A review of things you need to know before you go home on Monday; Slow start to Xmas for retailers, China gears up, Invercargill stronger than Italy

By David Chaston & Gareth Vaughan

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

TODAY'S MORTGAGE RATE CHANGES
There were reductions by Kiwibank today (the ones we noted on Friday), NZ Home Loans and AMP.

TODAY'S DEPOSIT RATE CHANGES
There were no changes today.

A SLOW START?
Spending during the first seven days of December has been slow for some retailers in New Zealand with spending through the Paymark network showing that although spending has increased by 4.9%, it is well below last year’s growth rate of 8.6% for the same period.

BIG AUSTRALASIAN BANK CAPITAL RATIOS 'NOT UNQUESTIONABLY STRONG'
David Murray, the ex-Commonwealth Bank of Australia CEO being labelled a poacher turned gamekeeper across the ditch, delivered a major speech hot on the heels of issuing the Australian Government's Financial System Inquiry final report on Sunday. In it he noted the capital ratios of Australian banks should be "unquestionably strong." Specifically, Murray said, they should be ranked in the top 25% of global banks when the big four (the parents of NZ's major banks) are languishing somewhere between the global median and the 75th percentile.

"This means that they are not ‘unquestionably strong’. Accordingly, they should be required to increase their capital ratios so that they are in the top 25% of global peers, and a process for more transparent reporting of comparative capital ratios should be developed," Murray said.

Elsewhere in the speech Murray noted his Inquiry's recommendation that the big Australasian banks should hold more capital against residential mortgages, narrowing the gap with how much smaller banks hold. This would create "a small funding cost increase" for the major banks.

CHINA GEARS UP
In its latest quarterly review the Bank for International Settlements (BIS), the central banks' bank, highlighted an "extraordinary" surge in post global financial crisis cross-border bank lending to China. Between the end of 2012 and the end of June this year the amount outstanding more than doubled to US$1.1 trillion. That makes China the seventh largest borrower worldwide. Chinese nationals have also borrowed more than US$360 billion through international debt securities, from both bank and non-bank sources.

"Contrary to prevailing wisdom, any vulnerabilities in China could have significant effects abroad, also through purely financial channels," Claudio Borio, the head of BIS' monetary & economic department, said.

WARNING FOR COMMODITY EXPORTERS
With falling commodity prices and global volatility, Borio also had a warning for commodity exporters saying they could face tough challenges. Especially those "at the later stages of strong credit and property price booms and those that have eagerly tapped equally eager foreign bond investors for foreign currency financing." Sound a bit like New Zealand?

"Should the US dollar, the dominant international currency, continue its ascent, this could expose currency and funding mismatches, by raising debt burdens. The corresponding tightening of financial conditions could only worsen once interest rates in the United States normalise," added Borio.

KIWISAVER CONSOLIDATION
NZX has bought SuperLife, a funds manager and KiwiSaver scheme provider. They have paid up to $35 million in cash, shares and earnouts. SuperLife has $1.2 billion of funds under management and will be added into the NZX funds management business. More than 40,000 'members' will now have their nest egg controlled by a new manager although SuperLife directors and staff will be absorbed by NZX.

FINANCIAL HEFT
Here's a little fun: Fitch has rated Invercargill City's debt as AA, and late last week S&P cut Italy's credit rating to BBB-, both investment grade, but Italy is perilously close to junk status. Invercargill is financially stronger than Italy!

SOME FACTORIES QUIET, SOME BUSY
Data out today from StatsNZ on third quarter manufacturing revealed surprising weakness. This was driven largely by falling meat and dairy manufacturing volumes. These falls were more than made up by rising metal manufacturing. Transport equipment, machinery and equipment manufacturing, were up 3.5% while petroleum and coal product manufacturing was down 4.5%. Economists weren't spooked by the data. Westpac said; "Our quick estimate of manufacturing GDP suggests an increase of around 2% in the September quarter. This would make it the biggest quarterly increase since a 3.1% rise in the March 2012 quarter."

WHOLESALE RATES
Swap rates are unchanged today despite the rise in benchmark rates in New York over the weekend. Markets are awaiting RBNZ signals from Thursday's Official Cash Rate review and Monetary Policy Statement. The 90 day bank bill rate is also unchanged at 3.68%.

NZ DOLLAR WEAKER
Check our real-time charts here. The NZ dollar weakened today to US76.59 cents, A92.19c, and the TWI is at 77.81.

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