US data positive; OECD criticises QE and low interest rates; equities fall; UST 10yr yield 1.67%; oil lower, gold higher; NZ$1 = 71.3 US¢, TWI-5 = 74.6

Here’s my summary of the key events overnight that affect New Zealand, with news of a further surge in the value of our currency.

But first, in the US the number of Americans filing for jobless benefits unexpectedly fell last week. And wholesale inventories recorded their biggest increase in 10 months in April, prompting economists to raise their second-quarter economic growth estimates. The rise in inventories came even as sales at wholesalers rose for a second straight month. The expectation is that American GDP will come in at about +2.5% pa in Q2.

Overnight, the OECD issued a report critical of QE and low policy interest rates. It says they are not having the desired effect and just encourage short-term economic decision making. They also say such policies may also be harming the possibility of a sustainable recovery.

Equity markets are all sinking today. Wall Street is lower after pushing at new records just a few days ago. European equities markets are also lower as were markets in our region yesterday. Mostly, its a -1% sell-off.

In New York, the benchmark UST 10yr yield has fallen today and is now at 1.67%. Locally, the 2-year swap closed the day up 4 bps at 2.33%, after being up as much as 8 bps at one stage. The markets now see the odds of further cuts from the RBNZ as low and the 90 day bank bill rate unwound any pricing for a rate cut in 2016.

The oil price is seeing a small pullback today. The US benchmark now just over US$50/barrel and the Brent benchmark just under US$52/barrel. On the climate front, there has been an innovative development in building a workable carbon capture process.

On the other hand, the gold price is up US$10 to US$1,270/oz.

And finally, the NZ dollar starts today substantially stronger again at 71.3 US¢, especially against the Aussie where we are now at 95.9 AU¢, and at 62.9 euro cents. The TWI-5 index is now at 74.6. The last time it was this high was exactly one year ago.

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 ».

Daily exchange rates

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for(i=0;i

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