Here's our summary of key economic events overnight that affect New Zealand with news Australia's official tolerant attitude to Omicron infections sees it about to sweep over its population.
But first in the US, their merchandise trade deficit widened to a new record high of US$97.8 bln in November from a revised US$83.2 bln in October. Imports rose +4.7% reflecting the ongoing recovery in domestic demand due to rising wages and a fast-recovering economy. Meanwhile, exports were down -2.1%. Both wholesale and retail inventories are creeping higher, in response to the supply-chain difficulties that are just not going away.
US pending home sales unexpectedly dipped. Contracts to buy US previously owned homes fell -2.2% in November from October when a +0.5% rise was expected. This follows a 7.5% surge in October, amid limited supply and high home prices.
The latest US Treasury 7yr bond auction has brought lower yields in a well-supported auction today. This event delivered a yield of +1.40% pa, compared to 1.53% in the equivalent event a month ago.
South Korean business confidence rose in December and the outlook for January was also revised higher.
In Turkey, their currency fell heavily again yesterday, down -6% on the day, just days after last week's Government rescue effort. It is now back to where it was at the start of December. They are battling +20% inflation, in part caused by the fast-retreat in their currency. The guarantees the Turkish government offered as part of that plan may have a very expensive downside. The yield on Turkey's 10 year government bond now exceeds 25%.
The WHO is warning of a 'tsunami of cases' worldwide as they see surges in both Delta and Omicron.
In Australia, there were 11,201 new community cases reported yesterday in NSW, a doubling, now with 61,332 active locally-acquired cases, but only 3 more deaths. Health officials there say 10%+ of people will likely catch Omicron. What is interesting about these numbers is that despite the NSW Premier telling people to ignore the risks because the economy needs their spending, huge numbers of its citizens are isolating and cancelling plans to be out in the community. And 3767 pandemic cases in Victoria were reported yesterday, also a massive jump. There are now 19,994 active cases in the state - and there were another 5 deaths there. Queensland is reporting 1589 new cases and 7 more deaths. In South Australia, new cases jumped to 1472 yesterday. The ACT has 138 new cases and Tasmania 55 new cases. Overall in Australia, 18,149 new cases were reported yesterday and the pressures on their health system have been ratcheted up, while 90.2% of eligible Aussies are now fully vaccinated, plus 3.2% have now had one shot so far.
The UST 10yr yield opens today at 1.54% and a +6 bps rise. The UST 2-10 rate curve starts today recovering its steepness at +80 bps. Their 1-5 curve is flatter +91 bps, while their 3m-10 year curve is steeper at +154 bps. The Australian Govt ten year benchmark rate is up +3 bps at 1.62%. The China Govt ten year bond is down -1 bp at 2.81%. The New Zealand Govt ten year is also lower and by -4 bps at 2.25%.
On Wall Street, the S&P500 is trading flat in Wednesday afternoon trade. But it is still near its record high. Overnight, European markets were all lower by about -0.5% after yesterday's big rise. London started trading again in catchup mode. Tokyo finished its Wednesday trade down -0.6%. Hong Kong lost -0.8% and Shanghai -0.9% yesterday. The ASX200 ended up +1.2% and the NZX50 gained +0.4%, both in very light trade.
The price of gold will start today at US$1804/oz and down -US$6 from this time yesterday.
And oil prices start today just a little firmer at just over US$76/bbl in the US, while the international Brent price is now just under US$79/bbl.
The Kiwi dollar opens today a little firmer and is now at just over 68.3 USc. Against the Australian dollar we are also firmer at 94.3 AUc. Against the euro we are little-changed at 60.2 euro cents. That means our TWI-5 starts the today up at 72.8.
The bitcoin price is down marginally at US$47,690 and -0.4% below this time yesterday and holding its new lower level. Volatility over the past 24 hours has been modest at +/- 1.6%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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75 Comments
When the dollars were flowing, they (China) loved the dollars and us. Now that they aren’t, geopolitics has chilled to a decided Cold War temperature. Random coincidence?
No. Rate of change in economy goes down, rate of change in (geo)politics goes way up. Link
It wasn’t all that long ago when 8% real GDP growth was said to be China’s absolute bottom, its recession-line. And then it was 7%. Now…
Tongue in cheek humour but point taken thank u. Am well and truly over lockdowns and extreme govt covid restrictions. To me the risk is not so much omicron but the chris Hopkins announcement this morn. We just have to look to our brothers across the tasman for a different response.
So Australia is to let Omicron ride the range!? Would seem an acknowledgement of inevitable reality coupled with sufficient confidence in the vaccination level achieved & hospital admissions remaining constant and/or manageable. Note Minister Hipkins is to address our nation at 11.00am. Unfortunately, for him & us, he is the one saddled with announcing unwelcome news while his seniors do the good stuff, if there ever is any. So the overbearing cynical nature I maintain, surmises NZ will not follow Australia’s example and restrictions will be increased here. Very, very content to be proven wrong though.
ps. Hipkins announces NZ is to carry on as is. Pleasingly, my above cynicism hardly justified. Advance New Zealand fair then!
There is a hope that Omicron, which is not very virulent, may drive Delta away and will lead the way to the Corona self destructing. But before that, many may get infected with Omicron and suffer a little. Not sure whether this theory or expectation will play out. But many countries may be hoping so.
You know you could regard Omicron as a kind of vaccine. It certainly exposes you to covid nucleocapsid, membrane, and spike protein in a very safe way. It's as contageous as measles. It's just a shame that the vaccines weren't as safe and effective as omicron. Can someone remind me why we're running after kids with needles?
I guess because what you just said relates to science, but at a month or so old, there's no where near the data available yet to validate it. Some UK data is showing an eightfold increase in hospitalisation rates with omicron for unvaccinated people.
So far every previous instance of kneejerk wishful thinking about various covid strains hasn't shown to be long lasting. Maybe this is the time that broken watch gets to be right.
Imagine not believing the huge quantity of vaccine research and worrying about long term consequences, but thinking that omicron has enough research to let it rip through the whole population.
If you think omicron is harmless (and the evidence does look like it's pretty benign compared to other variants), then the vaccine is an absolute teddy bear by comparison.
What's the popular music world come to: they elevate a DJ of all people to the status of a pop star! Is NZ so bereft of talented musicians that they need to import a DJ from Covid-basket-case UK who doesn't even perform and write his own music.
I never thought a trade agreement with the UK would result in this.
I suggest NZ immediately stops all imports from the UK if this is all they can offer us: an Omicron-infected DJ.
Jacinda has been too kind. It's about time she played hard ball and refused entry to any arrivals from all Covid-basket-case countries. And this action would certainly take the pressure off our MIQ facilities.
“Is NZ so bereft of talented musicians”? Yes, unless you count six-sixty, which you shouldn’t.
And a DJ isn’t the only thing the UK gives us, is it?
No need to get hysterical. Like the NZ Reddit, everyone panicking and screaming for him to be thrown in jail. How quickly we went from aroha to lock them up.
The timing of this right ...Just when everyone was forgetting about covid, not getting tested - enjoying summer. We get Omicron announced in the community, an unscheduled press conference, experts warnings over new years, the spread of fear fear & more fear.
This scaremongering approach is getting abit tiresome & predictable.
I think its more a case of the boy who cried wolf.
It gets trickier every time to convince the people that giving up some freedoms has helped to avert some disaster. People are mostly conditioned to some tangible reward for giving up their time and freedoms, e.g. getting paid to work.
It's a curious time to be living through.
Except NZ hospitals are calling code blacks and cancelling much needed surgeries even when they have no covid cases yet. So more a case of the boy crying wolf after the fact as the sheep were all mauled and dying and introducing new lambs to the area with a wolf running in it would be slaughter.
I work in Hospo and already a raft of cancellations for NYE dinners as of last nights news. People who have young kids or live with elderly or immunocompromised are afraid to go out because of Covid. My former colleagues in Sydney are noticing the same thing. It’s hugely different from 2020 here in Auckland
I guess it's down to perception. I'm in constant communication with a wide range of business owners in NZ, and they're all swamped with activity. Overseas demand for our products is greatly exceeding supply. The security offered by prudent pandemic management appears to offer a far better environment than the trains off rails experience overseas.
You have to wonder who's really promoting invisible boogeymen.
This line gave me a bit of a fright - Queensland is reporting 1589 new cases and 7 more deaths. Slight correction- Queensland has had 7 deaths total over outbreak. No deaths in last week. They will get some with cases rising but it will be a few weeks before these occur.
Whilst omicron does sppear milder the case numbers will be huge. A low percentage of a huge number needing hospital will still be a significant absolute number needing care. If we can minimize spread until later in Feb when 3rd doses and 5-11 yr old vaccinations are well underway it would help the health system cope. At some stage omicron will run through the population. But maximizing vaccinations first will make a huge difference. Also good to watch nsw as a similar population to ours. Uk is not comparable as they've had such a different path through covud. That few weeks delay will give us so much more informative about consequences of letting it take off here.
"Crucially, no one in Queensland is in intensive care with Covid, or on a ventilator"
Omicron is a wimp.
https://www.news.com.au/travel/queensland-scraps-pcr-test-requirement-f…
People need to have a coherent strategy. If "omicron will run through the population". What is the rationale in immunising 5-11 year olds. Because if we assume it will become endemic, we are not trying to achieve herd immunity. And most 5-11 years would not have elderly household members. So the logic must be we are immunising 5-11 year olds to protect themselves from omicron. This would seem to be a very marginal risk reward call, on health benefit to 5-11 year olds. And then we need to consider the financial cost of immunising 5-11 year olds. The whole debate and strategy does not seem to be based on common sense. As someone with tertiary education in relevant fields and a doctorate, omicron mortality appears to be 10% of delta. So it is in the realms of a bad flu season. If covid kicked off with omicron in Jan to March 2020, I doubt we would have heard of the term lockdown.
Note I used the term "most", as I am aware of the obvious point you made.
The question is how many cases of omicron that would have resulted in death, will be prevented by immunising 100s of thousands of children. Are all children to be immunised for influenza every year going forward. Will these children also need regular pnuemococcal vaccinations as well.
A pragmatic approach would be a no stigma approach. Vaccination will have marginal benefit for the immunised child. But, if you have medically vulnerable people in the household, it may reduce the chance they will contract covid 19. The government could push that the decision is the parents to make, and if you choose to not vaccinate your children, this is a reasonable decision. Rather than the stigma of labelling people who have had a myriad of previous vaccinations, anti-vaxxers. Note the CDC had to change the definition of a vaccine, from providing "immunity" to "protection", to fit the covid 19 vaccines.
And before I'am labelled an anti-vaxxer. I have had the initial 2 + the Pfizer booster.
Australia's cases are still mostly Delta, that's why it still looks serious. If it were omicron, you'd see a lot of positive tests but not a lot of hospitalisation and less deaths. Always the deaths are those with underlying/existing conditions (except from a bullet which is not a pre-existing condition) or vulnerable, almost never healthy persons.
High vaccination rates is ensuring that omicron's symptoms will be mild for just about everyone. Hospitalisation stays are also shorter. Many hospitalised just panicked when they found out they were positive and turned up to the hospital even though they did not have serious symptoms or any at all. Those who needed oxygen are a lot less in number than with Delta, and those who needed ventilation even less. And again, these will be mostly people with pre-existing conditions/comobidities.
Natural infection from Omicron will guarantee stronger resistance to future and current variants than vaccines (at least the current vaccines used). The mRNA vaccines only give you a couple of the immunoglobulins needed to fight off a virus effectively. Natural infection gives you a lot more, especially the IgA immunoglobulin which stops a virus (in a healthy individual) before it gets to the lungs where it will mess you up big time.
None of what I said is speculation or theory, only based on data from official sources from health ministries of the UK and S Africa.
One thing that is speculation at this time and worth a look, is that Japan has abnormally low numbers of covid, and that their numbers started dropping after they approved the use of Ivermectin, a drug rubbished by much of western media and medical establishments. Ivermectin is long established, effective and cheap (patent expired) - which threatens the drug companies' profit margins and investments so far from governments into a vaccine. So there has been a campaign to dismiss or even smear Ivermectin.
All the grumbling about the government's handling of things, when we should be looking at the multinational multi-billion dollar pharmaceutical companies... Pfizer has made $33 billion this year just from the vaccines - just one item in their vast catalog of products. Think about that.
Fun fact different mutated strains are not the same virus and your logic is severely broken https://xkcd.com/2557/ why do you want to get infected? to get immunity, why do you what immunity? to prevent you from getting infected by the same virus... hmm a bit broken logic and laughable. Protip a vaccine will give you immunity without getting infected and without infecting your friends and family and gambling with their lives and incomes.
I reckon we are now in the most dangerous phase of the pandemic. It is not about Omicron itself, but our fatigue after the 2 years-long battle with Covid19.
The contradictory reports regarding Omicron make it worse. Omicron itself seems to act as HCov-229E that causes the common cold based on some of the reports, but others say otherwise.
Even if it is confirmed Omicron does very little damage to people who have got some level of resilience (either via vaccination or/and previous infection). I'd like to remind you that the 2nd biggest economy China does not have an exiting strategy yet. CCP's brutal elimination approach plus their useless homegrown vaccines are now the biggest problems to them, and us.
...the common cold based on some of the reports, but others say otherwise.
Those others who say otherwise have a right to be cautious (there will always be opinions on the spectrum of thoughts), but after two years of this pandemic, many are looking for hope and optimism rather than pessimism. And those others need to look at the data coming out of the UK and S Africa...
Given the choice of self isolating at home ALONE or being forced to stay in an MIQ facility with lots of other Omicron infected cases in close proximity, perhaps in the next room and using the same lift buttons, door handles and handrails, which would you say would be most risky? There were lots of cross contaminations in MIQ with Delta and Omicron spreads much easier in the air. We are putting the old and infirm at increased risk for ?
We just had someone self isolating at home alone that hasn't followed the rules, so we have a new strain in the community. If we removed facility isolation altogether, it would be a fair assumption that we would have a lot more covid in the community.
So it's the few thousand in MIQ, vs 5 million people being exposed.
Covid has billions of potential hosts on Earth. There's millions of active cases out there, which we can see are resulting in various new strains evolving as it passes through hosts. These strains are going to have a varying level of contagiousness and severity.
So it stands to reason that for the time being at least our borders have to remain restricted.
for delta i would have agreed with your point. but Omicron has proved MIQ's worth for this period of time , the number of Omicron cases daily coming in now would start spot fires all over the country, after Feb 1st, or my pick april the 1st fine. open up the country and get rid of MIQ, people would have had a chance to get a booster or their kids vaccinated , for now i want to enjoy my holiday relatively covid free in NZ and if i catch it make it after the summer please when the weather is no longer good and i prefer to be inside anyway
Maybe, but who really knows.
NZ and OZ were both Covid free. Then Delta came, and Australia were slower to contain it. NZ was faster, and that bought us valuable time getting our population up to a high level of vaccinations, and our case counts are yet to mimic Australias, when by all rights we should be up in the 500-1000 cases a day, or more.
Who is to say that time we bought hasn't made a significant difference in the severity of our community transmission. Regardless there's something that has separated our experience from Australias.
Because people of any nationality travelling from overseas are our most likely transmission route for Covid variants, and how long the virus' incubation period is.
You'd think after nearly 2 years this sort of thing wouldn't need to be kept being explained. It's like a kid in the backseat asking if we're there yet.
I have friends and family all over the world. Most of them would prefer to have been in NZ in recent times. I have a relative in Australia with a recently diagnosed severe brain bleed, and with high levels of covid amoung hospital staff there, the treatment is very hit and miss. That's not fear, that's the reality of medicinal requirements for surgical staff to be free of viruses of any sort.
I have found in my experience that when life throws you a curve ball, you have to pick the least shitty option and get on with things.
Perhaps there is a better approach than our governments, but I haven't seen it. I can split hairs over some decisions, but any organisation public or private doesn't always get things right.
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