US confidence high; Abe wins re-election in landslide; China sees lower growth; bond yields slump; oil prices dive again; gold price stable; NZ$1 = 77.7 USc, TWI = 78.3

US confidence high; Abe wins re-election in landslide; China sees lower growth; bond yields slump; oil prices dive again; gold price stable; NZ$1 = 77.7 USc, TWI = 78.3

Here's my summary of the key issues that affect New Zealand over the weekend with news of a big voter endorsement for Abenomics.

But first, American consumer sentiment rose in December to a near eight-year high on improved prospects for jobs and wages and on lower petrol prices, a key survey released over the weekend showed. It was at its highest reading since January 2007, higher than many other recent polls.

In Washington, the Senate completed congressional approval of a controversial US$1.1 tln Federal budget which will now go to President Barack Obama for signature.

In Japan, exit polls show Prime Minister Abe’s ruling coalition is on track for a sweeping election win - more than 300 of the 475 seats contested - with the premier claiming a mandate to continue with his economic policies. But less than 40 mln people cast their votes out of the 105 mln registered.

In China over the weekend, economists at the central bank said they expected growth there to be 7.4% this year and 7.1% in 2015. Other data showed that industrial output grew by just +7.2% pa in November.

Benchmark UST 10 year bond yields ended with a big-time slump on Friday in New York and are now at 2.08%. The 1-5 NZ swap differential is at a seven year low, the 2-10 curve similarly. They haven't been this low since before the start of the GFC. Meanwhile, junk bond yields rose, something that may hurt Graeme Hart's Reynolds empire.

Later this week - on Thursday - the US Federal Reserve will meet and it is now expected they will end their two-year pledge to keep interest rates close to zero for a "considerable time". Depending on the nature of their signals, this could have a major impact on world interest rate expectations.

The oil price dived again on Friday and is now at US$57.50/barrel and the Brent price is just on US$61.50/barrel. A bearish IEA report drove it down. An inability to limit output, along with the ending of fuel subsidies in a number of countries were the main factors they said. American oil drillers shut down the most rigs in almost two years on the low prices and growing competition from suppliers abroad.

In Peru, international negotiations to reach a climate-change deal over the weekend in which almost 200 countries agreed on a way to draw up plans for reducing carbon-dioxide emissions after 2020. But some say the deal is close to meaningless. Climate change negotiators can kick the can more expertly than US congressional budget negotiators.

The gold price also fell and is now at US$1,222/oz level.

Meanwhile our currency fell but only minorly. We start the week at 77.7 USc, 94.4 AUc, and the TWI is at 78.3

If you want to catch up with all the changes on Friday 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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