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BofA pays another huge fine; US factory and jobs data positive; EU and China PMIs disappoint; gold down sharply, S&P500 up at record; NZ$1 = US$0.84, TWI = 79.2

BofA pays another huge fine; US factory and jobs data positive; EU and China PMIs disappoint; gold down sharply, S&P500 up at record; NZ$1 = US$0.84, TWI = 79.2

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of another huge bank fine.

In the US overnight, Bank of America reached another settlement over its mortgage lending practices leading up to the sub-prime crisis. It paid $16.7 bln this time, and that takes its total 'legal costs' over a range of similar issues to almost US$70 bln. But its a behemoth bank, is still in business, and is still prospering as one of America's biggest bank. It is expected to star now most of those woes are behind it.

Americans resold their homes in July at the fastest pace in almost a year, a sign the housing market was gaining steam again after a year-long slump.

The number of Americans filing new claims for unemployment benefits fell more than expected last week, pointing to a sustained improvement in their labour market conditions.

American manufacturing PMI in August reached its highest reading in over four years. This expansion was mirrored in the Philly Fed survey.

Across the Atlantic, the news wasn't so positive. German and French indexes are both sinking, although Germany is still expanding while France is contracting.

France has acknowledged it is in trouble, after recording nine months of zero growth. But President Hollande says the eurozone’s budget deficit targets are making growth impossible, and he vows to pursue stimulus measures instead. It will be interesting to see how that turns out. A big renegade within a currency union can cause enormous problems for everyone.

China's factory unofficial HSBC PMI also disappointed falling more than analysts were expecting in August, as a credit slowdown and property slump add to risks. That is going to have an impact on Australia. China's economy faces an uphill battle for the rest of 2014, adding pressure on Beijing to step up government spending or free up money to spur growth.

The focus of the weekend will now shift back to the US were investors awaited the start of a meeting of top central bankers and economists in Jackson Hole, Wyoming.

The S&P500 Index rose to a record high of just under the 2000 level, amid optimism the Federal Reserve is committed to supporting a strengthening economy - meaning rate rises are still some way off. 

UST 10yr benchmark bond yields rose 1 bp today and are now at 2.42%.

The US oil price is soft and is just under US$94/barrel. Brent is also basically unchanged and under US$103/barrel. Gold sank on the speculation of future higher interest rates - down another US$16/oz - and is now at US$1,274/oz.

We start today with our currency higher. We are back above 84 USc, 90.4 AUc, and the TWI is at 79.2.

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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4 Comments

The report by the US Treasury – released on Friday when everyone was on vacation or getting ready to head out of town, and when no one was supposed to pay attention – was a zinger: US net capital outflows soared to $153.5 billion, the largest ever recorded. Read…

  http://davidstockmanscontracorner.com/money-managers-warning-the-bull-m…  
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Looks like gold bugs are about to be handed something...

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The 'settlements' don't worry the BofA.   What would cause them to panic would the the FBI coming up in the lift waving handcuffs. 

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Very true KH, these bank administrative "fines" are being carefully constructed so as to maximise tax offsets etc and reduce the actual $ costs. They are also drafted to avoid admissions of guilt and the US courts apply a strict application of Locus Standi doctrine making civil actions more difficult - such is the fate of the Slater and Gordon v Barclays Libor case. 

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