A review of things you need to know before you go home on Wednesday; more retail rate rises, great labour force data, RBNZ ticks financial system soundness, dairy prices up, swaps stable, NZD soft, & more

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

Some big things happened today; here are the main ones:

MORTGAGE RATE CHANGES
BNZ raised home loan fixed rates. More here. Click through for a graphic rendering of how all fixed rates from all banks compare. The Cooperative Bank and First Credit Union also raised their home lending rates. Update: TSB has also raised rates, but their levels are all still lower than any main bank.

TERM DEPOSIT RATE CHANGES
The Cooperative Bank raised term deposit rates, as did the Bank of Baroda, and the Bank of India.

BETTER THAN REPORTED
The headline news for the Q3 labour market stats was the sharp fall in the jobless rate, going from 4.0% in Q2 to 3.4% at the end of September. Those are seasonally adjusted rates, and given the unusual flow of data during the pandemic, we should always be sceptical of how seasonal adjustments are working. The actual reduction is from 111,200 jobless people at June to 93,900* at September, taking the actual jobless rate down to 3.2% of the labour force of 2,913,000, a record high. The actual participation rate remained very high (70.9%), the employment rate was a record high at 68.6%, and the under-utilisation rate was a record low at 8.9%. (*This is the lowest since September 2008, and the 3.2% rate is the lowest since 2007.)

BEST IN THIRTEEN YEARS
And as you might expect with such strong labour market data, earnings are rising fast too now. The QES reveals that public sector earnings for FTEs rose +6.5% in the year to September to $1,663/week (86,500 pa). For the private sector the rise was +6.2% in the year to $1,291/week ($67,150 pa). The impact on the economy is stronger because the number of people in part-time work has fallen to very low levels. (The number of under-employed people wanting more work is down to just 45,800 in the whole country. It is little wonder few people apply for crop harvesting roles. It hasn't been that low in absolute number since before the GFC - when the labour force was 657,000 smaller).

JOB ADS STRONG
Confirming the labour shortage/labour demand situation, Seek's October job ad data shows a +1% rise from September, taking them to +15% above the 2019 levels (realising that the 2020 benchmark was pandemic-affected).

RBNZ SAYS FINANCIAL SYSTEM IS 'SOUND', INSTITUTIONS ARE 'ROBUST'
In its November Financial Stability Review, the RBNZ says it is mindful of the impact 'faster than expected' interest rate rises might have on asset valuations, especially how they affect first home buyers. But other than that, it says we have a strong, resilient financial system (banks and insurers) who look good under all their stress tests. 

STRONG DAIRY PRICES
The overnight dairy auction came in better than expected, with foodservice commodities rising sharply. Overall, prices were up +4.4% from the last auction and the largest jump since March, and are +35% higher than a year ago. WMP was up +2.7%, SMP was up 6.6%, butter was up +4.7% and cheddar cheese was up +14.1%. Analysts say the price strength reflects weak global dairy production, but that even if prices rise from here, the Fonterra farmgate milk price may be sticky at about $8.50/kgMS. That level is about the limit of what Fonterra can afford even if there is upside in product prices from here.

JEYKELL & HYDE DEPOSITORS
Banks may be 'sound' and 'robust' but depositors won't commit their funds in them for any length of time. 73.5% of all bank funding (L3) of $522.4 bln is "non-market" funding, meaning it is from depositors rather than wholesale markets. This is little-changed in September. But bank depositors like to play it very short: 90.3% of all funding banks source from their depositors is due in six months or less, near a record high, and 69.4% is due in less than one month. The irony is, that these same depositors pile in with unbridled exuberance when an unsecured bank bond issue is launched, usually for 5+ years - and usually for yields less than the 5 year TD rate. Depositors aren't rational it seems. (So banks raise their longer term money essentially from these same people and usually take up "unlimited oversubscriptions".)

UNEXPECTED WEAKNESS
In Australia, residential building permits fell by a more than expected -4.3% in September from August, driven by a fall in house approvals in all states, and a fall in unit approvals in all states other than NSW where they had a surprising bounce.

LOCAL PANDEMIC UPDATE
In Australia Delta cases in Victoria have dropped to 941 cases reported there today, and less than yesterday and the second time in more than a month it has been below 1000. There are now 18,361 active cases in the state and there were another 8 deaths yesterday. In NSW there were another 190 new community cases reported today with 3,180 active locally acquired cases which is lower, and they had another 4 deaths yesterday. Queensland is still reporting zero new cases. The ACT has 15 new cases. Overall in Australia, more than 78% of eligible Aussies are fully vaccinated, plus 10% have now had one shot so far. In contrast, there were ten new cases in New Zealand at the border, and 100 new community cases. Now 88.5% of Kiwis nationally aged 12+ have had at least one vaccination, while the Australian rate is now also at 88.5% of all aged 16+. The NZ Government has ordered 4.7 mln Pfizer doses for 2022 delivery.

GOLD SOFT
In early Asian trading, gold is at US$1784/oz and down -US$8 from this time yesterday. This level is also lower than both the New York close, and the afternoon London fix.

EQUITIES FIRM
The NZX50 is up +0.2% in late Wednesday trade and recovering yesterday's slip. The ASX200 is up a strong +1.2% in early afternoon trading there. Tokyo us closed today for a public holiday. Hong Kong has opened flat, holding yesterday's large rise. Shanghai has also opened flat today. The S&P500 rose +0.4% in its Tuesday trade to a new all-time closing high.

SWAP & BONDS RATES ON HOLD
We don't have today's closing swap rates yet. They are probably little-changed although they may have flattened. The 90 day bank bill rate is unchanged at 0.80%.The Australian Govt ten year benchmark rate is now at 1.84% and down a chunky -14 bps. The China Govt 10yr is now at 2.93% and down an unusual -5 bps. The New Zealand Govt 10 year rate is now at 2.54% and down -2 bps from this time yesterday. That still leaves it above the earlier RBNZ fix for that 10yr rate at 2.52% (unchanged). The US Govt ten year has slipped -2 bps to just on 1.55%.

NZ DOLLAR SOFTER BUT STILL HIGH
The Kiwi dollar is now at 71.3 USc and -½c lower than this time yesterday although the big fall was overnight and a recovery is underway today NZT. Against the Aussie we are firmer at 95.8 AUc. Against the euro we are at 61.5 euro cents and softer. The TWI-5 is still at 75, and still well above the top of the 72-74 range we have been in for most of the past eleven months, and settling in to a new higher band.

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BITCOIN FIRM
The bitcoin price is now at US$62,122 and +2.0 higher than where we were at this time yesterday. Volatility in the past 24 hours has been moderate at just under +/- 2.8%.

This soil moisture chart is animated here.

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