Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that US President Barack Obama has proposed spending US$3.7 trillion in the coming fiscal year.
Only US$2.1 trillion of that is supported by taxes and other revenues. The remaining US$1.6 trillion or 10.9% of the budget will be borrowed.
Republicans have attacked the plan and called for more aggressive spending cuts. Obama is proposing to reduce deficits by just US$1.1 trillion over a period of 10 years.
This is widely seen as unsustainable in both political and financial terms.
A battle is looming in Congress over Obama's plan to lift the US government's debt ceiling from its current US$14.3 trillion.
If it is not lifted, the US government would not be allowed to borrow more and would have to either default on its debt or stop spending.
This political drama in America matters for New Zealand because any budgetary or funding crisis in America is likely to lift longer term interest rates globally.
US government interest costs are expected to triple to 3.1% of GDP by 2016 as the US government borrows a further US$4 trillion over the next four years.
Debt servicing costs will rise to 82% of America's budget deficit by 2016 from 12% last year. This compares with Portugal at 69% now.
Yet, astonishingly, the US 10 year bond yield actually fell overnight by 2 basis points to 3.61%, while the 30 year Treasury bond fell 3 basis points to 4.66%.
The US Federal Reserve is still buying some of these bonds, effectively printing money.
Meanwhile in New Zealand, there were mixed signals on the health of the economy.
Retail sales in the December quarter were weaker than expected, but Freightways -- an economic bellwether -- published mildly positive results with 9% growth in volumes.
But it said it was cautious and was not seeing broad strength in activity.
See more here in Freightways' result.
The New Zealand dollar was mildly weaker over the last 24 hours after weak retail sales figures and some encouraging signs of recovery in the US economy.
It fell as low as 75.5 USc overnight.
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