Here's my summary of the key issues from overnight that affect New Zealand, with news of serious accusations against the culture at the big Australian banks.
But first, the US Federal Reserve said overnight that economic activity expanded from early April to late May and growth was expected to continue at a "modest" to "moderate" pace against the backdrop of declining oil and gas investment. It was a fairly rosy assessment.
American data out overnight also impressed. Their trade deficit shrank on higher exports and lower imports, mainly of oil. And the ADP Employment Report, the precursor to their Non Farms Payroll report, showed rising jobs growth.
That contrasted somewhat with the OECD who downgraded their forecast of American economic growth. Rather than 3.1% growth this year, they now see the giant US economy growing at just 2%.
In the same assessment, the OECD noted that jobs growth will pick up in New Zealand as our economy stabilises at a healthy level. But they called for more housing supply in Auckland and for "taxation of trading gains on property extended and more strongly enforced".
Europe reported slightly lower jobless levels overnight continuing a trend, but they are still at the crazy level of 11.1% on average. The range is 4.7% in Germany to 25.4% in Greece.
In Australia, ANZ has been named as one of the big banks frustrating an official ASIC investigation into the fixing of key market interest rates, in behaviour the corporate regulator has reportedly called 'absolutely appalling'.
And yesterday's Q1 GDP data showed that Australia’s economy grew at the fastest pace in a year as they shipped more minerals abroad, built more homes and bought more consumer goods. It was an upbeat surprise that sent the Aussie dollar higher. But observers doubted the Q1 result can be repeated.
In New York, the UST 10yr benchmark yield jumped even further in trading today. It is now up another +9 bps at 2.36%. This is a very dramatic rise in benchmark interest rates and is being reflected in the long end of the New Zealand swap curve and that will undoubtedly get even steeper in local trading today. Internationally, bond markets see inflation looming. There may be 'brutal' consequences for bond market investors however.
The US oil markets are lower today with the US benchmark price now back under US$60/barrel again, and Brent crude is under US$64/barrel. OPEC signaled overnight that it is set to carry on pumping oil nearly flat-out for months more, content that last year's shock market therapy has revived demand and knocked back growing competition.
The gold price is down as well, by $10 to US$1,184/oz.
The New Zealand dollar is also lower this morning, currently at 71.4 US¢, at 91.9 AU¢, and at 63.5 euro cents. The TWI-5 is at 75.4.
If you want to catch up with all the local changes yesterday, we have an update here.
The easiest place to stay up with event risk today is by following our Economic Calendar here »
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