A review of things you need to know before you sign off on Wednesday; dairy prices hold, carbon prices fall, spending patterns change, taxes rise fast, FLP ends, auctions quiet, swaps firm, NZD unchanged, & 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
Heartland Bank raised its reverse equity interest rate by +50 bps to 8.50%. First Credit Union raised fixed and floating rates.

TERM DEPOSIT RATE CHANGES
There were no term deposit rate changes today, but ANZ did raise its on-line savings account rate to 1.95%, along with their Business call account.

DAIRY PRICES LITTLE-CHANGED
Stunted Asian demand, along with a rising volume of WMP in coming months seems to have kept dairy prices restrained today, changing very little overall from the prior auction two weeks ago. But in NZD, prices fell because the NZD is rising. This auction probably won't change any payout forecasts for the current season, where we are now on the downside of the milk curve.

CARBON PRICE -7.5% LOWER
Now that it seems clear farm emissions won't be linked to the carbon market price, that seems to have taken the wind out of the carbon market trading for NZUs. The price has been hovering just over $80 recently, having essentially flat-lined for most of 2022. The Q4 NZU auction occurred today, and fewer bidders showed up, but all units sold but for an average of $79/NZU. This is -7.5% lower than the Q3 auction price. These instruments are now just a financial play, and soon the FMA will regulate them like any other derivative. 

JOURNALISM HONEYPOT
The NZ On Air administered Public Interest Journalism Fund allocated a large tranche of funding today, mostly to the usual suspects who promise to do good deeds with the money. You can check the allocations here. A quick count shows that about $11.8 mln was funded in today's decisions.

LATE TO THE PARTY
Sharesies said today it has been given the OK by the FMA to launch a KiwiSaver scheme. It will probably launch in early 2023. They have more than 500,000 members in New Zealand and Australia, who have invested about $2 bln mainly through trading in the NZ, US and Australian equity and managed funds markets. Average balances are a low $4000 among these members. They are laggards, however. Rivals InvestNow and Kernel are already offering KiwiSaver options.

CHEERFULLY BUYING LESS
Payments processor Worldline (ex-Paymark) is reporting that consumers spent less on goods but more on hospitality in November and the most recent week in December.

TAXES RISE VERY FAST, BUT NOT AS FAST AS SPENDING
Stats NZ reported today that central government delivered a -$8.6 bln operating deficit in the year to June (as previously reported by Treasury), but that local government produced a +$2.0 bln surplus is the same period. Total taxation of all types rose +11.6% in 2022 from 2021 (+$12.9 bln increase). That is a slightly slower pace than the prior year's +15.3% increase or +$14.9 bln rise.

FLP ENDS QUIETLY
The Funding for Lending program ended with a whimper, no-one dipping in yesterday on the last day for more. A total of $19 bln has been drawn. Each tranche is due to be repaid in three years, and the first due date is about a year from now. The cost is the OCR rate. The $19 bln drawn represents about 2.9% of all bank liabilities, so its distortionary impact has actually been small. (All bank liabilities total $652 bln.)

MUTUAL BANKS GETTING NEW CAPITAL SOURCE
The Reserve Bank says mutually owned banks such as The Co-operative Bank and SBS Bank will be allowed to issue what are known as Mutual Equity Tier 1 (MET1) capital instruments, to both give them more flexibility for raising capital and support the Reserve Bank's financial stability objectives by aligning shareholders’ financial interests with the performance of the bank. The MET1 instrument is another avenue to raise Common Equity Tier 1 capital.

AUCTIONS LOSE FAVOUR
Real estate auction rooms are getting even getting quieter as the housing market heads towards its end of year break. The auction sales rate dropped to 26% nationally, held back by the very low 17% rate last week in the Auckland market.

GROWTH WEAKENS
The Australian economy expanded +5.9% (real) in Q3-2022 from Q3-2021, but only +0.6% of that was in the September quarter, and that was less than was expected. Nominally, their dollar rise was +13.1% from a year ago, but the Q3 weakness was very pronounced in this nominal data. New Zealand doesn't report its Q3 GDP result until December 15, 2022. The Massey GDP Live tool suggests we can expect +2.5% real year-on-year.

SWAP RATES FIRM
Wholesale swap rates were likely firmer again today, this time on local trends. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +2 bps at 4.47%. The Australian 10 year bond yield is now at 3.36% and unchanged from this time yesterday. The China 10 year bond rate is at 2.97% and up +3 bps. The NZ Government 10 year bond rate is now at 4.11%, and up another +8 bps and now well above to the earlier RBNZ fix for the NZGB 10 year which is up +4 bps to 4.01%. The UST 10 year is now at 3.54% and down -3 bps from this time yesterday.

EQUITIES MIXED
The S&P500 ended its Tuesday session down -1.4% on Wall Street. Tokyo has opened its Wednesday session down -0.4%. Hong Kong has opened up +0.2%, while Shanghai is down -0.3% in its opening session. The ASX200 is down -0.8% in afternoon trade. The NZX50 was down, but is recovering near the close to be back in positive territory, just.

GOLD LOWER
In early Asian trade, gold is at US$1774/oz and down just -US$1 from this time yesterday.

NZD HOLDS
The Kiwi dollar is little-changed, now at 63.3 USc. Against the AUD we are still at 94.3 AUc. Against the euro we are still at 60.4 euro cents. That all means our TWI-5 is still at 71.9 and unchanged from this time yesterday.

BITCOIN BECALMED
Bitcoin is now at US$17,046 and virtually unchanged from where we were this time yesterday. Volatility over the past 24 hours has been low at just over +/- 0.6%.

AN EXCUSE
Please note that there is unlikely to be a 4pm briefing tomorrow. The interest.co.nz crew will be decamping for its end-of-year function.

This soil moisture chart is animated here.

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