A review of things you need to know before you sign off on Tuesday; State of Emergency; house prices sink, food prices rise, rents up, Aussie sentiment falls, swaps high but stable, NZD up, & 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 RATE CHANGES
HSBC lowered most of their fixed rates today.

TERM DEPOSIT RATE CHANGES
No changes to report here.

STATE OF EMERGENCY
A National State of Emergency has been declared in response to Cyclone Gabrielle. This will allow nationwide coordination for cleanup and recovery when the event dies down. This will help put it in context for Auckland.

AUCKLAND MEDIAN HOUSE PRICES NOW DOWN BY -33% FROM PEAK
January sales data from the REINZ shows that the housing market outlook is in a grim state as sales slumped in the month to a record low and the number of homes for sale surged. The national median price sank to $762,500 and the Auckland median price sank to $940,000. These are -17.6% and -27.7% lower than the peak in November 2021. And these declines came at a time inflation surged. Applying the RBNZ Inflation Calculator to these changes, the inflation adjusted falls are -23.1% and -32.6% from that peak respectively after inflation.

QV DATA CONFIRMS SLUMP
Broader housing data from QV isn't any cheerier. They report that average house prices are falling -$10,000 a month, and the market is yet to hit bottom. QV figures show average NZ house values were down -$129,000 in the January year, and both Auckland and Wellington values were down -$220,000 on the same basis.

DOWN BUT STILL "TOO HIGH"
An influential RBNZ survey shows a substantial drop in expectations of inflation in two years time - albeit that at 3.3% the survey respondents still see inflation outside the targeted band in 2025.

PAST THE PEAK?
Stats NZ says food prices were up +10.3% in the year to January 2023 - which is down on the 32-year high increase of 11.3% seen as at December. So an optimist might see some sign of slowing in the raging increases in this data. In fact, monthly food prices rose +1.7% in January 2023 compared with December 2022 and after adjusting for seasonal effects, they were up +0.3% or an annualised +4% rise. So perhaps the optimists have a point. Recently, Infometrics reported that grocery costs to supermarkets rose +10% in the year to January with a softer month-to-month increase from December. However, with the usual moratorium being in place until the end of January, it’s unclear if supplier cost pressures are in fact stabilising.

RENTS UP
Sadly, there is no moratorium in place for rents. Stats NZ released its rent index data for January and they jumped +2.7% in the month from December and ending a year where rent increases hardly moved. Over the whole year they are up +3.1% in Auckland, up +0.3% in Wellington, but up +6.5% in Christchurch. In the north, taking many houses out for storm damage (red-stickered) at a time when social housing needs are already elevated is likely to mean we are in for a torrid time with housing rents in 2023.

FLOOD-RELATED INSURANCE CLAIMS TALLYING UP AT IAG
IAG, the country's biggest general insurer, says AMI, State and NZI had received more than 21,000 claims following recent North Island floods with 57% being home claims, 21% contents, 6% commercial and business, and 16% motor vehicles. IAG says it has 316 teams of builders "stripping out homes."

AUSSIES WORRIED
In Australia, January has revealed a serious wavering of consumer sentiment. (and here.) Sentiment is back to recessionary levels and historic lows. Over half of consumers expect mortgage rates to rise by +1% from here (3.35%) or more. And they are reporting intense pressure on their finances, in the mortgage belt especially (remembering OCR hikes hit instantaneously in Australia). Attitudes towards major household purchases are very low. Confidence around jobs is still positive but starting to get rattled again.

JAPAN DISAPPOINTS
Japan turned in a very lackluster economic performance in Q4-2022, one that was below expectations. And their Q3 was revised lower. About the only 'good' thing about these results is that at least their aren't contractions. (But remember, these are 'flash' results and subject to revision.)

SWAP RATES STAY UP
Wholesale swap rates likely held their higher levels today. The real action in swap rates comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up another +3 bps at 5.10%. The Australian 10 year bond yield is now at 3.75% and down -6 bps from yesterday. The China 10 year bond rate is little-changed at 2.92%. The NZ Government 10 year bond rate is now at 4.32% and up +1 bp, and still above the earlier RBNZ fix at 4.28% which was up another +4 bps. The UST 10 year is now at 3.70% and down -4 bps from this time yesterday.

EQUITIES TURN UP
The S&P500 ended its Monday session up +1.1% on Wall Street today. Tokyo has opened +0.7% higher. Hong Kong and Shanghai have opened little-changed from yesterday's close. The ASX200 is up +0.3% in  early afternoon trade. The NZX50 is also up +0.3%, in their late trade.

GOLD LOWER AGAIN
In early Asian trade, gold is now at US$1855/oz, and down -US$5 from this time yesterday.

NZD FIRMS
The Kiwi dollar is at 63.6 USc and up +70 bps from this time yesterday. Against the Aussie we are marginally firmer at 91.4 AUc. Against the euro we are firm at 59.3 euro cents. The TWI is now at 71 and up +50 bps from a day ago.

BITCOIN SLIPS
The bitcoin price is virtually unchanged from this time yesterday, still at US$21,760. Volatility has been modest at +/- 1.2%.

NO POWER
We trust you remain safe during Cyclone Gabrielle's landfall. Our Auckland office is closed and without power so some data updates will be delayed.

This soil moisture chart is animated here.

Keep abreast of upcoming events by following our Economic Calendar here ».