Here's my summary of the key news overnight in 90 seconds at 9 am, including news the New Zealand dollar has firmed to near a 1 year high of 79.6 Australian cents as a tightening of interest rate differentials made the New Zealand dollar relatively more attractive.
Long term Australian bond yields nudged down to record lows as investors looked at the prospects for slowing Australian growth after Chinese demand for iron and coal slumped. Australian investors are expecting the Reserve Bank of Australia will cut short term official rates by more than 50 basis points over the coming year, while the Reserve Bank of New Zealand is expected to hold its Official Cash Rate for at least the next year. A divergence in commodity prices is partly responsible, with the US drought driving up 'soft' commodities such as milk powder at the same time as a hard landing in China drives down 'hard' commodity prices.
Meanwhile, the New Zealand dollar was flat to marginally lower vs the US dollar at around 82.35 USc in morning trade. Appetites for 'risky' assets such as the New Zealand dollar were further reduced overnight as US stocks fell 0.5% and European stocks fell 2.7%. See more here at Bloomberg.
There are renewed fears that the massive stimulus now being applied by the European and US central banks will not be enough to restart global economic growth.
Also, there are fresh fears about the European financial crisis. There were new riots in Greece and Spain against austerity measures designed to keep those countries in the Euro-zone. Spain is expected to announce later this week a fifth austerity package in nine months. Tensions in Spain have risen after Catalonia announced elections seen as a defacto vote for independence. See more here at Reuters.
All this concern about Spain saw its 10 year bond yield rose over the 6% level widely seen as unsustainable for Spain's debt position. See more here at Bloomberg.
Elsewhere, doubts also arose over a Spanish bank bailout that most had thought was done and dusted. Germany and Spain said they wanted Spain to bear more of the bank losses, rather than spread them around Europe. Also, see more here from Reuters about a dispute on bailing out Greece again.
In the United States, Philly Fed boss Charles Plosser also said the Fed's third round of quantitative easing was unlikely to boost economic growth or hiring.
No chart with that title exists.
We welcome your comments below. If you are not already registered, please register to comment
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.