Here's my summary of the key issues from overnight that affect New Zealand, with news of rising bond market risks as rates rise.
But first, the number of Americans filing new claims for unemployment benefits fell more than expected last week, offering fresh evidence that the US labour market was gathering steam, and easing concerns over last week's unusual blip.
Overnight, Greece formally requested a six-month extension to its euro zone loan agreement, offering major concessions as it raced to avoid running out of cash within weeks, but it was immediately rejected by Germany.
Greece's negotiating style is winning fans back home but alienating the EU and especially the Germans.
Japanese exports rose 17% in January from a year earlier for a fifth straight month of gains, Ministry of Finance data showed overnight in a further sign of a pick-up in international demand.
Imports fell -9% on cheaper oil.
The extreme hazards of bond markets that have low yields and huge volumes are getting some attention, finally. A rise in Japanese bond yields from under 0.2% to over 0.4% is renewing long-standing anxiety among some traders about the health of the Japan's NZ$10 trillion government-debt market. Any rise there will stress the government finances dramatically.
Also overnight, The Wall Street Journal rattled Aussie investors by quoting an S&P analyst as saying Australia is not in good enough shape to withstand a global bump and that "could put the country's AAA rating at risk".
The UST 10yr yield has risen to 2.08% today. Yesterday it rose strongly until the Fed minutes were released and then fell back sharply. Swap rates in New Zealand reflected the Fed reaction.
The crude oil price fell to US$51/barrel with Brent crude down to US$59/barrel. Record high US stocks caused the shift.
The gold price rose $10 to be back above US$1,200/oz at US$1,209oz.
We start today with the New Zealand dollar holding after yesterday's rise, at 75.3 USc, at 96.5 AUc, and the TWI is at 78.6.
If you want to catch up with all the changes yesterday 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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3 Comments
As usual I find Ambrose Evans Pritchard’s views on Greece/Germany to be interesting. Given that Grexit would seem to me to be a good if short term messy outcome for Greece, but a disaster for Germany, then AEP's following line makes absolute sense:
"Germany's leaders can't let Greece leave the euro, and the Greeks know it. They will die in a ditch to defend the euro. This is our Eastern Front, our Battle of Kursk, and I'm afraid to say that it will end in unconditional surrender by Germany," he said.
The quote by Gunnar Beck, a German legal theorist at London University.
Time will tell. Will the Germans blow their foot off to spite their face?
No need to worry about Greece.
The new Greek PM is a charismatic leader who is poised to take the world stage, is friends with the Pope, has links to Russia, is working on a Middle East peace plan.
The EU will see the Greek PM and his Finance Minister as the solution to the EU woes.
The EU will bow to Greece not vice versa.
Aussies catch hepatitis A from imported Chinese berries:
http://www.abc.net.au/news/2015-02-18/govt-demands-reassurances-china-o…
Yum yum?
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