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Factory expansion sinks in Europe and China, does better in Greece, Spain; Aussie housing boom near record while factories wither; CBA to float NZ office properties; NZ$1 = US$0.838, TWI = 79.2

Factory expansion sinks in Europe and China, does better in Greece, Spain; Aussie housing boom near record while factories wither; CBA to float NZ office properties; NZ$1 = US$0.838, TWI = 79.2

Here's my summary of the key news overnight in 90 seconds at 9 am, including news of withering factories but soaring property prices.

Overnight there was a huge release of advance PMI data for many economies. The US factory data had been already released a week ago and is very positive, the best since 2010. Their services data was also very expansionary, but the rate of growth slowed.

But that contrasts with today's release of Eurozone factory PMI which is at a 13 month low and barely expanding. Every EU economy seems to be slipping; Germany is at 11 month low, the UK at an 11 month low like Italy, France is contracting and at a 15 month low. In contrast, countries who have taken their medicine are doing better. Greece and Spain are expanding. (In fact, Spain sold 50-year government bonds for the first time, tapping investor appetite for longer- maturity debt, after its benchmark bond yields fell to a record low last week.)

These poor results have investors all looking to the ECB and their decisions on Friday.

Meanwhile, China's factory output growth all but evaporated in August, and Australia saw a further deepening in their contraction. There has been no consistent expansion in Australia's factories since 2010.

However, money is falling out of the sky; new data shows Australia’s speculative housing boom, which is as big as the last investment “bubble” in 2003, has ­continued at a furious pace over the past three months, even in seasonally adjusted terms.

And to tap into the demand for real estate and the big gains that are flowing from low yields, Commonwealth Bank is about to sell to its huge Aussie client base a new real estate fund made up of New Zealand offices, including the headquarters of the ACC.

Perhaps Governor Stevens will have something to say about these disparities and distortions in the Aussie economy when he reviews their cash rate later today. But that is actually unlikely; he is more likely to say he has his policy positions about right.

US markets were closed overnight so yields are unchanged for the UST 10yr benchmark bond which is at 2.34%. Ditto the oil and gold markets. It was not a holiday in London or Frankfurt, but trading was very light there and movement absent without New York.

We start today with the currency higher and holding the gains it made after yesterday's better-than-expected and record terms of trade. We are now just on 83.8 USc, 89.8 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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1 Comments

Houses - the Magic Money Tree of our times.

 

Until the music stops....

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