Here's my summary of the key news overnight in 90 seconds at 9 am, including that pleas from Spain and Italy for urgent financial aid from the eurozone to bring down borrowing costs were dismissed by Angela Merkel yet again as divisions hardened on the eve of their critical summit. The euro is trading at near six year lows against the US dollar and near all-time lows against the New Zealand dollar. Short-term national interest by everyone involved is causing the rest of the world to shake their heads. Even members of the EU who are not in the eurozone are questioning the value of EU membership.
Across the Atlantic, the signals rebounded and they were somewhat higher than expectations. US durable goods orders grew positively, and home sales were up as well.
US and UK authorities have fined giant British bank Barclays US$450 million for manipulating the benchmark LIBOR index. It seems odd to me that London authorities who have also been investigating dodgy behaviour in this index have not taken similar action yet. This fraud is likely to have cost borrowers billions.
Also in the US, California city Stockton has become the largest municipality to decide it will file for bankruptcy. It's a city the size of Christchurch about 100 kms east of San Francisco. Bond markets seem to be taking this action in its stride, but it may become a trend for some hard-pressed communities. The US local authority bond market is a huge US$3.7 trillion market so Stockton's US$700 million bond debt is only a very tiny part of this and the main loss will be taken by bond insurers, not the market itself.
In China, the focus is on policy makers there and whether they are about to announce new stimulus measures. The markets are betting they will, and stocks are up around the world. The Dow and the S&P500 are up nearly 1%, oil and gold are higher.
The NZ$ is starting today at just over US$0.791 and the TWI starts at 71.9.
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[Corrected who has fined Barclays]
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