A review of things you need to know before you go home on Monday; no retail rate changes, PSI strong, migrant flows slowing, inflation gauge up, recession risks rise, swaps slip, NZD holds, & more

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

MORTGAGE RATE CHANGES
No changes to report today.

TERM DEPOSIT RATE CHANGES
None here either.

STRONG SERVICE SECTOR
The BusinessNZ services PSI has come in quite strong for January. BNZ said that "for now, January’s glowing PSI report fits with the rather upbeat view of the economy expressed by the Reserve Bank last week. In the least, it helps offset a still soft looking PMI. Regardless, the near term outlook heavily depends on how much – and for how long – disruption occurs as a result of local weather conditions and COVID-19".

MIGRANT FLOWS SLOWING
The population rose by +43,625 in the past year from migration. This is a slower rise than at any time since October 2014. Part of the reason for the slowdown in growth is that we are attracting far fewer migrants from China. In fact, since the peak in July 2016, the migrant expansion has slowed by -30%. Another important reason is that increasing numbers of NZ citizens are leaving. The net of departures over arrivals has exceeded -9000 per year for the first time since 2014 after being close to balance in 2016.

THE USUAL PEAK
Visitor arrivals data for December was about the same as for the same month a year ago. But this data is well before the coronavirus impacts so there will be trepidation now, no matter what this data revealed. At least it clawed back some year-on-year softness we were saw in November, and December is the top month of the year. It is probably all downhill for a while for tourism from here.

UP, BUT THE FUTURE IS DOWN
The same can probably be said for inflation. While the January ANZ gauge (which measures non-tradable inflation) recorded a +2.9% rise year-on-year, the recent shift upward is all due to new taxes on cigarettes. Without that, ANZ says, the rise would have been very modest with downward pressure from falling road freight prices. They too see an upcoming dip from the effects of the coronavirus.

RECESSION RISKS RISING
BNZ is reminding us that despite the trade impacts from the coronavirus, we are also facing economic slowdown risks from the North Island drought (and South Island flooding. They are warning that they may add up to two quarters of declining GDP growth - that is a recession. They are not calling that yet, but they do say the risks are elevating.

COSTLY TO INSURE
Aussie insurance giant QBE has warned that climate change poses a material threat to its business (see page 32) and the entire Australian economy after booking a -AU$300 mln hit to revenue due to unusual weather events. It is looking to exclude or reprice climate risks. QBE operates in New Zealand focused on business insurance. (Like many other financial services companies, QBE is completely opaque about its New Zealand operational performance.)

CORONAVIRUS UPDATE
Today's updates for Covid-19 sees the tally of official infection up over 71,000 and 1773 deaths. A week ago these levels were at 40,500 and 910 respectively.

AT THE OPEN ...
The NZX50 has started the week +0.3% higher than where it finished last week. The ASX200 has opened -0.2% lower. Tokyo has opened sharply lower, down -0.7% (on worse than expected Q4 GDP data), while Hong Kong has opened +0.6% higher and Shanghai has opened +1% higher.

FINDING A WAY
We are not hearing of protests in Hong Kong. Partly that is because PRC influence in the media. But it is continuing even without unwise street demonstrations and crowd events. One way it is happening is economically. Retail businesses are crowd-categorised into 'yellow' - supporting democracy - 'blue - supporting Beijing - and 'red' - owned by mainland PRC companies. In a city where democracy forces won two thirds of the seats at recent elections, life is even tougher for 'blue' and 'red' businesses.

A NEW SERIOUS NON-BANK CORPORATE LENDER
Aussie non-bank corporate lender Metrics is opening up in New Zealand and has been joined by three ex-ASB managers. Metrics uses managed funds they organise and operate to fund their range of business landing. The core trusts are ASX-listed and their income trust targets a 4% return while their 'Opportunities Trust' targets a 7% return. Both are only available to 'wholesale investors'.

LOCAL SWAP RATES DOWN
Wholesale swap rates are marginally lower today, down -1 bp across the curve. The 90-day bank bill rate is down -2 bps to 1.19% and its lowest of the year. Australian swap rates are up about +2 bps across their curve. The Aussie Govt 10yr is down -1 bp to 1.07%. The China Govt 10yr is now up +1 bp at 2.89%. The NZ Govt 10 yr yield is unchanged at 1.37%. The UST 10yr yield is also unchanged from this morning at 1.59%.

NZ DOLLAR HOLDS
The Kiwi dollar is unchanged against the greenback at 64.4 USc. Against the Aussie we are also little-changed at 95.8 AUc. Against the euro we up still at 59.4 euro cents. That means the TWI-5 is holding at 70.2.

BITCOIN STOPS FALLING
Bitcoin is a little firmer since this time this morning, up +1.7% to US$9,901. The bitcoin price is charted in the currency set below.

This chart is animated here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

Our exchange rate chart is here.