A review of things you need to know before you sign off on Monday; straggling rate changes, confidence lower, service sector expansion slows, misery up, swaps stable, NZD holds, & 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
Cooperative Bank have raised their fixed rates today.

TERM DEPOSIT RATE CHANGES
SBS Bank raised term deposit rates. Christian Savings also rates rates, including for its savings accounts.

END OF YEAR DOWNER
The Westpac McDermott Miller consumer sentiment survey for the December quarter is the first of four end of year sentiment surveys, reports record low confidence as rising financial pressures bite. The pressures are widespread through the community, they say.

GOOD BANKING RELATIONSHIPS SLIP
The December Fed Farmers survey of how farmers relate to their bankers shows farmers are being squeezed by rising interest rates, with debt or other financial concerns "eroding mental wellbeing" they say. Although just on 60% of farmers said they were very satisfied or satisfied with their bank relationship, this was down 5 points from the survey six months earlier, and is the lowest since the biannual surveys began in 2015.

SUPPLY SIDE DEPRESSANTS RETURN
The local service sector is still expanding, but not as vigorously as it has been. That is according to the BNZ-BusinessNZ PSI survey for November. From an elevated reading of 57.1 in October it eased to 53.7. BNZ noted that while this reflected a sharp deceleration in the PSI’s employment index – to 51.8, from 57.1 – this component was still expanding. "The drag factor is really in supplier deliveries which, at 47.3, fell back into contraction territory, after poking above the 50 breakeven level in October, with 52.0. This infers supply-side issues are not fully resolved. In contrast, the demand side still appears robust, with new orders/business, at 57.3 in November, coming in very close to normal."

INFLATION EATS THE GAINS
Worldline (ex-Paymark) is reporting that consumer spending maintained its high levels in the second to last full week of pre-Christmas shopping, nudging above spending over the same time last year and surging ahead of pre-Covid levels. But that 'nudge' higher is only +1.9% and well below inflation - so they are really reporting a decline in 'real' terms. If December inflation is up +7% year-on-year, that means 'real' spending may be -5% lower this year.

ANZ RESTRUCTURES
ANZ Group is restructuring itself, splitting out their non-banking investments into a separate group. This will be owned by the new holding company, ANZ Group Holding Limited, which becomes the listed parent of both the banking division, and the new non-bank division.

THE DOWN SIDE OF TRANSITORY
There are increasing signs that globally at least, inflation has peaked and is trending down. Certainly economies that are suffering sharp demand falls are seeing that. Like China. And now possibly South Korea. The Koreans are now thought to be the most likely central bank to cut their policy rate (from its current 3.25%). Their inflation rate is currently 5.0%, having already fallen from 6.3% in July. They have an economy very dependent on exporting to China (24%) and Japan (10%), and even those exports are dependent on central US demand which takes 12% on South Korean exports directly.

MISERY UPDATE
We have updated our Misery Index charts - to find something unexpected. There is more 'misery' in Australia than New Zealand again. Between September 2021 and June 2022 we were holding that dubious prize. But from September, things have changed to the more 'normal' situation where NZ outshines AU. This economic definition of 'misery' is merely the sum of inflation + unemployment. We are leveling out at 2011 levels, whereas Australia is now at its highest since 2001. They how have higher inflation than us, and a higher jobless rate. (H/T Rumpole)  We have also updated our charts tracking public service staffing, and the wider public sector staffing. The original data is here.

SWAP RATES DRIFT OFF
Wholesale swap rates were likely marginally lower today. The real action comes near the close however. Our chart will record the final positions. The 90 day bank bill rate is up +3 bps at 4.58%. The Australian 10 year bond yield is now at 3.51% and up +3 bp from this morning. The China 10 year bond rate is at 2.90% and down -2 bps. The NZ Government 10 year bond rate is now at 4.30%, and down -3 bps and matching the earlier RBNZ fix for the NZGB 10 year which was up +2 bps to 4.30%. The UST 10 year is now at 3.51% and up +3 bps

EQUITIES START MIXED
It might be a week in the shadow of Christmas, but the NZX50 is down -0.7% in late trade today. No Santa rally here. The ASX200 is flat in afternoon trade. Tokyo has opened down a full -0.9%. Hong Kong has opened up +1.5%. Shanghai is down -0.2%. The S&P500 futures suggest Wall Street will open up +0.7%, bucking the trend. We'll see.

GOLD HOLDS
In early Asian trade, gold is just under US$1793/oz and unchanged from where we opened this morning.

NZD HOLDS
The Kiwi dollar little-changed from this morning at 63.9 USc. Against the AUD we are holding high at 95.3 AUc. Against the euro we still at 60.3 euro cents. That all means our TWI-5 is now at 72.3.

BITCOIN LOWER
The bitcoin prices is lower at US$16,773 and virtually unchanged from this morning. Volatility over the past 24 hours has been low at +/- 0.5%.

This soil moisture chart is animated here.

Keep abreast of upcoming events by following our Economic Calendar here ».