A review of things you need to know before you go home on Friday; TSB and SBS raise rates, Auckland concrete data strong, PMI hesitates, minimum wage up, inflation expectations up, swaps up, NZD stable, & more

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

MORTGAGE RATE CHANGES
SBS has raised all fixed rates today.

TERM DEPOSIT RATE CHANGES
TSB raised term deposit rates today. Their six month rate is now 1.20% and their one year offer is 2.40%. SNS has raised rates too, with their 6 month rate at 1.75% and 12 month rate at 2.40%.

IT'S POURING IN AUCKLAND
The volume of ready-mixed concrete poured in Q4-2021 was up strongly, almost all because of a sharp rise in activity in Auckland. The national level hit a new record high, driven by the Auckland activity which was also an all-time record. Activity in both Wellington and Christchurch was middling.

FACTORY EXPANSION FACES QUESTIONS
Although they are still expanding, new orders in the January factory PMI out today are softer than they have been. The overall PMI metric has continued its recent sequence of oscillating around its long term average. January’s 52.1 reading was a bit under the long-term norm of 53.1, after December’s somewhat perkier 53.8. At face value, the headline result looks reasonable enough. January’s result is the 5th consecutive month above the breakeven 50 mark and points to some further progress into the New Year.

CARD SPENDING UP +4.3%
Stats NZ reported that total electronic card spending was $8.2 bln in January, up +$339 mln or +4.3% from the same month a year go. But it is not really keeping pace with inflation (+5.9%) so it is hard to be too enthusiastic about the January result. Further they note there is some evidence that spending to prepare for Omicron may have helped keep it elevated.

MINIMUM WAGE UP +6%
As socially desirable as it may be, today's +6% rise in the minimum wage, and the consequent follow-throughs will add to inflationary pressures. The minimum wage is to rise by 6% as at April 1, 2022 - in line with inflation, but not a large enough jump to reach the living wage. Both the MBIE and business lobby groups fear Covid-affected businesses will struggle to absorb it. But with labour shortages reported to be widespread, this increase will protect those that aren't part of the inflating labour market.

INFLATION EXPECATIONS RISE
The RBNZ's Survey of Inflation Expectations reports a sharp jump in the near term. But it is a survey of only 33 people! - "a mixture of professional forecasters, economists and industry leaders operating in New Zealand". The one year was up from 3.70% to 4.40%, the two year out expectation was up from 2.96% to 3.27% and the five year a bit more restrained, up from 2.17% to 2.30%. In terms of the Reserve Bank's 1% to 3% mandate "over the medium term" this show pressure is on, but it is the near term pressures that are strongest. The two year expectation is back up to 30 year highs.

LOOKING FOR $100 MLN, GETTING $800 MLN
As we have been reporting over the past few days, Westpac has been in the bond market looking for $100 mln "plus unlimited oversubscriptions". In the end they raised $800 mln of five year money, at 3.70% - pumped at the end by the blip up in swap rates recently.

IAG NZ GROSS WRITTEN PREMIUMS RISE
Insurance Australia Group NZ, which includes State, NZI, AMI and Lumley, has posted an 8.3% rise in half-year gross written premium to A$1.481 billion. However, IAG NZ's insurance profit fell to A$99 million from A$162 million, with its loss ratio rising to 64.9% from 56.5%. Its underlying insurance margin was 16.8% versus 18.6%. The insurer says it wants to add 250,000 new customers over the five years to 2026.

STAFF ABSENT IN 22% OF BUSINESSES DUE TO COVID
In Australia, the Statistic agency reported that more than one in five (22%) of employing businesses had staff who were unavailable to work, due to issues related to COVID-19.

LOCAL PANDEMIC UPDATE
In NSW, there has been a rise to 8,950 new community cases reported yesterday, now with 64,813 active locally-acquired cases, and another 19 daily deaths. There are now 1,716 in hospital there, off their high but staying stubbornly at this level. In Victoria they reported 8,521 more new infections yesterday. There are now 55,617 active cases in that state - and there were 13 more deaths there. Queensland is reporting 5,977 new cases and 14 more deaths. In South Australia, new cases have slipped to 1445 yesterday and 2 more deaths. The ACT has 500 new cases and no deaths, and Tasmania 552 new cases and no deaths. Overall in Australia, about 26,000 new cases have been reported so far although not all counts are in yet. In New Zealand, there were 32 cases stopped at the border, plus 446 new cases reported in the community, a new daily record driven by Omicron. And with the superspreader event going on outside Parliament, that number is certain to jump soon, magnified when the protestors return to their regions. The delusional selfishness is stunning to witness.

GOLD SLIPS
In early Asian trading, gold is now at US$1827/oz, and down -US$7 from this time yesterday.

EQUITIES WEAK
After a soft start, the S&P500 ended its Thursday session down -1.8% after the high US CPI data. Tokyo is on holiday today (Foundation Day). Hong Kong has opened down -0.4% while Shanghai is has opened down -0.3%. The ASX200 is down -0.7% in mid afternoon trade but heading for a +1.7% weekly rise, and the NZX50 is down -1.7% in late trade today and heading fro a -1.1% weekly fall.

SWAPS SHIFT HIGHER EVERYWHERE
We don't have today's closing swap rates yet. They are likely to be sharply higher on the US moves. The 90 day bank bill rate is up +4 bps at 1.21% and a relatively big one-day move. The Australian Govt ten year benchmark bond rate is up +7 bps from yesterday to 2.16%. The China Govt 10yr is also up +6 bps to 2.80% and a huge move for them. The New Zealand Govt 10 year bond rate is now at 2.81% (up +8 bps from this time yesterday) and still below the earlier RBNZ fix for that 10yr rate at 2.82% (up +8 bps). The US Govt ten year is now at 2.03%, up +10 bps from yesterday at this time.

NZ DOLLAR HOLDS
The Kiwi dollar is little-changed today at 66.6 USc. Against the Aussie we are little-changed too at 93.1 AUc. Against the euro we are softish at 58.4 euro cents. That means the TWI-5 is up to just over 71.

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BITCOIN SLIPS
Bitcoin is a little softer today at US$43,448 and down -1.7% from where we were at this time yesterday. Volatility over the past 24 hours has been high at just on +/- 3.7%.

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