Here's my summary of the key news overnight to keep you up-to-date over these holidays.
Firstly, we should note that the NZD has taken quite a jump overnight, up about 1c across the board. Especially, we are at a new post-float high against the Aussie at 96.1 AUc. The strength was driven by the better than expected Fonterra auction results.
And secondly we should note that long term swap rates continue to fall with the New Zealand 1-5 swap curve at a new five year low of just 20 bps and the 2-10 at just 22 bps. They are likely to go even lower given that UST 10yr yields fell below 2% overnight. More on that below.
In the US their pace of expansion is slowing, which should not be unexpected. Growth in their giant services sector slowed in December and new orders for factory goods fell for a fourth straight month in November, signs their economy lost some of its growth momentum in the fourth quarter of 2014.
China is pushing ahead with more than 300 infrastructure projects valued at over NZ$1 tln as policymakers seek to shore up growth that's in danger losing momentum.
Also, keep an eye on another unpronounceable Icelandic volcano; apparently it is about to blow, possibly spectacularly. Nor not. No-one really knows but it could also be a major Black Swan event.
Also spectacular - and closer to home - two Melbourne men have been charged with a massive mortgage fraud scheme involving more than AU$100 mln - and possibly much more. Both worked for Cigna. ASIC alleges the two were the architects of a complex scheme that used faked documents to take out home loans from the Commonwealth Bank, ANZ, NAB, Westpac and a host of other lenders.
The selloff in global oil markets continued overnight with the he benchmark US price is now just on US$48/barrel and the Brent benchmark is just on US$51/barrel. The number of rigs operating in the US is now in steady decline, with almost 100 idled in the last three months of 2014 and twice that many planned to shut down in 2015. Still, that will leave more than 2,000 pumping in North America, and another 1,300 elsewhere.
Cheering the moves lower in the oil price is the Japanese corporate sector who now see a way back to competitiveness.
Going the other way, gold prices rose again overnight and are now up to US$1,220/oz.
UST benchmark 10yr bond yields sank again in overnight trading on Wall Street and are now at 1.99% which is a new four year low. As we noted above, New Zealand interest rate swaps saw more yield falls. Now the 1-5 curve is now just 20 bps and the 2-10 is just 22 bps, both fresh 5 year lows.
The NZ dollar has taken quite a jump in the past 12 hours, up about 1c. It starts today at 77.9 USc. We are also at 96.1 AUc and the TWI is now at 79.7.
And in the virtual currency world, Bitstamp, one of the largest exchanges for trading the digital bitcoin currency, said it has suspended its service after a security breach yesterday resulting in loss of around 19,000 bitcoins.
The easiest place to stay up with event risk over the holiday period is by following our Economic Calendar here » Have a fun, safe New Year celebration.
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