A review of things you need to know before you go home on Tuesday; a TD rate cut, GST flows on watch, business sentiment stable, personal debt growth sinks, business debt rises, swaps up, NZD slips, & more

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
RaboDirect took between -20 and -25 bps off all its term deposit rates for terms of 18 months to five years.

A GST CANARY?
The March update of the Crown accounts, for the nine months through to March 2019, shows a surplus (before valuation gains and losses) of $2.5 bln. In the data for the month of March however there is a worrying signal; GST collected is tailing off at an increasing rate. In the six months to December, GST taxes were up +8.9% compared to the same six months in 2017. But in January, these GST tax receipts fell -4.5% compared with January a year ago. In February the slippage was -2.3% on that same basis. And in March the bottom seems to have fallen out - March 2019 GST receipts were -15% lower than in March 2018. That means the nine month GST tax collected is now only +3.2% ahead year-to-date with a vanishing trend ahead. (We have asked Treasury for comment on this trend and their published reference to 'timing differences' and will add their response when received.) Responding to this analysis, Treasury says:

If you are looking to use GST as an indicator on the health of the economy, we suggest that the annual GST receipts numbers would be the best source to look at.  This is process changes at Inland Revenue since our December forecasts have affected when GST revenue is recognised and therefore will not be giving an accurate picture of what is happening in underlying GST.  We expect the revenue recognition timing variances being seen at the moment will reverse out at year end.

Core Crown GST receipts for the 12 months to March 2019 were up 5.2% on the 12 months to March 2018. Using the 12-month growth rate, what economists refer to as the annual average percentage growth (aapc), should give a more stable series over time than looking at shorter periods, as in-year seasonal fluctuations should not affect the result.  Another way to would be to look at total unconsolidated GST receipts, i.e. GST paid by the whole economy, not just the private sector. aapc for total net GST was +5.5% as at March 2019 (6.1% in March 2018).

All of these numbers have been constructed from the tax outturn data published on the Treasury’s website. Go to https://treasury.govt.nz/publications/tax-outturn-data/tax-outturn-data-march-2019 and open up the History spreadsheet. On the Receipts sheet, total net GST is on line 32, and subtracting the Crown GST eliminations in rows 38 & 39 from the figures in row 32 yields core Crown GST.

'STABLE'
ANZ reports: "Most ANZ Business Outlook activity indicators were little changed in April. Business confidence was flat at -38, while firms’ views of their own activity rose 1 point to a net +7% of firms expecting a lift. Pricing intentions were flat and reported cost pressures eased, but profitability expectations only lifted 1 point and remain negative. A net 30% of respondents anticipate lower interest rates. Residential construction intentions fell again. The survey period excludes any meaningful impact from the ruling out of a capital gains tax." See our tracking charts here.

SOUNDS GOOD IN THEORY, BUT ...
Risk related pricing is being extended in insurance. Low-risk home, car and contents policyholders at all the IAG brands will be repriced to stop the subsidising of high-risk customers. The company denies move is a money grab. One thing it will do is make it harder for the customers on struggle street, and make it cheaper for the well-off.

STILL COMMITTING
Housing debt increased by +6.2% in the year to March, according to the latest RBNZ update. While this rate is similar to February, it is the highest growth we have seen since late 2017. Only 17.6% of all housing loans are on floating terms, a cycle low.

SECOND THOUGHTS
Personal debt (credit cards and personal loans including car loans) are now growing unusually slowly. This debt is up just +1.9% in March compared to the same month a year ago and that is the slowest growth rate since November 2013.

RENEWED VIGOUR
The rise in rural debt is unremarkable at +3.3% but the growth in bank debt businesses are committing to is remarkable; it was up +6.2% in the year to March and that is the highest growth rate in 22 months. In fact in only one other month in the past four years has business debt grown faster than housing debt.

A FALLING STAR
The growth in household deposits is slowing. These were up just +5.2% in March and extending a waning trend that started in July 2018. In fact household deposit growth is back down to levels we last saw more than six years ago. In the meantime household deposit growth rose at the rate of +12% pa in August 2015, so we have dropped a long way since then.

AML/CFT ACT WARNING FOR DENTON MORRELL
The Department of Internal Affairs (DIA) has issued a formal warning to Denton Morrell Limited under the Anti-Money Laundering and Countering Financing of Terrorism Act (AML/CFT Act). Denton Morrell provides trust, company and limited partnership establishment for individual and corporate clients, trust and company administration/management services, registered office services and consultancy including reviews of existing family asset holding structures and succession planning. The DIA says Denton Morrell failed to meet AML/CFT Act requirements between 17 November 2015 and 2 May 2018 including failing to conduct customer due diligence, failing to adequately monitor accounts and transactions and failing to establish, implement or maintain an AML/CFT programme. The DIA says it's not alleging Denton Morrell was actually involved in money laundering or the financing of terrorism.

A BUMP IN THE ROAD
In China, there was a bump in the road with their official factory PMI coming in lower than expected in April and barely expanding, reversing the good (and surprising) gain in March. The official Chinese services PMI also undershot (although not significantly). Markets noticed and the USD jumped.

UPS & DOWNS
In Asian equity markets, Shanghai is up today, reversing some of yesterday's losses. It is up +0.4% in mid-day trade. The ASX is down -0.5% while the NZX50 is up +0.3% (but not quite at a new record high yet).

LOCAL SWAP RATES RISE
Local swap rates are up +3 bps across the whole curve today. The UST 10yr rate is at 2.53%. Their 2-10 curve is wider at +23 bps and their negative 1-5 curve now at -10 bps. The Aussie Govt 10yr is down again today to 1.80% (up +1 bp), the China Govt 10yr is also up +1 bp at 3.43%, while the New Zealand Govt 10yr is down -1 bp at 1.92%. The 90 day bank bill rate is unchanged at 1.79%.

NZ DOLLAR SLIPS
The NZ dollar is weaker as the greenback rose on the weaker China PMI data and is now at 66.6 USc (and to be fair, the overall scale of the adjustment is small). Against the Aussie we are little-changed at 94.6 AUc. We are also soft at 59.6 euro cents. The TWI-5 is now at 71.6.

BITCOIN UNCHANGED
Bitcoin has flat-lined again today at US$5,160. Bitcoin is tracked in the chart below.

This chart is animated here. For previous users, the animation process has been updated and works better now.