A review of things you need to know before you sign off on Wednesday; consumer sentiment slips, C/A deficit smaller; dairy prices hold up; fewer foreign trusts; LGFA ratings affirmed, swaps firm, NZD holds, & more

Here are the key things you need to know before you leave work today (or if you work from home, before you shutdown your laptop).

MORTGAGE RATE CHANGES
No changes to report today. All rates are here.

TERM DEPOSIT/SAVINGS RATE CHANGES
No changes here either. All updated term deposit rates less than 1 year are here, for 1-5 years, they are here.

SENTIMENT HESITATION
Westpac's consumer sentiment survey for March reveals a step backwards, probably driven by the uncertainties of talk about the tariff wars and extending inflation risks. Consumer spending had been climbing steadily in recent months, and it will be interesting to see if this latest tick down in confidence impacts future spending. The level of confidence continues to vary significantly among regions. Confidence is in the doldrums in Wellington, but households are more optimistic in regions that have a strong rural backbone or tourism ties, especially in the lower South Island. We won't get the ANZ monthly version on consumer confidence for another two weeks, but the quarterly Westpac version seems to suggest a deeper fall that their rival's version - or perhaps it has all happened rather sharply in the past few weeks.

BEST OF A POOR BUNCH
The housing market is offering only paltry returns for residential property investors. But the latest rental yield and cash flow figures suggest one bedroom apartments are the way to go for investors.

NOT GETTING WORSE
Our current account deficit is getting smaller. For Q4-2024 it was -$7.0 bln compared to the -$7.9 bln in Q4-2023. For the 2024 year it was -6.2% of GDP and down from 2023's -6.5% of GDP. But the gain was less than the -6.0% expected. A key reason for the improvement is that we now run a much smaller services deficit that offsets our goods deficit. (In fact, by shifting to look at seasonally adjusted data, that services balance is supposedly a 'surplus'. It isn't on an actual basis, but either way it is a good improvement.) We get the Q4-2024 growth result tomorrow (Thursday).

NET INTERNATIONAL DEBT STABLE
The Q4-2024 data shows little improvement in our international investment position overall. But the detail is interesting. Our international assets rose by +$77.1 bln from the Q4-2023 period, a remarkable +21.3% rise. Our international liabilities also rose and by +$76.1 bln, or a +13.3% rise. We are making gains in areas that are positive. Apart from the giant insurance related inflows in the 2010-2011 earthquake insurance event, the latest financial asset gains are among the largest ever seen. That is enabling us to keep our net external debt levels under control. Our net external debt of 51.6% of GDP is little-changed, the same as it was in 2017 and it has level-pegged over most of the intervening period.

DAIRY PRICES HOLD UP
The latest dairy auction earlier today brought overall prices unchanged in USD but the rising NZD pushed that to a -3.3% fall in local currency. This is a late season event with slightly lower volumes, but is positive that most commodities, especially cheese and butter, are holding up. The WMP dip is minor. Since early February, overall prices have been relatively stable.

HEAVYWEIGHT BOOST
Tomorrow Fonterra will announce its half year trading results, and no doubt give an update on its payout forecast and expected earnings. And an update on its Mainland division divestment. There will be lots to cover and expectations are that it will be all positive for Fonterra shareholders and suppliers.

JUST A REMINDER
From Tuesday, April 1, 2025 the adult minimum wage will go up from $23.15 to $23.50 per hour and the starting-out and training minimum wage will go up from $18.52 to $18.80 per hour. But if you still pay adults at this rate you should ask whether that is right or fair. It is not at a living wage level.

NZX UPDATE
The NZX50 has fallen -0.3% so far today and holding, extending its -1.7% decline over the past five days. Kathmandu, Sky TV, Stride Property, and SkyCity Entertainment are today's biggest gainers. Chorus, NZX, Ryman, and a2 Milk lead the decliners. Market heavyweight F&P Healthcare is up +0.5% so far today.

FEWER DODGY TRUSTS, BUT NOT NONE
There's a much smaller number of NZ foreign trusts than there was a decade ago, but they're still quite popular in some countries. The number of NZ foreign trusts are down more than -80% since the release of the Panama Papers.

DODGY SCAM ADS ANNOYING
Some readers may have had a scam McAfee ad takeover a page of ours. It is occasional and random. It is a worldwide problem and the ad industry is focused on countering this tactic. We have engaged a partner in Sydney to fight this in the ad-tech trenches who've already activated a defense. Supporters who go ad-free won't have been impacted. Most others won't either but some will. If you see it, just click the tab (x), or immediately close your browser. (It won't be there when you open it again.) Despite what it says it won't be running a scan if you do this.

MORE RATINGS AFFIRMED
S&P Global Ratings today affirmed its 'AA+' long-term foreign currency and 'AAA' long-term local currency issuer credit ratings for the Local Government Funding Agency (LGFA). They also affirmed their short-term foreign and local currency issuer credit ratings at 'A-1+'. At the same time, they affirmed the 'AA+' long-term foreign currency and 'AAA' long-term local currency issue ratings on the agency's senior unsecured debt. The outlook on the long-term ratings is stable.

JAPAN JUMP I
Japanese exports rose +11.7% in February from the same month a year ago and this was the second best rise since December 2022 and much better than the +7.8% rise in February 2024. Still it wasn't quite as strong as expected.

JAPAN JUMP II
Japanese machinery orders rose +19.8% in January from the same month a year ago (up to ¥3.27 bln from ¥2.73 bln in January 2024.)

BOJ WATCH
And we are waiting on the Bank of Japan monetary policy review which should be released just as this report is published. Markets expect no change to their 0.5% policy rate. Update: The Bank of Japan kept its key short-term interest rate at around 0.5% during its March meeting, maintaining it at its highest level since 2008 and in line with market expectations. It was a unanimous decision and a cautious stance, focusing on assessing the impact of rising global economic risks on Japan’s fragile recovery. They noted ongoing uncertainties in the domestic economic outlook, including trade policies and global conditions.

APRA WATCH
A recent speech by the head of the Australian prudential regulator made the case for making sure bank directors were not in sinecures, requiring turnover every ten years. It also made the case for "unquestionable strong" capital rules and suggested they would not follow the easing off signaled by the Bank of England and the ECB. The US Fed is also under political pressure to ease banks capital requirements (as is the RBNZ via the local select committee who want easier access to debt funding by shifting bank capital adequacy requirements lower). APRA don't see this as a good idea and suggested they won't follow those recent trends. Interestingly, the NZ subsidiaries of Australian banks also must comply with APRA because APRA regulates the parent banks as groups.

SWAP RATES HOLD
Wholesale swap rates are probably little-changed today, but keep an eye on our chart below which will record the final positions closer to 5pm. The 90 day bank bill rate was unchanged at 3.66% on Tuesday. The Australian 10 year bond yield is up +2 bps at 4.46% today. The China 10 year bond rate is down -1 bp at 1.95%. The NZ Government 10 year bond rate is down -2 bps at 4.73% while today's RBNZ fix was at 4.68% and down -2 bps. The UST 10yr yield is now just on 4.30% and unchanged from yesterday. Their 2yr is up +1 bp at 4.05%, so that positive curve is still at +25 bps.

EQUITIES FIRMER, EXCEPT THE NZX50, AGAIN
The NZX50 is down -0.2% in late Wednesday trade. The ASX200 is unchanged in afternoon trade. Tokyo is up +0.6% in early Wednesday trade. Hong Kong is down -0.4%, while Shanghai is mirroring that at its open. Singapore has opened up +0.5%. The S&P500 ended its Tuesday session down -1.1% in Wall Street trade.

OIL SLIPS
The oil price is down -US$1 from this time yesterday and now just over US$66.50/bbl in the US, and just under US$70.50/bbl for the international Brent price.

CARBON PRICE SLIPS LOWER
The carbon price is lower today at NZ$59.25/NZU on still-good volumes, a real bear trend. That is extending the slide that started early February. The next release of units at the official auction is this week on Wednesday, March 19, 2025. But that auction's floor price is $68/NZU, so it is heading for a failure. See our new daily chart tracker of the NZU price for carbon, courtesy of emsTradepoint.

GOLD STAYS ABOVE US$3K
In early Asian trade, gold is up another +US$24 from this time yesterday, now at US$3029/oz.

NZD EASES
The Kiwi dollar is down -20 bps at 58.1 USc from this time yesterday. Against the Aussie we are up +10 bps at 91.4 AUc. Against the euro we are down -20 bps at 53.2 euro cents. This all means the TWI-5 is just over 67.2 and down -20 bps from yesterday.

BITCOIN ALSO EASES
The bitcoin price is down -0.7% from this time yesterday, now at US$82,652. Volatility of the past 24 hours has been modest at just under +/- 1.4%.

This soil moisture chart is animated here.

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