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US sees a June surplus; Fed eyes rate rises; AU minor party extracts policy backdown; UST 10yrs at 2.52%, oil at 3 month low; NZ$1 = US$0.88, TWI = 81.9

US sees a June surplus; Fed eyes rate rises; AU minor party extracts policy backdown; UST 10yrs at 2.52%, oil at 3 month low; NZ$1 = US$0.88, TWI = 81.9

Here's my summary of the key news over the weekend in 90 seconds at 9 am, including news of a tail-wagging-dog deal in Australia.

But first, the US Treasury reported that the US Federal government actually posted a surplus in June. Revenues were higher than expected, expenses lower, and a monthly budget surplus of $71 billion was recorded. That is the third one in the current budget year and the overall deficit will be smaller than originally planned.

The improvement in US labour markets has surprised policy makers too. The WSJ is reporting that the Federal Reserve's regional bank presidents are debating whether to push interest rates up from zero sooner than planned because of these recent improvements. The FOMC itself is looking at other ways to tighten. 2015 may be the year the US Fed follows Graeme Wheeler up, and it may be earlier in the year than many expect.

But it won't be until they start withdrawing the more than the US$1 trillion in QE money printed that you will know that the GFC policy response is over. Then the US Congress can start to invest in its long deferred and ageing public infrastructure. The leadership will then move from 'monetary policy' to 'fiscal policy'. But given the state of US politics, don't hold your breath.

In Australia overnight we see the emergence of a deal that shows how small political parties can distort public policy. The billionaire Clive Palmer's party has succeeded in getting a new disclosure and penalty regime on companies modified so that it won't apply to most businesses - his included. Remember, a similarly-sized billionaire is also involved in New Zealand politics, hoping to be in a position to influence policy outcomes that favour his predicament. It can happen in our backyard, as the Australian example shows.

The international equities markets ended last week on a strongly positive note in what has actually been a poor week.

Yields on benchmark UST 10 yr bonds also ended the week in New York unchanged at 2.52%. The oil price dropped more than US$2/barrel to just on US$100 in the US and under US$107 for the Brent benchmark. These are the lowest levels since April. The gold price inched up again and is now at US$1,339/oz.

And we start today with the NZ dollar holding on to its gains. We are at 88.0 USc, at 94.0 AUc. The TWI is now a just under 81.9.

If you want to catch up with all the changes on Friday we have an update here.

The easiest place to stay up with today's event risk is by following our Economic Calendar here »

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