Here's our summary of key economic events overnight that affect New Zealand with news China is in a new pandemic battle.
But first, there was another dairy auction today, and this one brought lower prices again - this time down by -1.0% in US dollar terms but in NZ dollar terms it was a more serious -2.3% fall. Almost all this drop is attributed to the high-volume WMP product which fell -3.8%. On top of the continuous sliding from March, these declines are mounting. In March, prices jumped +15%. Since they have given up all of that to be just +1% higher than before the big March gain. Analysts and Fonterra will be re-thinking their 2021/22 farmgate price forecasts. On a pure formula basis, today's prices take it back to $7.92/kgMS and at the lower end of most analyst's ranges and even below Fonterra's mid-point.
In the rest of the world, the US LMI logistics managers index is holding at its very high level, boosted this month by rising wholesale prices.
US factory orders for June came in slightly better than expected, but also slightly lower than for May.
New data shows that rents are on the move sharply higher in the US as tenant demand soars. In June, they were up +15% for new leases from a year ago, and average occupancy is at a 20 year high at 97%.
In China, they are implementing a wave of travel restrictions and quarantine orders to confront a delta-strain pandemic resurgence brought in from Russia, the scale of which has not been seen since the country’s initial explosion of cases from Wuhan last year. Mass testing and cash incentives for dobbing in suspected sufferers are part of the new efforts. Of particular concern to officials is to keep the virus out of Beijing - "the capital must be protected at all costs".
China is not unique in battling the delta strain of course - but they are unique in the mass social controls they bring to bear on their populations - and if they still have problems using these, it is hard to see how others can get on top of their outbreaks without full vaccination coverage. Policymakers are starting to adopt policy resignation strategies, and trying to make these sound 'positive'.
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Yesterday afternoon's RBA decision to not delay the tapering of its asset purchases is a hawkish signal to markets. It seems likely they will hike rates in early-2023. There were expectations they would delay the tapering of its bond purchase program in response to the Sydney lockdown. But they said they are still on track to reduce its QE purchases from AU$5 bln per week to AU$4 bln starting in about a month. They may even reduce it from there again before the end of 2021. This hawkish stance dragged the NZD higher with the AUD.
According to official data, the number of dwellings consents approved in Australia fell -6.7% in June for a third consecutive month, following a -7.6% fall in May and a -5.0% fall in April. But that is after a record high in March and the June 2021 level is +29% higher than the pre-pandemic level.
Similarly, Aussie lending for housing fell in June from a record high in May to be a massive +91% higher than the pre-pandemic level in June 2019.
There were 199 new community cases in NSW yesterday with another 111 not assigned to known clusters, so still going backwards there. Victoria is reporting just 4 new cases. Queensland is reporting 16 new cases. Brisbane's snap lockdown has been extended.
On Wall Street, the S&P500 is higher today by +0.6% and just under the new all-time record high. Overnight, European markets were mixed with Paris up +0.7% and Frankfurt down by -0.1%. Yesterday the very large Tokyo market fell -0.5%, Hong Kong fell -0.2% and Shanghai also fell -0.5%. The ASX200 fell -0.2% while the NZX50 Capital Index ended flat after being higher most of the day.
The UST 10yr yield starts today at 1.18% and little-changed overnight. The US 2-10 rate curve is to now at just under +100 bps and unchanged. And their 1-5 curve is also unchanged at +58 bps, while their 3m-10 year curve completes the trend at +113 bps. The Australian Govt ten year benchmark rate starts today at 1.16% and up a marginal +1 bp. The China Govt ten year bond is at 2.85% and also up +1 bp. The New Zealand Govt ten year is now at 1.54% and unchanged.
The price of gold is now just at US$1810/oz and down -US$6 from where we were yesterday.
Oil prices have drifted lower again today and by another -US$1/bbl so in the US they are now just over US$70/bbl, while the international Brent price is just over US$72/bbl.
The Kiwi dollar opens today just on 70.1 USc and up since this time yesterday from the RBA decision. Against the Australian dollar we are little-changed at 94.8 AUc. Against the euro we are up at 59.1 euro cents. That means our TWI-5 starts today at 72.8 and marginally higher.
The bitcoin price is now at US$38,145 and down another -4.1% from this time yesterday. Volatility in the past 24 hours has been moderate at +/- 2.7%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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45 Comments
Shipping costs have gone through the ROOF!
Shanghai Freight index, average ~$1000 currently at $3000
Shanghai to LA container rates: Usually ~$2000 currently over $ 10,000
INflAtIon is TraNSiTorY!
https://twitter.com/SoberLook/status/1422489398273249299?s=20
So the prodigal son has returned to Wuhan, wearing new clothes. The vaccine being used there is either insufficiently potent and/or herd immunity insufficiently developed. That does not augur well for NZ should Mr Delta come thru the border, in the near future at least. Vaccination program herecannot be allowed to fall short of either numbers or timeframe. That is so obviously critical. Hope MoH think so too.
Don't worry. We have enough vaccines to go around- enough to even help those in need around the pacific.
Solidarity is priceless, we shouldn't allow worries to overcome virtue.
https://www.rnz.co.nz/news/world/448359/nz-sends-100-000-vaccine-doses-…
And in line with this highly performing government we are sending these to a region that is not really that into a lock down of any sort ruled by a Dictator and given these vaccines must be temperature controlled will largely be wasted even if there was a plan for their dispersal.
Another gold medal in the virtue signalling Olympics we are all a part of.
You raise an important question Foxglove. Is the lack of hospitalizations/deaths caused by the Delta (in the likes of the UK) a result of herd immunity via infection (before we had vaccines) or is it due to the vaccines. Chances are its a combination of both. As I said earlier the authorities in NZ should be watching Israel's current outbreak with a keen eye. There high vaccination rates (with pfizer) & low infection rates prior to the delta wave will provide incredibly good indications as to how we will fear with delta. If there is a significantly higher number of per capita hospitalizations/deaths in Israel vs the UK then we will be in for a rough time.
Pfizer is a mRNA vaccine. Very quick and safe to change the code for the spike protein to match the Delta variant. Has this been done yet? Is this the basis of Israel's proposed 3rd booster injection? Will NZ be able to use the latest version of the Pfizer vaccine (if it exists) and is being late to the vaccination game an advantage?
How arrogant are we to think we can rewrite our rna to make something we dreamed up to maybe help our immune system, then with little to no checking out how this will affect the human population long term we just determine that everyone should have to take it. Its lunacy.
Heavily tested for how long? The DNA sends construction advice to the RNA. In this case if jabbed with the Pfizer or Moderna mRNA we are relying on their made up mRNA to get something right that took all of our history as mammals to get right. And if they get it wrong. If the RNA makes something that isnt so hot. Well its not just a piffling number of us humans is it?
That is the AETEROHA dollar now..or is it spelt Aotearoa...(.who knows))....I will have you know it is....all hail and farewell to New Zealand. The Land of the Long White Cloud....is now clouded in mystery as the World turns on its Axis and a New World Order comes down from on High......sneekily....meethinks.
We are a mixed race, in a mixed up country, led by mixed up individuals, who think they know best, but are mixing it up with a mix of trying to bring the Social Scale up, the Prison scale down, the Housing scale up beyond all recognition, mixed with bringing the cash rate down, beyond all understanding, along with the debt to DTI, and the debt to sickness benefit and the debt to service Health and nurses and Jabs and Aiding other Minor Nations in a Major way. Whilst also filling up our Motels and Hotels, with MIC, the Social Calender, the million dollar debt to income ratio and the over paid, but totally insane levels of Inflated debt to oweing what tomorrow will bring, compared to other Nations of Mixed Member Proportional Race. Some Sheep of course will follow what I mean, some Olympic Hopefuls will be cock-a-hoop, some will share Gold, some will fill their Trough with Gold, Frankinsense and Mirth. Taxation might apply, some will avoid it like the Plague. Land of Hope and Glory, Father of the Free, Over Leveraged, Over here, playing the Game, until we sink, swim, or Flounder. Banks will of course Pay their equity forwards, Split to Infinity. Orr will we just keep our Fingers Crossed......and go for Gold. Overrated by Council and Countries...Alike...in a Race to the Finnish. We is All Blacks.....no racism here.
Not that I am a believer, but Gold, Frankincense and Myrrh are what the 3 Wise men took to the Stables to Stabalise and support Jesus's Birth.....
Still in use today apparently....But we do not have any Wise Men in Power anymore.......But that is just my opinion, not trying to foist my beliefs on anyone...that is a complete waste of my time...I just rant a little.
Lucky we have the ute tax to save the world. "Now, data from global intelligence company GlobalData reveals just how far the global gas industry is from entering the managed decline required for net-zero greenhouse gas emissions.
...Data that charts how gas fields will remain [in production] up to 2100 is testament to the fact that gas is abundant,” says Gordon. “We will never run out, and therein lies the rub. We cannot solve our climate problems through demand shifts only. The oil and gas industry typically acts like a herd. When they are in, they are all in. You can see this in the trillions of dollars of planned investments.”
https://energymonitor.ai/finance/risk-management/exclusive-natural-gas-…
The drummer for the band The Offspring can't tour because he hasn't been vaccinated. His doctor advised him against the vaccine because of a medical condition that he's had since childhood. Furthermore he has had Covid so he's obtained immunity naturally. Can someone please explain the science behind authorities denying natural immunity the same status as vaccinated immunity? That seems unreasonable.
'Overall, our results indicate that mild infection with SARS-CoV-2 induces robust antigen-specific, long-lived humoral immune memory in humans.'
https://www.nature.com/articles/s41586-021-03647-4
A (very) quick browse over some study abstracts showed natural immunity (where it occurred as not all study participants gained natural immunity) only lasting between 6 and 11 months post exposure. You could test for antibodies but it was be costly and overwhelm pathology services.
This guy is essentially saying that if you have a non sterilising vaccine, as is the case with covid-19 vaccines, or promote these vaccines, you are a murderer.
Ultimately he might be right, I don't know enough, but his early description of vaccines is flawed. Vaccines prime the immune system to recognise viruses to enable them to fight them off more effectively. No vaccine has ever been considered to be 100% effective. If vaccinated with what he describes as a "sterilising" vaccine you are not a lifeless piece of rock to the virus, as he suggests. The problem is viruses mutate, and non-mRNA vaccines can only cover known mutations. The promise of mRNA vaccines, which is yet to be fully realised, was to enable the immune system to recognise a virus even if it had mutated. This would hopefully then mean only one vaccination would be required. We are all still figuring this out, and irrespective of how these COVID vaccines are classed in NZ, to all intents and purposes they are experimental and we are still learning about how and if they work, and how effective they will be.
That might have been the promise but looking at the data coming out of Israel it looks to me like the stated effectiveness of the Pfizer vaccine starts rapidly decreasing after three months (enough time to complete a study first). If we want to open the border the old should be last to be vaxed.
https://twitter.com/andrewbostom/status/1421877354708750341
https://www.medrxiv.org/content/10.1101/2021.07.29.21261317v1
"We found that the risk for infection was significantly higher for early vaccinees compared to those vaccinated later"
Its still a preprint but the nine authors have many reviewed papers.
If we want to open the boarder you want to get the vaccine as late as possible. Get the real virus to provide proper immunity while the vaccine still helps.
I agree that the young should be vaccinated first. I suggested that right back in the beginning, partially tongue in cheek. But as time has past, I realise that I was more right than I originally thought. My original rationale was that the young would thoroughly test the vaccination, and this remains true, but more than I thought. It is the young who are protesting the lockdowns the most, and ultimately breaking the lockdown rules. thus vaccinating them first would lessen the negative impacts of those breaches.
I'm not sure I could make the ethical case for coercing the young to be vaccinated with our current vaccines. It would have to via properly informed consent and I don't think we would get anything close to the numbers for heard immunity in that case.
Consider the age group being vaccinated at the moment and the age range reporting side effects:
https://www.medsafe.govt.nz/COVID-19/safety-report-19.asp
That is my logic for currently being in no rush to get a covid vaccine.
I am not a pro -diseaser, but for me being in the least at risk category, while also having the highest potential to experience long term side effects that we are all unaware of yet, makes getting it not really a priority.
If I want to travel, or we actually get an outbreak in NZ then I will of course get one. But at this stage I would rather wait as long as possible.
Also I am opposed to the loss of personal freedoms and rights that global governments have been pushing on their citizens under the guise of Covid. Of which most of these will remain in place once the immediate threat of Covid has passed, they will just find some other bullshit excuse to keep it. Like Israel expecting everyone to get a third shot, or not letting people without a Vaccine passport be able to go to cafes, or any other public place.
Yes, he says it in CAPITAL letters so it must be true. Belongs in the same filing cabinet as climate change deniers. I suspect Covid jabs will work much like flu jabs in the years to come, good but not bullet proof protection. It’s all we have, so why fight it?
As some European pundit said last week: “I no longer have any intention of sacrificing my life, my time, my freedom and the adolescence of my daughters, as well as their right to study properly, for those who refuse to be vaccinated. This time you stay at home, not us.”
I would put 'you stay at home' in capitals. YOU STAY AT HOME. Make your bed and lie on it.
I'm willing to call it on the UK data now, their cases are falling and now hospitalisations are following despite a reopened economy, it's no false dawn. This was achieved at between 65 and 70% vaccination rate and despite having the Indian Delta variant. We should target at least the upper end of that band to be safe before reopening commences.
Now we just have to get back to the the housing crisis and global warming.
I am not as sure as there are 500,000 people a day being told to isolate and deaths are still running at 60-70 a day (similar to us having about 5 die a day)? Surely this is not an economic success story?
https://www.bbc.com/news/uk-57854999
Mass testing and cash incentives for dobbing in suspected sufferers are part of the new efforts.
Welcome to the future, where we will all nark on our neighbours and love doing it!
"My neighbour hasn't got a vaccine passport! He needs to be arrested and forcefully vaccinated for the good of the country!"
There are over 45 Chinese cities larger than Auckland. Shanghai is twice the size of Beijing. "" Of particular concern to officials is to keep the virus out of Beijing - 'the capital must be protected at all costs'. ""
History repeats itself. 200 years ago China had its forbidden palace where the ruling nobs lived. Now it has Beijing.
NZ is no better - 200 years ago indigenous leaders boasted about the advantages of persuading Europeans to live here; they sold them land; helped them set up businesses. Some of those leaders did benefit for a while. At least they did gain a written language, the wheel and a few trinkets but they lost ownership of NZ; now we trade merely for the advantages of the latest mobile phone and plastic trinkets. History is depressing.
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