielle is now $3.5 bln for the 112,812 claims. It has been 31 weeks (seven+ months) since these events and so far paid out $2.053 bln of that, or 59%. If the Christchurch earthquake is any guide the final 40% will be paid out even slower. In addition to the Auckland Anniversary Weekend floods and Cyclone Gabrielle events, extreme weather in the North Island between 21 and 28 February (2,801 claims, $20.8 mln) and again over 9-10 May (3,822 claims, $41.4 mln) bring the total for climate related claims in 2023 to 119,435 worth around $3.563 bln.

MORE POLICY UPDATES
Today there are policy updates in our Election 2023 comparison tool for: National, on Agriculture, ACT on benefits and income support, and some policy starting to come through from Labour, today on Health, Justice & Courts, and Training & Apprenticeships.

HARDLY CREDIBLE
China said the cost of new houses slipped -0.1% in August from July, the same slippage the month before. Given the known low sales levels, this seems a dubious outcome, especially as only 16 of the 70 largest cities reported prices holding or advancing very slightly. The rest fell. For pre-owned houses, prices inched up in only 3 of the 70 major cities in August from July. The reported slippages in the other 67 cities were remarkably similar, which also doesn't pass the smell test. This all has significant implications for international travel volumes, and visitor levels from China.

CHINESE CAR SALES STALL IN AUGUST
China also said that "the total retail sales of consumer goods was 3,793.3 billion yuan, a year-on-year increase of 4.6%. Among them, the retail sales of consumer goods other than automobiles were 3.382 billion yuan, an increase of 5.1%". It is simple math to extract from that "retail sales of automobiles" and that showed virtually zero growth.

MORE CREDIBILITY ISSUES
Meanwhile, Chinese electricity production stalled in August from July, coming in -2.5% lower, which for a country as large as China is quite a drop. Year on year, electricity production rise only +1.1%, also not indicative of an expanding economy. But nevertheless, they reported industrial production rose +4.5% from a year ago. Either China is undergoing a recent spectacular burst of energy efficiency and reduced energy density, or one of those statistics is unreliable.

SWAPS STILL ON HOLD
Wholesale swap rates were probably little-changed again today across the whole curve. But the real reaction will come at the close. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 5.66%. The Australian 10 year bond yield is down a rather large -11 bps to 4.01%. The China 10 year bond rate is unchanged at 2.66%. The NZ Government 10 year bond rate is down -2 bps at 5.01%, but still above the earlier RBNZ fixing of 4.94% which was down -4 bps today. The UST 10 year yield is up +5 bps at 4.28%.

EQUITIES REVEAL THE NZX50 NOT GETTING THE GAINS
The NZX50 is up +0.1% near today's close and heading for a -0.2% weekly slip. But the ASX200 is up a very strong +1.8% in early afternoon trade and heading for a +2.3% weekly rise. Hong Kong is up +1.6% in opening trade, heading for a +2.2% weekly gain. Shanghai isn't showing anything like that however, up +0.3% on opening trade and if that holds it will be up +0.5% for the week. Tokyo has opened its Friday trade up +1.3% and if held will put them +2.8% higher for the week. And the S&P500 up +0.8% in Thursday trade on Wall Street and so far for the week, up +1.2%.

GOLD UP
In early Asian trade, gold is at US$1916/oz and up +US$6 from this time yesterday. Earlier in New York it closed at US$1911/oz, and earlier still in London at US$1902/oz.

NZD HOLDS
The Kiwi dollar is unchanged from this time yesterday at 59.3 USc. Against the Aussie we are back down -½c at 91.7 AUc and still it its recent tight range. Against the euro we are up another +½c at 55.7 euro cents. The TWI-5 is little-changed at just over 68.7.

BITCOIN HIGHER
The bitcoin price is higher and now at US$26,606 and up another +1.6% from this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.2%.

This soil moisture chart is animated here.

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