Here's my summary of the key news over the weekend to keep you up-to-date over this Auckland Anniversary day.
The Greeks have voted and the radical left-wing and anti-austerity party Syriza appears to have won reasonably comfortably. It stood for taking the EU bailouts but not any tough measures to fix their distorted economy. It has pledged to reverse many of the austerity measures adopted by Greece since a series of bailouts began in 2010. The upcoming negotiations to change the terms will now be interesting in the EU context.
Meanwhile, some senior monetary officials in the EU are concerned their €1.1 tln bond-buying program announced by the ECB last week may not be big enough. An ECB insider is worried that the effort will be undermined by slack EU governments.
American home resales rose surprisingly strongly in December, a winter boost that was unexpected. The +2% December rise capped a year of lower total sales transactions which saw prices rise +6% to a median of US$209,500 (NZ$280,000). First home buyers seem to be returning to this market.
A widely-watched leading indicator of the US economy also suggested growth is picking up there.
In addition to the top of the North Island, it is also a public holiday in Australia so market activity will be especially thin today. All the focus this week will be on the RBNZ OCR review and although no-one is expecting any change, observers will scour the short press statement for any hints of changed thinking. Very minor tweaks could move the market.
We will also get trade balance, migration and building consent data at the back end of the week, all closely watched.
Low oil prices extended their run over the weekend with the benchmark US price is now just on US$45/barrel and the Brent benchmark is just above US$48/barrel. The Brent price got a small boost on uncertainly surrounding the death of the Saudi king. But US prices showed there is downside risks still. China is using the low prices to stock up on a massive scale.
Gold ended last week unchanged at US$1,298/oz.
UST benchmark 10yr bond yields were lower on Friday in New York, falling to 1.79%. Today New Zealand swap rates start marginally higher with the curves essentially flat. They will probably loose a little today following the New York softness. A lot will depend this week on how aggressively local mortgage borrowers and corporate treasurers move to take advantage of the lower long rates.
The NZ dollar starts the week at 77.4 USc, against the Aussie at 94.1 AUc, and the TWI is at 77.9.
The easiest place to stay up with event risk over the holiday period is by following our Economic Calendar here »
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3 Comments
The reasons behind the planned ECB purchases have been well documented and acted upon long ago - trouble is bank traders and their hedge fund clients want more of the same and are already pressuring officials despite BIS warnings.
The ECB has launched into a massive bond buying campaign for the sole purpose of redeeming Mario Draghi’s utterly foolish promise to make speculators stupendously rich by the simple act of buying now (and on huge repo leverage, too) what he guaranteed the ECB would be buying latter. Simple really - read more
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