A review of things you need to know before you sign off on Wednesday; REINZ data soft, FBU dives, ASB profits lower, Tower positive, inflation eases, border arrivals high, swaps up, NZD lower, & 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). It's a skinny edition today.

MORTGAGE/LOAN RATE CHANGES
None so far again today.

TERM DEPOSIT/SAVINGS RATE CHANGES
None here either.

STRUGGLING FOR POSITIVES
The national housing market is off to a very slow start in 2024, according to the January REINZ data released today. And there are increasing signs that last year's housing market slump will continue into this year. But with fast rising listings, there is a wide range of views about what this means. Some see it "ready to pounce" (Kiwibank) while others have trouble seeing much upside potential (Infometrics, ANZ, Westpac).

BAD TO WORSE
Fletcher Building's chairman and chief executive both fell on their swords today as company reported a big loss of after-tax -$120 mln for the half year. It won't pay a dividend. It has put its Australian Tradelink subsidiary up for sale after a $122 mln write down. And it warned of a potential 'material' impact of Australian leaky pipes problem. Their shares are trading a $3.57, down -14% from Monday.

RESULTS DOWN, DIVIDEND UP
ASB reported a 6 month profit drops from record high, down -11% on a falling net interest margin and rising costs. But they doubled their dividend to owner CBA. Meanwhile, CBA reported a -3% fall in profits on the same pressures. CBA's share price fell -3% today on the news.

SOME POSITIVES
It's not all bad news on the local earnings front. Tower said in a market update released today that "The increased expectation for underlying NPAT guidance follows strong trading results for the first four months of the financial year, including positive GWP growth and a better-than-expected claims performance as the frequency of motor claims has begun to normalise."

INFLATION'S SURGE EASED
StatsNZ said food price prices rose again in January, but but the annual rate of price increase dropped to +4.0%. They also released a wider range of monthly changes to other components that make up the quarterly CPI. Rents for new tenancies were up +2.5%, and tobacco prices increased +6.4% - but airfares went into reverse, dropping by -31% from a year ago, down -21% from the September quarter. Middle-class wanderlust is now much cheaper.

THE SURGE CONTINUES
Overseas worker and student numbers arriving at the border continue to increase. A total of 20,202 people arrived on work visas in January and another 11,790 on student visas. Work visa numbers are up +20%; student visa levels are up about +60% from the same period a year ago.

BOUNCEBACK
KiwiSaver funds under management increased around $8 billion to $104 billion in the December quarter, according to Morningstar, while all KiwiSaver funds apart from two provided “positive returns”. In the same period, IRD data shows contributions were $2.2 bln so it was very positive recovery from a lackluster September quarter. Default options returned an average of +6.3%pa in the December quarter while the average multisector category returns ranged from +4.9% for the conservative category to +7% for the aggressive category. The two funds that reported decreased returns in the December quarter were SuperLife UK Cash which was down -1.1% in the three months to December, and Kernel S&P Kensho Ele Veh Innv which dived -7.2% in the same period.

GOING FOR BULK
As earlier indicated, the Treasury's Debt Management office said today that they expects to issue at least $2.0 bln of the 15 May 2054 nominal bond via syndication in this March quarter, and the transaction will be capped at $4 bln. As per usual practice, if the syndication occurs, the scheduled bond tender for that week will be cancelled. Today they appointed the five "joint lead managers" for the syndication, the usual suspects as BNZ, CBA, JP Morgan, UBS, and Westpac. There is an expectation that it will yield about 5.17%, but we will see.

SWAP RATES RISE
Wholesale swap rates will probably be higher yet again today, except for the one year which seems to have done its dash. But offshore forces are at work on the longer terms. However, the key reaction will come at the close. Our chart below records the final positions. The 90 day bank bill rate is down -1 bp to 5.73%. The Australian 10 year bond yield is up +11 bps at 4.30%. The China 10 year bond rate is unchanged at 2.45% while they are on holiday. And the NZ Government 10 year bond rate is up another +6 bps to 5.01% and its highest since early December, while the earlier RBNZ fixing was at 4.94% and up +5 bps from yesterday. The UST 10 year yield is now at 4.32% and up a very sharp +15 bps from yesterday. The UST 2yr is now up at 4.66% and so that key inversion is now just out to -34 bps.

EQUITY WINNERS & LOSERS
The prospects of higher interest rates is hurting equity market valuations. The NZX50 is down more than -1.0% in late trade today, hurt also by FBU but there are another ten NZX50 members down by about -1% or more. The ASX200 is down -1.0% as well in afternoon trade. Tokyo has opened down -0.8% but off a recent high. Hong Kong is back after its holiday break down -1.1% at its open. Beijing will be watching, lucky Shanghai is still on holiday. Singapore has opened down a sharpish -1.2%. Wall Street ended its Tuesday session down -1.4%, knock hard by the inflation and interest rate reassessments.

OIL PRICES HOLD
Oil prices are holding at just over US$77/bbl in the US while the international Brent price is now just on US$82/bbl.

GOLD DROPS
In early Asian trade, gold is now at US$1990/oz and down another -US$30 from this time yesterday. The surprise US inflation results has knocked gold rather hard.

NZD DROPS
The Kiwi dollar has dropped further from where we were this time yesterday on the rising greenback, now at 60.6 USc and down -½c. Against the Aussie we have firmed to 93.9 AUc. Against the euro we are marginally lower at 56.6 euro cents. That means the TWI-5 is now at just over 70.1 today and down -30 bps.

BITCOIN SLIPS
The bitcoin price has moved down slightly today, now at US$49,457 and down -1.3% from this time yesterday. There's been moderate volatility again over the past 24 hours of just on +/- 2.0%.

This soil moisture chart is animated here.

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