Here's my summary of the key news overnight in 90 seconds at 9 am, including news European Central Bank President Mario Draghi said overnight he was ready to fire his 'Big Bazooka' of unlimited bond buying in Southern Europe as soon as Spain formally asked for a bailout.
This reassured stock markets, who are hanging out for the central bank to calm down the European debt crisis and try to restart growth. See more here on Draghi's comments at Bloomberg.
However, Spain is prevaricating on whether and when to ask for a bailout. Its Economy Minister said overnight a bailout was not needed. Spanish bond yields edged up on the doubts. However, most expect Spain will eventually capitulate, including the President of Spain's restive Catalonia region, which is agitating for independence.\
Here's a useful Ambrose Evans Pritchard summary of why Spain is so reluctant to ask for a bailout. It fears harsh rescue terms from the likes of Germany, Holland and Finland.
Spanish bond yields rose overnight. The 10 year yield rose 9 basis points to 5.90%, which is dangerously close to the 6% mark seen as unsustainable. See more here at Bloomberg.
Also there are doubts within the European Union that Spain's targets are credible. See more here at Bloomberg.
The Dow is closing around 0.6% higher as investors hope for the 'Big Bazooka' to be fired and on news that a rise in US jobless claims was slightly less than expected. See more here at Bloomberg.
Meanwhile, the International Monetary Fund's Chief Economist Olivier Blanchard has said he expects the global economy will not return to regular growth until 2018, suggesting a 'lost decade' after the beginning of the Global Financial Crisis. See more here at The Guardian.
All this concern about a slowing global economy and a return to recession in Europe matters for New Zealand because it reinforces expectations of lower interest rates for longer. Financial markets are now expecting the Reserve Bank of New Zealand will cut the Official Cash Rate by 0.25% over the next year. Markets also expect interest rates to stay at or near these record lows for another two years. See more here in our Swaps rates charts.
Tonight markets will be watching US non-farm payrolls jobs data for September, which is expected to show 115,000 jobs were created in September. The number is crucial for the outlook for the world's largest economy and important for President Barack Obama's re-election chances, particularly in the wake of yesterday's debate with Republican candidate Mitt Romney, which media pundits said he lost.
Also watch later today for news from the Bank of Japan, which is under heavy political pressure to print more money to try to weaken the yen and help Japanese exporters.
The New Zealand dollar was broadly unchanged overnight after the ECB and the Bank of England left their rates on hold. See more here on currencies moves on our site from BNZ's Mike Jones
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