Here's my summary of the key news overnight in 90 seconds at 9 am, including news the Chinese central bank is making an effort to stabilise credit markets.
The statement it issued late yesterday helped calm the nervous market conditions that it was partially responsible for. It said it is still the lender of last resort, will provide liquidity support to banks that have temporary funding shortages and will apply measures to maintain the stability of money markets.
The tone of the statement marked a clear contrast with its previous comments, where it stressed that the onus was on the country's largest banks to stabilise the situation. Credit markets rallied on the news, though credit spreads still have a long way to go to recover all of the ground lost during the recent turmoil.
In the US, house prices are rising, durable goods orders rose more than expected in May and a gauge of planned business spending increased for a third straight month, the latest signs of a pick-up in American economic activity.
As a result, equities are higher in mid-day trade in New York, oil is lower, gold is holding at low levels, but most other commodities are up. The big exception is for natural gas prices, which have plunged almost 2.5% over the past few hours. Not sure why yet.
A new threat is emerging for big international banks from the recent surge in bond yields. Banks have built giant portfolios of liquid securities, partly at the behest of regulators and also because they have not found better opportunities to lend a flood of deposits. Rising yields are decreasing the capital value of these holdings. Under new Basel capital rules, unrealised losses in these 'available for sale' portfolios will hit banks’ equity capital hard.
The NZ dollar starts today at 77.4 USc which is about a one year low, 83.5 AUc, and the TWI is at 72.96 and that is its lowest level since November 2012..
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.