Here's our summary of key economic events overnight that affect New Zealand with news there is a major relief rally going on at present, relief that Omicron won't derail the global economic recovery.
Firstly and at first sight, the overnight dairy auction was a lackluster affair, not delivering the good increases the derivatives market was counting on. In USD terms, overall prices rose just +1.4% from the prior auction to be +31% higher than a year ago, and +12% higher than the end of August. Today's event however came after a -3% devaluation in the Kiwi dollar, so in local currency terms today's prices are +4.6% higher than the prior event three weeks ago. It is this rise that will underpin the farm gate milk price payout forecasts.
In terms of product, WMP rose only +0.6%, SMP rose +1.3%, while butter is on a foodservice tear, up +4.6% and is up +30% since the beginning of July.
In the US, their Logistics Managers Index (LMI) is still expanding. Growth is increasing at a decreasing rate for inventory levels, and warehousing utilisation. Growth is increasing at an increasing rate for inventory costs, warehousing prices, transportation utilisation, and transport prices. Warehousing capacity and transport capacity are contracting. The supply chain pressures are not over yet despite the holiday shopping season crush coming to its natural end.
As expected, the giant American deficit in international trade of goods and services shrank sharply in October, reducing from -US$81 bln in September to -$67 bln in October, and a six month low. Exports rose sharply, imports changed little. Their politically sensitive deficits with both China and the EU each shrank, as did their deficit with Canada, but their deficit with Mexico rose.
The UST 3 year bond auction was well supported again, but it was notable that the Fed took very much less this time than at the prior equivalent event. And the median yield rose sharply from +0.69% pa to 0.96% pa this time.
China's FX reserves rose again and back to August levels, with more than US$3.2 tln in their FX piggy banks. That is about 20% of their 2021 GDP.
China recorded a smaller trade surplus in November where exports changed relatively little, but imports swelled unexpectedly.
Weak investment and sluggish demand in China now has the attention of the highest authorities in Beijing. 'Of course', none of these issues have been cause by their own policies.
Taiwanese exports starred again, with another very strong performance in November.
In Germany, investor sentiment sank, although not to as low a level as was anticipated.
In Australia, their central bank kept its key rate at a record low 0.1% and said it would be ‘patient’ in reaching its employment and inflation goals before tightening policy. About the only interesting aspect of this announcement was the omission of the suggestion of how long these policy setting might last.
And staying in Australia, pandemic cases in Victoria were 1185 reported yesterday. There are now 13,050 active cases in the state - and there were another 7 deaths yesterday. In NSW there were another 260 new community cases reported yesterday, a jump, with 3,060 active locally acquired cases, and two deaths. Queensland is reporting one new case. The ACT has 3 new cases. Overall in Australia, just over 88% of eligible Aussies are fully vaccinated, plus a bit under 5% have now had one shot so far.
The UST 10yr yield opens today at 1.46% and up +3 bps overnight. The UST 2-10 rate curve starts today unchanged at +77 bps. Their 1-5 curve is still at +94 bps, while their 3m-10 year curve is steeper at +141 bps. The Australian Govt ten year benchmark rate has risen +11 bps to 1.87%. The China Govt ten year bond has bounced back +3 bps to 2.87%. The New Zealand Govt ten year is also firmer, up +7 bps at 2.37%.
On Wall Street, the S&P500 has started their Tuesday session up a very enthusiastic +2.1% and on top of Monday's big gain. Overnight, European markets all rose even more, all up more than +3% (except London which was up less than +1.5%). Yesterday Tokyo ended up +1.9%, Hong Kong was up +2.7%, but Shanghai closed up a tame +0.2%. The ASX200 closed up +1.0% while the NZX50 was the outlier, ending with no gain.
The price of gold will start today at US$1785/oz and up +US$7 overnight.
And oil prices are up +US$4.50 at just under US$72.50/bbl in the US, while the international Brent price is up a bit less and now just over US$75.50/bbl.
The Kiwi dollar opens today marginally firmer at 67.8 USc. Against the Australian dollar however we are softer by another -½c at 95.3 AUc. Against the euro we are also firmer at 60.3 euro cents. That means our TWI-5 starts today at 72.6 and a little higher.
The bitcoin price has risen to US$51,381 and up a strong +4.5% from this time yesterday. Volatility over the past 24 hours has been high at just over +/- 3.2%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
Daily exchange rates
Select chart tabs
50 Comments
Well, upon reopening, we'll likely get it anyway. It's only a now or later question. For ethical reasons I don't think it's easy to dismiss, the public wouldn't look too kindly on extending the Delta wave (which appears to be about the worst variant so far) if the WHO reports milder Omicron symptoms.
It appears we might be getting ahead of Delta at the moment. But we still don't fully understand Omicron, so it is still too early to make any calls. We are still learning about Delta too. Yesterday's article in the Herald about the lady who had it so bad they were planning her funeral, but her partner and children only had mild symptoms. She was young, active and fit with only diabetes to worry about. Is the diabetes a factor in how it attacks you? What of her partner and child? Are they diabetics too? Lots of questions to be answered.
https://www.diabetes.org/coronavirus-covid-19/how-coronavirus-impacts-p…
Diabetes has been a known risk factor since pretty early in the pandemic.
Covid 19, next month is 2022, time to make a call Murray.
. Hard data from Singapore for the period May 1- November 15 2021, which covers their recent outbreak( daily cases have now dropped below 1000 ), within the 5-19 age group "Proportion (%) of cases ever requiring oxygen supplementation in general ward, unstable and under close monitoring in ICU, critically ill in ICU care or died, by age and vaccination status" was zero.
German study found that not a single healthy child between the ages of 5 and 18 died from COVID-19 in the first 15 months of the pandemic. Yet we are preventing children and teenagers from playing cricket, getting a haircut and getting their drivers license. Pfizer et al.must be making a lot of policy makers very rich.
https://www.medrxiv.org/content/10.1101/2021.11.30.21267048v1.full.pdf
Though I guess if the karens are fretting about the zero risk of their healthy kids dying from covid they wouldn't let their kids in a car - let alone have a drivers license or hold a cricket bat.
”The main reason why THL does not recommend vaccinations at this point for all children aged 5 to 11 years is that their burden of disease is small. Infections in children of this age are usually mild and severe disease is extremely rare compared to other vaccine-preventable diseases. When the burden of disease is small in one’s own group, very few adverse effects are accepted. If society aims to control the epidemic by vaccinating children who themselves benefit only a little from the vaccinations, having reliable information on safety is even more important”, says Chief Physician at THL, Hanna Nohynek"
https://thl.fi/en/web/thlfi-en/-/thl-recommends-coronavirus-vaccination…
Almost entirely preventable too. I don't understand why people aren't fixing their diet/metabolisms. A man can easily get into shape, lose 10% or more of his body weight, in about three months.
Stop eating the rubbish, fast intermittently, eat mostly meat and vegetables. Exercise. Try just having one meal a day late in the afternoon. Can't go wrong.
Correct Zach. The real pandemic is the western world diet and the clueless Boomer's consumption of fast food commodities that are slowly killing them. Then the unhealthy want a quick fix from the medical industrial complex that only want to benefit their bank accounts and not our 'health'. Even the agencies created to regulate and protect the people have been captured by corporations and Big Pharma (Pfizer). Now Boomer's want me to take an experimental drug to keep them 'safe', when a decent diet can do that. In the US addictive, destructive drugs are the new normal, drive-up drug dispensaries are littered amongst the junk food outlets. Big Pharma likes to get em started young, get control of their immune system for a life-time of boosters. $$$$. Sick.
The original title of this article was "Should The Triple Vaxxed Avoid The Double Vaxxed?", but has since been changed
https://www.theatlantic.com/family/archive/2021/12/covid-booster-fully-…
In particular, I like the line: "Is it still safe to hang out with someone who is vaccinated but not boosted?"
In other words, plenty more fear and panic to milk!
Weak investment and sluggish demand in China now has the attention of the highest authorities in Beijing.
Euro$ curve inversion and now two China RRR’s, and a dramatically flatter curve(s) since mid to late October (so much for the CMB deluge). Something appears to have accelerated the downside risks which are, for now, evidently sizable if still risks. Link
"the giant American deficit in international trade of goods and services shrank sharply"
Less competition for the rest of the world for those forgone foreign products? If so, 'Inflation!" might have run its course, and with it any chance of higher debt prices. How can % rates rise when everywhere there is this:
An old truism; whatever else households do by way of belt tightening, defaulting on the mortgage comes the very last. They’d much rather cut consumption than risk losing the house. Indeed, it was this risk that determined the Bank’s decision – not so much the risk of mass default as the possibility that overstretched households might unduly cut their consumption if interest rates were to rise
https://www.telegraph.co.uk/business/2021/12/07/house-prices-control-ba…
belt tightening will too see household necessities reduced, including general & health insurance. Aware since the virtual halving of income from TDs etc seniors being forced to forgo their health policies. At a time of life when vulnerabilities increase this then places that burden back on a health system already acknowledged as under daily pressure. In other words that long list of delayed electives is going to get longer and longer.
Aware since the virtual halving of income from TDs etc seniors being forced to forgo their health policies.
The elderly are progressively excluded from seeking cover for too many possible future health events to make it worthwhile paying health insurance premiums.
There are many reasons not to like the Cloud. Service provider issues are but one (watch what happens if Gmail or Outlook etc goes down). Then there are more local issues - you are reliant on your local Internet service provider , the fibre or copper that connects you - the list is long I am now a firm believer in managing your own mail / file etc server locally if possible. Trusting it to the Cloud just increases the points of failure.
One assumes you have multiple geographic redundant backups and 24x7 operation with automatic switching on of generators if your house goes down? Halon incase of fires? If so, how much does it all cost?
And if your local loop goes down, accessing your files is mostly pointless, you can't share them with others/send them etc. All you can do is open your own files locally. But if viewing them locally is all you will ever need, then go for it. Personally I would trust them to the pro's and pay $5 a month or so to have peace of mind...
The real issue is the small number of cables which stitch the whole shebang together. One robot sub with a big snipper would take them out with ease. It's what has come to be called (John Robb, Global Guerillas) a systempunkt: a point where small and cheap disruption has gigantic and expensive consequences, and where defence against those possibities is next to impossible physically or economically.
https://finance.yahoo.com/news/morgan-stanley-sees-fed-bigger-101910051…
This is what happened - Karma. Fed supported and promoted asset class ponzi and now they are being blamed by the same community or blackmailing to continue supporting and promoting.
Fed screwed the economy by lying and manipulation by coining the transitory inflation and now the same people are gunning him.
Every 40 or 50 year brings change and is it time to change the politics and agencies like reserve bank and WHO.
""The total cost of personnel in what's deemed Core Crown departments has risen 35.8 percent in the last four years since the Labour Government took office.""
""The number of public servants earning more than $400,000 annually has almost doubled in the last year.""
https://www.1news.co.nz/2021/12/07/public-servants-paid-over-400k-almos…
Our company experiences the pendulum of National vs Labour on this stuff. Under National we have to compete to get people - many instead prefer to make a lot of money as contractors to govt departments while the departments have limitations on fulltime headcount. Under Labour when the departments are allowed to increase headcount some of those same come to us looking for jobs (better pay in the private sector).
So it goes. Swing, swing, swing.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.