Here's my summary of the key news overnight in 90 seconds at 9 am in association with Bank of New Zealand, including news US Federal Reserve Chairman Ben Bernanke told Congress overnight the central bank was comfortable with its existing level of stimulus.
The Federal Reserve has previously pledged to keep interest rates near 0% until 2014, but many had expected it would also undertake a third round of Quantitative Easing or money printing known as QE 3. Bernanke's comments overnight were interpreted as meaning this QE 3 was now less likely. See more here at Bloomberg.
Gold fell US$75/oz to US$1,709/oz as the comments reduced expectations of money printing made gold less valuable in the eyes of investors looking for harder currencies than the US$, which rose in response. See more here at Reuters.
US stocks fell slightly and US bond prices also fell, which meant yields rose. See more here at Bloomberg.
Meanwhile, the European Central Bank lent a further €529 billion to 800 banks for 3 years at 1%. This was the ECB's second Long Term Refinancing Operation (LTRO). The first LTRO just before Christmas dumped €489 billion into Europe's banking system, helping to calm down stressed European bond markets.
Many of the banks promptly re-lent their long term funds to their own governments at slightly higher interest rates, collecting a handy profit on the way through and easing the short term stress for Southern European governments. The 'lolly scramble' was slightly bigger than expected.
However, European stocks finished marginally down on the day, dragged lower after Bernanke's comments.
Meanwhile, the New Zealand Institute of Economic Research (NZIER) issued a slightly downbeat economic forecast for this year and 2013, seeing growth of 1.5% and 2.4% respectively.
It sees no need for the Reserve Bank to hike the Official Cash Rate until the first quarter of 2013, which is later than most other economists, who see a late 2012 hike. See more here in Alex Tarrant's article.
The New Zealand dollar rose as high as 84.6 USc overnight, but the comments from Bernanke, which strengthened the US dollar vs other currencies where central banks are not printing, saw the kiwi drop back down to around 83.7 USc.
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