90 seconds at 9 am with BNZ: S&P 500 slumps 2.5% on fears America, Europe headed for triple-dip recession; European debt crisis back on; Milk powder price falls

Bernard Hickey details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news the S&P 500 fell more than 2.5% overnight on renewed fears the US and European economies are headed into a triple dip recession.

See more on the US stock market's slump here at Bloomberg.

Markets ignored Barack Obama's signing of a bill to raise the US Debt Ceiling on the last day possible before America's government ran out of cash. See more here on the debt deal at BBC.

Manufacturing output figures for America, Europe and China in recent days have all suggested a slow down in activity growth. Second quarter US GDP figures on Friday were disappointing and figures out overnight showed US consumer spending fell 0.2% in June while income rose 0.1%. See more here at BBC.

This reinforces the central problem in the indebted developed economies of deleveraging dragging on growth for years to come.

There is renewed talk that the US Federal Reserve will roll out a third round of bond buying known as quantitative easing (QE III). See more here at Bloomberg on QE III talk. This helped push the 10 year US Treasury yield down to 2.6%. See more on the fall in US Treasury yields here at Bloomberg.

Gold hit a fresh record high of US$1,647/oz on the recession, financial turmoil and money printing fears. See more here at Bloomberg.

This move to take risk off the table globally saw the New Zealand dollar fall briefly under 87 USc.

Also, fears of a sovereign debt crisis returned to Europe. There are renewed worries about whether Spain and Italy can continue to service their high government debts as their economies also slowed.

Italian and Spanish bond yields spiked to Eurozone highs and their spreads to German bund yeilds, a key measure of nervousness, also rose to record highs.

Italian 10 year bond yields rose over 6.25% and are getting nearer a point where the government won't be able to afford to access the bond markets. See more here at The Telegraph. A crisis meeting was called overnight because Italy's government is due to run out of cash by September if it cannot access bond markets. See more here at Reuters.

Spanish bond yields spiked to 6.45% or 4% above German bunds. The Prime Minister cancelled a Summer holiday to deal with the crisis. Spain will run out of cash by February if it cannot access bond markets. See more here at Bloomberg.

There are reports European money markets are again beginning to freeze because of the uncertainty. See more here from Ambrose Evans Pritchard at The Telegraph.

Meanwhile back here, the price of milk powder sold in Fonterra's fortnightly internet auction overnight fell a further 1.3%. This extends the fall in prices to 21% in US dollar terms since March 1. This is a double whammy for farmers who have seen the New Zealand dollar rise 17% vs the US dollar over the same period. See the full Fonterra auction results here.

The New Zealand dollar strengthened vs the Australian dollar to 80c late yesterday after the Reserve Bank of Australia held its official cash rate at 4.75%. Markets now see a good chance the next move by the RBA will be a cut as its domestic economy struggles with high household debts and falling house prices, despite the booming mining sector.

See more here at Bloomberg.