Here's my summary of the key events over the weekend that affect New Zealand, with news European banks can no longer find any demand for their CoCo bonds.
But first, rising rents and healthcare costs lifted underlying American consumer price inflation in January by the most in nearly 5 years and +2.2% higher that the same month a year ago. This underlies support for the view that the Federal Reserve could gradually raise interest rates this year as forecast.
And across the border in Canada, CPI inflation is rising too. Headline inflation is up to +2.0%, while core inflation (excluding food and energy) is higher by the same amount.
In Europe, banks are having trouble selling CoCo bonds, those bonds that can turn ugly on investors if a bank gets into trouble. Fear of that situation has dried up any demand for the products in Europe. (CoCos are contingent convertible bonds, sometimes called enhanced Capital Notes.) New Zealand banks have issued similar bonds here, but any more now seems unlikely in the near future.
And, there has been a dramatic firing at the senior policy level in China over the weekend. The Party has ousted the boss of the China Securities and Regulatory Commission with a very public dismissal. The previous boss is being blamed for the recent market turmoil and policy missteps. But most observers actually don't see any policy changes ahead with the new appointee.
In Australia, a substantial settlement has been reached in a landmark AU$200 mln (NZ$215 mln) class action brought against ratings agency Standard & Poor's, according to the law firm for the local governments, churches and charities bringing the suit. But a quarter of the settlement will go to a litigation funder. They sued because S&P gave Lehman Bros an investment grade rating prior to its failure in 2008.
In New York the benchmark UST 10yr yield could not hold its Thursday rise and has fallen back sharply by -6 bps to 1.74%. On Friday, local rate curves fell and flattened in a move that anticipated Wall Street signals.
The US oil price is down sharply too, to US$29.50/barrel while Brent is just on US$33/barrel. Rig counts are now getting quite low.
The gold price starts marginally higher at US$1,228/oz.
The NZ dollar is still trading in that narrow range, now at 66.3 US¢, at 92.8 AU¢, and at 59.6 euro cents. The TWI-5 will start the week at 70.8.
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 ».