The bare minimum
By Justin Pyvis – Delivered on 25 Nov 2021

Good morning! New Zealand will open its border in three steps beginning in January 2022:

17 Jan:Vaccinated Kiwis can fly from Australia without quarantine.
14 Feb:Vaccinated Kiwis can return to NZ from anywhere without quarantine.
30 Apr:Border open to any vaccinated traveller, from anywhere.

The now-familiar travel requirements will all still be in place, including a negative pre-departure PCR test and a travel history declaration. The Kiwis will also require seven days of self-isolation on arrival (details to be confirmed at a later date) and a final test before releasing travellers into the community.

Back on home soil, the NT's lockdown in Katherine may be extended beyond 4 December after a woman who subsequently tested positive for COVID-19 "evaded authorities, left the hard lockdown [in Binjari] and travelled by taxi to Katherine". The territory reported another 11 cases yesterday, almost all Aboriginal people living in remote communities.

Fully vaccinated population (aged 16+)


Daily % change







AU Yield (%)



US Yield (%)









Brent (bbl)



Gold (oz)



Iron ore (t)









Note: Brent oil, gold bullion and iron ore prices are the second futures contract. Bond yields are 10-year Treasuries. The S&P500 is a snapshot 30 minutes before close.

At the time of writing the US S&P500 was slightly stronger (+0.24%), recovering after a brief dip following the release of the Fed's minutes, which noted that the committee "would not hesitate to take appropriate actions to address inflation pressures".

Helping boost optimism was US personal consumption spending, which rose in October by more than expected – a solid 0.7% after inflation. Initial jobless claims also shocked, totalling just 199,000 last week which was the lowest reading since November 1969 (although that figure could be the result of some dodgy seasonal adjustments, with the unadjusted number much higher at 258,622).

Locally, the ASX200 fell 0.15% with the biggest losses again in tech (-0.6%), reflecting the rise in global bond yields following talk of an earlier than expected tightening by the US Federal Reserve.


Resilient: The value of construction work done in Australia fell 0.3% in the September quarter, a modest decline considering most of NSW (-8.1%) was in lockdown. Other than the ACT (-15.5%) – which was also in lockdown – the only other jurisdiction to record a decline was WA (-3.2%), mostly due to a large fall in engineering work (-5.9%).

Interestingly Victoria still managed to post a decent gain of 5.8%, despite also locking down on 5 August (not quite half way through the quarter).

Winter blues: German business sentiment fell again in November, a fifth consecutive monthly decline. The services sector was hit particularly badly due to the "recent surge in coronavirus cases", along with ongoing supply problems in retail and an expectation that prices are likely to increase over the coming months.

Is it still... "transitory"?: The US Personal Consumption Expenditures (PCE) price index increased 0.6% in October, or 5.0% from a year ago (up from 4.4% in September). The PCE index is used by the US Fed, which prefers it to the more widely used consumer price index.

So-called core PCE – which strips out food and energy costs (who needs those, right?) – accelerated 0.4% in October, or 4.1% from a year ago and was the highest reading since December 1990.

Not out of the woods: Chinese cities have cut land auction prices by up to 20% in a bid to lure developers, with the market so tough – property prices fell for the first time in 6 years in September – that even those "in relatively good financial health have been cutting costs".

Top end's doing fine: According to the Real Estate Institute of WA, so far this year 244 properties valued at over $A3 million have sold in Perth, already exceeding the previous record set in 2007 just prior to the global financial crisis.

Luddites unite: India's government is looking to join China in banning private cryptocurrencies "while paving the way for a new Central Bank Digital Currency (CBDC)", to be issued by the Reserve Bank of India.

Inflation is everywhere: Dollar Tree was forced to raise its prices from $US1 to $US1.25, "mitigating historically high merchandise cost increases," including freight, distribution and wage increases.

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The bare minimum

The Reserve Bank of New Zealand (RBNZ) raised the overnight cash rate (OCR) by 25 basis points yesterday, bringing the country's OCR to 0.75%. For context Australia's is still 0.1%, where it has been since November 2020.

Breaking it down: The 25 basis point increase was essentially the bare minimum, given price inflation is running at 4.9% per annum and is expected to accelerate further in the December quarter, as pressures build across the board (the chart above shows non-tradable inflation, i.e. goods and services less affected by global supply chain issues).

The RBNZ noted that "the level of house prices are unsustainable", but that "continued increases in the OCR are expected to support more sustainable house prices". The central bank is also considering implementing debt-to-income ratios or setting a floor on the level of interest rates used by banks in their serviceability assessments.

Why this matters: For whatever reason the RBNZ Monetary Policy Committee takes a long summer vacation – it won't meet again until February 2022. The huge break between meetings led markets to partially price in a hike of more than what was delivered, leading to a 0.5% drop in the Kiwi dollar to a six-week low against the greenback when the news broke.

The relatively 'dovish' 25 basis point increase followed by a long break means Kiwi consumer and asset price (housing) inflation will, all else equal, continue to build faster than it would have otherwise.

Looking forward: The RBNZ cautioned that "removal of monetary policy stimulus is expected over time given the medium term outlook for inflation and employment".

Given it did the bare minimum at this meeting, there's a good chance of another (potentially larger) increase in February depending on what the December quarter inflation figures come in at – they'll be released on 27 January, giving the RBNZ more than enough time to fully digest the Christmas leftovers before making a decision.

The Wrap Up
    🏉Congrats to Jason Horne-Francis, who was taken with pick #1 in this year's AFL draft. The AFL has a recap of the first 20 picks here.
    👮‍♂️Two men in WA were charged over allegedly "making a series of threatening phone calls to WA Premier Mark McGowan", including "an alleged threat to behead the Premier and his family".
    👨‍⚖️Defence Minister Peter Dutton won a defamation lawsuit against refugee advocate Shane Bazzi, after the latter accused him of being a "rape apologist" on Twitter.
    💰The federal government will pay compensation to anyone who suffers an adverse reaction from a COVID-19 vaccine, provided they lost at least $A1000 in income.
    🚀A NASA rocket will crash into an asteroid in an attempt to deflect it, as part of "a test run should humanity ever need to stop a giant space rock from wiping out life on Earth".
    👑The Queen, Prince Charles, and Prince William issued a rare joint statement lashing state broadcaster the BBC over allegedly presenting "unfounded claims from unnamed sources... as facts", in its new docuseries called The Princes and the Press.
    🧒When in doubt, blame millennials! Director/Boomer Ridley Scott claimed his recent $US100 million movie, The Last Duel, tanked because millennials "do not ever want to be taught anything unless you are told it on the cell phone".
    🧊This seems to happen every summer. "Police in Australia said a man was cited for driving without a license and officers confiscated his unusual vehicle -- a motorised cooler."
    🏴‍☠️A famous piracy website now offers every non-fungible token (NFT) on the Ethereum blockchain for free, so that "future generations can study this generation's tulip mania".
    🕊️Ethiopia's Prime Minister and former Nobel Peace Prize winner said he "will head to the war front to lead the defence forces in person", in an ongoing battle against rebel forces.
    At least 31 refugees and migrants died in the English Channel after their dinghy sank off the northern coast of Calais while attempting to cross from France to England.
    🤷‍♀️Sweden's first ever Prime Minister resigned only hours after her appointment following the defeat of her government's budget proposal in parliament in favour of one presented by the opposition.
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