A review of things you need to know before you go home on Monday; no retail rate changes, scary quarantine failure, NZD/AUD to fall, swaps firm, NZD firm, & more

A review of things you need to know before you go home on Monday; no retail rate changes, scary quarantine failure, NZD/AUD to fall, swaps firm, NZD firm, & more
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Here are the key things you need to know before you leave work today.

MORTGAGE RATE CHANGES
No changes announced today but the Kiwibank one year one came into effect today.

TERM DEPOSIT RATE CHANGES
No institution changed any TD rates today.

PUBLIC HOLIDAYS
It is Anniversary Day in Wellington today. Government offices are closed there and that includes both Statistics NZ and the RBNZ. (Their offices in other centers are open however.) Tomorrow, it is Australia Day (or in some circles, Invasion Day).

MIQ BREAKOUT
The Government has confirmed genome testing reveals the new community case has the South African 'variant' of the virus, infected while in managed isolation.

FAT SURPLUS, AGAIN
The Australian December merchandise trade surplus of AU$9 bln was a significant increase, up +AU$7.4 bn from the November surplus. Exports of iron ore and cereals are the strongest in history, resulting in the fourth highest goods trade surplus ever recorded there. Their strong surplus is heavily influenced by trade with China. Imports from China fell -7% in December, while exports to China increased+21%. Australia’s goods trade surplus with China alone stands at AU$5.2 bn for December. Despite Beijing's attempt to use trade to punish Australia just isn't working.

A RELATIVE FALL DUE
Westpac analysts see the NZD falling to 90 AUc over the next few months. They see both economies improving, but the Aussie one improving more than the Kiwi one.

GOLD PRICE SLIPS
Gold is trading in Australia, and soon in Asian markets. So far today it is down -US$2 from the end of trading in New York on Saturday to US$1854 and back to almost the closing level in London last week.

EQUITIES UPDATE
After a strong +2.4% gain last week, the NZX50 Capital Index has slipped a minor -0.2% by late trade today. The ASX200, which gained +1.3% last week, is up another +0.4% in early afternoon trade today. Shanghai has opened down -0.2%, and Hong Kong has opened up +1.1% in very early trade there. The very large Tokyo market is up +0.5% in their first session of the week. The futures market suggests that the S&P500 will open tomorrow with a small +0.3% gain.

SWAP & BOND RATES SOFT
We don't have today's swap rate movements yet. They ended last week with a firm rise but will probably soften from there today. If there are material changes when the end-of-day swap rates are available today, we will update them here. The 90 day bank bill rate is unchanged at 0.29%. The Australian Govt ten year benchmark rate is down -1 bp at 1.07%. The China Govt ten year bond is down -2 bps at 3.15%. The New Zealand Govt ten year is lower by -5 bps at 1.07% but still above where the earlier RBNZ fix was, at 1.06% (-1 bp). The US Govt ten year is down -2 bps at 1.09%.

NZD FIRMS AGAIN
The Kiwi dollar is now at 71.9 USc and slightly firmer than its open this morning. On the cross rates we are firm against the Aussie at 93.2 AUc. Against the euro we are slightly firmer too at 59.1 euro cents. That all means our TWI-5 is up at 73.3 and exactly where we left it on Friday.

BITCOIN FIRMS
The bitcoin price is now at US$32,538 and +1.9% above where is was it at the opening of trade in New Zealand today.

This soil moisture chart is animated here.

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

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34 Comments

14
up

Wellington was probably no less effective and efficient today. In fact, it was probably more so.

10
up

More nonsense from the government – at best 57th in the queue and falling further behind fast:

https://www.bloomberg.com/graphics/covid-vaccine-tracker-global-distribu...

Jan 25th – “The biggest vaccination campaign in history has begun. More than 65.6 million doses in 56 countries have been administered, according to data collected by Bloomberg. The latest rate was roughly 3.38 million doses a day, on average.”

https://www.tvnz.co.nz/one-news/new-zealand/new-zealand-front-queue-chri...

Hipkins back in November:

"Without going into detail I think we're in a very good place to ensure that as vaccines start to come to market New Zealand will be at the front of the queue to be getting vaccines," he said.

12
up

Why should we be at the front of the queue? A dose given somewhere else in the world has far more potential to save a life, I'd far rather all available doses were going to places where the virus is out of control before us.

10
up

Why would we hold our representatives to account indeed.

Exactly – Hipkins didn’t raise any moral or ethical considerations/provisos at the time of his statement - "New Zealand will be at the front of the queue to be getting vaccines."

Now that it’s patently obvious we’re not at the front of the queue, and in reality perhaps never were – this side-line smoke and mirrors “others need it more” line gets trotted out.

Yep. We know that the government likes to play misdirection games - how many times did you hear about a Cook Islands travel bubble whenever there was a little too much scrutiny over the government's track record? - so this is nothing new from the 'master communicator'. They know what they are doing. Watch as Q2 2021 becomes Q4 2021.

I imagine its like being at the front of the queue to the nightclub but then a car load of VIPs arrives.

Yep I imagine our bargaining power is very low on both the humanitarian front (no one is dying here) and the business front (our team of 5 million is significantly smaller than most).
Would anyone want it anyway? I am not an antivaxer by any stretch of the imagination, but in this case I would prefer to wait it out...

I'd take it, no issues. I'm not at risk in any particular way and in my 30s, but of course I'd take the opportunity to maybe spare myself a nasty illness or spread it around to the vulnerable. I'm in Healthcare so expect I'll be offered it before too long - my old colleagues in the UK have already received it.

Certainly seems to be less risky than catching the disease, and I'd be doing my bit for herd immunity. It's just like how I take the flu vaccine each year - flu almost certainly won't kill me but if I can help keep it away with a quick jab in the arm then I'll take it.

In this particular case I’d be worried about it being rushed. It seems funny to me that after one vaccine was ready there were all of a sudden many more ready.
I highly doubt there would be an issue with the vaccine, but likewise I highly doubt I will get Covid in NZ, so I’m not exactly putting my hand up.

Are you surprised when sprinters finish their races at similar times too? The vaccine companies were all in the same race, jumping through the same hoops, and running very similar trials. There was a huge rush to be first, and I'm not surprised it was a close race.

The risk of catching covid is currently small, but the only way to keep it that way long term without major sacrifice is through herd immunity, either via massive repeated outbreaks or through vaccine. I will do what I can to achieve the latter.

sparrow.... agree and also interesting to see that after all his rambling on equality over the years Trudeau has reserved 3 vaccines for every Canadian citizen. What a two-faced (one black and one white), hypocritical little man.

The Five Eyes allies nonsense means very little in reality.

With Trump leaving, Brazil backtracks in its opposition to Huawei's 5G bid

Fu Liang, a Beijing-based telecom industry expert said on Sunday that as Trump leaves the White House and the US failed in its promise to provide badly needed vaccines to Brazil, which has been hit hard by the virus, Brazil's committed pro-US stance naturally did not materialize.

We should be at the back of the queue, way back. We will be inoculating ourselves against a virus we have basically kept out, while half of the world desperately needs it to save lives. Our frontline MIQ workers only and maybe the pacific islands. Thank god we are part of the COVAX initiative. I would hate it if we were one of the countries "trying to get around" it. There are limited supplies of the vaccine and will be for quite some time, it should go to the right places first. The WHO is organising this, you can read about their methodology here: https://www.who.int/publications/m/item/fair-allocation-mechanism-for-co...

Biden get in and appoints hawks.

Australia pledges a billion on defense.

Join the dots.

If you've ever wondered why the US is so adept at getting other nations to align with it, this is why. Australia is not aligned with the US to protect itself from China. Australia is aligned with the US to protect itself from the US. #auspol Link

Back into Syria with more US troops. I expect Venezuela will attract some more sanctions as well.

Katherine Rich posted an interesting article on ballooning shipping costs sending businesses to the wall in the UK. Nobody in NZ and Australia seems to be talking about this. Should boost the CPI and make life tough for importers and exporters.

"We were paying £1,600 per container in November, this month we've been quoted over £10,000," says Helen White.

The founder of start-up Houseof.com, which imports lighting from China, says the rise in shipping costs means she's making a loss on what she sells.

https://www-bbc-co-uk.cdn.ampproject.org/c/s/www.bbc.co.uk/news/amp/busi...

There are significant freight issues for exporters, and importers of essential industry goods and parts in NZ. I am more concerned about that, than the lack of non essential consumer goods in NZ.

Thanks for these links Andrew. Very informative.

I did hear, and maybe someone on here could confirm, that the shipping companies are wanting to create a hub in Australia for NZ sea freight and then freight is sent from the hub to NZ and vice versa. Maybe someone could explain the implications of that - e.g. would that likely mean smaller ships with less capacity = greater delays??

TherE have been moves at foot to rationalise NZ shipping into 4 ports the regional ports acting as hubs. I wonder if we refused to budge so the big guys said lets do it in Aussie then,

Who was the Wellington genius who felt water tanks weren't an essential service business over the lockdown?

My electrician tells me house wiring is also in short supply and picked up a couple of my unused rolls because he couldn't get any from his suppliers. A housing shortage, labour shortage and a wiring shortage. And more mystifying - an inflation shortage.

Whats a wiring shortage got to do with the the government? Geez profile do you ever not blame them?
First, China is sending out a lot more exports to the U.S. and Europe than the other way round. Its economy bounced back faster as the virus situation within its borders was basically under control by the second quarter of last year. As a result, containers are stuck in the West when they are really needed in Asia. Delays and rates have now shot up...some 300%

Edit: Did the water tank manufacture shut voluntarily?

Did the Covid grants over lock down not keep them in business? Must have not been viable of so?

NZ produce is ending up in foreign markets in an inedible state. Katherine highlighted that on LinkedIn.

Lol. I always thought Manuka Honey was expensive sh*t packaged for pretentious foreign markets, but I was wrong.... it was just poison.

It is well below acceptable levels and to quote NZ Food Safety:
For a real world example, a five-year-old child who was consuming honey with the default maximum residue level in New Zealand would need to eat roughly 230kg of honey every day for the rest of their life to reach the World Health Organisation acceptable daily intake for glyphosate.
I think that is a very credible risk......../s

Colin Hurst- Federated Farmers

That hardy perennial – concerns about glyphosate – has cropped up again.
Stories on Radio NZ this week were prompted after random testing by Japan found glyphosate traces in NZ honey imports for the second time. Japan’s Ministry of Health, Labour and Welfare has told MPI that if 5 percent of imported honey exceeded its glyphosate limit, it would block future imports. Of our $490m of global honey exports last year, $68m worth went to Japan.

NZ Food Safety has responded by requiring glyphosate testing in an approved laboratory of honey heading to Japan. If test results aren’t provided, MPI would not grant export certification for that consignment.

At least there was balance in the RNZ reports. They came to us, and Apriculture NZ, for comment and broadcast the fact our two organisations had been talking about safe use of this herbicide, including getting that message out to landowners, and to councils that use glyphosate in their parks and reserves.

Glyphosate is Round-up. It’s in garden sheds everywhere.

Despite its use being widespread around the world, the International Agency for Research on Cancer (IARC) has classified it as probably carcinogenic to humans. But as NZ Food Safety concluded, the IARC data did not indicate any credible risk to users of the weedkiller or to consumers of produce with residues of glyphosate in compliance with New Zealand's maximum residue levels.

For a real world example, a five-year-old child who was consuming honey with the default maximum residue level in New Zealand would need to eat roughly 230kg of honey every day for the rest of their life to reach the World Health Organisation acceptable daily intake for glyphosate.

I don’t need to tell New Zealand farmers how vital a tool glyphosate is. As Nuffield Scholar and Federated Farmers Seedgrowers rep Hamish Marr told the PINZ Summit last year (read more) there would be huge ramifications for farming – and the environment – if we could no longer use it. For starters, we’d have to revert to full cultivation/ploughing, with significant downsides for greenhouse gas emissions and sediment in waterways.

The glyphosate traces in honey is a puzzle. Bees gather nectar when plants are in flower, but if a plant has been sprayed with glyphosate, there’s no flower because the plant will be dead. I do wonder if this has something to do with glyphosate use in forestry.

Anyway, the underlying message is: Use according to instructions. The conditions under which it should be used are on the label for good reasons. Be (bee!) sensible.

JC - Nations that allow the shopkeeping community to dominate their economic affairs are always at risk of sea lines of communication (SLOC) disruption.

Amazon is a case in point for the US - how did a shopkeeper become the second richest man in the US?