Here's my summary of the key issues that affect New Zealand over the long weekend with news there has been some strong labour market data out of the US.
Job growth rose solidly in January and wages rebounded, a show of economic strength that put a mid-year interest rate increase from the Federal Reserve back on the table.
The American participation rate rose and the sharply higher revisions to the previous two months underscored how strong the data is. There were 2.9 mln more people employed at the end of 2014 than at the beginning, plus another 257,000 rise in January 2015. This data was well above market expectations.
(Interestingly, employment only fell by 1,900 people in the oil exploration sector in January from December.)
More than that, hours worked rose very fast in the December quarter of 2014, up the fastest since 1998. And hourly compensation rose +2.8% pa. This is the sort of data that will have the Fed dusting off its inflation-watch manuals, and is why markets are betting the Fed may raise rates mid-year or even sooner.
In New York, benchmark UST 10 year bond yields keep have pushed higher on the labour market news and are now up to 1.96%. These rises will be reflected in local New Zealand swap rates at some point.
Greece's decision to 'reject austerity' is playing out as a dangerous gamble and the country could be out of cash before the end of the month. A request by them to raise an extra US$5 billion in short-term debt was immediately rejected by the European Central Bank. Although most people seem to be rooting for the 'little guy', its chances of winning the game of chicken they started seem slim. The new government doesn't like the 'gross indignity' of having to reform to pay back their excessive borrowing and it seems odd they want to borrow even more 'without strings'.
Data out over the weekend showed that China's trade performance slumped in January, with exports falling more than -3% from year-ago levels while imports tumbled almost -20%, far worse than analysts had expected and highlighting deepening weakness in their domestic economy.
But it did push its trade surplus to a record high.
In Brazil, the state-owned oil company is in a corruption and integrity crisis - so the government there has appointed a banker to sort it out. Seems an odd choice.
The oil price rose over the weekend on the American jobs data, and is now up to US$52/barrel with Brent crude at US$58/barrel.
On the other hand gold has fallen sharply and now at US$1,233/oz. China, for one, has sharply cut its buying.
We start this week with the New Zealand dollar about a cent higher than where it started last week. It is up to 73.5 USc, at 94.4 AUc, and the TWI is now at 76.9.
If you want to catch up with all the changes on Thursday before the long weekend we have an update here.
The easiest place to stay up with event risk is by following our Economic Calendar here »
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