Here’s my summary of the key issues overnight that affect New Zealand, with news the price of gold just took another large fall today.
But first, the move to get banks to hold more capital, at least for the largest institutions, is gathering steam.
In the US the Fed has just adopted tougher rules on minimum capital levels which will cost about US$20 bln over the few that need to raise extra, and in Australia they are about to do the same at a cost of about AU$12 bln in extra capital. It appears these new higher levels are still lower than levels large banks operating in New Zealand already maintain.
In 2012, the Russian president issued a decree to his government to raise social spending. Regional government took him at his word, but did so by borrowing vast amounts, amounts they seem unlikely to be able to repay. Investors in the bonds issued are worried, so much so they may shun central government bond issues as well as the regional issues. Russia is also facing a debt crisis.
In China, the falls in house prices may be stabilising. Of the 70 large and medium-sized cities surveyed in June, new home prices climbed in 27, up from the 20 in the previous month, while 34 reporting month-on-month price declines, down from May’s 43, according to data released by their National Bureau of Statistics.
New Zealand’s stresses seem more manageable and center around housing affordability. Migration data for June is due out today and that will no doubt feed into the housing debate.
In New York, the UST 10yr yield benchmark is slightly higher today and now at 2.37%.
Oil markets are basically unchanged although slightly lower in the US. The US benchmark price is now just on US$50/barrel, and Brent crude is just above US$57/barrel. News that a big innovative drilling program is about to start in previously drilled US shale fields is keeping prices low.
The gold price is also down sharply yet again, now at only US$1,108/oz. That is another -4% plunge and a new five year low. Chinese investors are the latest to offload the metal, doing so with some aggressive selling.
The Kiwi dollar showed a little strength overnight, perhaps on better local data yesterday and the move was certainly triggered by upbeat comments by the Prime Minister. We are start today at 65.7 US¢, at 89.1 AU¢, and at 60.7 euro cents. The TWI-5 is at 70.7.
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 »