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A review of things you need to know before you go home on Thursday; RBNZ view turns, Auckland Council readies bond offer, migration up, credit card use smarter, business bills paid on time, swaps and NZD fall

A review of things you need to know before you go home on Thursday; RBNZ view turns, Auckland Council readies bond offer, migration up, credit card use smarter, business bills paid on time, swaps and NZD fall

Here are the key things you need to know before you leave work today.

TODAY'S MORTGAGE RATE CHANGES
No changes to report today. Wholesale rates are very low; risk margins had declines as well. But lenders seem unmotivated to compete on price at the moment.

TODAY'S DEPOSIT RATE CHANGES
No rate changes to report today. Still, term deposit savers should be appreciative that retail offer rates have stopped falling even though wholesale rates haven't. But will it last?

THE RBNZ UPDATES IT VIEW
In their update today, the RBNZ says the inflation outlook has weakened due to 6% rise in NZ$ since June 9. It says a 'decline in exchange rate [is] needed' because without it, it is making it hard for the RBNZ to meet its mandated inflation target. It says it is likely further easing will be required (that is, a rate cut is coming). Following this release, wholesale swap rates fell sharply to record lows, and the currency eased.

BACK TO THE MARKET
Auckland Council is back indicating it will raise up to $200 mln via a 10 year retail bond issue. In June, the Council pulled this raising due to financial market uncertainty ahead of the Brexit vote. They want to raise up to $100 mln minimum with the right to accept up to $100 mln in oversubscriptions for bonds which would mature in July 2026. The delay has actually worked in their favour. They are offering a 90 bps margin over a 10 yr swap. Today that would provide a yield of 3.39% whereas pre-Brexit the same margin would have cost them about 3.75%.

NET MIGRATION HITS 69,000 PA
Migration growth is continuing with the net gain heading towards 70,000 a year, according to today's June data release. Arrivals are not special, but it is the fall-off in departures that is noticeable. The seasonally adjusted number of departures was the second smallest for any month in the last 13 years, with only the November 2015 result coming in lower. Of the 125,000 migrants arriving permanently in the year to June, 31,000 were New Zealand citizens returning and the largest single group. The next largest is the 12,118 who arrived from India in the year, followed by migrants arriving from China (9,688), the Philippines (5,010), and the UK (4,138).

ON THE MOVE
Overseas visitor arrivals to New Zealand were up a sharp +11% in June compared to a year earlier. This growth saw total visitor arrivals surpass 3.3 mln on an annual basis for the first time. New Zealanders are also taking advantage of cheap flights and a relatively strong currency to get out and explore, with the number of New Zealanders holidaying abroad in June sitting +6.5% higher than a year earlier. (Source: Infometrics)

'BAD DEBT' FALLS
In our debt-obsessed world you may find this item unusual. New Zealand credit card debt actually fell in June, down -0.9% from what was owed in June 2015. We are still using the plastic with amounts charged to them up +3.4%, but that is the slowest growth since April 2014. But we are collectively paying down this expensive debt, and that is a good thing. Rising incomes and falling prices for what we buy is making the task easier, and this data confirms it.

ON TIME
Dun & Bradstreet data shows that on average, New Zealand businesses pay their bills in a very respectable 35 days. 99%+ of all invoices are paid within 60 days. This is data that confirms local businesses are under very low financial stress levels at present. This average has been about 35 days since early 2015. It peaked at over 50 days in 2008.

DEFAULT SPIKE WARNING
Internationally, Standard & Poors reports global corporate borrowing demand will reach a record US$62 trillion by 2020, fueled by expansive monetary policy. However, nearly half of corporate debt issuers are estimated to be highly leveraged, strongly suggesting that a correction in global credit markets is unavoidable. In fact, analysts believe that the credit correction began in late 2015 and will likely stretch through the next few years as defaults spike.

SWAP RATES FALL SHARPLY
Wholesale rates fell sharply today following the RBNZ update and have not recovered. In fact, wholesale rates are now at new record lows across the whole curve after dropping by -6 and -7 bps (except for the 10 year which only fell -3 bps). NZ swap rates are here. The 90-day bank bill rate has also fallen sharply, by -5 bps, and is now at only 2.30%. A full -0.25% OCR rate cut is priced in.

NZ DOLLAR FALLS TOO
The Kiwi dollar has fallen following the clear signals from the RBNZ that rate cut(s) are coming. The NZD is now at 69.8 USc, at just over 93.4 AUc, and 63.3 euro cents. The TWI-5 is now back up to 73.2. Check our real-time charts here. You would have to say, given the 'certainties' contained in the RBNZ update, this fall is actually very minor.

You can now see an animation of this chart. Click on it, or click here.

Daily exchange rates

Select chart tabs

Daily benchmark rate
Source: RBNZ
Daily benchmark rate
Source: RBNZ
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Source: RBNZ
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Source: RBNZ
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Source: RBNZ
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Source: RBNZ
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Source: RBNZ
End of day UTC
Source: CoinDesk

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7 Comments

Credit card debt falling, may be due to banks not offering zero % interest on balance transfers at the moment. Hence people paying full amount off rather than transferring to another credit card.

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Or refinanced into their mortgage.

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People all falling on big debts due to this credit card finally.
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