US Q1 GDP thumped; May and June US data good; US plans oil exports; Palmer gores Abbott; NZ TWI hits post-float high; NZ$1 = US$0.87.4, TWI = 81.2

Here's my summary of the key news overnight in 90 seconds at 9 am, including news mainly from the US today.

The big news overnight was the surprise announcement in the US that their first quarter GDP actually fell much more than they had previously indicated. It was down a massive -2.9% annualised due to two key factors; corporate profits came in much weaker than in earlier estimates, and consumers were making major changes to their spending habits on healthcare.

Obamacare signups were going on in the middle of a severe winter period and these two aspects had much more of an impact than just about any observers imagined. The weather cut profits, and the redirected spending on healthcare was much lower than anticipated.

Second quarter US data appears to be very much better however. Today we got US services sector data for June and that was impressively strong. Every measure except new orders were higher in the latest durable goods report for May. And the Fed's favourite inflation measure, the PCE, came in bang on expectations at +1.2% for Q1. The PCE for Q2 will be out tomorrow, with +1.8% expected.

The Americans are also clearing the way for the first exports of unrefined US oil in nearly four decades, allowing companies to start chipping away at the longtime ban on selling their domestic oil abroad. This will tend to bring the international and US price benchmarks closer together.

In Australia, politics and climate taxes have been locked together for a long time. Overnight the scene got even murkier. Populist mining billionaire Clive Palmer has thrown the government’s latest carbon tax repeal plans into disarray by teaming up with former US vice-president Al Gore to demand Australia be part of a global yet-to-be-created emissions trading scheme. Everyone looks foolish in this latest twist.

Stocks are sharply higher in New York today in late afternoon trade. Yields on UST 10yr bonds are down sharply and currently at 2.58%, a move that will echo here later today. The oil price is marginally higher in the US benchmark, marginally lower in the Brent benchmark. And the gold price is basically unchanged at US$1,322/oz.

Through all this, New Zealand looks good. We start today with the NZ dollar at a new record post-float high on the TWI after a strong showing across the board overnight. We are now at 87.4 USc a rise of half a cent, 93.0 AUc and the TWI is at 81.2.

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

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