A review of things you need to know before you go home on Wednesday; more rate reductions, Aussie inflation, retail strong, NZSF under pressure, swaps flatten, NZD stable

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

TODAY'S MORTGAGE RATE CHANGES
The Cooperative Bank reduced its 18 month rate to 4.39% today, down -10 bps. This is not the lowest for 18 months however. That is by SBS Bank at 4.35%.

TODAY'S DEPOSIT RATE CHANGES
WBS and Heretaunga Building Society both lowered TD and savings rates today.

A BIT MORE INFLATION OVER THERE
Inflation is barely registering in New Zealand. In the year to December it rose +0.1% although the RBNZ's preferred measure ticked up to +1.6%. Today, Australia released its December data which came in slightly higher than expected, at +1.7% per cent year-on-year. Their underlying inflation rate come in a tad higher than expected, at +2.1 per cent year-on-year.

A HARDER SQUEEZE
First home buyers have been getting squeezed out of the Auckland market for more than two years, according to the Home Loan Affordability reports released today.

EVEN THE CHINESE IGNORE THEIR STOCK MARKET
Chinese consumer sentiment is up in January. The Westpac MNI China Consumer Sentiment Indicator increased, led by a bounce-back in consumers’ optimism about their expected personal finances which offset a worsening in expectations for business conditions. Significant share price declines in early January had no material impact on overall consumer confidence. The headline sentiment indicator rose 1% to 114.9 in January, reaching its highest level since September last year. Today, the Shanghai stock exchange index is down another -2% following yesterday's eye-watering -6.4% drop.

RETAILERS CELEBRATED CHRISTMAS
Retail sales data from a large shopping center landlord (Kiwi Income Property Trust) shows the big category winners of 2015 were cinema operators, with sales surging +9.6%, along with commercial services (most notably travel and telecommunications) up +9.4%, pharmacy and cosmetics up +6.8%, personal services up +5.1% and fashion, a subdued performer in previous years, showing growth of +1.6%.

A TOUGH START TO 2016
The NZ Super Fund returned +6.5% over 2015, increasing in size by NZ$2.0 bln to end the calendar year at NZ$29.5 bln. The Fund exceeded its passive Reference Portfolio benchmark, equivalent to a market return, by +2.8% or $766 mln during the year and also more than doubled the return on New Zealand Treasury Bills, a measure of the Government’s cost of debt, exceeding it by +3.4% or $934 million. "While the return for the 2015 calendar year was a good one," said Chief Executive Adrian Orr, "global equity markets had fallen significantly since then, with the global MSCI index down -7.9% as at 22 January 2016."

WHOLESALE RATES FLATTEN
For the first time in a while we saw some flattening of the swap rate curve today. One and two year rates actually rose +1 bps while rates for four and five years fell -1 bps, and rates for 7 and ten years fell -2 and -3 bps respectively. The 90 day bank bill rate fell by -1 bp and is now at 2.71%.

NZ DOLLAR STABLE
The New Zealand dollar is basically unchanged today. It is now at 64.9 USc, at 92.3 AUc, and at 59.8 euro cents. The TWI-5 is now at 70.5. Check our real-time charts here.

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