A review of things you need to know before you go home on Friday; a meaningless fee reduction, migration attraction diminishes, tourism flow settles, credit card convenience hooks us, swaps slip, NZD lower

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

MORTGAGE RATE CHANGES
No changes to report.

TERM DEPOSIT RATE CHANGES
No changes here either.

MEANINGLESS
The credit card companies are making a big deal about their recent decisions to reduce merchant fees. (I am not suggesting they are acting together, just a coincidence.) We got our reduction notice today, and the reduction for us is from 2.50% to 2.49% !! They seem to be both talking loud about a meaningless change. Many merchants are resigned to this type of opaque behaviour from these tax avoiders.

ATTRACTION DIMINISHES
The migration gain in June was more than -30% lower than the same month a year ago. That is the lowest migration gain for a June month since 2014. Our permanent net migration gain in the year to June was +65,000. But our population loss to Australia is starting to grow again. Some analysts (Infometrics) estimate that the rate will continue to slow and will be below +50,000 by mid 2019.

TOURISM NUMBERS SETTLE BACK
Tourist arrival numbers recorded a -3.5% drop compared with May (s.a.), the worst monthly result excluding major one-off events since 2014. Arrivals were also down -7.8% from June last year – an outcome that was less surprising given the British and Irish Lions tour boosting numbers during June 2017.

WE LIKE THE CONVENIENCE
We are putting a lot more of our personal financial transaction on credit cards. Transaction values are up +7.1% year-on-year to June, driven by a sharp rise in small-value purchases. We are leaving more as balances due, which is up +5.9% on the same basis. Fortunately "only" 62% of that is accruing interest and that is "good" only in the perspective of the past fifteen or so years when it started as about 75% - but 75% of a lot smaller balance due. Back then we owed $2.9 bln of which $2,2 incurred interest at the very high credit card rates. Today we owe $7.2 bln on these cards with $4.5 bln incurring interest, still at very high rates. The ticket clipping "payments industry" is doing very nicely. A pity their profits are shielded in a tax haven (Singapore). All cost to New Zealand, no support for the community they harvest. It's called freeloading.

IMPORTANT INFRASTRUCTURE NOW IN PLACE
Internation internet speeds just got faster. The new trans-Pacific Hawaiki fibre optic deep-sea Hawaiki cable system took 27 months to construct and now links New Zealand, Australia, part of the Pacific and the United States. It’s commercially operational as of today. The taxpayer invested NZ$15 mln in capital for this US$300 mln project.

SWAP RATES SLIP AGAIN
Local swap rates slipped just -1 bp or -2 bps across the board today. However, the UST 10yr is down to 2.85%, a -4 bps fall. The Aussie Govt 10yr is at 2.63, also a -4 bps fall, the China Govt 10yr is at 3.47% another -4 bps reduction, while the NZ Govt 10 yr is at 2.83%, down a more chunky -6 bps. The 90 day bank bill rate is unchanged at 1.92%.

BITCOIN RISES
The bitcoin price is now at US$7,457 which is a +1.6% rise from this time yesterday.

NZD A LITTLE LOWER
The NZD has slipped back to 67.5 USc. But it is firmer on the cross rates at 91.7 AUc, and weaker against the euro at 57.9 euro cents. That puts the TWI-5 slightly lower at 71.2.

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9 Comments

Lunch today was cats and pigeons with Double-GZ. An excellent host!

I had 4 slices of cold pizza left over from last night, 2 kiwi fruit with the ends cut off and skin removed in one circular motion using a teaspoon and a muesli bar.

How does the muesli bar factor into removing the kiwifruit skin? Enquiring minds want to know!

Did you set a snare in Aotea Square?

They got a cheek blaming it on interchange fees. So there should be no merchant fees if it is the credit card company your bank uses?. Which is strange because they all use both Visa and Mastercard. 0.5 % or so goes to pay the loyalty points, maybe 0.5 % to cover the risk, the rest is profit.
We get 1.49% merchant fees through a group rebate scheme , so there is a 1% difference right there.

The mainstream media should call out the banks on this nonsense , where the fee reduction is so meaningless

"These are not separate systems that in times of trouble can merely go their separate ways. The eurodollar binds them all together. Before August 9, 2007, everyone thought that was a very good thing (globalization). Since, not so much"

http://www.alhambrapartners.com/2018/07/19/decoupling-reborn/

Three weeks after the PBOC cut its Required Reserve Ratio, overnight the PBOC engaged in additional stealth easing.

https://www.zerohedge.com/news/2018-07-19/how-china-quietly-cut-rates-ov...

Sure enough, TIC figures show a further drawdown in HK dollar activities. Like Russia and RUB, HKD and TIC for Hong Kong continues to suggest 7.85 as a hard limit. The net effect of that limit (banks unable to be compensated for the increased risk of lending toward China, any part of China) is the further closing off of that important eurodollar bypass into the mainland.
http://www.alhambrapartners.com/2018/07/18/tic-confirms-pretty-much-ever...