Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the Reserve Bank of Australia has held its official interest rate at 4.75% and suggested it will leave it there for some time.
The RBA is dealing with the inflationary pressures from the biggest mining boom in a century, but says it can rely on a strong Australian dollar and big mortgage rate increases from the banks to help it control the economy.
Our Reserve Bank is also widely expected to hold our Official Cash Rate at 3% at 9 am on Thursday. The focus will be on when it is likely to increase the OCR again. Economists are saying the next hike is likely either in March or in the June quarter, while markets are inclined towards a June quarter hike.
Meanwhile, US President Barack Obama has agreed a compromise proposal with congressional Republicans to extend tax cuts for both middle income and high income Americans. Extending tax cuts was a key issue in the recent mid-term elections. Democrats are unhappy that the richest Americans will continue to receive tax cuts, making it much tougher to return the US budget to surplus.
Republicans and the markets are happy that the tax cuts may boost their wealth and potentially trickle down to the economy broadly.
However, the yield on the US 10 year Treasury bond rose 19 basis points to a five month high of 3.12% on fears the US will find it more difficult to service its debt and after a poorly received auction of new debt.
Meanwhile, the price of Gold rose to a fresh record over US$1,430/oz on fresh concerns about a third round of US quantitative easing and fears about the European debt situation. Gold investors are worried that money printing on both sides of the Atlantic undermine the value of currencies, pushing investors into hard assets that might hold their value.
Ireland's new austerity budget is being put to a vote later today. It includes pay cuts for the PM, ministers and senior civil servants and new stamp duties on property taxes.
Meanwhile European leaders have rejected the idea of increasing the size of the European bailout fund and are instead relying on the European Central Bank buying bonds to ease stress in the markets.
The price of oil also rose to US$90/bbl as demand for diesel from China remains strong and a cold European winter increases demand for heating oil. However it dipped back in later New York trade.. The price of copper hit a record high.
The New Zealand dollar was steady around 76 USc.
Closer to home, Stuff reports that receivership is possible for Pike River Coal.
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