Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the Dow hit fresh 3 year highs overnight after multi-national companies such as Ford, 3M and Fedex reported stronger than expected earnings, particularly from their international operations.
US multinationals have been able to boost profits by investing overseas in cheaper factories and by taking advantage of strong growth in these offshore markets and a weak US dollar.
However, these strong profits contrast with weak jobs growth in the US economy. There is also fresh talk the US Federal Reserve will unveil some form of third round of quantitative easing after its policy setting meeting tonight. This could include reinvesting interest payments on mortgage bonds in US Treasury bonds, essentially recycling printed money rather than withdrawing stimulus.
See more here at Bloomberg on the Dow's rise and a fall in US Treasury bill yields overnight on talk of fresh Federal Reserve easing.
Meanwhile, back in New Zealand, the NZ Debt Management Office, which manages the government's bond and Treasury bill auctions, held a tender yesterday where an auction for NZ$200 million worth of three month bills failed.
It only received NZ$135 million worth of bids and bids for the six month and 1 year Treasury bills was also weak. See the results here.
This may be because yesterday was a public holiday in Australia or there is some buyers fatigue after last week's record NZ$1 billion bond tender. See more here from Gareth Vaughan on that record borrowing and Bernard Hickey's piece on the implications of that borrowing.
Elsewhere, France's Lactalis, which owns the President brand of cheeses, has bid US$7 billion for Italy's Parmalat to create the world's biggest dairy processing and marketing group. Fonterra is unlikely enter the race. See more here at NYTimes.
Meanwhile, the New Zealand dollar rose to 80.7 USc overnight as investors sought riskier assets with higher interest rates. Prospects for continued very low interest rates in America is continuing to push money to the periphery looking for returns. See BNZ's currencies report here.
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