Holiday briefing for Wednesday, December 29, 2010

Holiday briefing for Wednesday, December 29, 2010

It may be the holiday break, but in the rest of the world, business goes on.  Here is a quick snapshot of some key news and data overnight.

China raised its interest rates on Christmas eve by +0.25% to 5.81% for lending, the second time it has done so in eight weeks. It is seriously worried about runaway inflation. It also lifted its benchmark deposit rates by the same amount, to 2.75%.

Japan's second largest life insurer has agreed to buy Tower Australia for A$1.2 billion.

US equities rose in their largest December rally in over ten years on signs of growing global demand, and rising commodity prices.

China cut its export quotas for rare-earth minerals by 11% for early 2011, exacerbating a global shortage. These minerals are used in smart-phones, hybrid cars - and guided missiles.

Demand for 5 year US Treasury bonds was at its lowest level since June.

Southern Cross Building Society has increased most of its term deposit rates, bringing them in line with the Marac TD rates.

The cost of crude oil is on the rise, and now sits at its 52 week high. In fact, airlines are being tipped to add fuel surcharges again as the cost of jetfuel surges.

The NZ dollar has spiked this morning to as high as US$0.76, 'benefiting' from another push higher in the on-going commodity price boom.

Here are some key benchmarks:

            ---   52 week  --  
    Today   yesterday   high low  
     --------    --------   --------- ---------   
FX rates NZ$1=US$ 0.7547   0.7499   0.7964 0.6584  
  NZ$1=AU$ 0.7473   0.7472   0.8212 0.7408  
                 
Gold in US$ 1,380   1,373   1,421 1,058  
  in NZ$ 1,829   1,832   1,877 1,507  
                 
Copper in US$ 9,391   9,270   9,414 6,091  
  in NZ$ 12,443   12,362   12,671 8,951  
                 
Crude oil in US$/bl 91.45   91.01   91.45 70.15  
  in NZ$ 121.15   121.36   121.36 101.30  
                 
US Treasuries 30 yr bond 4.49%   4.41%   4.78% 3.61%  
              2.62%  
Dow DJIA 30 11,587   11,555   11,591 9,614  
                 

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

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Isn't the 52 week low for the 30 year more like 3.62%? (Back in August).

Just checked, 3.61% in late August 2010.  2.62% is the 2 year low in December 2008 not the 52 week low.

You are right [of course]. Thanks. My min/max had the wrong range.

Aussie property lenders getting desperate? Oh dear....

"...Westpac via St George–is now allowing potential borrowers to treat their rental payments as “evidence of genuine savings” when applying for a home loan....It will, they state, enable Australians who currently can’t afford to buy a home–because they can’t save a deposit–to do so."

http://www.debtdeflation.com/blogs/2010/12/23/loan-standards-drop-to-keep-the-bubble-afloat/

 

A sure sign they have exhausted the demand side. Their bubble must be going.....will we hear the bang?

ooch that does not sound good. if cant save any deposit then should not buy a house. What happens when value drops 10 percent , no capital, loose your job, um sounds like Amercia all over again. Ozzie may be worst as they did'nt really have any negative growth so are thinking they have come out recession really well. Bang may well be heard and felt here, considering our banks are their banks.

It would mean the aussie parent bank taking the ice cream off the NZ baby bank...goodbye profits...and capital...hello higher rates...and losses....mortgagee mayhem....Bolly triggering his nuclear option....media lying like buggery promising all is well....bank collapse on the cards...deposit takers told to get stuffed by covered bond owners who now come first in line for capital........

The trick will be getting your savings out of the bank before the govt does a midnight fart and locks up all deposits...oh yes they bloody will.

On the Australian subject...the Sydney Morning Herald is worth a read...There are more commentators now in Oz not so confident about their property market & China...just seems to be a realisation coming through that 2011 may be a rocky year for them...oh and us too...

the rain in spain is mainly on the plain --in queensland it,s bloody everywhere  --thery,re saying the price of produce is set to increase 50%---doe,s nz import much fresh food from aus?also insurance costs just went up again i guess---does,t bode well 20011--the ist 2-4 months are going to be had yakka methinks

http://www.news.com.au/national/floods-deal-6bn-blow-to-economy-as-1000-evacuated-in-queensland-deluge/story-e6frfkwr-1225977695312