A review of things you need to know before you sign off on Friday; retail spending rises, consumer sentiment falls, Hassall resigns at BNZ board, FLP in final seven days for access, swaps settle, 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
As we write this, no main bank has yet changed its floating mortgage rates in response to the RBNZ +75 bps hike in the OCR. But the Bank of Baroda, a bank for the Indian community, has raised floating & fixed rates.

TERM DEPOSIT RATE CHANGES
No changes here yet either.

GOOD BUT NOT GREAT
Strong growth in incomes is allowing retail spending to hold up, and probably better than many expected. Q3 retail sales were up +15% higher in 2022 than in the same period in 2021. But sales volumes were up only +4.9%. But that was off a depressed base. Compared with pre-pandemic Q3-2019 the rise in retail sales volumes has been an anemic +2.3% pa since. Adequate and certainly not a decline, but not that flash either. We have 'recovered' but it is a modest recovery. Neither the cheerleaders not the doomsters can claim much from this data. (On that basis, we should be satisfied.) ANZ however notes: "Looking forward, the outlook for household spending has deteriorated with Wednesday’s hawkish OCR hike from the RBNZ. The RBNZ made it clear that they need spending to fall to tame inflation, and they’ll get it too – it’s just a question of how high the OCR needs to go."

SENTIMENT STAYS LOW, INFLATION EXPECTATIONS RISE
Consumer sentiment fell in November to its lowest level since June. But it has been in the dumps for most of 2022 so this month's downshift isn't significant. "Sharp increases in the cost of living and interest rates (not to mention falling house prices) are clearly hurting confidence, but excellent job security and strong wage growth have so far seen spending hold up far better than this level of confidence would normally imply," noted ANZ. The proportion of people who believe it is a good time to buy a major household item fell 9 points to -31%. Inflation expectations for price rises two years out lifted to 5.3%, from 5.0% last month. A separate RBNZ survey asking the same question has them at lower. No matter, both are well above where the RBNZ needs them to be, and over 5% they will drive a wage/price spiral.

RETIRING
BNZ has announced that Bruce Hassall (65) is to retire from the BNZ Board. Hassall is currently chairman at Fletcher Building, The Farmers Trading Company, and Prolife Food. He is also a director at Fonterra. Before becoming a professional director, be was CEO at PwC.

LOG PRICES DIP
An easing back in high domestic demand, and weakening Chinese markets for logs and sawn timber is bringing slightly lower export returns for logs. Indian demand remains lower too.

SEVEN DAYS TO GO
The last day to draw down on the Funding for Lending program is Tuesday, December 6, 2022. Each drawdown must be paid back within three years. The interest rate that applies floats equal to the OCR, which is currently 4.25%. Interest is accruing to the RBNZ on the current $18.7 bln balance at the rate of $2.2 mln per calendar day.

SWAP RATE SETTLE
Wholesale swap rates were likely a little higher today after yesterday's dip. The real action comes near the close as market participants continue adjusting for the hawkish RBNZ views of what is to come. Our chart will record the final positions. The 90 day bank bill rate is up +1 bps at 4.40%. The Australian 10 year bond yield is now at 3.58% and up +2 bps. The China 10 year bond rate is at 2.81% and unchanged. The NZ Government 10 year bond rate is now at 4.15%, down -2 bps and now well above the RBNZ fix for the NZGB 10 year which is down -12 bps at 4.08%. The UST 10 year is now at 3.67% and down another -2 bps from this time yesterday. Recall, it was at 3.82% this time last week.

EQUITIES QUIET
The S&P500 didn't trade in New York today dues to their Thanksgiving Day holiday. It will trade for a short half day tomorrow. Tokyo has opened little-changed today and holding on to its 1.2% weekly rise. Hong Kong is down -0.7 % at their open. Shanghai has opened down -0.3%. The ASX200 is up +0.3% in afternoon trade and heading for a weekly gain of +1.5%. The NZX50 is up +0.2% in late trade on its way to a weekly -0.4% loss.

GOLD HOLDS
In early Asian trade, gold is at US$1756/oz and up +US$2 from this time yesterday.

NZD HOLDS
The Kiwi dollar is unchanged at 62.5 USc as closed US markets keep volumes very low. Against the AUD we are holding soft at 92.5 AUc. Against the euro we are still up at 60.1 euro cents. That all means our TWI-5 is now at 71.2 and unchanged from this time yesterday.

BITCOIN HOLDS
Bitcoin is now at US$16,522 virtually unchanged from where we were this time yesterday. Volatility over the past 24 hours has been modest at just over +/- 1.0%.

This soil moisture chart is animated here.

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