A review of things you need to know before you sign off on Wednesday; inflation falls but still high, real estate agent commissions at 4yr low, credit card use withers, swaps up, NZD forms, & 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/LOAN RATE CHANGES
No changes to report again today.

TERM DEPOSIT/SAVINGS RATE CHANGES
No changes here either.

LOWER. BUT THE DETAILS STILL CONCERNING
Annual inflation dropped to 4.66% in the December quarter, down from 5.64% in the September quarter and down from 7.22% in the December 2022 quarter. Food prices declined, albeit domestic inflation tops RBNZ expectations. Tradable inflation came in at a lower-than-expected 3.0% but non-tradable inflation was 5.9% and higher than expected. Analysts viewed the outcome with surprisingly varied views. How the RBNZ sees where we are now at will be revealed on Tuesday.

FOUR YEAR LOW
Residential property sales commissions were at a four year low in 2023 but showed signs of improvement in December. Annual commissions were -$780 mln lower in 2023 that they were at their peak in 2021.

GOING EASIER ON THE BANKRUPT
Westpac says it is updating its bankruptcy policy to improve access to basic banking services for people going through tough times. A 2022 survey undertaken by the Insolvency and Trustee Service found about half of respondents faced bank account closures after being declared bankrupt, while almost a quarter had difficulty finding a new bank or credit union. Westpac’s policies have now been updated so that customers who are in bankruptcy are able to continue to operate transactional accounts, open new transactional or savings accounts and retain or apply for a debit card.

EXTENDED WARINESS
Domestic billings on locally issued credit cards were essentially unchanged in December from the same month a year ago. That however means real spending on credit cards fell by the amount of intervening inflation. (But we did spend considerably more on these cards outside New Zealand from a year ago as we recovered our travel enthusiasm. But this increase has tailed off since mid 2023.) Balances due on credit cards was flat in December from November and only up a very modest +1% from a year ago. It was the same last year. This is unusual; in the prior ten years the rise from November to December averaged +$125 mln for the holiday impulse. But not recently. We are becoming wary of using expensive credit card debt.

NEW FEATURE
We have expanded the coverage of our NZX50 analysis with sector monitoring, helping explain how capitalisation in this equity market changes over time. It is a companion to the individual NZX50 company profiles here.

EXPORTS UP, IMPORTS DOWN
Japanese exports are firing impressively. They were up +9.8% in December from the same month a year ago, more than expected. And with the sharp drop in oil prices, the cost of their imports fell equally impressively, down -6.8% on the same basis. That enabled them to log an unexpected trade surplus in December. (They can probably thank the missteps from Xi and Putin for this result.)

SWAPS RISE
Wholesale swap rates will probably be higher today, possibly +7 bps, because today's CPI data suggests rate cuts will come much later than markets were pricing. However, the key reaction will come at the close. Our chart below records the final positions. The 90 day bank bill rate is unchanged again at 5.65%. The Australian 10 year bond yield is up +5 bps at 4.27%. The China 10 year bond rate is little-changed at 2.52%. And the NZ Government 10 year bond rate is up +9 bps at 4.82% following the CPI release, while the earlier RBNZ fixing was at 4.70% and down -5 bps from yesterday. The UST 10 year yield is now at 4.14% and up +4 bps from yesterday. The UST 2yr is at 4.34% and down -5 bps, so that key inversion is now back down to -20 bps.

EQUITY WINNERS & LOSERS
The NZX50 is little-changed in late trade today, but on the 'plus' side. The ASX200 is also little-changed in afternoon trade, but on the 'minus' side. Tokyo is down -0.3% in morning trade.. Hong Kong is up +1.8% in early trade, still optimistic about the upcoming impact of home team market support plans. Shanghai is up +0.6% at its open on the same view. Singapore has opened up +0.3%. In New York, the S&P500 ended its Tuesday session up +0.3%.

OIL HOLDS
Oil prices are holding at just under US$74.50/bbl in the US while the international Brent price is soft, now just over US$79/bbl.

GOLD FIRMS
In early Asian trade, gold is now at US$2028/oz and up +US$8 from this time yesterday. It closed earlier in London at US$2022/oz.

NZD RECOVERS SOMEWHAT
The Kiwi dollar is now just on 61 USc and marginally higher than this time yesterday. Against the Aussie we are back up +40 bps to 92.8 AUc. Against the euro we are +30 bps higher at 56.2 euro cents. That means the TWI-5 is now at just under 70 again and up nearly +40 bps.

BITCOIN HOLDS
The bitcoin price has moved up today to US$39,925 and up a minor +0.5% from where we were this time yesterday. There's been moderate volatility over the past 24 hours of just on +/- 2.2%.

This soil moisture chart is animated here.

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