US economy expanding 'modest-to-moderate'; IMF sees debt binge risk; Indonesian voters choose hard-line religion; Aussie bank pay review attacks commissions; UST 10yr yield at 2.21%; oil and gold lower; NZ$1 = 70 US¢, TWI-5 = 74.9

Here's my summary of the key events overnight that affect New Zealand, with news the way bankers are paid is about to get a major shakeup.

But first, the US Fed reports their economy expanded at a modest-to-moderate pace between mid-February and the end of March, and inflation pressures remained in check. This is despite more difficulties in attracting and retaining workers that is putting broad pressure on wages as firms increasingly report trouble filling low-skilled jobs. In a couple regions, “worker shortages and increased labor costs were restraining growth in some sectors, including manufacturing, transportation and construction,” the Fed said in their latest Beige Book review.

The IMF's latest Financial Stability review has pointed out that a quarter of American firms have gone on a debt binge to take advantage of low interest rates and they make up a significant threat to financial stability in markets and for banks if there is a significant rise in interest rates. The ability of companies to cover interest payments is at its weakest since the 2008 financial crisis, according to one measure. The situation also undermines the Trump assumption that tax cuts would lead to higher corporate investment. In an era of rising rates, they may just allow some to hold on, leaving the Government with higher debt levels and not seeing any economic upside.

Voters in the Indonesian capital of Jakarta have ousted a close ally of the country's president in mayoral elections, replacing him with a candidate riding a wave of hard-line religious support that has up-ended politics in the world’s largest Muslim-majority nation. This result will have policy-makers in Canberra reassessing their positioning in Indonesia.

And staying in Australia, major changes on how retail bank employees are paid are about to happen. Sales and commission payments are 'out', and very large changes are about to hit mortgage brokers. In a major review that has been accepted by the industry, banks will scrap performance incentives based on meeting sales targets. It recommends banks immediately cap the contribution of sales targets to 50% of any incentive, falling to 33% by 2020. It also recommends banning any form of accelerated commission structure and a host of payments for mortgage brokers in anticipation of a fee for service model emerging. 'Soft' incentives like overseas travel and 'sales conferences' are out. It is all about addressing the fast declining level of trust customers have in traditional retail banking, and comes at a time when banking distruptors are gaining strength.

In New York, the UST 10yr yield is back up today and now at 2.21%.

Oil prices are down sharply by more than -US$2 and are now just under US$50.50 for the US benchmark, while the Brent benchmark is now just under US$53 a barrel. This is due to the combined impact of high-than-expected American petrol inventories and data that shows producers aren't cutting production at the rate they said they would.

The gold price is also lower, by -US$8 and now at US$1,282/oz.

The New Zealand dollar is marginally lower as well at 70 USc. On the cross rates the Kiwi dollar is up again at 93.4 AU¢ but against the euro we have slipped a little to 65.3 euro cents. The NZ TWI-5 index is down to 74.9.

If you want to catch up with all the changes yesterday, we have an update here.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».