Here's my summary of the key news overnight in 90 seconds at 9 am, including news of a rebounding US economy.
We start with the US Fed issuing its regular FOMC review and not surprising the markets with anything unexpected. The pace of bond purchases has been decreased with that program to end in October. They maintained their signal that it will be a "considerable time" before they expect to raise interest rates because they want to see a more solidly improving labour market - which is code for rising wages.
Bond purchases may be ending, but don't forget the Fed now has a balance sheet of a massive US$4.4 tln. Still, in perspective, that is still 'only' less than 30% of US GDP.
The US economy is certainly improving. Data out overnight - the advance estimate of Q2 GDP growth - surprised markets at the strength. GDP growth came in at +4% rather than the +3% expected. Remember this is just an advance estimate and will be subject to two more revisions. The Q1 decline reported was also revised to be significantly less than earlier thought.
And the pre-cursor ADP labour market report also came out overnight and that showed jobs growth lower in July than the red-hot pace previously recorded in June. However, it was the fourth straight monthly report showing gains above 200,000.
In England, their central bank has proposed some new rules so that senior bankers could be forced to pay back bonuses as long as seven years after they’re awarded, along with possible jail terms, rules designed to curb short-term risk-taking. Industry reacted by saying these new rules might hurt London’s reputation in the financial world. Seems to me they might improve it, but expect serious push-back.
Closer to home, the AFR is reporting an the extent of the corruption surrounding the RBA-owned banknote business, Securency. There is an Australian censorship order concerning a multi-million dollar corruption case explicitly naming the current and past heads of state of Indonesia, Malaysia and Vietnam, their relatives and other senior officials. Names are named and is sure to embarrass everyone involved - as it should.
Default is close for Argentina now. But a top Argentine banker and former Economy Ministry official have arrived in New York today to make a last-minute proposal aimed at averting the country’s second default in 13 years.
In mid-afternoon trade today, UST 10yr yields jumped to 2.54%. Local interest rate swaps are ending the month at near six week lows although today's New York rises may give them a final burst higher.
The oil price fell again on the US benchmark to just on US$100/barrel. On the Brent benchmark it is now US$106/barrel. Gold also fell and is now at US$1,296/oz.
We start today with the NZ dollar lower again following a stronger US dollar. We are now at just 84.9 USc and that's a seven week low, just over 91 AUc. The TWI is at 79.6.
If you want to catch up with all the changes yesterday 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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