TEST TEST A review of things you need to know before you go home Friday; HSBC deal ends, markets react to new Govt, migration slips, visitor arrival growth dips, credit card balances hold, swaps fall, NZD dives

TEST TEST A review of things you need to know before you go home Friday; HSBC deal ends, markets react to new Govt, migration slips, visitor arrival growth dips, credit card balances hold, swaps fall, NZD dives

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

MORTGAGE RATE CHANGES
None, but you should note that the HSBC 18 month fixed rate 'special' of 3.87% ends today at 5pm.

DEPOSIT RATE CHANGES
None here either today, so far at least.

MARKET REACTIONS
The new Government has drawn some strident political reaction, pro and con. Both probably unrealistic. But how are the markets reacting? Firstly, the NZD has been sold off fairly strongly and is now bumping along at 70 USc, down -336 bps since the day before the election. Wholesale interest rate for 2 yr swaps is down -4 bps on the day, down -9 bps since the day before the election. But there are winners: Fletcher Building shares are up +2% in trading today, and making back most of its decline since the firing of its CEO. Wellington house prices are also probably due for a sharp rise. Bob Jones and other commercial property owners in the Capital will be feeling pretty good today as well. (One thing we should be thankful for is a civil transfer of power.)

PAST ITS PEAK
Permanent migration slid in September according to data released today. The new Government will undoubtedly 'grease the slide'. (H/T Infometrics) We have had the lowest net migration gain for a September since 2014.

UPCOMING CHALLENGES
Infometrics has reviewed September visitor arrivals. They say: "In September, the number of overseas visitor arrivals edged up just 0.3% (seasonally adjusted) and was 3.1% higher than a year ago. Year-end growth in visitor arrivals in September is the lowest it has been since October 2015. Although we expect some headwinds ahead for the industry, there were pockets of promising growth from China and other parts of Asia this month."

CO2 INTO STONE
Carbon capture technology is making fast progress. A new plant in Switzerland operates 'direct air capture' processes. And now a new one in Iceland is doing something similar, but taking it one step further, converting the CO2 into 'stone'. It was only a year or so ago sceptics were claiming this was a dead-end idea.

GLACIAL CARD SHIFTS
The latest credit card data shows the same minor level of overall risk. Balances are still lower that they were at December 2016, and transaction growth year on year is less that +1%. Overall we owe almost $6.9 bln on our credit cards, quite low on a per capita basis by international standards. Interest-bearing amounts are now just on $4 bln, their lowest in eight months. Interestingly, the weighted average interest rate on these is down to 17.7%, the lowest in more than two years, indicating existing borrowers are shifting balances to lower-cost alternatives.

WHOLESALE RATES DROP
Swap rates have fallen sharply today. the two year is down -4 bps, the five year is down -5 bps and the ten year is down -3 bps. The 90 day bank bill rate is up and now at 1.94%. Yields on most Government bonds traded today +2 bps higher.

NZ DOLLAR SLUMPS
The NZ dollar has lost another -170 bps today, now just under 69.8 USc. On the cross rates we are also down sharply similarly at 89.1 AUc and 59.1 euro cents. The TWI-5 has dropped to 72.5, more than a -2% fall. The bitcoin price is up +2.7% today to US$5,696 and close to its all-time high of US$5,809 on October 15. It is at a record high in NZD.

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USD 
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Source: CoinDesk

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13 Comments

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It's time to re-open the flag debate !

... we have a Red ( Labour ) , Greens , Black ( NZF ) government ...

I reckon our new flag design ought to be of someone out in the vegetable patch , stealing a watermelon at midnight ....

... that sums up the current state of our fair land , girt-by-sea .... Cool !!!

Debate is so last century. It's all about 'Captains calls' now.

BTW: I wonder is Clark can stop spruiking Mito Q now he's accruing half of slippery cinders salary in any eventual split?

According to estimates published this week by China’s National Bureau of Statistics (NBS), GDP, industrial production, and retail sales all continued in the same low-level range that has existed since the start of 2015 (when the “rising dollar” first broke). FAI, however, has dropped to a level unseen in decades.

The headline estimate for FAI is reported on an accumulated basis, meaning that what you see published for September is really for all nine months of this year up to and including September. Accumulated FAI growth last month was just 7.5% (meaning FAI in the first nine months of 2017 were 7.5% more than in the first nine months of 2016). The last time FAI was that low was at the end of 1999, a time when Asian flu was still a lingering concern rather than any idea of ghost cities. Read more and more

“The truth is, we know so little about life, we don’t really know what the good news is and what the bad news is,”
https://www.brainpickings.org/2016/05/02/complementarity-frank-wilczek-a...

"Wellington house prices are also probably due for a sharp rise"

Why?

More well paid bureaucrats putting their snouts in the trough.

Like they haven't been sharply rising for the past 2 years..

Strange how people keep trying to invent a process ,(Co2 storage), a tree does perfectly well.

Isn't the taiga putting on biomass at a rate of knots? Or should that be megatons of CO2 per annum? Not sure whose figures are real and whose are imagined. Modeling is an imaginative process isn't it? My problem with data is that, by and large, I get to see what I want to see.

There is a huge learning curve going on for everyone on Carbon. One study calculated growing trees in cold regions would increase global warming , because the dark trees would absorb more heat than snow , which would reflect it. There seems to be consensus that trees and mangroves in tropical areas absorb and store more carbon. Unfortunately , these are the areas most likely to be cleared , without intervention.

yep easiest way to sequester carbon is to bulldoze forests into huge landfills (or deep ocean) and bury with dirt in anaerobic conditions. For some reason greens don't want to hear this ;)

Electric bulldozers I presume.

"For a while, Bernie Madoff’s investors felt great about their impressive “returns.” For a while, investors in dot-com stocks felt the same. For a while, investors in mortgage bonds felt the same. But when investors focus on returns rather than the very long-term structure, stability, and even existence of the underlying cash flows, terrible things can happen. All that’s required to get the snowball rolling is the creeping recognition that there’s no “there” there.

In response to the delusion that low interest rates “justify” virtually any level of market valuation, regardless of the growth rate of the underlying cash flows, the speculation of recent years has created a situation where there is effectively no way out for investors in aggregate. Every security that is issued must be held by someone until it is retired. When one investor sells a share, it simply means that another investor buys it. The only question is who will hold the bag.
https://www.hussmanfunds.com/wmc/wmc171009.htm