A review of things you need to know before you sign off on Tuesday; still no mortgage rate hikes from the big banks, business sentiment subdued, the forestry ETS problem, the home loan pain cliff, swaps high, NZD stable, & 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
Wairarapa Building Society (WBS) lowered some fixed rates. Heartland Bank has raised its floating rate by +50 bps to 6.75%, but not their reverse mortgage rate yet. But more broadly, no main bank has yet raised rates following the RBNZ OCR increase last week. The big banks are unusually slow in passing these on - even as they pass on some of the increase to savers.

TERM DEPOSIT/SAVINGS RATE CHANGES
ANZ raised its bonus saver rate today, so that the potential Serious Saver rate rose by only +30 bps to 3.75%. That is however well below BNZ's RapidSave which was also raised today to 3.95% which was raised by +50 bps - and Rabobank's 4.25%.

'SUBDUED'
Latest ANZ Business Outlook Survey shows some further improvement in activity indicators in February - but inflation expectations 'remain stuck around 6%'. As a result, although sentiment and activity are lifting, they still remain 'subdued'.

HEARTLAND PROFIT SLIGHTLY HIGHER
Heartland Group Holdings interim profit rose +2%, or +$1.1 mln, to $48.7 mln with gross receivables up +10% to $6.5 bln. Its net interest margin fell 34 basis points to 3.97%. It'll pay an unchanged 5.5 cents per share interim dividend. Heartland expects its annual profit to be within a range of $109 million to $114 million. Meanwhile, subsidiary Heartland Bank is considering making an offer of up to $125 mln of unsecured subordinated notes.

UPDATE FROM TOWER
Local insurer Tower (TWR) updated its results and claims situation today. They estimate the ultimate cost of the Auckland and Upper North Island weather events to be within the range of $95 mln to $125 mln. Those costs will predominantly be covered by Tower’s reinsurance for catastrophe events which has an excess of $11.875 mln. They also say in Q4, their gross written premiums were up by +12.5% on the same period a year ago "through a balanced mix of rating and volume".

CARBON CREDIT SUSPENSION
Forest owners who lost trees in the cyclone and were ETS-registered will stop receiving carbon credits. They can apply for a Temporary Adverse Event Suspension and if approved, they won't have to pay back carbon credits already received. But the affected forest will stop earning credits until it is re-established (replanted or regenerated), and achieves the same level of carbon storage it had before the loss event. For example, in the case of 20-year-old trees that were windthrown during Cyclone Gabrielle and will get replanted with the same species next year, the pause would be 20 years plus 1 year for the replant interval = 21 years. (H/T PFO) Not sure what happens if a change if public policy prohibits the ability to replant. Anyone reader know?

IS THERE AN COMPETITION INQUIRY COMING FOR THE BANKING SECTOR?
Earlier today, RBNZ Chief economist Paul Conway was reported as saying: "I think the banking sector would be an appropriate focus for a market study [by the Commerce Commission], should the Government wish to go there." In response, the Commerce Minister Duncan Webb has said, “No decisions have been made as regards the focus of the next market study, however I am focused on using the tool to ensure that markets operate fairly for consumers. I am particularly interested in improving markets where the greatest long term gains can be made for ordinary New Zealanders.” (which could mean anything).

THE BIG SLOWDOWN CONTINUES
Latest RBNZ lending figures show the total stock of mortgage borrowing grew by just 4.1% in the 12 months to January, which is the slowest annual rate of growth in exactly 10 years.

THE PAIN CLIFF APPROACHING
As at January, 33.9% of all home loans come up for repricing within the next 180 days. That is $117 bln worth of mortgages. This is the most since May 2022. That also means that $229 bln do not. This is a huge contrast to Australia where most of their mortgager lending is exposed to immediate interest rate changes. Kiwis have organised themselves to be much more insulated and resilient, although when the change actually happens, it can be a substantial shock for those affected (rather than the creeping general corrosion in Australia).

HOUSEHOLD DEPOSITS FALL, BUT WE ARE WORKING THEM HARDER
Household deposits fell -$1 bln in January from December, but they are still +$11.5 bln higher than a year ago. But within that, term deposits rise +$1.6 bln in January from December to be +$23.2 bln higher than a year ago. That means that balances in household savings accounts and current accounts both fell.

IMMIGATION CAN TRUMP DEPRESSED HOUSING MARKETS
In Australia, it is becoming clearer that their immigration surge is turning the housing market prospects around from 'negative' to 'balanced', according to Westpac. They report a material tightening in rental markets. Continued net inflows and subdued levels of new building mean a sustained further tightening across the wider market is likely in coming years. These forces are likely to push the current focus on inflation and interest rates into the background there.

AUSSIE RETAIL SALES RISE
Even though retailer Harvey Norman said its sales were down -10% in January, national Australian retail sales surprised on the upside, coming in up +1.9% from December and up +7.5% from a year ago. These rises are not inflation adjusted however. But they do follow a sharp retreat in December. Today the share market has not been kind to the Harvey Norman share price which is down -12.5% so far today.

GREENWASHING CAN COST
Staying in Australia, regulator ASIC has launched its first court action against alleged greenwashing conduct, commencing civil penalty proceedings in the Federal Court against Mercer Superannuation for allegedly making misleading statements about the sustainable nature and characteristics of some of its superannuation investment options. ASIC alleged Mercer, which oversees A$27.5 billion in assets, misled members of its Sustainable Plus fund by claiming it excluded companies that were involved in carbon intensive fossil fuels but then heavily invested in 15 stocks from the sector including AGL Energy, BHP, Glencore and Whitehaven Coal.

BIG SHIFTS IN JAPAN
In Japan, their retail sales came in very strong in January, up +6.3% when a +4% rise was expected, and compared with a +3.8% rise in December. But things were not so great for their industrial production, which fell a sharpish -4.6% in January.

SWAP RATES HOLD HIGH
Wholesale swap rates are likely little-changed today. Yesterday they closed with the 2-year at its highest since November 2008. It may hesitate from here before finding a new track. The real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate dipped -1 bp to 5.13% which is now +38 bps above the OCR. The Australian 10 year bond yield is now at 3.88% and little-changed from this time yesterday. The China 10 year bond rate is also little-changed at 2.94%. But the NZ Government 10 year bond rate is now at 4.66% and down -5 bps and still above the earlier RBNZ fix at 4.64% which was unchanged today. The UST 10 year is holding at 3.92% and little-changed.

EQUITIES FIRMISH
On Wall Street, the S&P500 ended its Monday session up +0.3%. Tokyo has opened up +0.4%. Hong Kong has opened up +0.9%, and Shanghai up +0.3%. The ASX200 is up +0.5% in early afternoon trade. And the NZX50 is up +0.3% in late Tuesday trade.

GOLD IN MINOR FIRMING
In early Asian trade, gold is little-changed from this time yesterday, now at US$1818/oz and up +US$5.

NZD SOFT
The Kiwi dollar is little-changed from this time yesterday at its new lower level of 61.7 USc. Against the Aussie we are softish at 91.4 AUc. Against the euro we are also softer at 58.1 euro cents. That means the TWI-5 is now at just over 69.7 and down -20 bps from yesterday.

BITCOIN HOLDS AGAIN
Bitcoin not really going anywhere today, now at US$23,450 and virtually unchanged from this time yesterday (US$23,468). Volatility over the past 24 hours has been modest at +/- 1.6%.

This soil moisture chart is animated here.

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