A review of things you need to know before you sign off on Monday; net migration settles in high, service sector now contracting, strong tourism, swaps slip, NZD holds, & 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
Nothing to report again today.

TERM DEPOSIT/SAVINGS RATE CHANGES
In case you missed it on Friday (because we briefly did, sorry SBS), SBS Bank raised its 4 month rate to 4.30%, its 5 month rate to 5%, and its nine month rate to 6.15%.

SETTLING IN HIGH
New Zealand's population growth from migration appears to have about doubled from pre-Covid levels. In February, a net +7630 people arrived, but the annual net flow is back a little to a still-high +131,000. While arrivals have largely held the line, departures have continued to trend higher over the last year. Westpac says they see this as a combination of catch-up movements after the Covid border closure, and people looking for opportunities elsewhere as job prospects deteriorate in New Zealand.

'ABOUT TURN'
The local services PMI has now shifted from expanding (February and prior) to contracting in March and the shift was as substantial as it was sudden, and killing the recently upturn. Of particular concern is the drop in new orders. And BNZ commented: "Combining today’s weak PSI activity with last week’s similarly weak PMI activity, yields a composite reading that would be consistent with GDP falling below by more than 2% compared to year earlier levels. That is much weaker than what folk are forecasting."

FEBRUARY TOURISM ACTIVITY STRONG BOTH WAYS
Inbound, there were 362,800 visitor arrivals in February, an increase of +94,100 from February 2023, so up +35%. About one-third of this increase was attributable to visitors from China. The 37,900 visitor arrivals from China is the highest number of monthly visitor arrivals from China since 50,300 in January 2020, shortly before pandemic-related travel restrictions were introduced worldwide. We get a peaking of Chinese inbound tourists this time of year because of the timing of Chinese New Year. For outbound travelling, there were 204,500 New Zealand-resident travellers who arrived back from short-term overseas trips in February, a record for any February month and the first to exceed 200,000. The previous record for a February month was 190,600 in February 2019. (The record number of New Zealand-resident arrivals for any month was 345,100 in July 2018.) In February, Australia was the top destination for Kiwi travellers, followed by China, India, the United States, and Fiji.

WHAT IS THE NEUTRAL RATE NOW?
New RBNZ analysis shows that due to high inflation expectations locally, the OCR would currently need to be about 3.9% to neither tap the brakes nor push on the accelerator of the economy. The current OCR – at 5.5% – is reducing capacity pressures and inflation they say.

ONE-YEAR MLF RATE UNCHANGED
Just for the record, the People's Bank of China had its monthly review of its benchmark One-Year Medium-Term Lending Facility Rate, which is the main rate at which the central bank lends to big commercial banks, and it held it unchanged at 2.5%.

SHIFTING UP
In Japan, machinery orders jumped +7.7% in February from January, reversing the -0.7% fall in January and far exceeding market expectations for just a +0.8% gain. That put them a healthy +9.4% higher than year-ago levels.

SQUEEZE TIGHTENS
Media companies in Australia are reacting with horror that their Federal Government is reportedly planning to ban advertising of unhealthy food options. It is an idea promoted by independent Teal MPs. This comes as it is expected Meta will stop paying for news content it takes for its service. The squeeze is making most of them uncomfortable about their future business prospects. 'Free' news access is under threat there, as everywhere.

SWAP RATES UP AGAIN
Wholesale swap rates are likely to be lower today although the change won't be large it seems. Our chart below will record the final positions. The 90 day bank bill rate is up +1 bps to 5.65%, a level it has hovered around for 30 days. The Australian 10 year bond yield is up +1 bp at 4.27%. The China 10 year bond rate is holding at 2.29%. The NZ Government 10 year bond rate is down -7 bps from this morning at 4.88% and the earlier RBNZ fix was at 4.82% and down -2 bps. The UST 10yr yield is up +1 bp from this time morning to 4.53%. Their 2yr is down -3 bps at 4.91%, so the curve is now little-changed, now by -38 bps.

EQUITIES GO MOSTLY RISK-OFF
In late trade today, the NZX50 is down -0.8% to start the week. The ASX200 is down -0.5% in a similar risk aversion mood. Tokyo has opened down -1.2%. Hong Kong is down -1.0% at its open. Shanghai is up +0.6% however to start its week. Singapore is down -1.1%. The S&P500 futures suggest Wall Street will open tomorrow bucking the trend. up +0.2%.

OIL PRICES HOLD
Oil prices have held at just under US$85/bbl in the US while the international Brent price is now just over US$89.50/bbl.

GOLD IN SMALL RECOVERY
In early Asian trade, gold is up +US$12 from this morning, now at US$2355/oz but well off its recent highs.

NZD HOLDS LOWER
The Kiwi dollar has firmed marginally from this morning's open to 59.4 USc. Against the Aussie we are a touch lower at 91.7 AUc. Against the euro we are now unchanged at just on 55.8 euro cents. This all means the TWI-5 is now at 69.2 and actually little-changed.

BITCOIN RECOVERS
The bitcoin price has risen today from its morning open, now up to US$65,634 and a +2.7% gain. Volatility of the past 24 hours has been high at just over +/- 3.0%.

This soil moisture chart is animated here.

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