Here's my summary of the key news overnight in 90 seconds at 9 am, including news New Zealand house prices hit a record high in June, with the median reaching NZ$372,000 in the latest REINZ data. It was the strongest June sales month since 2007. There is more detail on this story here »
In China, inflation is falling fast and has been reported by authorities there at 2.2% for June. That is a sharp dip from the rate of 3.0% in May and has China watchers talking deflation. Others also note that this may give room for China to embark on a new stimulus program.
The news from the euro zone overnight is not good. Spanish bond yields are well into danger territory above 7%, and Spanish CDS spreads are now greater than those for Ireland. Spain has been given extra time to cut its deficit, but its now all too late.
The euro zone is fragmenting faster than the EU can act. Deposit flight from Spanish banks has been gaining pace and it is not clear a euro zone agreement to lend Madrid up to 100 billion euros in rescue funds will reverse the flows, as investors fear Spain may face a full sovereign bailout.
Many banks are reorganising - or being forced to reorganise - along national lines, accentuating a deepening north-south divide within the currency bloc. An invisible financial wall, potentially as dangerous as the Iron Curtain that once divided eastern and western Europe, is going up inside the euro area.
The NZ dollar is little changed overnight and starts the day at US79.6c and the TWI is at 72.4. The New York stock market is down marginally in late trade; oil and gold are slightly higher. Yesterday did see quite big market falls in Asia, but these have not flowed through to European or US markets.
Late yesterday, Westpac announced two mortgage rate hikes, the latest in a series of rate changes from the major banks - most up, but a couple down.
We think there are still a few more changes to be announced and most of those will be responding to recent firming of swap rates.
Keep an eye on our mortgage pages for all the latest changes.
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