A review of things you need to know before you sign off on Tuesday; TSB launches 6.25% TD rate, new car sales weak, housing listings surge (not sales), discretionary spending weak, swaps unchanged, NZD stable, & much 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 today to report.

TERM DEPOSIT/SAVINGS RATE CHANGES
TSB has raised its one year term deposit rate to 6.25%. That is about +15 bps better than at any main bank for that term, and almost as high as the 6.3% offers by both Heartland Bank and Rabobank.

SHARP PULLBACK
February new car sales were weak, more evidence of an economic pullback. At 5,951 new cars sold in the month, this was the lowest February result in 11 years, since 2013. The largest pullback is in EVs and hybrids. In December 2023 81% of car sales were NEVs - but in January and February it was about 40%. Light commercials suffered a pullback too. But not heavy commercial vehicles; at 660 units that is the best February result ever (and 38 of them were full EVs).

A LOGJAM OF PROPERTIES FOR SALE
Auckland's housing market is swamped by homes for sale, leaving buyers spoiled for choice and 'creating the largest buyers' market since 2011', says the region's dominant realtor, Barfoot & Thompson.

TOUGH, ESPECIALLY FOR DISCRETIONARY SPENDING I
Household spending data shows that - not unsurprisingly - food has been a big contributor to increased costs, while we've been trying to save with decreased spending on communication and recreation. Increased living costs force spending changes, says Stats NZ

TOUGH, ESPECIALLY FOR DISCRETIONARY SPENDING II
Consumer spending patterns were mixed in February with some merchant groups up and others down, but the overall trend still indicates slowing growth due to the higher cost of living. That's according to the data in the Worldline payments network.

IMPACTS ON ARREARS AND DEFAULTS
Centrix says as consumer arrears are climbing, the flow on effect continues to impact Kiwi businesses. Overall business defaults were up +28% year-on-year in January , while company liquidations were up +16% over the same period.

WATCH THE GST TRACK
Another indicator of toughening economic conditions was revealed in today's Crown Accounts to January. While income taxes collected from individuals are still rising far faster than inflation (+6.3% pa - partly due to more people being employed, but also higher pay rates), GST being collected took a surprisingly sharp dive in January 2024. The Crown collected $2.84 bln in GST in January 2023, but only $2.47 bln in January 2024, a -13% drop. We haven't seen a drop like that for quite some time and it will be closely watched to see if it is a portend, of just a one-off (which does happen sometimes with GST collections). (Total Crown revenues are running +$4.9 bln more in the year to January than the same period last year. +7.0%.)

RBNZ INTRODUCES CYBER RESILIENCE REQUIREMENTS
The Reserve Bank (RBNZ) says it's implementing cyber resilience reporting requirements for the financial institutions it oversees in phases through 2024. These include; a requirement to report material cyber incidents to the RBNZ within 72 hours; entities are to inform the RBNZ of all cyber incidents regardless of materiality with large entities required to report all cyber incidents every six months and smaller ones annually, and; financial institutions will also be required to report to the RBNZ on self-assessment against the regulator's guidance on cyber resilience, annually for big entities and every two years for others. This comes as the RBNZ publishes consultation feedback and decisions on collecting data to support cyber resilience.

CONSUMER LAPTOP TUNED FOR STRONG AI PERFORMANCE
Apple has now released its M3 chip MacBook Air, and claims it is the 'world's best consumer laptop for AI'.

HOW IT WILL BE PAID FOR - BY USERS
The Coalition Government has unveiled a vehicle registration fee hike to pay for its transport plan. National will add $50 to vehicle registration costs and hike fuel taxes by 12 cents in 2027 to cover the costs of transport infrastructure.

COMMODITY PRICES TURN UP
The ANZ World Commodity Price Index gained +3.5% in February from January as both dairy and meat prices improved. In New Zealand dollar terms, the index lifted +4.1% m/m as the NZD fell -0.8% against the US dollar, and from a year ago that puts them up +6.3%.

CREDIT RISK & CLIMATE RISK
The RBNZ is talking more about how these two are linked. This goes down to credit risks at individual banks and up to financial stability risks at a system-wide level. The more this risk assessment is developed, the more you will see it applied when you get a loan, and how that loan is priced. The RBNZ is making sure the signals go right through the lending systems of all financial institutions.

COST OF MONEY NOT GETTING CHEAPER AT BANKS
The January banking system funding profile saw continued declines in no-cost at-call monies, and rises in short term funding (<1 year). Funding for longer terms is stable. This continues the slow rise in funding cost pressure on banks overall. As the RBNZ recently noted, these shifts will be felt by banks and get reflected in their pricing decisions. Banks are due to repay $1.8 bln of the Funding for Lending program in March, on top of the $1.3 bls they have already paid back. At its maximum they took $19 bln under this program (at the OCR rate). For the rest of 2023 they are due to repay another $3.9 bln. It seems unlikely they will replace those funds with cheaper cost money.

SENDING AN OLD DOG ON A REINVIGORATION TRIP?
The Government is making South and South East Asia a priority because "it is critical to maintaining and building [our] security and prosperity". To do that they are sending Winston Peters to talk his way through India, Indonesia and Singapore looking for "reinvigoration". I wonder if those hosts realise that it is domestic politics to get WP out of the country?

A POSITIVE PORTEND
Australia delivered a bumper current account surplus in Q4-2023 od +AU$11.8 bln, much more than was expected. This was their best 2023 quarter, taking the annual current account surplus to +AU$31.9 bln. That probably means their Q4-2023 GDP activity will be positive too, helped by net exports.

SWAP RATES HOLD
Wholesale swap rates will probably be little-changed again today. Our chart below records the final positions. The 90 day bank bill rate is up a minor +1 bp at 5.66%. The Australian 10 year bond yield is unchanged from yesterday at 4.12%. The China 10 year bond rate slipped even lower, now just under 2.37%. And the NZ Government 10 year bond rate is up +2 bps to 4.82%, while the earlier RBNZ fixing was at 4.76% and up +1 bps from yesterday. The UST 10 year yield is now at 4.22% and up +2 bps from this time yesterday. The UST 2yr is now down to just on 4.61% and so that key inversion is out to -39 bps.

EQUITY WINNERS & LOSERS
Wall Street ended little-changed as measured by the S&P500. But after hours, futures price=ing has slipped, down -0.2%. Tokyo has opened down -0.6% today. Hong Kong has opened downa sharpish -1.3%. Shanghai is holding the line (for the Party). Singapore has opened also little-changed. The ASX200 is also little-changed in afternoon trade. But the NZX50 is down -0.3% in late trade today.

OIL SOFT
Oil prices are about -US$1 lower at just under US$78.50/bbl in the US while the international Brent price is still at just on US$82.50/bbl.

GOLD FLIRTS WITH ATH
In early Asian trade, gold is now at US$2111/oz and up +US$29 in a day, and to about a record high.

NZD HOLDS
The Kiwi dollar has dipped -10 bps from this time yesterday, now at 60.9 USc. Against the Aussie we are marginally firmer at 93.6 AUc. Against the euro we are marginally softer at 56.2 euro cents. That means the TWI-5 is little-changed today.

BITCOIN SHOOTS HIGHER STILL
The bitcoin price has continued its heady climb today, now at US$68,432 and up +7.8% from this time yesterday. Volatility has been very high at +/- 4.3% today.

This soil moisture chart is animated here.

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