St George Economics economy and finance update
The US stockmarket edged higher on Friday night, supported by upbeat earnings results from financials including Wells Fargo & Co and JP Morgan Chase & Co.
The Dow was unchanged for the session, the S&P 500 gained 0.3% and the Nasdaq gained 0.6%.
US Treasuries edged lower (yields rose slightly) as negative sentiment regarding Europe (see below) drove investors into US government bonds.
In Portugal 10-year government bond yields jump from 6.90% to 7.51% for the session on rising concerns about the ability of Portugal to successfully transition back to market access when the current bailout ends in June 2014, given the President threatened to call early elections.
Safe haven flows saw German 10-year bond yields fall for the session.
The Aussie dollar weakened across the board on Friday on speculation the RBA will cut interest rates again in August and given concerns about the growth outlook for China, ahead of the release of today's Q2 GDP data from China.
The Aussie dollar fell to just below US 90 cents on Friday night, for the first time since September 2010, but has rebounded from that low.
The gold price was boosted after Bernanke's comments earlier in the week suggested quantitative easing would continue to some time, which boosted the safe haven and inflation hedge appeal of the precious metal.
Housing finance is bouncing along the recovery track.
Low interest rates, low vacancy rates together with improvements in rental yields, housing affordability and household wealth have spurred the bounce evident in housing lending.
In May, the number of loans to owner occupiers rose by 1.8% and the value of all loans expanded by 2%.
The recovery in investor housing loans started later than that for owner-occupier loans, but its recovery is now stronger.
Annual growth to investor loans stands at 23.7% - the fastest rate of growth in nearly six years excluding October 2012.
Uncertainty about the outlook for the Chinese economy remains after the Chinese finance minister has said that the "7 percent goal should not be considered as the bottom line".
The remarks highlight the risk that China may undershoot the government's 7.5% growth target for 2013.
However, he was also reported to have said that "there is no doubt that China can achieve the growth target".
The comments may heighten nerves ahead of key Chinese economic data to be released today.
France was downgraded by Fitch from AAA to AA+, matching its rating from S&P and Moody's.
Prospects for public debt had deteriorated with a lacklustre outlook for economic growth.
In Portugal the Opposition leader insisted that austerity be abandoned, just hours after the President invited his Party to cooperate with the imploding coalition government in an interim administration ahead of early elections.
Euro zone industrial production fell 0.3% in May, the second monthly decline this year.
This took the annual rate of growth in industrial production down to a -1.3% annual rate in the year to May, from a -0.6% annual rate in the year to April.
ECB Council member Couere acknowledged the risk that the economic recovery might be delayed a few quarters.
Industrial production rose 1.9% in May. This was a slight downward revision from the previously reported 2.0%, but it continues to indicate that factory output is increasing steadily.
The producer price index rose 0.8% in June, led by higher gasoline prices.
This was the largest gain since September last year. Core producer prices rose 0.2% for June, with auto prices a contributing factor.
For the year, producer prices are up 2.5% (from 2.1% in the year to May), while core producer prices remained steady at 1.7% in the year to June.
The slow growth in producer prices indicates little price pressures for producers.
The preliminary University of Michigan consumer sentiment index unexpectedly dipped 0.2 points to a reading of 83.9 in July, with expectations deteriorating, while current conditions improved.