A review of things you need to know before you sign off on Tuesday; waiting for the RBNZ, milk flow drops, trade deficit jumps, big new FLP drawdown, swaps firm, 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 RATE CHANGES
Nothing changed today, again. And to repeat, we are unlikely to get many changes until the Reserve Bank releases its November Monetary Policy Statement tomorrow afternoon. And then, a lot will depend on variation from what the market has priced in. Overall, it had priced in +63 bps at the beginning of today. Separately, most local analysts expect +75 bps. Most offshore analysts expect +50 bps.

TERM DEPOSIT RATE CHANGES
None here today either.

PERSONAL LOAN RATE CHANGES
Unity Money have increased their competitive secured personal loan rates by +1.0% and their unsecured personal loan rates by +2% today. 

MILK PRODUCTION KEEPS SLIDING
Data for the whole dairy industry to October (Fonterra and all the other diary companies) shows that milk production is lagging quite a bit in the early and heavy part of the current milk season. Production was down -2.9% in October 2022 compared to 2021, and for the past 12 months, it has sagged -4.3%. The La Nina weather pattern will determine how the season ends from here, but October is usually peak production in the overall season.

HUGE DETERIORATION IGNORED
Lower export volumes (of dairy products) isn't helping, but we aren't yet adjusting to our excessive import appetite. In October 2020, we ran a merchandise trade deficit of -$471 mln. In October 2021, that had jumped to -$1.3 bln. Now in October 2022, that has raced down to a deficit of -$2.1 bln. All this is being driven by surging imports, especially of cars (switching to NEVs comes with Government support via subsidies). Imports are up +24% from the same month a year ago, totaling $8.3 bln in the month, our largest splurge ever. The Government agency that reports this worrying data didn't even bother to put out a news release about it (just a standard "information release"). But it is a track that really should worry policymakers. For the year to October, our imports were $84 bln, our highest ever, and our imports were $71 bln. At some point our creditors will notice.

OUR 'FRIENDS' ARE LUNCHING ON US - I
In October, our usual trade surplus with China turned into a big deficit (NEV car imports again, like MGs, Havals, Teslas, etc.). Our surplus with the US turned into a deficit (other Tesla models), and our deficit with Japan swelled further. We are going broke in the 'energy transition'. Year on year, the China surplus fell from +$3.9 bln to just +$700 mln. Our trade with Australia is going bad too, going from +$100 mln to -$700 mln. Our trade with the US has gone from a surplus of +$870 mln to +$270 mln on that same basis. Our net trade with Japan has gone from -$900 mln to -$1.1 bln in the year to October. These four trading partners are out top four and represent 57% of all merchandise exports. At some point our creditors will notice. The next current account deficit is likely to be a shocker (due out on December 14, 2022 for Q3-2022).

OUR 'FRIENDS' ARE LUNCHING ON US - II
Here's a belt-tightening idea from ASB. As the cost of living continues to bite, ASB customer research shows one in five subscription holders are paying for services they don’t use and close to a third spend more than $100 on rolling subscription costs each month. More than 1,000 ASB customers nationwide took part in the bank's survey on subscription spending.

FLP JUMPS NEAR THE END
Yesterday, we missed noting that banks dipped into the FLP for another $1.65 bln on Friday, and taking the total borrowed up to $18.5 bln. There will be a bit more to come as banks look like they will all take up their maximum before this loan window closes in about three weeks. (H/T SH.)

CHINA IN TROUBLE WITH COVID AGAIN
The Covid surge in China is starting to generate some shutdowns. Beijing schools are the first. Beijing, Shijiazhuang (which has now locked down), Guangzhou and Chongqing, all mega cities, are all at risk of widespread shutdowns. If they all happen, the economic impact will be large. And in something of an embarrassment, Hong Kong leader John Lee (hand picked by Beijing) has tested positive for Covid - after meeting Xi Jinping.

SWAP RATE SHIFTS MINOR
Wholesale swap rates may be slightly firmer today, but the real action comes near the close. It is their last positioning before tomorrows RBNZ full MPS at 2pm. Our chart will record the final positions. The 90 day bank bill rate is up +8 bps at 4.31%. (This corner of the interest rate markets expects a +50 bps rise tomorrow.) The Australian 10 year bond yield is now at 3.60% and little-changed. The China 10 year bond rate is at 2.84% and also little-changed. The NZ Government 10 year bond rate is now at 4.25%, unchanged and still above (just) the RBNZ fix for the NZGB 10 year which is up +3 bps at 4.24%. The UST 10 year is now at 3.82% and up +2 bps from this time yesterday.

EQUITIES MIXED
The S&P500 ended its Monday session down -0.4% in New York today. Tokyo has opened up +0.8%, but Hong Kong is only up +0.1% at their open after yesterday's large fall. Shanghai has opened little-changed. The ASX200 is up +0.5% in afternoon trade, and the NZX50 is down -0.3% in late trade.

GOLD HOLDS
In early Asian trade, gold is at US$1743/oz and down -US$2 from this time yesterday. But that is a recovery from much lower earlier.

NZD LITTLE-CHANGED
The Kiwi dollar is marginally softer than this time yesterday, now at 61.2 USc. Against the AUD we are firm at 92.5 AUc. Against the euro we are still at at 59.6 euro cents. That all means our TWI-5 is now at 70.6 and unchanged from this time yesterday.

BITCOIN SLIPS FURTHER
Bitcoin is now at US$15,776 and down -2.5% from where we were this time yesterday. Volatility over the past 24 hours has been moderate at just over +/- 2.5%. 

This soil moisture chart is animated here.

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