A review of things you need to know before you sign off on Friday; consumer confidence slides, prioritising the mortgage (less), our taxes are low, our R&D spending is 'high' (?), swaps up, NZD stable, & 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
No changes to report today.

TERM DEPOSIT/SAVINGS RATE CHANGES
None here either.

SENTIMENT SAGS
Consumer confidence deteriorated in April, led by a pessimistic turn in the forward-looking components of the survey. ANZ-Roy Morgan Consumer Confidence fell 4 points to 82.1, close to lows seen during the Global Financial Crisis, but still slightly above the more recent pandemic lows. The fall was most pronounced in Wellington.

STILL MAKING SUBSTANTIAL EXCESS PAYMENTS
Perhaps rather remarkably, given the supposed rise in household budget stress, the March C35 data released today shows that households are still salting away $3.5 bln per quarter in extra mortgage repayments over and above the $7.1 bln in scheduled repayments. But that excess is now under 50% of the scheduled repayments, the lowest it has been since this data started to be collected a decade ago. (It was double the scheduled repayments in December 2016). And that might be because interest is taking a far larger chunk of the repayments, now exactly half, the most ever.

CREDIT CONDITIONS EASING
In its March edition of its half-yearly Credit Conditions survey, the RBNZ reports that banks don't expect loan demand to change of the next six months for mortgage, consumer or corporate loans. But that is far better than the negative outlook a year ago. The same bank respondents no longer see regulatory changes as a factor affecting the availability of 'credit' (debt).

MORE SOCKED AWAY
The RBNZ's foreign currency intervention war chest (F5) rose from just under $20 bln in February to $20.7 bln in March, another chunky +$700 mln bolstering since July 2023 when they spent almost $4 bln bolstering the capacity. To be fair they still have a long way to go before they have reserves that the currency markets would take seriously. (NZ$20.7 bln is only a bit over US$12 bln at today's exchange rate.) But at least they are working toward that in a purposeful way.

TAXES ON WORKERS ARE LOW
New data out from the OECD shows that taxes on employee earnings in 2023 were low in New Zealand. The average single worker faced a net average tax rate of 21.1%, compared with the OECD average of 24.9%. In other words, in New Zealand the take-home pay of an average single worker, after tax and benefits, was 78.9% of their gross wage, compared with the OECD average of 75.1%. Taking into account child related benefits and tax provisions, the employee net average tax rate for an average married worker with two children in New Zealand was 10.9% in 2023, which is the 28th lowest in the OECD, and compares with 14.2% for the OECD average. This means that an average married worker with two children in New Zealand had a take-home pay, after tax and family benefits, of 89.1% of their gross wage, compared to 85.8% for the OECD average. For Australia, the single worker rate was 24.9% (at the OECD average), and the single earner, two children rate across the ditch is 18.0%.

HIGH BUT NOT HIGHEST
Our petrol pump prices might seem high at present (and they are) but are well off the peak they reached on June 17, 2022. From then the crude oil price is virtually the same (US$118.50/bbl then, US$116.71/bbl now). But our currency has turned in our favour so these prices are NZ$183/bbl then, NZ$150/bbl now, and that is a +18% gain. By the time that raw material ends up at the pump, the change has been a -9% fall since that peak, $3.23/L then, $2.94/L now. (Auckland prices are higher of course due to the regional fuel tax.)

STILL COMMITTED TO R&D
A Stats NZ survey for 2023 is reporting that business R&D spending increased +$540 mln between 2022 and 2023 to $3.7 bln. The +17% increase is the largest annual increase since 2018, when data on R&D began to be collected annually. Apparently there was a total of 21,000 full-time staff working on R&D in 2023, with the number of researchers increasing by +23% from 2022, to 14,000. But I am sceptical. There are tax benefits for claiming work is for R&D which may have the effect of embellishing the survey data - and little progress is being recorded in 'measured sector' productivity. Yes, R&D and 'productivity' are different things, but in the long run good R&D should improve productivity, especially when the increases in R&D are claimed to be so large. Not seeing that productivity increase over these five years.

SWAP RATES TURN BACK UP
Wholesale swap rates are have likely turned back up today and probably on global influences. Two year swap rates might be up almost +10 bps. Our chart below will record the final positions. The 90 day bank bill rate is -1 bp lower at 5.63%, a level it has hovered around for more than 45 days. The Australian 10 year bond yield is up +7 bps at 4.50%. The China 10 year bond rate has firmed +1 bp to 2.27%. The NZ Government 10 year bond rate is up +6 bps to 5.06% and the earlier RBNZ fix was at 4.90% and +2 bps firmer. The UST 10yr yield is up +8 bps (from Wednesday) at 4.70%. Their 2yr is now at 5.00%, so the curve is now -30 bps and a slightly lesser inversion.

EQUITIES MIXED
The NZX50 is down -0.9% in late trade and heading for a weekly rise of +0.7%. The ASX200 is down -1.3% in early afternoon trade, and heading for a net +0.3% rise for the week. Tokyo is up +0.3% in its opening Friday trade so far and heading for a net +1.4% weekly gain. Hong Kong is up another +1.5% today and on the way to a spectacular +6.9% weekly jump. Shanghai is up +0.5% but will be lucky to end with a +0.3% weekly gain. Singapore has opened with a very minor +0.1% rise. On Wall Street the S&P500 closed its Thursday trade down -0.5% and if this holds tomorrow it may end its week with a +0.9% net gain. But the excellent Google and Microsoft earnings reports after the market close might move markets tomorrow.

OIL FIRMISH
The oil price is on hold today from this time yesterday at US$83.50/bbl in the US, while up +50 USc to US$88/bbl for the international Brent price.

GOLD IN ANOTHER MINOR SLIP
In early Asian trade, gold is down another -US$2 from this morning, now at US$2331/oz but up +$11 from this time Wednesday.

NZD IN MINOR RISE
The Kiwi dollar has risen today, up less than +¼c to 59.7 USc. Against the Aussie we are little-changed at 91.4 AUc. Against the euro we are firm at 55.6 euro cents. This all means the TWI-5 is now at 69.3 and up +20 bps.

BITCOIN LOWER
The bitcoin price has slipped to US$64,483 and down -3.1% from this time Wednesday. Volatility of the past 24 hours has been modest +/-1.9%.

This soil moisture chart is animated here.

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