Here's my summary of the key news overnight in 90 seconds at 9 am, including news of widening economic disparity building up between the US and Europe.
The American economy rebounded +4.2% and more strongly than initially thought in the June quarter with a larger part of the growth driven by domestic demand. The increase primarily reflected positive contributions from personal consumption expenditures (a key Fed measure), private inventory investment, exports, nonresidential fixed investment, state and local government spending, and residential fixed investment. Federal government spending restraint kept it lower than it would have been.
In their housing market, the number of contracts signed to buy previously owned homes rose in July at a level much higher than was expected, a sign that steady job growth is supporting a rebound in housing demand.
And US initial unemployment claims continue to trend lower.
But across the Atlantic, overnight borrowing costs in euros fell to a negative level for the first time as the ECB’s penalty charge on deposits damped money-market rates and yields in the region continued to fall.
Euro-area economic confidence fell more than forecast, Spanish consumer prices dropped the most in five years and German unemployment unexpectedly rose in a burst of data backing Mario Draghi’s warning that more stimulus may be needed.
The EU has also announced emergency subsidies for their dairy farmers who have been hit by the Russian ban on food imports from the EU.
Meanwhile, in the USDA monitoring of dairy prices out this morning, European prices have fallen sharper and harder than Oceania prices, but they are generally still higher than prices New Zealand can access. Milk powders are especially hard hit.
Markets have taken fright following the Russian invasion of parts of the Ukraine and the worsening EU economic situation, with a quick move to safe haven assets.
Yields fell everywhere with the UST 10yr benchmark bond yields lower again today and are now at only 2.33%. That's the lowest level so far this year.
The US oil price rose marginally at just over US$94/barrel. Brent is basically unchanged at just over US$102/barrel. Surprisingly, given the geopolitical risks, gold had only a small rise overnight and is now at US$1,289/oz.
We start today on the currency front with little change from yesterday. We are now just above 83.7 USc, 89.6 AUc, and the TWI is at 79.0.
If you want to catch up with all the changes yesterday we have an update here.
The easiest place to stay up with today's event risk is by following our Economic Calendar here »
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