Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with BNZ, including news that the Dow initially fell and then rose in late trade on talk that the slow US economy may force the US Federal Reserve to reduce the interest rate it pays banks for excess reserves held with the Federal Reserve.
The New Zealand dollar bounced almost a cent to 72.5 USc. It also rose in tandem with the Australian dollar, which was also boosted by talk that China could ease some curbs on property speculation and announce a new infrastructure spending push.
However, the US economic news was not good. US housing starts slumped in June to the lowest since last October after the expiry of a tax break and payrolls were down in 27 states.
The Bank of Canada raised interest rates overnight by 0.25% to 0.75%, but its commentary was bearish.
In Europe, a bond auction in Hungary was poorly supported, sending the Euro lower, but bond auctions in Spain, Ireland Greece were well bid.
However, bond yields continue to fall, suggesting longer term mortgage rates here may also fall further if our wholesale rates follow the same trends. Fears of deflation and a double dip saw the US 2 year Treasury bond yield fall to a record low of 0.56% and the 10 year Treasury bond yield fall to 2.95%.
The markets will be watching US Federal Reserve Chairman Ben Bernanke tonight and European stress test results on Friday night.
Meanwhile, the Timaru Herald has reported that the government's decision to put Allan Hubbard into statutory management may cost National votes.
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