Here's my summary of the key issues from over the long weekend that affect New Zealand, with news of concerns over Australia's credit rating.
But first, the April PMI reading for the giant American service sector remains very positive showing it expanding in a healthy manner. Business activity and incoming new work are both increasing at strong rates in April. In fact, the survey recorded the sharpest rise in service sector payroll numbers since June 2014. It also recorded that cost inflation rose to a six-month high.
The Fed will notice, although it will meet later in the week, and after that release its own preferred measure of inflation in the USA economy. And economists only see a very modest rise for that index.
Over in the US manufacturing sector, purchases of US durable goods jumped by +4% in March, the largest gain in eight months. This comes after this same data slipped by -1.4% in February. But a closer look at the March detail reveals that businesses kept pruning their investment plans. The result was led by a big jump in demand for commercial aircraft. Outside of that however, factory orders fell for a sixth straight month.
In Europe, the weekend negotiations between the EU and Greece were a disaster for Greece; they managed to burn off any sympathy they had and left the EU fuming at the intransigence and lack of reform progress. This morning, the Greek government announced it had changed its negotiating team, removing their lightening-rod finance minister away from the front line. It is too early to know whether this represents a change of heart by Athens or is just a stalling tactic.
In Australia, the warnings over the consequences of a coming sovereign credit rating downgrade and subsequent downgrades to bank credit ratings are growing louder. Should these occur, that will raise the cost of funding for those banks and that will flow over to our main banks.
Back in New York, the UST 10yr benchmark yield is marginally lower today at 1.93%. But the New Zealand swap curves are definitely steepening, at their strongest slope in six weeks.
The US oil price remains at about US$57/barrel, while Brent crude is up to US$65/barrel in trading earlier today, mainly on expected rising international demand.
The gold price has shot higher overnight and now trades at US$1,205/oz. At one point yesterday it had fallen to US$1,175, so that is a $30 gain in 24 hours.
After a brief dip over the weekend, the New Zealand dollar starts today rising, although a little lower than where we left it on Friday. It is at 76.4 US¢, at 97.3 AU¢, and 70.2 euro cents. But the TWI is still very elevated at 80.7.
If you want to catch up with all the local changes on Friday, we have an update here.
The easiest place to stay up with event risk is by following our Economic Calendar here »