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 today.
TERM DEPOSIT/SAVINGS RATE CHANGES
No changes here either.
A SHARP TURN LOWER
The steady improvement in consumer confidence over recent months took a blow this month. The ANZ-Roy Morgan consumer confidence survey fell 9 points in March to 86.4, with a fall across most questions, likely affected by recession headlines. Late-month responses were markedly weaker than those that preceded the GDP data. Inflation expectations were unchanged at 4.5%, while expected house price inflation fell from 4.1% to 3.4%.
AND THE EVIDENCE IS BROADENING
And that turn lower has been confirmed by a Westpac retail pulse report. They say spending growth has slowed to below the rate of inflation, despite rapid increases in the population. Households have become increasingly cautious about their spending plans in the face of high interest rates and ongoing cost of living pressures. Those factors have been a particular drag on spending on discretionary items like furnishings and dining out.
BUSINESS CONFIDENCE SLUMPS
Meanwhile business confidence is easing as well, according to the ANZ Business Outlook Survey. The ANZ economists say the recent published drop in GDP data 'seems to have given things a decent shunt south' in respect to business confidence.
CHANGE ON THE MPC
Following two retirements (of Peter Harris and Caroline Saunders), the Government has appointed economists Carl Hansen and Professor Prasanna Gai to the Reserve Bank Monetary Policy Committee. Carl Hansen, the executive director of Capital Strategic Advisors, will not undertake any work for financial sector clients while he is a member of the MPC. As Carl Hansen is also an advisor to Meridian Energy, he will not participate in any discussion relating to Meridian Energy’s fixed-interest funding arrangements. Professor Gai, the Professor of Macroeconomics at the University of Auckland and Head of the Departments of Economics, Accounting & Finance.
ANOTHER INQUIRY INTO BANKING?
The Parliamentary Primary Production Committee has initiated a briefing to investigate practices in rural bank lending. The committee is headed by ACT list MP Mark Cameron. He is hoping to shift this briefing forward to a full terms of reference for a full parliamentary enquiry.
BENEFITS TO INCREASE FOR ABOUT 1.4 MLN
From April 1, 2024 a wide range of public assistance benefits will rise. They include Jobseeker Support where a couple with children will get an extra +$56.48 a fortnight (and taking the per hour rate to $18.10 equiv for one person), while single parents will see their Sole Parent benefits increase by +$44.02 per fortnight. NZ Super and the Veteran's Pension will increase by +$71.08 per fortnight and the rate for a single superannuitant living alone increasing by +$46.20 per fortnight. Student allowances rise, with under-24s who are living away from home will get an extra +$27.94 a fortnight. And the payment rates for childcare assistance weekly maximum will rise +$14. There are a mix of rises, some the CPI (4.66%) and the Net Average Wage (5.28%).
MINIMUM WAGE RISING
The details of this increase are: Adult minimum wage will go up from $22.70 to $23.15 per hour (+2.0%). Starting-out and training minimum wage will go up from $18.16 to $18.52 per hour (also +2.0%), all from April 1, 2024.
ANOTHER VERY SUCCESSFUL BOND TENDER
Today's NZGB auction was well supported from 66 bids worth $1.275 bln chasing the $500 mln available. The April 2029 $275 mln tranche went to 13 successful bidders at 4.36% pa yield, which was lower than the 4.81% at the prior equivalent tender 17 weeks ago. The May 2034 $225 mln went to 8 successful bidders at a 4.57% pa yield, down from 4.76% eight weeks ago. $775 mln bid was unsuccessful and is still out there looking for a home.
TIMID LENDING/BORROWING APPETITES
Borrowing from banks and other non-bank institutions is rising at only modest levels still. Housing loan balances are only +3.0% higher than a year ago, personal loan balances are up only +3.7% (and the least in 12 months), business borrowing is anaemic, rising only +1.7% (see separate note on overdue balances, so banks won't be keen for more of that). And rural lending is up only +1.0% in February from a year ago. But "at least it didn't fall" some may say.
MAKING MONEY WORK HARDER
For the first time in three years we have has a second consecutive dip in household bank deposits. The retreats are not large, and they are for the seasonal January and February period. So it may not be a signal that household bank deposits are topping out - or it may be. It is certainly a possibility, and one consistent with the overall rise in cost-of-living stress. Meanwhile those same households are making their funds work harder, adding almost +$1 bln to their term deposit balances. The money is principally coming out of savings accounts, and to a lesser extend current accounts. A record $129 bln is now invested in TDs. More than 53% of household bank balances are in TDs, finally back to the level just at the start of the pandemic. A return on your money now takes priority over a return of your money.
DROUGHT EXTENDING
More funds ($80,000) are being offered to rural support trusts for advice on how farmers can handle drought conditions. A medium-scale adverse event classification already in place for parts of the South Island has now been extended to cover the Northland, Taranaki, Horizons and Greater Wellington regions including the Wairarapa.
O'OH
An NZX announcement from Synlait (SML) revealed it requested a trading halt today. "As previously announced by SML, SML (i) is required under its syndicated banking facilities to make a prepayment of at least $130 million on Thursday, 28 March 2024; (ii) is running a sale process in respect of Dairyworks; (iii) has announced that it will provide an update to the market on Tuesday, 2 April 2024 regarding its plans to deleverage its balance sheet; and (iv) is due to announce its half-year results for the six months ended 31 January 2024 on Tuesday, 2 April 2024." And " ... to provide it with additional time to finalise separate discussions with its banking syndicate regarding an extension to the $130 million prepayment obligation due on Thursday, 28 March 2024, and with its major shareholder, Bright Dairy, regarding the provision of financial support ..."
EYES ON THE YEN
The Japanese yen's brief slide on Tuesday to a new 34-year low near 152 per dollar (and reprising its November 2023 levels) triggered an emergency meeting of Japan's three main monetary authorities yesterday, suggesting direct intervention in the market to stop what they consider disorderly and speculative moves is imminent. If they have already moved in the background, it isn't obvious yet.
STUCK OVER 4%
Aussie inflation expectations, which had been suck at 4.5% since December, actually slipped in March to 4.3%. While this may be its lowest since October 2021, it does emphasise just how sticky Aussie CPI inflation has become.
SWAP RATES HOLD
Wholesale swap rates are likely to be little-changed again today. Our chart below records the final positions. The 90 day bank bill rate is unchanged at 5.64%. The Australian 10 year bond yield is down -2 bps at 4.00%. The China 10 year bond rate is unchanged at 2.31%. The NZ Government 10 year bond rate is down -5 bps from this time yesterday at 4.63% and the earlier RBNZ fix was at 4.59% and down -4 bps. The UST 10yr yield is down -1 bp at 4.22%. Their 2yr is now at 4.61%, so the curve is now inverted more, now by -39 bps.
EQUITIES UP LOCALLY
Wall Street ended its Wednesday session up +0.8% with a late jump earlier today. Sentiment seeing earlier Fed rate cuts drove the rally. Tokyo has opened down -1.1% today. Hong Kong is up +0.2% at its open and Shanghai has opened little-changed today. Singapore has also opened little-changed. Meanwhile, the ASX200 is up +0.8% in early Thursday afternoon trading and heading for a weekly +1.5% rise. The NZX50 is up +0.7% in late trade heading for a +1.0% weekly gain.
OIL PRICES FIRMISH
Oil prices have eased up +50 USc today to US$81.50/bbl while the international Brent price is now at US$85.50/bbl. Both have been in this narrow range for days now.
GOLD FIRMER AGAIN
In early Asian trade, gold is up +US$10 from this time yesterday, now at US$2188/oz.
NZD HOLDS SOFT
The Kiwi dollar is back has slipped marginally from this time yesterday at 59.9 USc. Against the Aussie we have stayed down at 91.8 AUc. Against the euro we are unchanged at 55.4 euro cents. This all means the TWI-5 has remained at just under 69.2.
BITCOIN SLIPS BACK
The bitcoin price has softened since this time yesterday, now at US$69,516 and down -1.6%. Volatility of the past 24 hours has been moderate at +/- 2.4%.
EASTER HOLIDAY SCHEDULE
Over the Easter holiday break, we will have normal weekend service, and will return with these daily briefings on Tuesday, April 2, 2024.
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