A review of things you need to know before you go home on Friday; food prices jump, rents stop rising, new factory orders rise, Auckland home building stays high, swaps up again, NZD firm, & much more

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

MORTGAGE RATE CHANGES
CFML (Conrad Funds Mortgages) have raised their floating rate to 5.45% (+10 bps). Among banks, if others respond to ANZ, they will likely do so soon.

TERM DEPOSIT RATE CHANGES
Heartland Bank have raised the rate on their Direct Call Account - to 1.05%.

FOOD PRICE RISES HIGH
Although food prices didn't change much in February from January, they are up +6.8% in a year, and that is their highest rise in eleven years. But prices in 2011 were kicked along by a GST increase which was a one-off. It is doubtful current inflation and supply-chain issues will fade as quickly as that historic GST effect did. Grocery food rose +5.4% in a year. Sharp fruit and vegetable price jumps will also be more about an inability to harvest this time due to the pandemic and closed borders, than international pressures.

RENTS STOP RISING
Nationally, rents fell in February from January, down -0.6%, and are now +4.6% higher than a year ago, according to Stats NZ's 'flow' monitoring - that is, monitoring of the rental property bonds being filed. The 'stock' monitoring (all, whether or not they changed tenants) shows a +3.6% rise in a year and a +0.3% rise in a month. Provincial North Island is where the softness seems to be building.

PMI EXPANDS FASTER
Our factories are holding in there with the February PMI expanding faster, at a moderate rate. Positively, new order levels rose. Production and inventories were lower however, pointing to the challenges of making things in a pandemic. Conditions may be ok, but they will be more brittle than anyone would want.

SETTLING IN AT A HIGH LEVEL
The number of new homes being completed in Auckland appears to be flattening out in 2022 at around 1100 a month, which is down from the 2021 peak.

EXPENSIVE 5 YEAR FUNDING?
Challenger bank SBS Bank has raised $150 mln in the bond market, a 5 year, unsecured, senior, fixed rate bond maturing on 18 March 2027. SBS Bank is rated BBB. They are paying 4.32% pa for this money, a 1.15% margin over the related swap rate. (SBS Bank doesn't offer a 5 year term deposit. The highest term deposit offer for a 5 year deposit at any bank is at Rabobank, at 3.60% pa.)

INSURER RAISING 15 YR BOND FUNDING
Big Aussie insurer, IAG, who has been hit hard by climate claims in Australia, said it is raising funds in New Zealand as part of an overall fundraising drive. The New Zealand portion is for $400 mln of "unsecured subordinated notes". IAG is rated A, and these Notes are rated BBB. They are 15 year bonds, but which can be repaid early at IAG's discretion. The offer will close on March 25, 2022.

PRESSURE MOUNTS FOR BENEFICIAL OWNERSHIP REGISTER FOR NZ COMPANIES
As the Government drags its heels on introducing a beneficial ownership register for New Zealand companies and limited partnerships, the Financial Action Taskforce (FATF) has said it wants member countries to to take concrete steps to have adequate, accurate and up-to-date information on beneficial ownership. The Paris-based FATF is an inter-governmental body that sets international standards and is considered the global money laundering and terrorist financing watchdog. 

CARBON PRICE UPDATE
The week is ending with the carbon price at NZ$72.50/NZU, a massive -16% fall in a month. The EU carbon price is now at €76.40/tonne (NZ$122.50), a net -20% fall in the same period, but a +28% rise so far this week from its €58.50 (NZ$93.75) recent low.

TURNING POINT?
Japan might be rising from its national funk in 2020/2021. Household spending there increased by +6.9% in real terms from the prior year in January, easily beating market forecasts of +3.6% and reversing from a -0.2% fall a month earlier. This was the first rise in personal spending since last July and the strongest pace in eight months, as consumption recovered following soaring vaccinations.

HEADS UP
We are expecting top get the REINZ February data on Monday morning. We will have full coverage and data. Recall Barfoots revealed their February was unusually weak in Auckland, so the wider February results are widely anticipated.

LOOKING AHEAD
Next Thursday, Stats NZ will release the Q4-2021 GDP review of economic activity. ANZ thinks it will rise +3.5% from Q3, after the Q3 -3.7% contraction. Westpac thinks it will bounce back +3.8%. This data (or its variation from the expected levels) should be market sensitive, but it will almost certainly be overshadowed by the same day release of the US Fed's policy review.

UNDER PRESSURE
In Australia, their new home building sector is under pressure. Their peak industry body said new home sales fell by -7.0% in February following an -8.3% drop in January. But the recent NSW and Queensland floods seem to have destroyed about 5000 houses, and that rebuilding will take years as insurers work through the mess. It won't be a quick salve for the existing home building industry.

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GOLD FIRMS
In early Asian trading, gold is higher today from this time yesterday, now at US$1996/oz and up +US$13. It closed earlier in New York and London at very similar levels.

OIL PRICE GIVES UP MORE
We don't usually cover the crude oil price in this afternoon update, but it is moving down further. It is now just over US$105/bbl in the US, down -US$5 from this time yesterday. It is also down for the international Brent price, to US$107.50/bbl.

EQUITIES SINK
In New York, the S&P500 ended down -0.4% in their Thursday trade although that is a good recovery from sharp falls mid session. In opening Friday trade, Tokyo is up +3.3%, Hong Kong is up +1.9%, Shanghai is +1.8% higher at their open. In early Friday afternoon trade, the ASX200 is down -0.6%, heading for a -0.3% weekly slip, while the NZX50 is down -0.3% in late trade and heading for a -2.1% weekly loss.

SWAPS PUSH UP EVEN HIGHER
We don't have today's closing swap rates yet. They are likely to have risen yet again in a further push higher. The 90 day bank bill rate is up another +3 bps at 1.48%. The Australian Govt ten year benchmark bond rate is up +8 bps at 2.40%. The China Govt 10yr is up +1 bp at 2.88%. The New Zealand Govt 10 year bond rate is now at 3.02% (up another +7 bps) and still higher than the earlier RBNZ fix for that 10yr rate at 3.00% (up +8 bps). The US Govt ten year is now at 1.99% and up another +6 bps from this time yesterday, after touching 2.01% in between.

NZ DOLLAR FIRMS
The Kiwi dollar is up +¼c from this time yesterday, now at 68.6 USc. Against the Aussie we are unchanged at 93.4 AUc. Against the euro we back up +c at 62.4 euro cents. That means the TWI-5 is now at 73.7 and up +40 bps in a day, up +100 bps in a week.

BITCOIN FLOPS BACK
Bitcoin has retreated from the relief rally at this time yesterday, now at US$39,357 US$41,825 and and down -5.9%. Volatility over the past 24 hours has been very high at just on +/- 4.2%.

This soil moisture chart is animated here.

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