David Chaston details the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news that the New Zealand dollar is falling steadily and is now at its lowest level in seven months on a TWI basis. It is also under 76 cents Australian and under 77c American.
With politicians out of the way and technocrats in place in both Greece and Italy, there was hope that the right kind of individuals were finally in place to tackle the painful and challenging budget problems in both countries - that was the storyline anyway.
But the market is quickly judging that Europe's problems are more systemic and less about personalities. Not only did Italian and Spanish bond auction yields soar to unsustainable levels, French yields over German levels pushed out to record levels. Europe is headed for recession, as the latest growth data shows.
Across the Atlantic, growth data is much better. Retail sales are rising as as Americans spent their dollars at electronics stores and on the Internet.
On Wall Street, the news was all about the clearing of the "Occupy" protesters overnight - although they are trying to reassemble, even retake the park where the protest started.
On the markets meanwhile, the Dow is up 0.5% holding well above the 12,000 mark. It's added 1,000 points from the levels we saw in the three months August to October. Pretty impressive really. US oil is rising and about to push through the $100/barrel mark.
In China, the IMF is warning authorities there that they need significant banking reform to head off a "steady build-up of financial sector vulnerabilities". China is doing well, but struggling to find a balance for its fairly heavy hand in regulation. The worry is that it is their banking system into which the unresolved economic issues get pushed into.
And finally, here at home we have the latest Fonterra GlobalDiaryTrade auction results and there is a positive surprise - prices rose 2.6% from the previous auction, the largest rise in the last ten auctions.
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Don't know what to spread on your toast for breakfast?
Sovereign Debt Yields and Spreads Soar Everywhere: Belgium, France, Italy, Spain, Ireland; Major Problem List is Every Country but Germany; Belgium Spread Inverts Significantly
The ECB, IMF, EMU, and EU are on the verge of multiple emergency meeting, if indeed meetings are not already underway. A quick check of the following bond spread tables and today's yield action will explain.
Across the board, yields and spreads widened significantly today. Note in particular the jump in the 2-year bond yield of Belgium.Also note the inverted spread situation for Belgium.
The spread to German 2-year bonds is 3.49 while the spread to 10-year bonds is 3.13.
Dutch PM reckons it should be possible to expel some members from the euro currency union - http://www.guardian.co.uk/business/2011/nov/15/eurozone-crisis-countrie…
There is some good news here, with our dairy export prices holding well coupled with a drop in the dollar.
"Rises in the New Zealand dollar have cost exporters approximately $6.6 billion over two and a half years according to the New Zealand Manufacturers and Exporters Association (NZMEA). "
“We have heard from the Government and the Reserve Bank that it is too hard to make policy changes in this area, but a $6.6 billion impact shows that intransigence comes at a massive cost. To put a scale on this, the sale of Air New Zealand and the energy State Owned Enterprises is projected to raise $7 billion as a one off."
http://www.interest.co.nz/opinion/56740/only-way-improve-prosperity-sustainable-manner-improve-competitiveness-says-michael-en#comment-655055
Kiwis = lions led by donkeys.
Cheers, Les.
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