ECB to start bond buying on Monday, warns Greeks; UK SFO investigating the BofE; Brazil raises rates; UST 10yr yields up to 2.12%; NZ$1 = 74.6 USc, TWI = 78.8

Here's my summary of the key issues from overnight that affect New Zealand, with news from three major central banks overnight.

Firstly, an upbeat European Central Bank said this morning it will launch into quantitative easing next week having increased its economic growth forecasts for this year and next. It kept its super-low rate settings unchanged.

None of this will help Greece though; they also said they will tie Greek funding to compliance with the bail-out terms.

In Britain, their local Serious Fraud Office is investigating whether the Bank of England played any role in rigging money market auctions during the financial crisis. Meanwhile, the English central bank left all its settings unchanged in its latest review which means it has kept its rates unchanged for six full years now.

In Brazil, the central bank there has raised rates - by +0.5% to 12.75% - to restrain inflation. Inflation is high there at +7.4% but growth has evaporated with estimates showing it will be -0.5% this year.

In the US, initial jobless claims were higher than the recent trend suggesting improvements in their labour markets may be levelling off. However wage rises seem to be rising - unit labour costs were up +4.1% in the December quarter, quite a bit above expectations. Those wage increases were higher than output, so US productivity fell.

As we reported yesterday, Australia's David Murray called for new controls on their hot housing markets. Later however the RBA's deputy governor said imposing tougher lending rules and caps is unlikely to be very effective.

Moody's has overnight confirmed its Aaa soverign credit rating for New Zealand, talking up our economic performance and structure.

The UST 10yr yields held on to yesterday's gains in New York earlier today and rose another +2 bp to 2.12%. New Zealand swap rates slipped a little but also steepened. In fact the 2-10 curve is now its steepest since the beginning of the year at +27 bps. The 1-5 is only half that.

The crude oil price rose marginally today and is now just on US$51/barrel and the Brent crude price is just on US$61/barrel.

The gold price is still treading water at US$1,203oz.

The New Zealand dollar starts today substantially lower at 74.6 USc down more than 1c from this time yesterday, at 96.2 AUc which is also about 1c lower, and the TWI is down to 78.8. The RBNZ's announcement that it is looking at targeting loans to property investors for new regulation seems to have been the trigger to sell off the NZD.

If you want to catch up with all the changes yesterday, we have an update here.

The easiest place to stay up with event risk is by following our Economic Calendar here »