A review of things you need to know before you sign off on Thursday; some retail rate rises, Marsden Point changes affect GDP data, Westpac NZ pays up, Lowe moves markets, swaps fall, NZD rises, & 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
ASB raised two short fixed mortgage rates, for 12 and 18 months. More here.

TERM DEPOSIT RATE CHANGES
ASB raised two short term deposit rates too. And SBS Bank raised most TD rates; their new 1 year rate has become 4.30% and the highest of any bank.

A LOOMING INVENTORY PROBLEM?
Some of the final data for the Q2 GDP result which is due out next week was released today. The factory sales data was weak, down -1.5% from Q1 and only above year ago levels because of an exceptionally strong Q4-2021 quarter. One big impact in the June quarter is from the ending of local refining activity at Marsden Point. Raw material stocks were up +5% from the prior quarter, but finished goods stocks were down -19% on the same basis. However wholesale sales were very strong, up +21% from year-ago levels and wholesale inventories up an eye-catching +38%. From Q1, they were up +22%. These clearly are a problem, adding $3.3 bln in just 90 days. But again, the big increase in wholesale inventories probably came from the new Marsden Point status as only an import facility.

FUNDING NO LONGER 'CHEAP'
Westpac NZ's offer of unsecured subordinated notes raised $600 mln in total at an interest rates for the first five years of 6.19% pa. That compares with a Westpac 5 year term deposit interest rate offer of 4.50%. (The term deposit offer would rank above the "unsecured subordinated notes" which could be used to bolster capital if the bank needed that in times of stress.)

RISING YIELDS, STRONG DEMAND FOR RISK-FREE
There were 133 bids for the $400 mln on offer today at the Treasury debt tender. All up they bid $1.132 bln; 46 were successful. The $200 mln May 2026 offer (4 years) went for a yield of 3.87% to the 26 of the 47 bidders. That was up from 3.47% 3 weeks ago. The $150 mln April 2029 offer (7 years) had 56 bidders but only 8 were successful. The yield was 3.90% and up from 3.45% three weeks ago. The final small $50 mln May 2051 (29 years) tender went for 4.25% and up from 3.95% last time.

LOWE THE DOVE
The RBA Governor has been speaking today, and left his audience with a dovish message, implying that their next rise might be just +25 bps. These comments moved both rates and currency markets locally. He was expected to be a bit dovish, but in the end he was more so than expected.

RECORD DROP
Continuing the theme of big numbers being reported today, Australian exports plunged in July from June mainly due to sharp falls in the export of minerals and coal. That tanked their trade balance sharply, in fact the June to July fall was their largest ever, falling almost -AU$11 bln in one month resulting in a surplus of only +AU$8.5 bln (the previous record monthly fall was -AU$6.7 bln in January 2017.) Within this data was the note that Australia's rural exports rose +3.9% on a 'healthy'(?) grain market.

JAPAN DELIVERS SOME 'GOOD NEWS'
The Q2-2022 GDP data for Japan was released today (the second estimate) and economic activity came in better than expected. It was +3.5% higher than a year ago when a +2.9% expansion was expected, boosted by a strong pickup in private consumption and a faster rise in government spending. (Don't forget, this is after inflation has been removed.)

SWAP RATES REVERSE
Wholesale swap rates are probably much lower today across the curve. Our chart will record the final positions. The 90 day bank bill rate is unchanged at 3.53%. That is still near its highest since July 2016. The Australian 10 year bond yield is now at 3.56% and down -19 bps from this time yesterday. The China 10 year bond rate is unchanged at 2.65%. The NZ Government 10 year bond rate is now at 3.96% and down -15 bps from this time yesterday and now below the earlier RBNZ fix for this bond which was down -9 bps at 4.01%. The UST 10 year is now at 3.23% and has dropped -11 bps.

EQUITIES MAKE STRONG RECOVERY
Wall Street ended up +1.8% on the S&P500. Tokyo has opened sharply higher, up +2.1%. Hong Kong is down another -0.4%. And Shanghai is down -0.1% in early trade. The ASX is up +1.5%. And the NZX50 is up +0.9%.

GOLD RECOVERS
In early Asian trade, gold is up +US$18 from this time yesterday to US$1,715/oz.

NZD RECOVERS
The Kiwi dollar is now up +½c and at 60.5 USc recovering from this time yesterday. Against the AUD we are also up almost +½c at 89.9 AUc on the Lowe comments. Against the euro we are at 60.5 euro cents. That all means our TWI-5 is down at 70.3 and up +30 bps from yesterday.

BITCOIN RECOVERS
Bitcoin has recovered some of yesterday's fall, now at US$19,252 and up +2.7% from this time yesterday. Volatility over the past 24 hours has been moderate at +/- 2.2%.

This soil moisture chart is animated here.

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