A review of things you need to know before you go home Wednesday; no rate changes, record trade surplus, Fonterra upbeat, new mortgage lending tanks, China downgraded, swap rates up & steeper, NZD rising

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

MORTGAGE RATE CHANGES
No changes to report today.

DEPOSIT RATE CHANGES
No changes today here either.

CHINESE-STYLE GROWTH
We are selling our export goods at an impressive rate. In fact, April was an all-time record month and April's goods trade surplus was the largest monthly surplus since March 2015 and the largest April surplus since April 2011. Easter fell in April this year, but the holiday appeared to have little impact on exports. Both exports and imports reached new highs for an April month. Goods exports in April 2017 were worth $4.8 bn, up +9.8% from April 2016. The top-five export commodities all rose compared with April 2016. Milk powder, butter, and cheese continued the increases seen in recent months, up +35% on the back of higher prices. Logs, wood, and wood articles rose +18%, with quantities up at a similar rate. Wine values rose +20% with quantities up +40%. Goods imports were worth $4.2 bln, up +4.9% from April last year.

BULLISH
As if to confirm this data, Fonterra released a higher 2016/17 payout forecast at $6.15%/kgMS, and an even higher forecast for the new season at $6.50/kgMS. The payout history for all dairy companies is here.

BEARISH I
Lending for new mortgages in April was just NZ$4.6 bln, down an staggering -30% from $6.5 bln in April 2016. Maybe Easter had something to do with it, but that doesn't answer such a steep drop. New lending to investors fell -48%. There is now virtually no new lending to investors at 70%+ LVRs. The drops for lending to owner-occupiers and First Home Buyers were much less, but still steep at -20%.

BEARISH II
Across the ditch the data out today was not as positive. The value of construction completed is falling and falling rather quickly. They really need the spending from their latest Federal Budget to kick in soon. In the March quarter engineering construction fell -13% year-on-year. But there were also falls for residential construction (-3.1%), and for other types of buildings (-2.1%).

TOO MUCH DEBT HAS CONSEQUENCES
Moody's has downgraded China's long-term local and foreign currency issuer ratings one notch to A1 from Aa3. (In contrast, Moody's still has New Zealand of Aaa, its top rating and now four notches above China.) "The downgrade reflects Moody's expectation that China's financial strength will erode somewhat over the coming years, with economy-wide debt continuing to rise as potential growth slows," Moody's said in a statement. "While ongoing progress on reforms is likely to transform the economy and financial system over time, it is not likely to prevent a further material rise in economy-wide debt, and the consequent increase in contingent liabilities for the government," it said.

VERY BEARISH
Not to be outdone, S&P delivered more bad news to Brazil, warning that it may cut the country’s sovereign debt rating because of its troubled political situation. S&P currently has them rated BB with a negative outlook, already in junk territory. Bad governance costs are real.

SENTENCED
Napier loan company Cash to You Loans Limited has been banned indefinitely from operating as a lender, after charging borrowers unreasonable fees and excess interest and failing to correctly disclose fees charged. The company was sentenced in the Napier District Court on eight charges under the Credit Contracts and Consumer Finance Act 2003 (CCCFA), relating to loans it provided between 1 April 2012 and 31 March 2015.

WHOLESALE RATES UP
Market expectations of a US Fed rate hike, plus good data in both the US and New Zealand has underpinned a rise across the board today with a steeper tone. The two year is up +1 bp, the five year is up +3 bps, and the ten year is up +4 bps. The 90 day bank bill rate is unchanged at 1.97%.

NZ DOLLAR FIRMS
The NZD is still at 70.1 USc. But we are stronger on the crosses at 94 AUc (the China downgrade didn't help the Aussie dollar), and at 62.7 euro cents. The TWI-5 is at 74.5. Meanwhile bitcoin has hit another new record at US$2,355, and that is up +9.4% on the day. (Fidelity Investments Chief Executive Abigail Johnson championed the growth of bitcoin and other alternative currencies in a speech Tuesday, a rare vote of confidence by a major player in the financial world.) Meanwhile, the price of gold has slipped.

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