A review of things you need to know before you sign off on Thursday; BNZ trims mortgage rates, trade deficit falls, credit cards out of favour, inflation expectations stinger, poverty progress?, swaps firm, 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). It's a skinny edition today.

MORTGAGE/LOAN RATE CHANGES
BNZ trimmed most fixed rates by between -4 bps and -20 bps. More here.

TERM DEPOSIT/SAVINGS RATE CHANGES
None here today.

UNBALANCED WITH THE EU & KOREA
The January merchandise trade deficit was -$976 mln, lower than the -$2.1 bln in the same month a year ago, and even lower than the -$1.1 bln in January 2021. Exports were down -7.1% from a year ago, but imports fell -20%. Oddly, one reason exports fell is because we didn't export as much crude oil. Imports of "petroleum and products" fell -50%. The change in our trade surplus or deficit with our top four trading partners - China, Australia, USA, Japan - changed very little in January from the same month a year ago. But our trade with South Korea is now in a huge deficit, more than -$400 mln in January alone, -$3.6 bln for the year to January and the largest we run with any country. It is only beaten with the deficit we run with the EU bloc.

WHAT IS A GMO?
The Environmental Protection Authority has released a clarification that certain organisms, known as null segregants, are not considered genetically modified organisms under the HSNO Act 1996. Null segregants are descended from genetically modified organisms but do not contain genetic modifications themselves. This can occur when one parent has the genetic modification, and the other parent does not. EPA said, "This decision provides certainty for researchers in our primary industries and brings New Zealand into line with other countries in the OECD, such as Australia and the United States. This will help New Zealand scientists keep pace with international research."

SLIGHTLY HIGHER
The trending higher of dairy prices recently has induced the ANZ economists to raise their forecast payout for the current season by +15c/kg to 7.85/kgMS. This is only marginally higher than the current Fonterra forecast midpoint of $7.80. (ANZ didn't change their initial 2024/25 season forecast of $8.50.) Forecasts from all major analysts are here.

NOT IN FAVOUR
Credit card billings for transactions within New Zealand actually fell in January from the same month a year ago. That is the first time we have seen such a retreat since January 2009 - and we all know what was happening back then. (However, there are still 'healthy' +10% rises for card use outside New Zealand.) One thing credit card users aren't doing is using the debt facilities of the cards any heavier - that is stable. In fact, it is running at its (equal) lowest ever. And as you might surmise from this data, total card balances are little-changed.

NOT WHAT THE RBNZ WANTS TO HEAR
The release of the Q1-2024 household inflation expectations survey will give the RBNZ policy committee no comfort. Householders views of future inflation have risen sharply in a development that goes very much against what the Reserve Bank is looking for as it seeks to dampen down inflation

KEY SOCIAL DATA
StatsNZ today released a comprehensive set of child poverty measures. They aren't nice reading. But are we making progress? We didn't in 2023 from 2022. But a longer term look reveals a declining trend. A proper assessment should have you reading the data released. There is a lot of gritty detail here. But for readers without any attention span or only passing interest in this key topic, here is a chart tracking the percentage of children living in households in Material hardship. Progress may not have been, or smooth, or fast enough - but clearly, there has been progress.

COMCOM WANTS BANKS TO 'PICK UP THE PACE ON PAYMENT OPTIONS'
The Commerce Commission is calling for more innovation in payments between bank accounts, saying this could support better ways to pay online and in-person. Chairman John Small says examples overseas include the use of QR codes and mobile applications that facilitate new in-person payments, with this complementary to the Government's development of a Consumer Data Right regime. The Commission will begin formal consultation on whether to recommend to Commerce and Consumer Affairs Minister Andrew Bayly the need to exercise powers enabling it to regulate so this innovation "happens in a timely manner."

BETTER AS A RENTER?
StatsNZ household expenditure survey results show, for the year to June 2023, total rent payments were up +4.0%, total mortgage payments were up +27%, mortgage interest payments up +50%, mortgage principal repayments were unchanged, property rates up +5.9%, and building-related insurance costs up +14%.

'A DIFFERENT WAY TO THE SAME DESIRED OUTCOME'
The Government said today it will repeal the Business Payment Practices Act 2023, designed to get big business to pay SMEs faster. They say the legislated approach was modelled on a Morrison Govt Australian plan that research shows had no impact at all, other than adding compliance cost. The new government says it recognises there is an issue to be sorted out and will look for new ways to achieve that. BusinessNZ predictably applauded the change of direction.

JAPAN GROWTH STALLING
Some preliminary PMIs for February are starting to come through and the first is from Japan, showing its factory sector contracted more than expected, and its services sector expanded again, but by less than expected. Together they paint a picture of growth stalling in Japan.

MORE ON AUSSIE WAGES
Australia said average weekly ordinary time earnings for full-time adults was AU$1,888.80 in November (NZ$2030/week). The annual increase of +4.5%, or AU$81 a week, was the strongest since May 2013, other than a brief spike in average earnings early in the COVID-19 pandemic.

SWAP RATES FIRM
Wholesale swap rates will probably be on the firmer side today. However, the key reaction will come at the close. Our chart below records the final positions. The 90 day bank bill rate is still unchanged at 5.71%. The Australian 10 year bond yield is down -1 bp at 4.20%. The China 10 year bond rate is unchanged at just under 2.43% and still its lowest ever. And the NZ Government 10 year bond rate is up +5 bps to 4.92%, while the earlier RBNZ fixing was at 4.85% and unchanged from yesterday. The UST 10 year yield is now at 4.31% and up +3 bps from this time yesterday. The UST 2yr is now up to just under 4.67% and so that key inversion is now out tot -36 bps.

EQUITY WINNERS & LOSERS
Just before the market closed on Wall Street, the release of the upbeat Nvidia results which came in higher than the high expected gave the S&P500 a late boost enabling it to finish up +0.1% for the day. Locally, the NZX50 is up a strong +1.0% near the close. The ASX200 is little-changed however in afternoon trade. Tokyo has opened its Thursday session up +1.6% and another new record high. Hong Kong is up +0.2% at its open. Shanghai is up +0.4%. Singapore has opened down -0.2%.

OIL FIRMS
Oil prices are up +US$1 to just under US$78/bbl in the US while the international Brent price is down at just over US$82.50/bbl.

GOLD ON HOLD
In early Asian trade, gold is now at US$2027/oz and up just +US$11 from yesterday.

NZD FIRMS FURTHER
The Kiwi dollar has eased higher from this time yesterday, now at 61.9 USc. Against the Aussie we are firmer at 94.5 AUc and a +¼c gain. Against the euro we are also firmish again, at 57.2 euro cents. That means the TWI-5 is up at 71.3 today.

BITCOIN EASES
The bitcoin price has moved lower today, now at US$51,561 and down a bit more than -1% from this time yesterday. There's been modest volatility over the past 24 hours of just on +/- 1.5%.

This soil moisture chart is animated here.

Keep abreast of upcoming events by following our Economic Calendar here ».