90 seconds at 9 am with BNZ: Aussie inflation lower than expected; Fed holds rates as expected; gold and oil jump unexpectedly

Here's David Chaston's 90 seconds at 9 am summary of overnight financial news in association with Bank of New Zealand, including news that it's all about official rate decisions today.

Firstly, we have the NZ rate decision at 9am which is being covered by Bernard Hickey in Wellington.

Australian inflation for December was lower than expected, leading some to think rate cuts are the next RBA action. But core inflation there was higher than expected, and the markets may be having a re-think expectations about the next move on February 7.

The US Fed had a rate review overnight and kept things unchanged, as expected. But it said it planned to hold short-term interest rates near zero "at least through late 2014" - so its low-rates policy is to stay for at least another 18 months. But the US economy is recovering only slowly, and it is reiterating that it faces significant downside risks even as growth picks up.

The overnight European news was mixed. The British economy shrank more than expected in the fourth quarter, while German business confidence rose in January, indicating its economy is still growing.

Back here, manufacturing confidence ended the year on a positive note. The PMI was in expansion territory, with manufacturers feeling positive overall about their prospects - except perhaps in the Wellington region. And, larger maufacturers, the ones more likely to be exporters, are more positive than smaller ones. Clearly most New Zealand manufacturers have long-since learned to live in such a way that the exchange rate is less of an issue for their businesses.

The day starts with the NZ$ at US$0.8120, EU0.6220 and AU$0.7680.

Gold was in the doldrums overnight but in the last few minutes has suddenly spiked but over $50 per ounce and is now over US$1,700/ounce. Something to keep an eye on. Oil has also rallied strongly in late trade, but is still below US$100 per barrel.

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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Gold Extending Gains On Realization Fed's Only Option Is CTRL+P
What was that argument about gold having no yield?  Something about how bonds provide a fixed income etc, hows that going with ZIRP?  Those negative real returns sound like a safe bet.

Everything You Wanted To Know About Credit Trading But Were Afraid To Ask

George Soros on Europe. I really like George Soros. He actually understands a) how markets work, and b) the importance of what he calls "open society", which is a more precise way of thinking about what underlies democracy.
He makes an interesting link between economic decline and social disintegration, the danger that a period of economic difficulty causes us to fight among ourselves. Fighting amongst ourselves then leads to further economic difficulty and a downward spiral takes over.

You have to stand back and see the sloping deck, upon which that fight is happening. Murdoch will be firing his revolver into the air any time now.

Treasuries rallied, pushing the five-year note yield to a record low, after Federal Reserve officials unexpectedly said their benchmark interest rates will stay low until at least late 2014.
And just to highlight the ease of legalised wealth transfer operating within our society, Goldman was touting short sales of US ten year treasuries on Monday. Read more.
I guess having a placeman at the NY Fed is not an impediment, except to those on the outside.

David, you gonna bang up a link to teapot tapes or not?  Herald says all you media types got the tip off.  What about us plebs?  Just give us a hint.

Local moneylender Frufru Lagarde says the stallholders have had a whip-round, but Big Charlie Dalloran is threatening to get all unnecessary unless they pay more. Frufru addresses the locals in Angie’s own pub – liberteee -  and says Angie, Slick Narcozy and Dave Camerlot should stump up some more before someone gets ‘urt.

"Current rates rises across New Zealand are "unsustainable" and a burden on households and businesses, says Local Government Minister Nick Smith.
Smith has warned local government mayors and chief executives to focus on getting better value for ratepayers in his annual speech to Nelson Rotarians."
Thanks Nick Smith...I forgot to buy a bag of fertiliser today and then you come along with some free quality BS....no wonder they made you a Minister!
Peasants will know Smith is just out for headlines that suggest he and the govt are all for lower council rates...lower council boss salaries...less stupid waste...and hey opening his gob in Nelson is a three for one act...some idiot Nelsonians thinks he's god...the rates claptrap makes the govt look good for no effort and best of all it takes the Media attention away from the splurging waste going on in wgtn where senior state servants are wallowing in half million dollar salaries and then some...

Extreme salaries are coverable and inflate-away-able in a growth paradigm.
As I've pointed out here once or twice, Wally, the historical expectation that rates - which cover physical infrastructure largely - would track average incomes, is history now. Costs will rise exponentially in comparison with incomes. Its the same reason that precious historical 'median multiple' means diddly-squat. 
The sinking is simply happening faster than you can chase the fat-cats off the deck. Put your lifejacket on..........

But but PDK the fatcat salaries and bonuses in the state sector and local govt sector seem to only be "inflate..upable"
Pretty soon one million dollar pay packs for the Sir Humphreys et al. will be as common as cowdung on a dairy farm.

Wolly, grab an earful of that teapot tape, and learn why the opinions of the elderly are not considered important to Mr Key.

Can't do Moa man...speakers spat the dummy and I lost the bloody wire that goes from the screen to the big box...but I got a fair idea of what they said...so too do people who can lip read.
Smith and Key have less than three years on the clock....the memories of Clark and who was it are fading fast...Shearer is the new face on the posters.....

Why are spot silver volumes so low. Since Jan 20th they have been a fraction of normal.
Gold also looks low.

"Mr Shearer promised that the changes he had been talking about since he became leader would be noticeable over the next few weeks." herald
Delete "weeks"....insert..."Months"
Delete "Months".....insert "years"
Delete "years"....insert "Decades"

The house sits next on Tuesday, February the 7th  officially for the first time in 2012.
Wolly - just listen what D. Shearer, the upcoming NZleader, has to say about “turning the next page”.

Walter you poor old thing...Parliament is just a front to keep the peasants believing they have a democracy...it's humbug in fancy dress.
Shearer is busy attending to his fancy dress. Expect nothing of any consequence and you will not be disappointed.

..... doesn't say much about Labour's forward thinking if they're still promising to " turn the next  page " , ....  in the digital era ......

I will hold off until it becomes clear whether Shearer is a hollow man or someone able and willing to do what Key and Co have failed to do. ie he has to stand up and tell the nation that under him Labour will wind back the welfare state on every front and reduce the size and scope of govt, both in cost and dominance in the NZ economy....I'm not holding my breath.

Wolly - you poor old thing, sadly enough the parliament is about the only place where the NZpublic has an insight view about daily politics. Politicians public appearances are rare and end up mostly in propaganda and lies. Real NZ- hardtalks – with politicians – have you seen/ experienced one  ????????
Good on you Wolly – what we heard so far, especially from the media, is speculation. Reshuffling an opposition party under a new leadership needs time and a comprehensive party policy.
I’m convinced D. Shearer acts on economics and leads New Zealand on a better course – but that is speculation too.