Australia decides to not respond to its omicron surge

4m ·

Australia decides to not respond to its omicron surge

Kia ora,

Welcome to Thursday’s holiday edition Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the International edition from

Today we lead 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 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.

In South Korea, 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 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%.

You can find links to the articles mentioned today in our show notes.

And get more news affecting the economy in New Zealand from

Kia ora. I'm David Chaston and we’ll do this again tomorrow.

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