Here's my summary of the key news overnight in 90 seconds at 9 am, including news key policy makers are moving markets.
Ben Bernanke came to the rescue of risk assets yesterday after he indicated that monetary policy would stay 'highly accommodative' for the 'foreseeable future'.
Bernanke has proved himself over the last few years as a friend of the markets, even though that may not be his main intention. Yesterday's comments suggest that he is all too aware of the mistakes by his predecessor following the Great Depression, a period in which he is a noted authority.
Monetary policy was tightened prematurely by the Fed in 1930s, and it seems that in 2013 Bernanke would rather err on the side of caution, particularly when inflation is so low. Expectations of QE tapering have now been scaled back, and the markets rallied accordingly.
US equities are up strongly this morning - up more than 1% in New York following the Aussie markets up 1.3%, as are metals prices; gold is up to US$1,285 this morning and copper is at a three week high, although oil has fallen more than US$3/barrel.
Not everything was rosy however. More people claimed for unemployment benefits in the US last week than was expected.
On the other side of the coin, the US Treasury reported a budget surplus, its second in the past three months and at a level almost three times what markets were expecting. A sharp fall in outlays in June and rising revenues were the cause of the unexpected result.
China looks set to soften its stance on monetary policy after Premier Li said the nation’s economic growth and employment must stay above a certain floor. The credit-fixing medicine threatened in China may not be quite as vigorous as first indicated.
And finally in Australia, their unemployment rate, although still only 5.7% has in fact risen to a 4 year high in the June quarter. Talk of an August rate cut is growing. We won't get our updated unemployment rate until the first week in August - it was 6.2% in March.
The NZ dollar starts today at 78.3 USc, 85.4 AUc, and the TWI is at 74.3.
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