A review of things you need to know before you go home on Monday; wholesale interest rates leap on surprisingly high CPI, PSI less terrible, consumer saving sentiment, China falters, swaps take off, NZD firms, & more

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

MORTGAGE RATE CHANGES
There have been fixed rate increases from Kiwibank and BNZ. But there has also been a set of fixed rate reductions from TSB.

"WE'LL BEAT IT BY 0.05%"
TSB is no longer just matching the big four Aussie banks, it is offering to undercut them. "Bring us any current nationally advertised fixed home loan rate from ASB, ANZ, BNZ or Westpac for the same term and offer conditions and we’ll beat it by 0.05%, subject to the borrower meeting TSB’s lending suitability and affordability criteria. Minimum new lending of $100,000 applies. The offer only applies to the purchase, refinance from another lender, or building of (a) residential owner-occupied properties with a loan-to-value (LVR) ratio under 80% and (b) residential investment properties with an LVR under 60%. Offer available until 30 November 2021."

TERM DEPOSIT RATE CHANGES
None announced today.

THE BEAST IS BACK (H/T JK)
CPI inflation soared to 4.9% in the full year to September 2021. This is a 10-year high. But it is probably running worse than this according to the Statistics New Zealand data released today because the price growth rose 2.2% in September quarter alone, which was by far more than economists and the Reserve Bank picked.

IMPORTING INFLATION
Of particular note is that tradables inflation was up +5.7% year on year, up +1.7% quarter-on-quarter (so an annualised rate of +6.8%!). It has been decade since it has been this high and 13 years since tradable inflation has beaten non-tradable inflation by this much. We have just ended a very long streak where imports have been keeping our overall inflation rate at bay. Now it is juicing it. Only a fast rising exchange rate can peg that back, otherwise it will compound the issue.

INFLATION RESULTS HARD TO SWALLOW
The RBNZ has delayed releasing its Sectoral Factor Model which is experiencing “technical difficulties”. (H/T NS)

BRUISED BUT NOT ON KNEES YET
The services sector remained in contraction during September, according to the BNZ-BusinessNZ PSI. But this was up 11.5 points from the terrible August levels as the country moved to eased alert levels during September, freeing up some businesses for increased activity. The key positive in this data is employment, lifting to an above average 52.0 from August’s 49.3. This seems consistent with firms expecting activity to bounce once restrictions are eased, fiscal support from government, and a reluctance to let staff go. It bodes well for the official labour market statistics to hold up (perhaps very) well in Q3, even with a huge decline in GDP, says BNZ.

NAME CHANGE
Asset Finance's official name has been changed to Xceda Finance Limited, according to Companies Office records. That reflects its Australian parentage.

RISKY CAPITAL
Kiwibank is looking for $250 mln via issuing perpetual preference shares. They will pay at least 2.5% above the 5 year swap rate, which today is an bumped up 2.21%. To they are looking a preference shares that will pay more than 4.7% pa - for high risk capital that could be used to bale it out if the bank stumbles.

SURPRISING POSITIVITY
Consumer NZ's Sentiment Tracker reports some unexpected findings regarding personal savings. They say "15% of New Zealanders had no savings, and a further 27% were anxious about their level of savings and would like to have more tucked away." This hardly seems news - everyone surely would like more savings. But what does seem unexpected is that 58% of people (3 in 5) responded to their survey saying they are either "happy" with what they have (35%), "satisfied" with what they have (18%) or have "more than enough" (5%). In fact almost half of them reported saving 5% or more of their income over the past three months. In the middle of the uncertainties of a pandemic these results seem remarkably upbeat. They clearly surprised Consumer NZ who went with the negative heading instead.

CHINA FALTERS
In China, more evidence of a sharper slowdown than expected. The Chinese economy expanded at a +4.9% year-on-year pace in Q3 of 2021, and well below the +7.9% growth in Q2. It was also below market estimates of +5.2%. It was the slowest pace of expansion since Q3 2020, and is due to their electricity problems, widespread supply chain bottlenecks, a faltering property sector, and persistent Delta outbreaks.

PANDEMIC UPDATE
In Australia Delta cases in Victoria have risen to 1903 cases reported there today, and more than expected. There are now 23,376 active cases in the state and there were six deaths yesterday. In NSW there were another 266 new community cases reported today with 4,490 active locally acquired cases which is lower, but they had another 5 deaths yesterday. Queensland is reporting zero new cases again. The ACT has 17 new cases. Overall in Australia, more than 68% of eligible Aussies are fully vaccinated, plus 17% have now had one shot so far. There were five new cases in New Zealand at the border, and 60 new community cases. Now 84.9% of Kiwis nationally aged 12 and over have had at lease one vaccination and the Australian rate is now at 84.6% of all 16 year olds and older.

GOLD FIRMER
In early Asian trading, gold is up +US$3 from where we opened this morning at US$1770/oz.

EQUITIES MOSTLY NEGATIVE
The NZX50 started today in positive territory but has slipped just negative near the end of the trading session. The ASX200 is up +0.3% in early afternoon trade. The very large Tokyo market has opened the week down -0.3%. Hong Kong has opened -0.6% lower, and Shanghai has also opened -0.6% lower. Despite the strong prospect of strong earnings reports, the S&P500 is down -0.1% ahead of the Wall Street opening.

SWAP & BONDS RATES LEAP
We don't have today's closing swap rates yet. They probably rose strongly across all terms. So far, the one year swap is up +19 bps, the two year swap at +18 bps. We will update this if there are significantly different changes when the end-of-day data comes through. The 90 day bank bill rate is up +5 bps at 0.74%. The Australian Govt ten year benchmark rate is now at 1.70% and up +4 bps from where we opened this morning. The China Govt 10yr is now at 3.04% and up +4 bps as well. The New Zealand Govt 10 year rate is now at 2.31% and up a massive +13 bps from just this morning. All thanks to the CPI of course. And that is now well above the earlier RBNZ fix for that rate at 2.25% (+7 bps) because the trend is strongly higher. The US Govt ten year is up +1 bp to 1.58% from this time this morning.

NZ DOLLAR FIRMER
The Kiwi dollar is up another +10 bps to 70.8 USc from where we opened this morning. Against the Aussie we are up tot 95.4 AUc. Against the euro we are up to 61.1 euro cents. The TWI-5 is now at 74.4 and further above the top of the 72-74 range we have been in for most of the past eleven months and touching its highest in eight months.

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BITCOIN RISES
The bitcoin price is now at US$62,375 and +1.0% above where we opened today. Volatility in the past 24 hours has been moderate at just over +/- 2.9%.

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