US factory output rises strongly, prices stable; Russia in sanctions squeeze; Aussie home loan rates fall; oil price lower; UST 2.34%; NZ$1 = US$0.848, TWI = 79.5

Here's my summary of the key news the weekend in 90 seconds at 9 am, including news of a sharp fall over the weekend in benchmark US bond rates.

But first, American factory output rose broadly in July and car production recorded its largest increase in five years, boosting the economy at the start of the third quarter. The US Federal Reserve said factory production jumped 1% in a month after rising 0.3% in June. That was the largest gain since February and reflected increases across all major categories.

In a separate report, the US Labor Department said its producer price index for final demand at the nation's farms, factories and refineries inched up only 0.1% in July as the cost of oil, gas and coal fell, offsetting an increase in food prices. That is down from 0.4% in June. In the full year through July, producer prices have increased a modest 1.7%.

If you haven't yet read the Saturday Essay in this week's WSJ you should, especially if you are trying to understand the flows of wealthy Chinese out of that country. It doesn't specifically mention New Zealand, but the points raised clearly have relevance here.

In Russia, and in a sure sign the sanctions are biting hard in a key quarter of their economy, Russia's state-controlled energy giant Rosneft has asked the Russian government for a US$42 bln loan as it feels the impact of Western sanctions. Interestingly, Rosneft is partly owned by BP.

In Australia, there are more signs of falling home loan rates as banks there take advantage of lower costs of money. UST 10yr yields took another dive at the end of last week and are now at only 2.34%, a significant fall that will surely influence swap rates here this week if sustained. It is hard to see the RBNZ pushing on up against these forces.

The US oil price seems stable at over US$97/barrel but at one point over the weekend it got down to US$95, Brent recovered from a fall to US$102/barrel to end the week a dollar higher than that low. Gold also fell - about US$10/oz - and is now at US$1,304/oz.

We start today marginally stronger on the exchange rate front at 84.8 USc, 91.2 AUc, and the TWI is at 79.5. 

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 »