A review of things you need to know before you sign off on Friday; DTIs fall sharply, Census struggles, households a tax target, April trade surplus, no credit card stress yet, swaps jump, NZD firm, & 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
No changes so far today.

TERM DEPOSIT/SAVINGS RATE CHANGES
None here either.

DTI RATIOS DROP VERY SHARPLY - AGAIN
Latest RBNZ figures show new mortgage borrowers stretching themselves much less than has been seen in recent years in regards to the amount of debt they're taking on relative to income.

86.5% EFFECTIVE SO FAR
The 2023 Census date was March 7, 2023. Now Stats NZ says not-quite 4.5 mln people have returned their census forms so far, and households that have not taken part yet can expect to receive a Final Notice about the census. The 2018 census, which was considered an operational failure for which the head of Stats NZ lost their job, came in with a 97.4% population coverage. The 2023 census is only running at 86.5% so far. The is about 700,000 uncounted. "We are focusing effort on lifting responses from Māori and Pacific peoples, with the support of partnerships and collaborations," they say.

MEO-GROSER TO AVANTI
Avanti Finance has appointed a new Chief Risk Officer, Olivia Meo-Groser. She was previously at the now-closed New Zealand operation of hummgroup, where she was the General Counsel and Head of Operational Risk.

HOUSEHOLDS TO PAY MOST OF THE +$7.6 BLN RISE IN TAXES
The Budget revealed that the Government expects to collect $133 mln in tax and other 'revenues' in the 2023/24 year, or 32% of GDP. Taxes on individuals from income taxes and GST make up more than half of this. The PAYE collected is expected to rise +6.0% and GST will rise by +9.2% in a year, together an extra +$4.7 bln or an extra +1.1% of GDP. We have started releasing our summaries of the tax and spending data from Budget 2023. The tax/income data is the first summary to be released, and is here.

MOVING SURPLUSES, BUT NARROWER
April is an unusual month on trade front, a month when we report a surplus. April 2023 was no different, and a +$427 mln surplus was achieved. Goods exports rose +10% from year-ago levels to $6.8 mln in the month. Goods imports rose +12% to be $6.2 bln. That trend meant the April surplus reduced from the +$469 mln in 2022 and the +$558 mln in April 2021. Our surplus with China actually picked up to +$759 mln in April 2023, a rise from +$471 in April 2022 - so we are more dependent on them recently, even though for the full year to April that dependency is decreasing fast. In that year, our surplus with China has been +$920 mln and down from +$2.164 bln in the prior April year.

RISING RATES COST THE CROWN BILLIONS
The Budget 2023 revealed some large rises in the upcoming NZGB bond program yesterday. There was a bond tender under the old program today and it was well supported, but at rising yields. There were 110 bids todalling $1.388 bln for the $400 mln on offer in three parcels. The May 2026 $200 mln was broadly supported and resulted in a yield of 4.69%, up +36 bps from the prior equivalent tender two weeks ago. The $150 mln May 2032 parcel had 51 bidders but only 3 won anything. They bid 4.40% on average, up +27 bps from two weeks ago. The final $50 mln went for a yield of 4.65%, only +15 bps more over the past two weeks. The Government is only paying about -1% less than similar term deposit rates. The Budget allows for the Crown to pay $5.6 bln in interest ("debt servicing") in the next fiscal year, a +9.0% increase from the current year, and a massive +445% increase from the 2021/22 fiscal year ($4.0 bln)

CARDS PUT AWAY
Spending using credit cards has been falling recently and was down to $3.5 bln in April. It peaked recently at $4.2 bln in December. It all-time peak was $4.3 bln in December 2021. The April 2022 spending level was a miniscule +$12 mln more than year-ago levels and far less that can be accounted for by inflation. If this spending just kept pace with inflation it would have been more than +$200 mln higher.

NO STRESS SHOWING YET
Weak credit card spending is flowing through to lower credit card balances and lower credit limits. And helpfully, the proportion of balances that incur interest isn't rising. So that suggests credit stress isn't actually showing up in credit card activity. Lower activity, yes, but not higher balances, and not more slipping through to be being interest bearing.

BEATING DEFLATION, FINALLY
Japanese inflation came in at 3.5% in April, well above the expected +2.5% and above March's 3.2%. Japanese inflation is settling in above the Bank of Japan's 2% target rate. That's twelve consecutive months higher than that target.

THE ASSOCIATION GETS UNCOMFORTABLE
In Australia, the brand damage to PwC is getting worse. And now corporate clients are trying to distance themselves from the firm as their tax scandal creates a bad odour. In New Zealand ASB, Kiwibank and Westpac are all PwC clients. The odour hasn't spread to New Zealand yet, but the parents of ASB and Westpac NZ may well trigger a move away. They could also come true for other brands with high public profiles.

SWAP RATES RISE FURTHER
Wholesale swap rates are probably a higher yet again today and maybe substantially too. 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 up +9 bps at 5.79% and 54 bps above the OCR. This is yet another unusually large daily rise. The Australian 10 year bond yield is now at 3.60% and up +16 bps from this time yesterday. The China 10 year bond rate is little-changed at 2.74%. And the NZ Government 10 year bond rate is now at 4.45% which is up another +8 bps, and still above the earlier RBNZ fix at 4.41% which is up +15 bps from yesterday. The UST 10 year yield is now at 3.65% and up another +8 bps from yesterday.

EQUITIES RISE STRONGLY
The NZX50 is up +0.7% near the close, and heading for a weekly rise of +1.0%. The ASX200 is up +0.6% in early afternoon trade but it might only reach a weekly rise of +0.4%. Tokyo is up +1.0% in an extension of they strong run so far this week. If this holds they will be up +4.6% for the week. But Hong Kong is down -1.0% in early trade today and will be lucky to end the week unchanged. Shanghai is down a marginal -0.1% in their early Friday trade, heading for a gain of +0.7%. The S&P500 ended its Thursday trade up another +0.9% with a late surge. So far this week this index is up +1.8%.

GOLD LOWER
In early Asian trade, gold is down at US$1963/oz and down another -US$21 from this time yesterday. It closed in New York earlier at US$1957/oz, and in London at US$1960/oz.

NZD HOLDS
The Kiwi dollar is little-changed from this time yesterday at 62.5 USc and not much moved by the Budget. Against the Aussie we are also unchanged at 94.1 AUc. And against the euro we are up at 58 euro cents. That means the TWI-5 is up slightly at 72.4.

BITCOIN SLIPS
The bitcoin price is a little lower today, now at US$26,799 and down -1.9%. Volatility over the past 24 hours has been moderate at just on +/- 2.0%.

This soil moisture chart is animated here.

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