A review of things you need to know before you sign off on Monday; no retail rate changes, inflation speeds up except for rents, service sector healthy, bank profits grow faster, swaps retreat, NZD firmish, & 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
None to report today.

TERM DEPOSIT/SAVINGS RATE CHANGES
None here either, so far.

FOOD & GROCERY PRICES STILL SURGING HIGHER
Food prices surged at an annual rate of +12% in February with rises across all the broad food categories Statistics NZ measures. That is its highest rate in 34 years. The annualised increase from January to February was +18% (even more on a seasonally adjusted basis). The consumer price index is due to be released on Thursday, April 20. Also today, Infometrics said the prices Foodstuffs paid suppliers in February were up +10.4% from the same month a year ago, up an annualised +12.1% from January.

RENT RISES TURN TAME
After surging in January, the rental index Stats NZ tracks fell in February to be only +2.1% higher than year-ago levels. But the key reason is because Wellington rents are in the doldrums. In most other regions, increases are over +4%, and that included Auckland. It is clear that rents are going to be a drag on Q1-2023 CPI, just as food prices are going to be a boost.

THE CONSENSUS ISN'T VERY ROSY
The NZIER updated its Consensus Forecasts today bringing together the estimates from a wide range of analysts. These revealed that growth should be better than they had previously estimated in the 2022/23 year to March, fall away more than previously expected in the next two years, and then pick up more strongly in the 2025/26 year. Having said that, the pick-up won't be back to 2022/23 levels. These analysts don't thing inflation will be back to under 3% until 2024-25.

SERVICE SECTOR IN HEALTHY SHAPE
Meanwhile, the service sector is going from strength to strength, a positive story. It was healthy in January and lifted again in February. The PSI's improvement comes on top of the factory PMI improvements for February. Both would have been better still if the NI East Coast storm damage hadn't happened. Overall, new orders were strong.

HEARTLAND SAYS EX-CHAIRMAN GEOFF RICKETTS HAS PASSED AWAY
Heartland Group says Geoffrey Ricketts, its chairman from 2013 until last month and still a director, has passed away following a sudden illness. Ricketts was a founding director of Heartland’s board, previously chairing Southern Cross Building Society before it merged with CBS Canterbury and MARAC to become Heartland New Zealand Ltd in 2011. Heartland says Ricketts' strategic leadership, governance experience and wise advice to the board and management will be sorely missed.

FALLING INTO LINE
Rabobank trimmed its 2022/23 milk price forecast from $9.00/kgMS to $8.60/kgMS today, the last of the major analysts to do that. Remember, Fonterra releases its half year results on Thursday morning, and they have already trimmed their indication to a mid-point $8.50/kgMS.

STATE OF EMERGENCY TO END TUESDAY
The remaining state of national emergency over the Tairāwhiti and Hawke’s Bay regions will end on Tuesday 14 March, the Government announced.

SPEEDING UP
We have updated our Bank Leverage resource to the end of 2022 with the recent RBNZ Dashboard data. It reveals many things, by bank. One is that 2022 was a year where total bank after-tax profits almost hit $7 bln. They first hit $3 bln in 2008, $4 bln in 2013 sixty months later, $5 bln in 2017 120 months later, and $6 bln in 2021 50 months later. The final +$1 bln has happened in just 18 months, the largest/fastest pace of growth ever.

US REGULATORS KEEP THEIR HEADS
The local news 'noise' around the SVB failure is getting a bit ridiculous. It is unlikely to have much real impact on New Zealand, or on our trade flows. It is interesting from a car-crash sort of view, but we need to keep a level head here. Certainly the US regulators seem to have things well under control. It is very easy to slip into the-sky-is-falling mode, and nothing about SVB is positive. But no depositor will lose any money for their insured deposits, and the US taxpayer won't be on the hook for a bailout. Regulators are levying all banks to make up what might be lost. Certainly, shareholders and management will lose everything. We should also remember that SVB's failure was caused because it specialised in funding startups, companies who are basically unprofitable. It is a very questionable sector for a bank to be dominantly involved with. It was bad strategy of one bank, not the whole system. Also, see this. (Another tiny bank, Signature Bank, NY, also folded today, unrelated to SVB. It is more akin to Sliverlake because Signature's focus was also on crypto.)

SWAP RATES RETREAT AGAIN
Wholesale swap rates are likely sharply lower again today across the curve. However, the real action in swap rates comes near the close. Our chart will record the final positions. The 90 day bank bill rate is down -3 bps at 5.19% which is +44 bps above the current OCR. The Australian 10 year bond yield is now at 3.52% and up +5 bps from this morning. The China 10 year bond rate is down -1 bp to 2.89%. And the NZ Government 10 year bond rate is now at 4.43% and another -8 bps from this morning but still above the earlier RBNZ fix at 4.32% which was down -18 bps from Friday. The UST 10 year is at 3.74% after falling to 3.68% at the end of last week.

EQUITIES MIXED
In its Monday session, the NZX50 is down almost -1.0% to start the week. The ASX200 is down -0.4% in early afternoon trade. Tokyo has opened down -1.6% in early trade. Hong Kong is actually up +0.9% in their early trade after a grim week last week. Shanghai is up +0.2% after a similar drubbing last week. The S&P500 futures are up +2.0% from the Friday close, suggesting financial markets are satisfied with how US regulators (Yellen/Powell/Grantham leading the Treasury/Fed/FDIC) are handling the SVB failure.

GOLD RISES SLIGHTLY
In early Asian trade, gold is up another +US$4 from this morning at US$1872/oz.

NZD A LITTLE FIRMER
The Kiwi dollar is slightly stronger than where we opened this morning, now at 61.5 USc. Against the Aussie we are also firmer at just touching 93 AUc, the highest of the year. And against the euro we are holding at 57.6 euro cents. That means the TWI-5 is marginally firmer overall.

BITCOIN MOVES BACK UP SHARPLY
The bitcoin crowd are paddling fast to keep their music playing. The bitcoin price has moved up to US$22,546, probably on the meme that the sky-is-falling for fiat currencies and the banking system. This latest price is up +9.3% from where we started this morning. Volatility is extreme today at +/-5.6%.

This soil moisture chart is animated here.

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