A review of things you need to know before you go home on Friday; more rate cuts, factories happy, Fonterra cuts back, food prices unchanged, Govt bond yields stable, swaps hold lower

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

TODAY'S MORTGAGE RATE CHANGES
Cooperative Bank, TSB Bank and SBS Bank all passed on the full -25 bps cut today to floating rates. Only HSBC has yet to announce its floating rate change. BNZ followed Westpac however only passing on a part of the reduction. Kiwibank and the Cooperative Bank both cut some fixed rates with the Cooperative Bank two year rate being market-leading.

TODAY'S DEPOSIT RATE CHANGES
No rate changes to report today, but we are pretty certain there will be some cuts announced on Monday, including from a major bank.

FACTORIES BUZZING
This is what the BNZ economists made of the improved August PMI. "We were not surprised to see August’s Performance of Manufacturing Index come in close to July’s reading. But we were surprised to see it nudge a bit higher, to 55.0 from 53.7, rather than nudge a bit lower. It is not a big move, but the improvement is against the flow of generally softer economic indicators and certainly some rather dour economic commentary over recent months. It pays not to read too much into one month’s result. But, equally, it would also be unwise to dismiss August’s result out of hand given the buoyancy in the production, new orders and employment sub-indices as well as across industries, regions, and firm size."

FOOD PRICES INCH UP
In the year to August 2015, food prices increased by just +0.4%, Statistics New Zealand said today. This follows an increase of +1.2% in the year to July. Fruit and vegetable prices increased +3.7% over the year, with Restaurant meals and ready-to-eat food prices rising +1.9%, while non-alcoholic drinks rose +0.9%. Meat, poultry, and fish prices remained unchanged. Lower prices for grocery food (down -1.8% to their lowest level in five years) were influenced by lower prices for fresh milk, cheese, and butter. Fresh milk prices are now at the lowest level since August 2013. Lower cheese prices (down -8.9%) were influenced by more discounting.

CUTTING BACK
Fonterra is reducing further what it offers on the GDT auction platform. WMP is the main contributor to the change with a 8,400 metric tonnes decrease over the September to November period and a further reduction January to March of 7,500 metric tonnes. Lower expected milk collections are the reasons given.

ONLY HOUSES
In Australia, commercial borrowing is falling, down -3.6% year-on-year to July (-2.7% sa). Lending overall is only being held up by housing loans - even personal finance is going backwards. Can a retrenchment in housing be far away now? The news from Western Australia is particularly sobering.

GOVT BOND YIELDS UNCHANGED
The latest Crown bond tender of NZ$200 mln 2027's received bids for NZ$437 mln. The coverage ratio improved but the weighted average yield was up a only smidge. The overall proportion of Government bonds now held by non-residents fell marginally to 69.%.

BIG WEEK COMING
Big week of news coming up next week. Early Wednesday morning the next dairy auction results will be known; data suggests another strong gain. Then we get the June balance of payments data which may show it worsening to -3.8% of GDP. And on Thursday we get the June quarter GDP growth number; expect +3%. And finally on Friday, the US Fed will tell us whether they are raising their policy interest rate. Markets are unsure; it could go either way. If they do, expect economic turbulence.

WHOLESALE RATES HOLD
Swap rates are holding yesterday's big fall after the cut from the RBNZ. Rates are unchanged at the lower level. The 90 day bank bill rate went up by +1 bp to 2.85%.

NZ DOLLAR FLAT
The Kiwi dollar moved very little today. The NZD is holding at 63 USc, at 89.2 AUc and 55.9 euro cents. The TWI-5 is now at 67.5. Check our real-time charts here.

You can now see an animation of this chart. Click on it, or click here.