Here's my summary of the key issues from overnight that affect New Zealand, with news today is the day the day when the RBNZ reviews the OCR and its monetary policy settings.
But first, in the US their economy was probably not as weak as has been reported in the first quarter, with comprehensive data out overnight showing stronger consumer spending than previously estimated. Consumer spending could be bumped up to as much as a 2.2% annual rate when the BEA releases its final Q1 GDP result on June 25.
And the improving US economy is resulting in more tax revenues collected by the Federal government and in fact their May budget showed a much better than expected -36% decline in the monthly deficit, year-on-year. The improving American jobs scene is also supporting a strong rise in mortgage applications.
In England, their central banker has hit out at the 'ethical drift' of the London financial markets and criticised his own institution for being weak, slow and ineffective in managing the ethical failings of those they regulate. His mea culpa was in tandem with a UK Government promise to crack down on such behaviour and raise the penalties and punishments to 'criminal' levels. About the best you could say about this latest approach is 'better late than never'.
In the on-going TPP negotiations, newly leaked details dated in December shows that the US is no longer seeking protection for pharmaceutical drug prices.
Locally, the ANZ management and economists have been calling for a cut in the OCR, which will be reviewed by the RBNZ at 9am this morning. But they forgot to give their memo to their Aussie boss: he has said overnight that low interest rates create asset price bubbles and that they are a severe credit risk to banks.
Back in New York, UST 10yr benchmark yields are climbing yet again today, this time by +6 bps to 2.48%. This will add further to a steadily steepening domestic rate curve.
Also up are US oil markets, with the US benchmark price now at US$61/barrel, and Brent crude is at US$66/barrel. Oil traders are scrambling to secure crude in the US Midwest and have pushed prices for crude in the Bakken fields to a near premium for the first time in two years, a rally stoked by record refinery runs and an unprecedented slump in Canadian imports to the US.
The gold price is also up, today by +$9, to US$1,186/oz.
However, this morning the New Zealand dollar is only marginally higher than this time yesterday, currently at 72 US¢, at 92.8 AU¢, and at 63.6 euro cents. The TWI-5 is now at 75.6.
We will have full coverage of the RBNZ releases, decisions, and their press conferences at 9am and during the day.
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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