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90 seconds at 9 am: Elections in France and Greece; Spanish bank bailout; US fiscal cliff consequences; China and Australia improve
Here's my summary of the key news over the weekend in 90 seconds at 9 am, including news that we start the week with commodity prices soft and falling on widespread concerns that economic uncertainty is piling up in the wider world, even if not in New Zealand.
The oil price fell last week - both the US and Brent benchmarks are below US$100/bbl. Gas prices are very low. Many agricultural prices are falling, although not all, as we saw for dairy prices on Friday. But the drift for commodities is down.
French elections are underway, and early indications are that the anti-austerity Socialists are headed for a comfortable win.
Meanwhile, the EU has agreed a massive 100 bln bailout for Spain so that it can recapitalise its banking system. These two weekend actions should clarify euro-zone policy directions and in that sense, markets are expected to like that.
But campaigning is underway in the secound and decisive round in Greece, and until that result is known, the new government formed and the EU response to resulting Greek demands is hammered out, the latest weekend actions will drift fast into the background. There is much high-wire euro action, but little evidence of tough decisions being made. European voters can't bring themselves to pay for the excesses of their middle-class welfare systems and they are avoiding resolutions by adding ever more debt.
The US is in the same situation. But they have forced on themselves a 'fiscal cliff' that is fast approaching - some very tough automatic adjustments get enacted on January 1, 2013 and after their November elections if Congress can't work out a better plan. But as that approaches, credit rating agencies are threatening further downgrades.
It's not all gloom, however. China has recorded a surprise rise in exports and industrial output. Exports were up 15% on the same month earlier; industrial output up 10%.
Later today, we are expecting the May house sales data from the REINZ - and indications from the Auckland market is that the result will be a strong one. And later in the week, the RBNZ will deliver its Monetary Policy review which we will be covering in detail. The latest New Zealand trade and housing market data is likely to be important for Governor Bollard's decision on whether to change the OCR.