A review of things you need to know before you sign off on Wednesday; a little mortgage tweaking, imports winning the trade battle, tax, tax, tax and more tax, the RBNZ eases off on LVRs, trouble for Synlait, equities down, dollar marks time

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
China Construction Bank made the merest of tweaks to fixed rates, moving its six-month and one-year rates up 16 basis points and the 18-month and two-year up by 10 bps. The rates now range from 6.76% (for six months) down to 6.55% for two years.

TERM DEPOSIT/SAVINGS RATE CHANGES
No changes on Wednesday.

TRADING OUR WAY TO A $1.3 BILLION MARCH TRADE DEFICIT
Exports are rising but imports are rising faster, and the latest overseas merchandise trade figures from Stats NZ for March show that the deficit between what we exported and what we imported hit a record high for a March of $1.3 billion. That was up from a $593 million deficit in March 2022. Stats NZ said in the month goods exports rose $40 million compared with March a year ago (0.6%), to $6.5 billion, but good imports rose $719 million (10%) compared with March 2022, to $7.8 billion. The ending of oil refining in NZ is continuing to have a big impact on the figures, with petroleum and related products imports up some 99% compared with March 2022 to $1.3 billion.

ANZ'S TRUCKOMETER SUGGESTS A SLIGHT LIFT FOR THE ECONOMY
ANZ economists' reading of the latest traffic freight data is suggesting a small lift in economic activity in the first quarter of this year. According to ANZ NZ's March Truckometer the Light Traffic Index rose 4.6%, while the Heavy Traffic Index lifted 2.7%. Chief economist Sharon Zollner, in noting that expectations of recession this year are widespread, said that so far, heavy traffic is not showing anything like the sharp declines seen in the Global Financial Crisis. "That doesn’t mean a recession isn’t coming, but it is consistent with our belief that if GDP does contract in Q1, it’ll be mostly ‘noise’ around supply-side and weather impacts. We are forecasting the ‘real’ recession to start in the third quarter of this year."

A TAXING KIND OF DAY
A report prepared by Inland Revenue says high wealth families pay a median effective tax rate of just 8.9%, as they earn significant income from untaxed capital gains. Meanwhile Treasury's chimed in with two tomes on the tax subject as well. The reports will re-ignite the debate around whether New Zealand should adopt a capital gains tax. Meanwhile KPMG said the reports appear to be setting the scene for an announcement of tax changes to “level the playing field”. “2023 is an election year. We expect that the findings from Inland Revenue’s HWI Project in conjunction with the Treasury analysis, may be used by the Government in the upcoming weeks and months to support announcements regarding its tax policies heading into the election.”

RBNZ DECIDES THE TIME IS RIGHT TO LOOSEN THE LVR LIMITS
The Reserve Bank's relaxing - probably from the start of June - the current loan to value (LVR) restriction settings that have been in place since November 2021. Deputy Governor Christian Hawkesby says: "Our assessment is that the risks to financial stability posed by high-LVR lending have reduced to a level where the current restrictions may be unnecessarily reducing efficiency. In particular, impeding the provision of credit to some otherwise creditworthy borrowers, which is not proportionate to the level of risk that we see." 

IT'S STILL HOTTER ACROSS THE DITCH
In Australia, the Consumer Price Index (CPI) rose 1.4% in the March 2023 quarter and 7.0 per cent annually, according to the latest data from the Australian Bureau of Statistics (ABS). The quarterly rate was slightly ahead of market expectations, but the annual rate has slowed from 7.8% in December. However, at 7.0% Australia's annual rate is still running hotter than ours (6.7%) - albeit that both are way too hot for comfort. Michelle Marquardt, ABS head of prices statistics, said "CPI inflation slowed in the March quarter, with the quarterly rise being the lowest since December 2021. While prices continued to rise for most goods and services, many of these increases were smaller than they have been in recent quarters."

WHIPPED MILK - SYNLAIT SHARES SAVAGED BY MARKET AFTER HUGE FORECAST DOWNGRADE
Synlait Milk [SML] shares are getting a rare old beating on the market after the company downgraded its after-tax profit forecast made only last month by $20 million. Synlait shares were down 49c - that's nearly 23% - to $1.65 at time of writing. It should be noted that the market was having an overall bad day anyway. Synlait's after-tax profit guidance range is now -$5 million to $5 million. Synlait said further advanced nutrition demand reductions, "mostly from one of Synlait’s customers" would have a negative impact of $16.5 million, while the remaining $3.5 million was due to higher financing and supply chain costs.

SYNLAIT - A 'CUSTOMER' RESPONDS
The a2 Milk Company [ATM], a 20% shareholder in Synlait, said it was "surprised at the extent of the reduction in Synlait’s guidance range" in Synlait’s announcement, "which indirectly refers to a2MC". It said there is "no material change" to a2's outlook as confirmed at the time of the announcement of its first-half results in February. Nevertheless, the a2 shares slumped 31c (5%) to $5.93. 

KIWIBANK EYES $200M BONDS/TIER 2 CAPITAL ISSUE
Kiwibank has registered a disclosure statement for an offer of up to $200 million of unsecured subordinated notes. They will constitute Tier 2 Capital for Kiwibank’s regulatory capital requirements, and have a 10-year term. The interest rate will be a fixed rate for the first five years, and then reset to a new fixed rate for a further five years. The offer is expected to open next week.

SWAP RATES LIKELY EASIER
Wholesale swap rates are probably slightly easier after Tuesday's public holiday. 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 2 bs at 5.57%. The Australian 10 year bond yield is now at 3.31% and down 2 bps. The China 10 year bond rate is up 1 bp at 2.83%. And the NZ Government 10 year bond rate is now at 4.09%, and that is down 7 bps. The UST 10 year yield is at at 3.41% and up 1 bp.

EQUITIES MOSTLY LOWER
The S&P500 set a bad mood for global equity markets with a 1.6% drop overnight after more negative banking sector developments. Tokyo has opened down 0.5% but Hong Kong is bucking the mood with a 0.6% lift. Shanghai though is down 0.5%. The ASX200 is just slightly in negative territory in afternoon trade, but the NZX50 is down with a bit of a 0.7% bump, not helped by some of the corporate news mentioned further up this article.

GOLD DARING ITSELF TO GO ABOVE US$2000
Will it or won't it? In early Asian trade, gold is virtually unmoved having risen overnight and a short while ago it was perched on US$1999/oz, seemingly waiting for cues to either have another run above US$2000 or back away again.

NZD MARKING TIME
The Kiwi dollar is virtually unchanged against the US currency from earlier in the day, at US61.4c.  Against the Aussie we are just up at A92.75c. And against the euro we are at 55.9 euro cents. The TWI-5 is at 68.8, which is down slightly from earlier.

BITCOIN BACK ON THE SCENT OF US$30,000
The bitcoin price has been enjoying the risk-off equities sentiment of the past 24 hours, by driving back towards US$30,000 again after several days of weakness. At time of writing Bitcoin was up 3.3% in the past 24 hours at US$28,330.

This soil moisture chart is animated here.

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