Here's my summary of the key news overnight in 90 seconds at 9 am, including news of the latest US Fed decisions.
The Federal Reserve said the US economy is expanding at a moderate pace and inflation is below its goal while maintaining a commitment to keep interest rates near zero for a "considerable time" after asset purchases are completed. It said it will end its stimulus program next month.
Many economists and traders had expected the central bank to alter the rate guidance it has provided since March, given generally improving data on the US economy’s performance.
However, from the backrooms, Fed officials have raised their median estimate for the federal funds rate at the end of 2015 to 1.375%, compared with 1.125% in June. That is signaling that US rates could rise by more than 1% over the next year.
Meanwhile, American consumer prices fell for the first time in nearly 18 months in August and underlying inflation pressures are low. Prices were down -0.2% from July and up +1.7% from the same month a year earlier. This will lessen the urgency for the Federal Reserve to raise interest rates.
With the Fed setting now behind us, markets will quickly turn their attention to the Scottish vote tomorrow. An independent Scotland is set to shock global financial markets, despite currency traders starting to price in a 'yes' vote for the referendum, one that could break up the UK.
Back in New York, the UST 10yr benchmark bond yield is unchanged overnight at 2.57%. Equities are on the rise following the Fed's continuing low rate pledge.
The price of oil has fallen slightly. The US oil price is now just under US$95/barrel and the Brent benchmark is just under $99/barrel. Gold is unchanged and still at US$1,236/oz.
We start today with our currency susceptible to the Fed's moves. But following the announcement we are unchanged against the US dollar and now just on 81.6 USc, at 90.3 AUc, and the TWI is at 78.3.
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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5 Comments
Low/zero interest rates are here to stay for quite a while yet.
NZ tried for a few months to raise rates but has now given up.
WW3 has effectively started (according to the Pope)
http://www.bbc.com/news/world-europe-29190890
Meanwhile, American consumer prices fell for the first time in nearly 18 months in August and underlying inflation pressures are low. Prices were down -0.2% from July and up +1.7% from the same month a year earlier. This will lessen the urgency for the Federal Reserve to raise interest rates.
Inflating US National Debt doesn't present such a benign outlook.
On September 30th, 2013 the U.S. national debt was sitting at $16,738,183,526,697.32. As I write this, the U.S. national debt is sitting at $17,742,108,970,073.37. That means that the U.S. national debt has actually grown by more than a trillion dollars in less than 12 months. Read more
And skyrocket pricing trends of necessary assets are not so calm closer to home;
A 16 percent jump in Sydney home prices in the past year is sparking alarm at Australia’s central bank.
Buyers shouldn’t be overly bullish in property purchases, Reserve Bank of Australia Assistant Governor Christopher Kent said at a Bloomberg Summit in Sydney yesterday. An investor-led surge in prices may amplify any subsequent fall and risk a drop in consumer spending, hurting the economy, the bank said yesterday in minutes from its Sept. 2 board meeting. Read more
Another survey, this one from the world's most senior bank, has confirmed New Zealand houses are among the most "unaffordable" in the world compared to people's incomes.
A survey of 55 countries by the Bank of International Settlements (BIS), the bank used by central banks, shows that New Zealand's ratio of house prices to income is well above its historical norm.
At just below 140 per cent, New Zealand was placed alongside Canada and Australia and just below Belgium, whose ratio was just above 140 per cent. Read more
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