A review of things you need to know before you sign off on Friday; PPI's underpin inflation, Stobo to the FMA, S&P explains its Watercare position, swaps firmish, NZD on hold, & 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/LOAN RATE CHANGES
ICBC today trimmed its 1 and 2 year fixed carded rates.

TERM DEPOSIT/SAVINGS RATE CHANGES
Nothing here today.

TOUGH IF YOU HAVE TO SELL
A huge nine year high overhang of unsold properties is squeezing the housing market in buyers' favour. Coming as we head into winter is doing nothing for sellers.

PRODUCER PRICES START TO RISE AGAIN
After declining for two quarters, producer output prices rose in the March quarter, by +2.6% from the same quarter a year ago. Input prices also rose +2.6% on the same basis, but that is after three quarters of declines.

FARM COSTS MODERATE
On the other hand, farm operating expenses extended their long run fall (excluding the costs of livestock) and were up just +2.2% in the March quarter. The largest rises were for horticulture (+3.5% year-on-year. Sheep & beef units had a +2.5% rise, while dairy is getting of light with a +1.3% annual rise falling consistently now for two years and up the least for a March quarter since 2017 (pandemic excepted). The largest push up cost for all farms is insurance (+10.8%), while fertiliser costs are now retreatimng fast (-6.9%).

AS DO COSTS OF CAPITAL GOODS
Capital goods prices are also growing much more slowly but were up +3.2% in March from a year ago. But they are being kept up by housing and other construction. The costs of new transport (+1.9%) and plant & equipment (+2.5%) is rising much slower.

NEW GOVERNANCE OVERSIGHT AT THE FMA
Commerce and Consumer Affairs Minister Andrew Bayly names ex-BT Funds Management CEO Craig Stobo as FMA Chairman.

S&P EXPLAINS WHAT IT WAS ASKED TO DO ON THE WATERCARE SEPARATION
Ratings agency S&P Global Ratings said the Government and the Auckland Council asked to evaluate some specific scenarios' hypothetical credit consequences on our ratings on the Council's AA/Stable rating, which they did. And they advised that in the short term a change in the AA was unlikely, but the outlook would shift to Negative. (They did not choose the scenarios, the Government did.) They were not asked to re-evaluate Watercare's likely position when it is separated from Auckland Council, but they did suggest that the deconsolidation is likely to be positive for Watercare.

DEFENDANTS NAMED
Two defendants can now be named in a Serious Fraud Office case alleging bribery and corruption related to the award of lucrative public sector construction contracts. The charges allege the defendant, Daud Suryantyo, abused his position as a public official while employed at what was then Regional Facilities Auckland (RFA) and later at the Counties Manukau District Health Board (CMDHB). Suryantyo is alleged to have taken advantage of his position and accessed official information that he was entrusted with to facilitate the awarding of contracts to Trinity Construction and a second company associated with the third defendant.  In total, the two companies are alleged to have received approximately $3.5 mln in public funds. He is charged along with Henry Rogo (formerly the director of Trinity Construction) and a third defendant who cannot yet be named.

CHINA DATA DUMP
China's industrial production growth recovered in April after a disappointing March to be back the expansion level in the prior three months. But this is the only 'good news' in today's data dump from the Middle Kingdom. But their retail sales rose by only +2.3% year-on-year in April, down from +3.1% in March and missing market forecasts of +3.8%. That is quite a miss. Prices for new dwellings fell their most since July 2015. Prices for resales fell even more. The depth of their property sector retreat is laid bare here - and this is official information. Perhaps it is no wonder they are considering a wholesale state intervention in the sector. Electricity production slipped in April from March to be up only +3.1% in the year. That is a long way lower than the +8% rise in the year to December. If 3.1% is a proxy for GDP, they are not on track to achieve Beijing's growth targets.

SWAP RATES RISE
Wholesale swap rates are likely to be higher on global forces today, especially at the longer end and perhaps clawing back some of yesterday's drop. Our chart below will record the final positions. The 90 day bank bill rate is down -1 bp at 5.62%, a level it has hovered around for more than 70+ days. The Australian 10 year bond yield is up +2 bps to 4.26% and holding its sharply lower level. The China 10 year bond rate is now at 2.33% and up +2 bps. The NZ Government 10 year bond rate is up +4 bps to 4.67% and the earlier RBNZ fix was at 4.61% and up +2 bps from yesterday. The UST 10yr yield is up +5 bps from yesterday at 4.37%. Their 2yr is now at 4.78%, so the curve has shifted out marginally to -41 bps inverted.

EQUITY MARKETS QUITE MIXED
The NZX50 is ending the week lower, down -0.5% and heading for a weekly retreat of -0.7%. The ASX200 is down -0.6% in afternoon trade today but holding a +1.1% weekly gain. Tokyo is down -0.4% in morning trade but if that holds will end its week up +1.5%. Hong Kong opened with a rush but that has faded to a morning gain of just +0.2%. But they are heading for a stellar +4% weekly rise. Shanghai is unchanged in morning trade and if it stays like that will be down -0.6% for the week. Singapore is down -0.3% in its Friday morning trade. Wall Street ended its Thursday trade down -0.2% on the S&P500 but still near a record high.

OIL SLIGHTLY FIRMER
The oil price is +50 USc higher from this time yesterday, now at US$79/bbl in the US, while now also now at just on US$83/bbl for the international Brent price.

GOLD EASES
In early Asian trade, gold has slipped -US$12 from this time yesterday and back at US$2375/oz.

NZD ON HOLD
The Kiwi dollar has slipped -10 bps to 61.1 USc. Against the Aussie we are up +10 bps at 91.7 AUc. Against the euro we are also marginally firmer at 56.3 euro cents. This all means the TWI-5 is still at 70.3.

BITCOIN EASES SLIGHTLY
The bitcoin price has eased very slightly to US$65,378 and down just -0.8% from this time yesterday when it had a big jump. Volatility of the past 24 hours has been modest at +/- 1.6%.

This soil moisture chart is animated here.

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