A review of things you need to know before you go home on Monday; lower rates, broader incentives, credit card growth stunted, BNPL extends, swaps up, NZD up, & more

A review of things you need to know before you go home on Monday; lower rates, broader incentives, credit card growth stunted, BNPL extends, swaps up, NZD up, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
SBS Bank launched a 3.39% two year 'special'. Both ANZ and SBS Bank now have advertised cash-back programs.

TERM DEPOSIT RATE CHANGES
Nothing to report so far today.

WINNERS & LOSERS IN THE CARD GAME
The stunting of credit cards continues, and the presumption is that buy-now, pay-later schemes are the cause. September credit card balances are virtually unchanged from a year ago, and that is the slowest growth in more than three years. A year ago, this category was growing at more than +5%. Now nothing. Use of these cards is growing (+3.7% pa), but use of them for debt isn't (down -2.5%). You need such a card for BNPL schemes but you don't need them for the interest-bearing transactions. Visa and Mastercard won't mind - they clip the ticket with the merchants based on the transactions (and then shelter their earnings in tax-free offshore havens). It is the banks who are losing out with on the debt side.

CAR SERVICING ADDED TO BUY NOW, PAY LATER SERVICE
Buy now, pay later service provider Laybuy says customers can now service their cars using buy now, pay later. Laybuy says 41 automotive merchants have signed up with it to offer the service. It says people can get their service completed immediately and spread the cost over six equal weekly payment installments.

BURNED OUT?
In Australia, coal prices contnue to retreat. Thermal coal is down more than metallurgical coal, but both are down sharply.

TOPPED OUT?
In China, house price growth fell again in September according to official data out today. There are reports of heavy discounting by developers and those effects won't come through in the offical data for while yet.

SHRINKING
Japanese merchandise exports fell more than -5% in September, a bit more than expected but less that the -8% they fell in August. It's only a little thing, but the outlier here is New Zealand. Japan's exports to us were up +19% and imports from us down -14%. That put the trade between us in September into balance. For the half year to September, New Zealand ran a sizable merchandise trade surplus with Japan.

SWAP RATES KEEP ON RISING
Wholesale swap rates are still rising and steepening. The two year is up another +2 bps today, the five year is up +3 bps, and the ten year is up another +4 bps. The 90-day bank bill rate dipped -1 bp to 1.04%. Australian swap rates are lower today by -1 bp. The Aussie Govt 10yr is up +3 bps to 1.14%. The China Govt 10yr is up +3 bps at 3.21% and that is a big move in the context of recent stability. The NZ Govt 10 yr is also up +2 bps at 1.26%. The UST 10yr yield is unchanged at 1.75%.

NZ DOLLAR FIRM
The Kiwi dollar is up further today and just on 64 USc. Against the Aussie we are also firmer at 93.23 AU cents. Against the euro we are up at 57.4 euro cents. That means the TWI-5 has risen to 68.9 and a new monthly high.

BITCOIN FIRM
Bitcoin is up today at US$8,212 and a gain on the day. The bitcoin price is charted in the currency set below.

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Source: CoinDesk

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We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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14 Comments

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Could you lovely people at interest.co.nz please do an article explaining swap rates. And how they affect interest rates.

Interesting, that not one finance entity arbitrages the credit risk anomaly depicted by negative US IR swap rates.

Negative Swap Spreads and Limited Arbitrage

Libor rigging inquiry shut down by Serious Fraud Office [link to something that is alleged to have happened in England, not New Zealand.]

The vast majority of people don't care nor will they really understand the consequences of what's been going on.

So chinese house prices are dropping again, it was a Dead cat bounce for some months..

At the end, debt can be a nuisance..

"In China, house price growth fell"

That means that house prices in China are rising, not dropping DGM, they're just rising less fast than before

They are just.5 up on last year, hardly a growth, and next month this time, will be negative

So that's why Japan's machine tool exports have been so bad of late. We had presumably not been buying them for a while. Good to hear we started again. Or is it just big gas gussling SUVs and fancy builder's utes we're buying? Not in little green Neu Zeelande, surely?
Japan's exports to us were up +19% and imports from us down -14%. That put the trade between us in September into balance. For the half year to September, New Zealand ran a sizable merchandise trade surplus with Japan.

The trade data referenced here doesn't look too good for Japanese machinery in general. Not a good sign for the bigger picture. And possibly car imports from Japan are down.

BBC Australian newspapers black out front pages in 'secrecy' protest
https://www.bbc.com/news/world-australia-50119559

The more I see buy now pay later expanding the more i think we will see the next recession hit as I think it shows more and more people struggling to pay for everyday things.

A bad thing? The Herald has done their usual half-baked paraphrasing. Is it the Old Orthodoxy of Monetary Policy, or New Orthodoxy? Is it the banking system, or.........the banks? OOoooOOOoo. Delete the word "that" so the crisis doesn't sound so hypothetical.

Herald

King called for the old orthodoxy of monetary policy to be abandoned and argued that by pretending we have made the banks safe "we are sleep-walking towards crisis".

Guardian

“By sticking to the new orthodoxy of monetary policy and pretending that we have made the banking system safe, we are sleepwalking towards that crisis.