Q2 US GDP weak; US consumers positive; ECB stress tests clear; no Japan double dose; Facebook's tax affairs in court; Steve Keen goes darker; UST 10yr yield at 1.45%; oil unchanged, gold higher; NZ$1 = 72.1 US¢, TWI-5 = 75.3

Here's my summary of the key events over the weekend that affect New Zealand, with news that the American tax authorities are taking on Facebook and its tax-dodging Irish strategy.

But first, there was a surprisingly weak announcement from the US about their economic growth in the June quarter. Markets had expected a rate of a +2.5% expansion but the flash result - the first of three 'estimates' - came it at just half that, at +1.2%. The gains all came from strong consumer spending; it was the business sector who held back with lower investment and inventories.

New data out for American wages and salaries to June showed they are up +2.5%. American workers are making 'real' gains in pay and that is driving the consumption aspect of their GDP growth. The latest consumer sentiment survey supports the view that consumers are in positive heart.

In Europe, the ECB's latest bank stress tests were out over the weekend and most European banks survived well, with only a few large lenders seen struggling to pass muster. The dodgy banks included the large Italian bank, Monti dei Paschi, and the huge British bank, the Royal Bank of Scotland. Overall, these tests show considerable progress from 2008 for most and the EU banking system is in much safer shape overall.

But one thing these stress tests seem to ignore is the impact negative yields are having on bank balance sheets. The negative yield factor was not around in 2008 and these latest tests expose the fact that these stress tests are testing for old issues, not today's strains.

In Japan over the weekend, their central bank came out with a surprisingly timid review which is being seen as unsupportive of the massive fiscal announcement earlier in the week by the Government. The "double dose" did not happen. Still, it might yet; there is talk of a special form of 'helicopter money' yet to be released. Policy makers are playing with huge risks in the world's third largest economy.

In Brazil, popular ex President Lula has been charged with interferring in a corruption probe.

In California, the US tax authorities have filed suit against Facebook in the way it has used Ireland to 'transfer' American taxable income out of the country. This will be a legal case worth following.

And in Australia, there are two items of note to report. Firstly, high-profile doomster Steve Keen, the professor who famously bet that house prices would fall in 2008 and lost the bet, he is back with an even more startling prediction: that house prices will fall up to -70% and Australia will enter a recession in 2017. He is not making any wagers this time though.

And the Australian banking regulator ASIC, which is prosecuting three large banks over interest rate manipulation, is vigorously rejecting claims that the rigging did not affect home mortgage rates, as the banks maintain. Things are getting a bit nasty in Australian banking circles as the heat goes on in the fights between the industry and the regulators.

In New York, UST 10yr yields ended last week lower yet again at 1.45% as bonds come back in favour following the weak US GDP result.

The US benchmark oil price has held over the weekend and is now just on US$41.60/barrel and the Brent benchmark is just on US$43.50/barrel.

But the gold price is up US$17 to US$1,349/oz as risk aversion grows among large investors.

However that is not stopping the NZ currency from its appeal. The NZ dollar will start today quite a lot higher from this time on Friday and now well above where the RBNZ would like it to be. It is now just on 72.1 US¢, at 94.9 AU¢, and at 64.5 euro cents. The TWI-5 index is now at 75.3.

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 ».