Overnight
# Global equities managed solid gains despite more worrying European developments. The Eurostoxx600 rose 0.65% and the S&P500 1.20% after comments from Chicago Federal Reserve Bank President Charles Evans helped prop up Tuesday’s rally. Mr Evans repeated his support for additional monetary stimulus from the central bank in an interview with Bloomberg Television.
# The NZD outperformed the field on the back of two robust pieces of data yesterday. Not only did May electronic card transactions rise a solid 1.2% (from an upwardly revised April of 0.8%), but REINZ and QVNZ housing statistics continued to strengthen quite remarkably. The REINZ Home Price Index jumped to a 6.4% in May, while the QVNZ measure also rose 3.9% y/y, from 3.1%. NZD/AUD reached a 5 week high of 0.7825 whilst the NZDEUR rose to 7 week highs of 0.6230
# Ratings agency Fitch cuts ratings on 18 Spanish banks.
# Spanish 10 year bond yields hit new record highs, an alarming 6.8% up from circa 6% when the EUR100 bln bailout was announced. The market clearly fears that all that this bailout money is doing is adding to Spain’s debt to GDP ratio, pushing it ever closer to 100%. (Background- Spain’s debt/GDP stands at about 80%. If they have to pay these sorts of rates on their debt then the economy has to grow at about the same rate 5%+ just to pay the interest. With the austerity programs sweeping Europe at the behest of Germany that kind of growth rate is highly unlikely so it becomes a negative debt spiral and that’s the huge worry).
# The World Bank forecasts Global GDP Growth 2.5% in 2012, 3.0% in 2013; China GDP growth 8.2% for 2012, 8.6% in 2013 (pretty good really!)
# UK April industrial production and manufacturing output disappointed with respective flat (+0.1 expected) and -0.7% (flat expected from +0.9% previously).
Ahead
# Westpac NZ Consumer Sentiment
# RBA Governor Stevens speaks
# Westpac Australian Consumer Sentiment
# European Industrial Production
# U.S. Retail Sales
# U.S. PPI
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