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US confidence jumps, wages rise; Greeks make last-ditch offer; AU new home sales fall; oil up, gold down; UST 10yr yield 2.32%; NZ$1 = 67.7 US¢, TWI-5 = 71.4

US confidence jumps, wages rise; Greeks make last-ditch offer; AU new home sales fall; oil up, gold down; UST 10yr yield 2.32%; NZ$1 = 67.7 US¢, TWI-5 = 71.4

Here's my summary of the key issues from overnight that affect New Zealand, with news of a growing fall overnight in the value of the Kiwi dollar.

But first, in the US there has been another major survey of consumer confidence and that reports surprisingly positive results. That report was for June. But an April report of house prices showed house price gains moderating although still quite high. But American factories aren't showing some of the gains that we saw a year ago.

However, the US Fed is seeing signs of growing wage growth pressure which is a signal that will be important to them.

In Europe, the Greek government has made a last-minute proposal for a new €29 bln bail-out deal from the eurozone, just hours before it must repay €1.6 bln to the International Monetary Fund. But the Euro-group have apparently rebuffed the move as grandstanding. Early polls suggest Greeks will vote on Sunday to stay in the euro-zone.

In Australia, new home sales have recorded their first monthly fall for 2015, with a drop in sales of -2.3% in May. The month's negative result comes after a run of four monthly rises.

Back in New York, the UST 10yr benchmark yield has fallen again but by only a small shift and is now at 2.32%. But credit spreads have narrowed in trading today signaling markets have absorbed the initial Greek punch.

US oil markets are slightly higher with the US benchmark price now just under US$60/barrel, and Brent crude just under US$64/barrel.

The gold price has fallen and is back at US$1,171/oz.

The Kiwi dollar starts today noticeably lower. It is currently at 67.7 US¢, a whole 1c lower than this time yesterday and in fact a five year low, at 87.9 AU¢ which an even larger drop, and 60.8 euro cents. The TWI-5 is now at 71.4 and the lowest it has been in three years. Falls of this magnitude will be inflationary, starting at the petrol pump.

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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10 Comments

NZD down.
Business confidence negative.
About time the Teflon started to rip from our Great Leader perhaps?

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IMHO Its already worn down to the aluminium which is supposed to give you alzheimer's.

However just consider what the alternative is, Andrew Little and an equally clueless, incompetent and divisive Labour "team" to lead us, bound to end well.

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So sales were down 2.3% in May in a possible response to a rise in mortgage rates. And the Fallout Ratio has also broken out as mortgage rates have risen off their lows of February. This could be a harbinger of mass destruction should mortgage rates begin a persistent rise from here. It may be time to get in the fallout shelter and out of the US housing market. Look out for the housing mushroom cloud. Don’t be a victim of the media manure and home sales fallout.

http://wallstreetexaminer.com/2015/06/heres-your-fallout-shelter-for-ws…

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The real economy is in a mess, government and councils spending money like water, a friend of a friend bought an small appartment in Auckland for $750,000! Scary stuff, does this government have any idea what it's doing?

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"like water" Consider that most of the incoming ppl are settling in Auckland and that places a bigger and bigger strain on services, hence higher rates of course there is a demand to spend..

"mess" yes because energy is now too expensive to keep the economy growing and the temp fix of more debt is maxed out.

"any idea" The likes of PDK have I think talked to some senior Labour ppl and they are denying the likes of peak oil etc. Watching the Govn change its tune (in particular Gerry Brownless) it is also not hard to think they know full well and are also in denial.

Consider that both major if not all parties have made promises the economy and planet cannot keep ie expotential growth on a finite planet.

Btw Have you watched the latest mad max movie yet? great film, watch them all.

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Stratfor.com not adding much to the Greek analysis, but thought I would post it anyway.

https://www.stratfor.com/weekly/beyond-greek-impasse?utm_source=freelis…

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Trading gold just got a whole lot more tricky.

What the chart above shows is that after fluctuating around the low to mid $200 billion range for the past 5 years, in Q1 the amount of Commodities with a maturity of under 1 year exploded to a record $3.9 trillion!

Sadly, the OCC provides no actual explanation for why there was such an epic surge in commodity derivatives within the US banking system in the first quarter, so we decided to explore.

What we found is what those who have for years accused JPM of cornering the commodity markets, have known: because it is none other than JPMorgan's Commodity derivative book primarily in the

In fact as the chart below shows, while historically JPM has accounted for just over 50% of total commodity holdings among all US commercial banks, in the Q1 this number soared to a stratospheric 96% which by anybody's standards is the very definition of cornering the market! Read more

I guess we know why the LBMA suspended the Gold Forward Offered Rate (GOFO) dataset at the end of January Read more

Did JPM use derivatives to manage gold price manipulation ahead of ECB QE? Check out an earlier story implying an engineered short gold/long Nikkei trade tied to repo financing costs.

And don't dismiss the importance of repo financed security positions as the real source of leveraged credit funding in a world no longer dominated by eurodollare financing. Read more

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Yes, I read that ZH analysis yesterday. This world is out of this world. No one can predict anymore. What will rise from the ashes? I simply cannot see it being capitalism as we know/knew it - as there is no longer any such thing as a functioning market.

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On the Greek debacle....
Interesting article at wired.com on how cash does have advantages, especially when the whizz kid financial overlords stuff things up, as is the norm. ATMs won't dispense, but those with cash on hand can still buy.
http://www.wired.com/2015/06/greece-atms/

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Greece is Putin's pawn in a plot to divide the EU
http://www.businessspectator.com.au/article/2015/4/2/europe/greece-puti…
Dr Oliver Marc Hartwich is the Executive Director of The New Zealand Initiative

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