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Hello. I’m David Chaston with Ninety at nine, brought to you by interest.co.nz. This
is where you get everything you need to know in 90 seconds at 9 o’clock, including news
of a warning about bank risk weightings.
But first, global stocks rebounded from their biggest drop in a month, bonds retreated and
the ruble rallied as Russia stepped back from escalating the crisis in Ukraine. The Russian
'pullback' means they will keep the Crimean peninsular but spare further incursions - for
now. Europe's dependence on Russian gas is a moderating influence on the West's rhetoric.
It probably means Putin has won this skirmish.
Both oil and gold dropped sharply as the tensions appeared to recede. Oil lost US$2/barrel overnight
and gold lost US$15/oz.
The Chinese central bank has started draining excess cash from their financial system again,
pushing up short-term interest rates. It's recent move to engineer a weaker yuan has
led to an unexpected and undesirable result: a sharp increase in cash flowing into its
financial system.
China has also announced new record levels of exploitable oil and gas reserves in 2013.
In Europe, there was something of a surprise well away from the geopolitical tensions.
Spain saw its unemployment fall by a few thousand, a far different result to the expected rise
of 75,000. That's its first fall in seven years.
The US Obama Administration's 2015 budget is being presented to Congress today and assumes
the fastest US growth since 2005 of 3.4% after 3.1% this year. It also sees inflation at
1.6% this year and 2% next year. And it is looking to reduce their Federal deficit from
3.7% of GDP to 3.1% next year.
Bond yields rose overnight, bouncing back up off their recent lows on the Ukraine news.
Benchmark UST 10 yr rates have moved up to 2.66%. Yesterday our swap rates continued
their flattening shift with short rates rising in anticipation of an OCR rise next week,
and long rates falling.
And there was a warning overnight from a Basel banking regulator. He said banks must accept
there is a problem with how they apply their risk weightings. He suggested they were in
denial and signaled moves to tighten up on the 'uncomfortably wide' variability of how
banks apply these risk weightings. I suspect NZ banks don't think there is a problem with
the very loose RBNZ guidelines either.
Although there were few changes for the kiwi dollar overnight, the minor trend that was
there was higher. We start today at 83.8 USc, 93.8 AUc and the TWI is up a tick at 78.8.
I’m David Chaston and that was 90 at nine, brought to you by interest.co.nz.