A review of things you need to know before you sign off on Wednesday; ETS prices up. dairy prices up, retail doing it tough, AU economy expanding solidly, swaps jump again, NZD sinks again, & more

Here are the key things you need to know before you leave work today (or if you already work from home, before you shutdown your laptop).

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
None here either, although AUD cash management accounts are up +50 bps.

MORE UNITS AUCTIONED INTO ETS CARBON MARKET
There was the official Q3 carbon market auction today. Prior it it NZUs traded at $87/unit (essentially $87/tonne of carbon equivalent). The auction was completed at $85.40/NZU with 4,825,000 units offered by the Government, the scheduled amount. A similar-sized auction will be held on December 7, 2022. There were 26 participants and 23 won something. Today's price was +12.3% higher than the year-ago price.

CARD FEE CAPS
The Commerce Commission has released draft guidance explaining new interchange fee caps for Mastercard and Visa networks. The guidance will ultimately help participants in these networks comply with price limits on interchange fees which will come into effect in November. But none of this addresses the tax schemes that both networks have set up to insulate them from paying almost anything of their profits for operating here. This is all about ensuring the fees built in don't disadvantage consumers, fees no consumer ever sees of knows about, but merchants are forced to pay so just get added to consumer prices.

A SUDDEN TURN UP
The latest dairy auction brought higher prices. They were up +4.9% overall in USD terms, up more than +10% in NZD terms from the prior event two weeks ago. Markets are starting to price in the impact of lower global milk supply. The gains achieved by AMF and WMP were impressive. Milk supply and energy factors will start weighing on the market in suppliers favour as we move towards winter in the northern hemisphere. The market will only move faster when participation from the Chinese market increases. Farm gate forecasts for the 2022/23 season now have upsides, and material if the NZD stays low.

DOING IT TOUGH
Worldline/Paymark reports that one year on from the delta outbreak that locked down the country, retail volumes remain soft while the Government’s Cost of Living Payment coincides with a small bump in consumer spending.

CASH FLOW STRESS
Xero has released some research that they say shows 45% of SMEs were paid late by their customers in 2021 and 8% were more than 1 month past due. But the same research shows this is a lesser problem here than in either Australia or the UK where Xero also has significant subscriber data they could analyse.

SERIES HIGH
In their B6 series, the RBNZ is reporting that average yields on business loans have risen to 4.89% as at the end of July 2022. This is the highest since this series started in 2017. And the July rise from both the prior month, and the same month a year ago, were the biggest jump ever in this series. (The monthly yield on total business loans is a weighted average yield on the total of all business loans for registered banks (not fully secured by residential property).

TRADE REVERSAL
China released its August export data today and it was weak, even weaker than expected. Their import data was weak as well. Their trade surplus dipped.

SOLID EXPANSION
Australian economic activity rose in Q2-2022 by about what was expected to be +3.6% more (real) than a year ago. In Q1-2022 the growth rate was +3.3%. Consumer spending was a bright spot in the June quarter. Exports also performed well, however, elsewhere conditions were pretty mixed. The New Zealand Q2-2022 GDP results will be released on Thursday, September 15 (next week). They are expected to record an expansion of just +1.2% from a year ago (RBNZ forecast in the August MPS).

OIL PRICE FALLS
Oil prices have fallen -US$1 since this morning as demand fears grow. The EU will clearly be a smaller net buyer, even if they do raise more orders other than for Russia. Their demand shift lower will likely be permanent.

SWAP RATES JUMP
Wholesale swap rates are probably much higher today, potentially by about +8 bps across the curve. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps at 3.53%. That is still near its highest since July 2016. The Australian 10 year bond yield is now at 3.75% and up +9 bps from this time yesterday. The China 10 year bond rate is marginally firmer at 2.65%. The NZ Government 10 year bond rate is now at 4.11% and up another +7 bps from this time yesterday and now just above the earlier RBNZ fix for this bond which was up another +7 bps at 4.10%. The UST 10 year has now still at 3.34% and up a startling +13 bps.

EQUITIES FALL AWAY AT VARYING PACE
Wall Street ended down -0.4% on the S&P500. The NASDAQ was down -0.7%. Tokyo has opened down another -1.2%. Hong Kong is also down another -1.2%. But Shanghai is up in early trade by +0.2%. The ASX is down -1.1%. But the NZX50 is only down -0.3%, restrained by FPH's +1.6% rise today. SkyCity and ATM both weighed heavily on the market today, down -3.9% and -2.4% respectively.

GOLD FALLS
In early Asian trade, gold is down -US$21 from this time yesterday to US$1,697/oz.

NZD SINKS
The Kiwi dollar is now down and under 60 USc and a full -1c lower than this time yesterday. It's only a USD thing really. The last time we were below 60 USc was in April 2020. Against the AUD we are little-changed from yesterday at 89.5 AUc. Against the euro we are at 60.8 euro cents and down -¾c. That all means our TWI-5 is down at 70 and its lowest since November 2020.

BITCOIN DROPS
Bitcoin has fallen sharply, now at US$18,739 and down -5.0% from this time yesterday. Volatility over the past 24 hours has been high at +/- 3.6%.

This soil moisture chart is animated here.

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