Here's my summary of the key events over the weekend that affect New Zealand, with news a huge bank loan restructuring program may be underway and under the radar in China.
But first, sales of American houses (excluding new one) rose in April for the second straight month, driven by a jump in the Midwest. Their housing demand is firming alongside steady job growth and historically low interest rates. Their median house price is now US$232,500 which is up +6.3% from the same month a year ago.
The wealth effect is gaining traction again. American credit-card balances are on track to hit US$1 trillion this year, as banks aggressively push their plastic and consumers grow more comfortable carrying debt.
Wall Street ended last week with some strong gains.
In China, it seems a huge bank bailout is underway. The government program, which forces banks to write off bad debt in exchange for equity in ailing state-owned companies, soared in value to hit more than US$220 bln by the end of April, up from about US$120 bln at the start of March. But this new 'equity' investment will probably compromise trading bank strength and their profitability. It's an odd solution for a huge issue.
It's no only Chinese banks facing issues. Debt-laden companies are struggling to lock in stable, longer-term financing. A rash of defaults has taken the gloss of their bond refinancing market, in turn making it harder for many companies including large ones to roll over their debt. There will be tears.
There could yet be more tears in Greece too. Their parliament is getting ready to vote on a final package of changes needed to unlock the rest of their bailout deal. The measures being voted on include new taxes on fuel, tobacco, alcohol, the internet, pay TV, hotel stays, cars, changes in property tax, as well as a rise in their GST rate from 23% to 24%. But that is probably not the end of it. The IMF is insisting the EU (that is, Germany) forgive some of the underlying debt. Germany is refusing, at least in the short-term. The IMF's contribution to the bailout deal is in the balance.
In New York the benchmark UST 10yr yield is basically unchanged at 1.84%.
The oil price is still basically unchanged with the US benchmark just over $48/barrel and the Brent benchmark just under US$49/barrel.
The gold price is also unchanged at US$1,255/oz.
And finally, the NZ dollar will start the week at 67.7 US¢, at 93.7 AU¢ which is its highest since February, and at 60.3 euro cents. The TWI-5 index is now at 71.7.
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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