Here's my summary of the key news overnight in 90 seconds at 9 am, including news the markets are cheering Larry Summers' withdrawal.
Credit markets started the week on a positive note in New York after the race to be next head of the US Federal Reserve took an unexpected turn.
Larry Summers, currently an economic adviser to the US President, announced over the weekend that he no longer wanted to succeed Ben Bernanke as Fed chairman. Summers was perceived as one of the favourites to win the nomination, so his withdrawal came as something of a surprise.
Risk assets were boosted by the news. Summers was widely viewed as more hawkish than the other main candidate Janet Yellen and he was expected to challenge the markets with an earlier withdrawal from the bond buying stimulus. If Yellen does win the position, she is expected to conduct monetary policy in a similar manner to Bernanke; in other words, loosely.
Stocks soared on the news when they opened overnight in London and New York. The Dow was up 200 points at one stage, and while it has fallen back in late trade, it is holding on to most of those gains. Gold is struggling. Oil is down sharply on the tentative Syria deal and news the Saudis have raised their output to 1970's levels. UST 10yrs yields are down again, now at 2.81% as bond prices rally.
US manufacturing output surged in August, according to a nationwide Federal Reserve survey. It was up 0.7% over July, one of the highest month-on-month growth of the year, and despite a wobbly result from the New York area.
Overnight, the IMF released some advice on the use of macro-prudential policies - broadly following and supporting the New Zealand experience. “Financial imbalances often grow in the background and under the surface of apparent economic tranquility,” the IMF said.
Macroprudential policies, such as caps on LVRs, can help contain the negative side-effects of low interest rates on financial stability, they say.
The NZ dollar starts today at 81.7 USc, 87.7 AUc, and the TWI is at 76.5.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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2 Comments
Macroprudential policies, such as caps on LVRs, can help contain the negative side-effects of low interest rates on financial stability, they say.
Cripes, the Fed, BOE & BOJ all playing the negative side of the stability ledger.
Very in depth analysis of Detroit's financial history.
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