A review of things you need to know before you go home on Monday; Kiwibank goes lower, business confidence soft, deposit growth soars, loan growth weak, NZD firm, & more

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes today.

TERM DEPOSIT RATE CHANGES
Kiwibank cut term deposit rates, matching the main bank lowball offers. The reason is below.

'FEELING THE PRESSURE'
The ANZ business confidence survey for August shows that sentiment is down but intentions and expectations saw 'relatively modest falls' compared to the first half of the month.

FAST GROWTH
Household deposits rose by +$1.25 bln in July from June, continuing a strong rising tide that started in March. That is a gain of almost +$12 bln in those five months, the most ever recorded in those months and almost double the GFC rise. The July levels involve a rise of +8.0% in a year and the healthiest in four years. And this is despite household term deposit balances falling -3.3% pa (and the most ever). All bank account deposits rose by almost $5 bln in July from June and are up more than $25 bln this the March to July period.

MEAGER GROWTH ...
In sharp contrast, bank lending only rose +$600 mln in the same March to July period, up in July by only +3.3% year-on-year which is the slowest annual gain since year 2013. That means new bank deposits (including business, government and household) exceeded new bank lending by $24 bln placing heavy downward pressure on the interest rates banks are prepared to pay for a term deposit. Banks just don't need the funds because loan demand has virtually dried up.

... ONLY BECAUSE OF HOUSING DEMAND
The only area where lending is growing is mortgage lending, up +6.4% in July from the same month a year ago. (In Australia, it was up +3.1%.) Business lending growth has evaporated (+0.1% year-on-year when it was +7.7% in July 2019) (Australia +3.7%.), lending to agriculture is shrinking (down -1.3% in July from a year ago), and consumer lending is in full retreat (down -10.2%) and shoved lower by the Buy-Now-Pay-Later sector. (Australia by -12.1%.)

HANGING IN THERE WITH THE PROGRAM
KiwiSaver hardship withdrawal data for July isn't a gruesome as you might have expected. In July 2019 there were 3841 of this type of withdrawal. In July 2020 there were 4680. Sure, that is +20% more, but five months into steep job losses and income stress, the extra +839 isn't especially remarkable.

CHINA PMIs EXPANDING
China's official factory PMI for August has held its small expansion level and came in at almost the expected level. But their services PMI is showing a clearer expansion. New factory order growth is now at its best level in a year, even if is an expansion that is modest. New export orders are now hardly contracting after a horror run, so that is a major improvement. New orders in the service sector are expanding well now. Expected future activity has turned quite enthusiastic in both sectors. In recent months, these official readings have proven conservative compared to the private PMI surveys.

STANDARD DOUBLE STANDARDS
After Chairman Xi extolled Thomas Piketty's first book, it has now said it won't release his second one unless he agrees to censoring his criticisms of China's growing inequality.

EQUITY UPDATES
The NZX50 Capital Index is down -0.7% today, while the ASX200 is flat (+0.1%). Shanghai has opened up +0.8%, Hong Kong is up +1.2% and Tokyo is up almost +2.0% in early trade today. The S&P500 futures index suggests Wall Street will open +0.5% tomorrow.

SWAP RATES UPDATE
Today's swap rates aren't available yet. We will update this note if there is a significant movement. The 90-day bank bill rate is unchanged at 0.29%. The Aussie Govt 10yr has settled back by -3 bps today to 0.99%. The China Govt 10yr is up +1 bp at 3.09%. And the NZ Govt 10yr yield is back up, rising by +2 bps to 0.61%. But the UST 10yr has retreated from last week's close, down -5 bps to 0.73%.

NZ DOLLAR FIRM
The Kiwi dollar has held it weekend rise, now at 67.4 USc as the greenback sinks. But against the Aussie we are unchanged from Friday at 91.4 AUc. Against the euro we are now up at 56.6 euro cents. That all means our TWI-5 is up to 69.9.

BITCOIN ALSO FIRM
The price of bitcoin is up +2.5% from Friday to US$11,679. The bitcoin price is charted in the currency set below.

This soil moisture chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».