Here's my summary of the key news overnight in 90 seconds at 9 am, including news of a new global economic forecast from the World Bank.
They say we should expect slower but less volatile growth in the coming months and years as risks from the financial crisis in Europe fade and emerging economies adapt to softer commodity prices and the prospect of rising interest rates. They say there’s a growing recognition that this is not the after-effect of the crisis; "It is a new normal."
US retail sales rose more than expected, and jobless claims were lower than expected in data out overnight in America. Together these have built stock market optimism and equities are up nearly 1% in mid-day trade.
At the same time, one of the biggest auctions of 30 year US Treasury debt - a massive US$13 billion - was held resulting in a yield of 3.355%, its highest in more than a year. Bid-to-Cover ratio was less than 2.5x, quite low but not a record low. To give you an idea how big that issuance was, New Zealand's total gross annual issuance is about half that - for a whole year and over every maturity.
In Australia, data out yesterday showed that employment rose in May, somewhat against expectations, and unemployment fell as the job market withstood a weaker domestic outlook. Markets have pushed back interest-rate cut bets. The main effect of their slowdown on the job market there has been the working of less hours, rather than job losses.
There is more drama in Japan. The Nikkei stock average fell into bear-market territory, ending one of the biggest and fastest bull markets in world history. Stocks had risen 80% in six months, but the gains are evaporating now in a series of violent market swings. Reform in Japan is bringing very unstable markets.
Around the world, good weather conditions are about to result in record cereal crop harvests. The FAO says output could be up as much as 6.5% and prices will fall and stocks will be at record levels. It also says that meat and dairy production rises will be at significantly lower levels than increases in demand.
The NZ dollar rose sharply again overnight and starts today at 80.4 USc - that's a 2.5% rise for the week - 83.8 AUc, and the TWI rose to 74.4. The NZ dollar has continued to rise against the US dollar and is now above 81 USc.
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