A review of things you need to know before you go home on Thursday; a sharp TD rate hike, Fonterra affirms milk price, ANZ worried about business confidence, Govt outlines its virus plans, swaps lower, NZD lower, & much more

Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
None to report today.

TERM DEPOSIT RATE CHANGES
Rabobank has raised its 3 month TD rate to 2.45%, a +15 bps increase. That is by far the highest rate for that term from any bank.

LOCAL ONLINE WINNING
January was a soft month for New Zealand’s online retail spending, with total spending down -1% on January last year, according to the BNZ/Marketview monitoring. The decline is driven by a large year-on-year drop in spending at offshore sites, which was down -12% on last January. Local online sales were up +7% on that basis. Online retail now accounts for 8% of all retail sales.

MILK SEASON UPDATES
Fonterra said today that its forecast Farmgate Milk Price range at $7.00-7.60 per kgMS and its forecast full-year underlying earnings guidance of 15-25 cents per share remains unchanged, despite the coronavirus clouds. It has also revised its forecast milk collections for the 2020 season down from 1,530 million kgMS to 1,515 million kgMS. That is almost a -1% reduction when an increase was originally expected. DCANZ reports that overall industry collections were up +1.6% in the year to January. For the current season, the industry collections are down -0.7% to January. Also today, A2 Milk reported very strong results to December 2019. (Their key supplier Synlait Milk didn't have such a good time of it however.)

'SOUND THE ALARM'
ANZ's business sentiment survey results were out today. They report headline business confidence fell -6 points to -19 in February. A net +12% of firms expect stronger activity for their own business (down -5). Survey responses received after the COVID-19 outbreak hit the headlines (about a third of all responses) were more negative. Agriculture sector own activity collapsed from +16 to -30. Manufacturing own activity also fell sharply, from +24 to +4. The construction sector lifted strongly from 10% to 22% of firms expecting busier times ahead. Retail sector pricing intentions soared to the highest level since mid-2008.

BACK UNDER 1%
Another $250 mln April 2025 in nominal bonds was tendered today by Treasury and $700 mln was bid. Only nine bidders were successful, leaving 19 with nothing. To win you needed to bid a yield of only 0.967% pa and that essentially ends the recent trend of rising yields. Fear will do that.

CORONAVIRUS UPDATE
The latest compilation of Covid-19 data is here. There are now 3332 cases outside China, a rise of +400 in one day. A week ago that number was 1097 so it has more than trebled in one week.

WE HAVE A PLAN - IN FACT THREE
How the NZ authorities will deal with the economic effects here has been outlined today. The response has been planned for three scenarios.

PETROL PRICE IRONY
The Government revealed today how it would 'reform' the petrol market to help consumers. But none of those proposals involved any rolling back of the recent taxes imposed. Governments like higher petrol prices so long as they raise them, but not otherwise. In fact they want to penalise others who raise prices. Actually, if pump prices fall, new taxes will probably be introduced to cover the change.

RBNZ'S NEW PAYMENTS SETTLEMENT SYSTEM UP AND RUNNING
The Reserve Bank this week launched a new "future-proofed" payment settlement system, replacing New Zealand’s inter-bank settlement system and central securities depository. The new platform replaces a 20-year-old system with two separate systems, ESAS 2.0 and NZClear 2.0. The new platform comprises the Real Time Gross Settlement and Central Security Depository. RBNZ Assistant Governor Mike Wolyncewicz says the successful changeover is the result of months of rigorous testing, which has featured cooperation from the system’s key users.

GANGBUSTERS! SMILING BANKERS!
Overall new mortgage lending in January rose to $4.7 bln which was +16% higher than in January 2019 (and a remarkable +27% higher than in January 2018). The growth is coming from first home buyers where they borrowed +27% more in January than the same month a year ago - and high LVR lending also rose faster than system (+18.7%). For investors, their appetite rose +31%. It was existing homeowners who couldn't keep up the pace, only (?) borrowing +9% more.

WEAK, & TO GET WEAKER
In Australia, new capital expenditure declined in the December quarter, falling more than expected. Investment in buildings and structures is now looking far weaker than for equipment and plant. Subsequent events aren't going to improve this either, of course.

EQUITY MARKETS UPDATE
After being up by as much as +1.6% in the morning session, Wall Street couldn'y sustain an odd optimistic streak. In the end the S&P500 fell -0.4% on the day. In our session, the NZX50 Capital Index is currently flat, the ASX200 is down -0.6%. At the open, Shanghai is actually up +0.3%, Hong Kong is down -0.6% and Tokyo is having another very bad day, down -1.5%.

LOCAL SWAP RATES DOWN AGAIN
Swap rates are down again, with the two year down another -2 bps, the five year down -3 bps and the ten year down -4 bps. The 90-day bank bill rate is also down -1 bp to 1.08%. In Australia, their swap rates are currently down a little less than us. The Aussie Govt 10yr is soft at 0.90%. The China Govt 10yr is also soft at 2.86%. The NZ Govt 10 yr yield is softer, down -5 bps at 1.14%. And the UST 10yr yield is unchanged near its record low, now at 1.32%.

NZ DOLLAR STILL QUITE SOFT
The Kiwi dollar has slipped further, now at 62.9 USc. Against the Aussie we are firmer at 96 AUc. Against the euro we are softer too at 57.7 euro cents. That means the TWI-5 is now lower at under 68.9.

BITCOIN SINKS
Bitcoin is another -6.9% lower today at US$8,599. The bitcoin price is charted in the currency set below. Other cryptos are even weaker, most main ones another down -11% (Ethereum) to -14% (bitcoin SV) on the day.

This chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Our exchange rate chart is here.