US factory outlook brighter; Mexico raises rates; S&P cuts EU rating; BofE eyes more QE; Italy rescues bank; China warns on growth; UST 10yr yield at 1.46%; oil and gold lower; NZ$1 = 71.2 US¢, TWI-5 = 75.1

Here's my summary of the key events overnight that affect New Zealand, with news the Bank of England has signaled more money printing, to hold up the UK economy post Brexit.

But first, in the US, factory activity in the key manufacturing region of the Midwest surged to its highest level in almost 18 month in June amid strong gains in new orders and production.

South of the border, Mexico has raised its benchmark policy rate by +50 bps to 4.25%. It said it did so to keep inflation in check even though they would have preferred to have followed the US Fed's lead. Their problem is, the Fed isn't leading.

In Europe, Standard & Poor's cut its long-term credit rating on the European Union to 'AA' from 'AA+' but raised its outlook to "stable". That puts the EU on the same rating as the UK, but the UK's outlook is "negative".

The British currency has fallen sharply as the Bank of England said "some monetary policy easing" will be required post-Brexit. (p15)

And Germany has rebuffed an Italian government plea to ease EU rules during the Brexit loss-of-confidence so that it could action a wider bank rescue plan. But time is not waiting for Rome; they have had to bail out a mid-sized bank overnight. Veneto Banca has sought €1 bln from investors to recapitalise, but got almost zero takers.

China's finance minister has warned that tax collections are running behind forecast and their economy is "facing great downward pressure".

The Australian election is coming to its conclusion with the vote tomorrow. After decades crude and bitter battles, this one seems to have been contested with a civility unusual in Australian politics, probably because the leaders of both main parties are uninspiring. Both are competent for the job however. But the lack of political venom in this contest is noticeable, and unusual.

Wall Street equity markets are all higher by more than +1% in mid-afternoon trading.

In New York, the benchmark UST 10yr yield has held overnight and is still at 1.46% in late trading. Credit risk premiums continue their reductions however, even for Australasian investment grade corporate debt.

The US benchmark oil price is lower today, now just over US$48/barrel and the Brent benchmark is just over US$50/barrel.

The gold price is also lower, down US$8 to US$1,315/oz.

The NZ dollar has risen yet again overnight but only marginally this time and is now at 71.2 US¢, at 95.7 AU¢, and at 64.4 euro cents. The TWI-5 index is at 75.1. Still, it has been more than a year since when our TWI has been at this level.

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 ».