Here's our summary of key economic events overnight with news markets are handling the Ukraine situation calmly so far.
As Ukraine braces for open war as Russian forces move deeper into their country, the rest of the world is bracing for the economic impacts however, which is including aggressive cyber war. RT is central to their global disinformation push. Spillover will no doubt affect New Zealand at some point.
EU and US sanctions are hitting the value of the ruble (its now at an all-time low) and the yield on Russian bonds (with the 10yr now approaching 11%). Their 9% inflation rate is expected to rise. Even though current sanctions only formally hit Putin loyalists (the oligarchs), they will still have a tough impact on ordinary Russians. And there will be loud echoes in EU and other global financial markets too.
Meanwhile in the US, retail sales growth continued its strong recent expansion last week, still rising far faster than CPI, so it is still recording 'real' volume gains.
Mortgage applications fell sharply last week, down to their lowest level in more than two years as their benchmark 30 year mortgage interest rate continues its slow but relentless push higher.
Today's tender of US$62 bln of UST 5yr bonds was well supported, but the yield rose from 1.49% at the equivalent tender last month to 1.83% pa today.
January industrial production in Taiwan continued its impressive run up +10.0% and rising faster than for December. Even more impressive is a resurgence in retail sales in the country, up +6.4% from the same month a year ago when inflation is rising +2.8% over the same period.
EU inflation was up +5.1% in January, with both Germany and Italy recording the same (on a harmonised basis) but France was at +3.3% and Spain at +6.2% rounding out the major four economies in the block.
One thing the Ukraine crisis is doing is raising global food prices. Wheat, a major Ukrainian export, it now trading at a nine year high, up almost +30% in a year. It has big implications for bread prices. It isn't the only commodity rising; palm oil and soybeans are too.
China is on a self-sufficiency program - again. There seems little in this latest push different to all the others.
In Australia, their wage index was up, up +2.3% year-on-year. But that is not strong enough to make a June rate hike more certain than not.
In NSW, there has been 8,931 new community cases reported yesterday, now with 100,745 active locally-acquired cases, and another 6 daily deaths. There are now 1,246 in hospital there and holding. In Victoria they reported 6,926 more new infections yesterday. There are now 42,016 active cases in that state - and there were also 18 daily deaths there. Queensland is reporting 6,301 new cases and 37 (not a typo) more deaths. In South Australia, new cases have fallen to 1378 yesterday and 3 more deaths. The ACT has 946 new cases and no deaths, and Tasmania 842 new cases and no deaths. Overall in Australia, more than 25,000 new cases have been reported.
The UST 10yr yield opens today at 1.98% and up +5 bps. The UST 2-10 rate curve starts today a touch flatter at +39 bps. Their 1-5 curve is also flatter at +75 bps but their 30 day-10yr curve is steeper at +195 bps. The Australian ten year bond is up +2 bps at 2.26%. The China Govt ten year bond is down -3 bps at 2.83%. But the New Zealand Govt ten year is up sharply, up +10 bps at 2.80%. There was a loud echo in swap rate markets yesterday after the hawkish RBNZ signals with the two year reaching a six year high.
Wall Street has opened slightly lower, down -0.2% in its Wednesday afternoon session. Overnight European markets fell a similar amount except London which was flat. Yesterday Tokyo was on holiday, Hong Kong gained +0.6% and Shanghai gained +0.9%. The ASX200 ended its Thursday session up +0.6% and the NZX50 ended up +0.2%.
The price of gold starts today at US$1910/oz and up another +US$7 from this time yesterday.
And oil prices are down -50 USc at just under US$91.50/bbl in the US, while the international Brent price is just over US$94/bbl. But it has been a rollercoaster ride for oil in between.
The Kiwi dollar will open today up another +¼c at 67.8 USc. Against the Australian dollar we are up slightly at 93.6 AUc. Against the euro we are also firmer at 59.9 euro cents. That means our TWI-5 starts today at just on 72.2 with another daily gain and the first time it has been over 72 in five weeks.
The bitcoin price has risen +2.2% since this time yesterday and now at US$38,670. Volatility over the past 24 hours has modest at +/- 1.1%.
The easiest place to stay up with event risk today is by following our Economic Calendar here ».
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94 Comments
Officially stopped scanning my covid app today.
Been at 3 locations with positive cases last week. Have been informed verbally or in writing by all of them. Scanned in to all of the places. I have not got one ping on my covid tracer app. What a joke, good bye and good riddance.
VTHO: You are consistent in your attitude.
It would be better to stick with the programme, annoying and cranky as it is. You know-- New Zealanders working together, a bit of work in it, but there is a problem to deal with.
6000K positives today so it seems the prediction path relatively right. And after a bit more drama to come passes and signing in will go Finished and gone. But given we had not heard of Omicron until December lets not get all hasty because there might be yet another curve ball. .
What you seek about restrictions ending will come, just might take some months yet. Todays announcement of reduced requirements are part of that and well flagged and understood. But impatience and what you advocate might lead to disaster.
Overall I think this government has done and is doing well with a tricky virus, and a tricky population.
(disclaimer: I still will not be voting Labour, because of their determined and destructive wokeness, massive increases in the civil service with even less implementation than before, and Grant Robertson's mad borrowing)
It is everywhere already, if you go ANYWHERE outside of your home, you need to assume exposure.
Scanning is literally pointless now, but go ahead and keep scanning a QR to no avail. You'll get Covid or become a close contact and your app won't notify and you'll be scratching your head wondering why it's not working.
As Kiwis cower in terror of catching a cold, in Iceland:
COPENHAGEN, Feb 23 (Reuters) - Iceland will lift all remaining COVID-19 restrictions on Friday, including a 200-person indoor gathering limit and restricted opening hours for bars, the Ministry of Health said on Wednesday.
"Widespread societal resistance to COVID-19 is the main route out of the epidemic," the ministry said in a statement, citing infectious disease authorities.
"To achieve this, as many people as possible need to be infected with the virus as the vaccines are not enough, even though they provide good protection against serious illness," it added.
The GP College in NZ has said Omicron is basically a cold for most vaccinated people:
the situation has changed dramatically with Omicron, which is not Delta - it's much more like a common cold
The excess mortality experienced from COVID being the key point referred to, obviously. From the start until now.
For vaccinated people is also fundamental, as you correctly identify. Before that, it wasn't just a cold. Many of the folk spouting "just a cold", "sniffles", "just the flu" seem to have overlapped significantly - at least in circles I've seen - with antivaxxers, and many of them long-term antivaxxers.
Yes, the government are again a bit slow in keeping up with Covid developments and whilst I have zero respect for those that refuse to be vaccinated, we are well past the point of being able to halt Covid spread in the community via the overwhelmed contact tracing system or even the vaccination mandates (all those that are smart enough to be vaccinated will have done so by now so mandates are no longer a stick to drive people to get vaccinated). We know Omicron can be caught by and passed on by the vaccinated as well as the unvaccinated so just let those stupid enough not to be vaccinated suffer the significantly higher risk of serious illness when they catch it. I suspect that the government may well have axed the divisive vaccination mandates already if it wasn't for them not wanting to be seen to capitulate to a totally out of control rabble outside Parliament. The Covid rules have all got too complicated but now I think the bottom line is simply to get vaccinated and boosted and to wear masks in public areas.
Probably that the numbers coming into the country are restricted by MIQ spaces - if it was unrestricted there would be thousands.
But your point is valid and MIQ is starting to be dismantled beginning on the 28th, and once we get as many cases as the rest of the world it will become pointless.
I got boosted on Tuesday. After my wife's experience (you may recall I indicated she went down hard for a week, vomiting, nausea, headaches - the works) I was more than a little nervous, but in the end nothing to speak of as to effect, slightly sore arm, but a gym workout yesterday has sorted that.
The reason I ask is not just to learn peoples experience but to understand a lot of the variances in opinion. My big concern is the evidence of COVID, any strain, leaving blood clots and causing long term down stream effects. Hope not to catch it even though i'm vaccinated, but still doing the usual shopping and gym etc.
Brock,
I wouldn't be quite so sure. https://newatlas.com/health-wellbeing/heart-cardiovascular-long-covid-d…
My Grandfather died of Covid in Feb last year. But really he was at the end of his journey and Covid was the push.
My wife had a mild cold for two days. And then a post infection cough for a couple weeks. The kids both fell asleep on the couch at about 2pm and got up the next morning, that was it.
I had two days that were pretty poor, but better than the flu. More worrying for me, I did my first proper work out earlier this week, six weeks later. Felt like I had a faulty battery. All better now.
My sister-in-law (mid-50s) got it and all she had was a loss of sense of taste/smell, which is really bizarre because Omicron does not have that loss of taste/smell (supposedly) while the earlier variants do, yet she was perfectly fine except for that.
My guess is the vaxx helped reduce the severity (if it was Alpha/Beta/Delta, and not Omicron).
My wife and 19yo son both have pretty bad 'flu-type' symptoms, can still smell and taste, and have been bed-bound with intermittent coughs for 3 days, 14yo daughter and I (53) both negative according to RAT tests today, son and wife tested positive with same batch. All of us vaxxed and boosted.
A big part of the reason for that is our Government has effectively shut down all mineral exploitation with no transition plan away from it, where as Aussie refuses. Under the free market successive governments exported not the products, but the factories and jobs that made them.
So after decades of incompetent government we are in a hole that none in Wellington will acknowledge, or do anything about. Their silence on the closure of the Marsden Point refinery speaks for itself.
That Marsden point decision could really come back and bite us if things kick of in Europe. I doubt NZ is top priority when it comes to Oil/Fuel demand in the worldwide scheme of things, any disruption to fuel shipments down here could have a devastating effect on internal supply chains.
The crude that was refined at Marsden was imported too. So little difference to importing crude to importing refined fuel if supply chains are an issue. And worth noting that the shareholders chose to close Marsden as it was not profitable, not the government. Closing Marsden also frees up a lot of electricity (enough to run 100,000 EVs per year) and they are building a large scale solar farm there. Shifting to energy generated in NZ is a much better resilience strategy than relying on imported fuels.
Hopefully this energy transition goes past the early planning phase. My scepticism stems from the fact that output is limited to speeches and comms on everything transformational our government gets involved in.
https://www.stuff.co.nz/taranaki-daily-news/news/300514091/value-of-tar…
Agree on the crude throughput at Marsden Point. Our high quality (low sulphur) crudes sell for a premium to overseas (Brisbane) refineries whilst we were able to deal with cheaper imported low grade crudes at Marsden Point because the plant was built in the 70's to handle just about anything (crude-wise).
On the EV's, everyone seems to think they are so wonderful but their lithium batteries are a serious problem to deal with at the end of their usable life (very labour intensive and costly to break down and very environmentally damaging to dump). From what I have read, they only have a life of a little over 120,000 km or 8 - 10 years so that is why we are now getting yet another round of Jap imports, this time used EV's that are well into their limited battery life cycle. The Japs export these used cars so they don't have to worry about dealing with the lithium batteries when they reach their use-by-date.
That lifecycle is far too short. The worst case scenario batteries in the orginal Leaf - low capacity, deep discharge, high cycling, no thermal management, poor chemistry - are still going strong at about 60% capacity. These batteries are still working and useful just the range starts to fall below what is needed for transportation. They can then be used for another 10 years in static installations.
Flip the Fleet based out of Dunedin are tracking the degradation of batteries across the EV fleet. Just for the Leaf, the newer 40kwh battery (improved capacity and chemistry but still not thermally managed) is degrading at half the rate of the 24kwh batteries and are forecast to have 80% state of health after 10 years - good for 220km of range.
Any battery going into a new EV now has a life of 500,000km (some upto 2,000,000 km) and will outlast the car around it.
Bit miffed at the change to a 'close contact' only being someone you live with. That means that for my family, with an infant, we'll only know we've been exposed to Covid if one of us actually gets it and tests positive. If someone with it wanders into our workplaces, my understanding is we'll get no warning or heads-up at all.
With a long incubation period of the virus, you will never know where you got it mate. All this scanning, cleaning and closing of places when someone tells a business that they tested positive is pointless because the people were symptomatic days before they get sick and would have already passed the virus.
Either do deep cleaning of business everyday at the hour or its pointless. But happy to be put straight if there is something I do not understand.
don't meet anyone, don't go anywhere, live a hermits life if you so scared of the virus. Or just get vaccinated, triple boosted and hope for the best. Any other choices except sanctions, mandates, lock downs are welcome.
You have explained the reality that the rest of the world, some exceptions, China, Taiwan & Western Australia for example, has come to accept & adapt to. This government has always been playing catch up, only reacting after rather than before an event, therefore so too all of us.
It's all but out of control, with case numbers almost certainly 10x what is being reported, as epidemiologists are saying. Because it's everywhere, everyone is going to be exposed unless you hide. And because it's everywhere, all the controls the government impose are now useless/pointless, the only thing you can rely on is your vaccinations and your own PPE. Locations of interest should now read: Everywhere.
Which is why they should remove the mandates which will lead to the end of the Wellington protest super spreader event, which will now be infecting the police force.
Ironically NZ has reached the same point that the USA arrived at right the beginning. That is no amount of regulation or restrictions would stop transmission. And at that point it immediately became an individual responsibility to protect yourself. Stay mainly at home, wash hands , wear masks, keep social distancing. NZ ‘s highly successful lockdown & isolation insulated us from the crises overseas, and the subsequent introduction of vaccines & pharmaceuticals provided critical safeguards for us. But now NZ & NZrs have arrived on that same playing field like it or not. Covid is amongst us spreading fast, take individual responsibility. Nothing the government can do to change that reality. Of course being able have a RAT test on hand would be very helpful & provide some reassurance, but unlike any other country, NZ will not allow individuals to purchase.
Do you really want to be locked away for 7 days every time you share a space with a positive case?
Being categorized as a close contact won't protect you, it's purpose is to stop you going out and passing it to others.
On another note, I'm in the same situation with an infant in the house. Doesn't look like there's too much to worry about though, as NSW have only had a total of 4 deaths in the 0-4 age bracket out of about 200000 cases.
No, because we should be able to get a couple of RATS and get back to work once we've got negatives - but we made such a pig's ear of the RATS roll-out and the PCR testing capacity that now both are going to be strained. Worst of both worlds. Give me the ping, let me get a RAT, and then let me go back to work the following day. Simple.
As for infants, it's the long-term effects that worry me more - mum has been triple-jabbed so there'll be some flow-on immunity but I feel like the 'can't be jabbed yet' demographic gets easily forgotten about when everyone is telling each other to just 'harden up' or 'learn to not live in fear'.
Yes the RAT situation is a shambles, I've managed to get some through my workplace (any business can buy them) and will be surveillance testing.
Stock here last time I checked https://dubray.com/collections/rapid-antigen-tests
I believe close contacts have to stay in for 7 days even with a negative test, unless you are a critical worker.
The government support package for isolating employees requires you to be either waiting for a test or having a confirmed positive before you're eligible. So yea, you still need to be getting test in some way.
That's at the moment anyway. Could be totally different by this afternoon. Almost given up trying to keep with it.
The trick with RATs is to take 2. At 0.2 ( or 20%) probability of false negative, once you take two it's 0.2*0.2 = 0.04 (or 4% ) chance that they're both wrong. If one differs, take a third and you have a 96% chance that the two that are the same are correct.
Now we just need access to two RATs...
Even though current sanctions only formally hit Putin loyalists (the oligarchs), they will still have a tough impact on ordinary Russians. And there will be loud echoes in EU and other global financial markets too.
Other nations subject to US sanctions are suffering: Global Times’ online petition demands US return money to Afghans
David you imply that RT is disinformation. Hopefully you are not implying that Western MSM is a paragon of virtue? For myself I find RT reporting quite good. Their lead article today on some unpleasant facts about the Charge of the Light Brigade is an interesting rebuttal to the UK Defence Secretary’s comments.
The Russian Defence spokesman’s comment at the end is priceless: We recommend that British military personnel study closely not only the geography of Russia but also its history, in order not to enrich our common military history with their lives for the sake of poorly educated British politicians,” Konashenkov concluded. Talk about a veiled threat......and surely not disinformation.
US Colonel Lang commented: Is DoD briefing retired media talking head generals and colonels again?
After watching the vacillating performance of talking head generals on TeeVee over the Ukraine matter, the question arises as to whether or not they are being “pumped up” by the Pentagon on a regular basis. In the Rumsfeld era this was routinely done. Some people were briefed in private, but others were invited to meetings with 20 or 30 others. These were presided over by Rumsfeld himself backed up by a couple of advisers. I was invited to one of these. I asked a couple of awkward questions to which Rumsfeld replied that he did not know the answers. I was not invited again, but that was all right as a number of those briefed talked to me regularly. Kellogg, Keane, Clapper, Petraeus, etc. IMO these people are probably on the briefing list.
I do find it very curious though how many of the same individuals can be very pro a Russian state news organisation while being quick to rant against Radio New Zealand.
Does make me wonder how much it may be driven by social media algorithms and echo chambers. Is it just a case of "this source tells me what I've been growing to think so I like it"?
One thing the Ukraine crisis is doing is raising global food prices. Wheat, a major Ukrainian export, it now trading at a nine year high, up almost +30% in a year. It has big implications for bread prices. It isn't the only commodity rising; palm oil and soybeans are too.
Is Russia paying carbon tax? Will be good if we can find a way to make some money out of the Russians.
Well Prince Charlie at 73 has had a covid dose with no major effects and no hospitalisation. Queenie at 95 also has covids and so far appears to be a bad cold. Two vaccine doses and maybe a booster?
MSM TVx here a day or two ago paraded a young woman 20-30? who gushed about how bad it was, aches and pains. Unfortunately didn't get the whole story so was unable to know vaccination status of the affected.
As it is a novel virus, it means nobody's immune system had seen it before. So different people will react differently, which is why we see such a wide array of symptoms and outcomes.
Anecdotes of how it affects individuals aren't worth anything in terms of saying what people should expect. Best bet for everyone is to prepare for the worst, but not be too worried about severe effects or death if you are vaccinated and even less so if you are boosted. In this way, I don't mind MSM showing someone who has had it bad.
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