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- 90 seconds at 9 am: A tax on bank deposits 18
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90 seconds at 9 am: Moody's cuts euro bailout fund rating from Aaa; China factory output expands; US budget negotiations bog down; NZ$1 = US$0.82, TWI = 73.4
Here's my summary of the key news overnight in 90 seconds at 9 am, including news Moody’s has cut the eurozone bailout fund’s credit rating to Aa1, and maintained a negative outlook. It also removed provisional Aaa ratings from debt issued by the EFSF.
In a statement, the ratings agency blamed France, whose own Aaa rating it cut last week.
Essentially, it felt it had to cut because of the high correlation in credit risk present among the entities’ largest financial supporters.
China’s economy looks set to rebound in the last three months of the year – after seven quarters of slowing growth – as a strong improvement in factory output and new orders is shown by a government survey.
A key official gauge of manufacturing activity in China rose in November, the latest sign that growth is recovering in the world's second-largest economy. It follows and confirms the HSBC 'flash' PMI, an early snapshot of the private sector, which also showed a pick-up in business activity.
In the US over the weekend, Treasury Secretary Geithner warned the US could go over the fiscal cliff.
Budget talks are in a stalemate there and Geithner has pressed Republicans to offer specifics on deficit reduction, though he admitted that he can't promise that the country won't go over the looming fiscal cliff of sharp tax hikes and spending cuts. Markets are increasingly nervous, although most people still think this is a game of brinkmanship and that a deal will be done at the last minute.
The NZ dollar starts the week at 82 USc and TWI is at 73.4. Tomorrow, we have the RBA reviewing Aussie rates and there is a reasonable chance of a cut to 3% which would put it back to its low in the depths of the global fiscal crisis in April 2009. On Thursday the RBNZ does a similar review, but Governor Wheeler is very unlikely to make a similar move from our 2.5% level.