Here's my summary of the key issues from over the weekend that affect New Zealand, with some very big issues to cover today.
But first, American consumer sentiment rose in June to the highest level since January, suggesting that spending would strengthen this year. The respected University of Michigan survey showed its index rose to 96.1 this month, from 90.7 in May.
It is likely that American jobs data out on Thursday will confirm their labour markets are growing strongly again. That means the Fed is likely to raise rates. And that will have a big influence on our swap markets.
Across the Atlantic, Greek lawmakers on Sunday authorised the Prime Minister to hold a referendum on July 5th over the EU bailout terms, enraging their creditors and increasing Greece's chances of exiting the euro zone.
The Prime Minister said he will campaign against it.
He also demaded the ECB support the Greek banks while the run on them is intensifying; but they refused to do so. And these angry creditors refused to extend the June 30 due date of their loans to accommodate the referendum, leaving it facing a default that will almost certainly push it out of the euro.
And then earlier today he announced that Greek banks and their stock exchange will be shut on Monday, and he has imposed capital controls, taking the standoff to a dangerous new level.
This car crash is not likely to have much influence on our markets but contagion among southern European country bonds is expected.
Staying in Europe and largely unnoticed, the Bank of International Settlements issued yet another strong warning on the dangers of low interest rates and the distortions they are causing the global economy.
Elsewhere, and in somewhat of a surprise announcement, the Peoples Bank of China cut lending rates for the fourth time since November and reduced the amount of cash that some banks must hold as reserves. It is stepping up efforts to support an economy that is headed for its poorest performance in over 25 years. They also injected NZ$7 bln into credit markets, a move made more important given the -7% drop in their stock markets on Friday. Their unhealthy stock market bull run is probably over.
Chinese economic trends will affect Australia, and New Zealand indirectly.
In Australia on Friday, there was data showing unexpected weakness in their population growth. A surge in deaths and a slowdown in births and immigration has produced their weakest population growth in eight years, placing a cloud over official growth forecasts and increasing the chances of more interest rate cuts.
And in Melbourne and Sydney, their housing markets are showing non-seasonal signs of cooling quickly. Maybe those demographic details are starting to bite.
Back in New York, UST 10yr benchmark yields rose sharply and are now at 2.47%. Expect that jump to be reflected in local swap rates today, especially at the long end.
US oil markets are basically unchanged with the US benchmark price just under US$60/barrel, and Brent crude is now just over US$63/barrel. Their rig count actually rose last week, the first time in quite a while.
The gold price is also unchanged, up marginally at US$1,174/oz.
The Kiwi dollar starts the week lower at 68.3 US¢, at 89.5 AU¢, and 61.2 euro cents. The TWI-5 is still at 72.3. Keep an eye on the euro which might be especially vulnerable this coming week.
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 today is by following our Economic Calendar here »
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