Delay, but not derail
By Justin Pyvis – Delivered on 08 Sep 2021

Good morning! ScoMo copped a lot of flak for his jaunt to Sydney over the father's day weekend. It was within the rules, sure, but the optics are poor – it was essentially the third holiday he has taken in the past three years while parts of the country were either burning or locked down. 🤨

Now safely back in Canberra for his "essential business", ScoMo revealed that the vaccine passports his government are concocting will work with "the QR code readers that the states have", and that once vaccination rates reached 80%:

"We're not talking about plane loads of COVID going from one state to the next that's a nonsense, that's not what is under contemplation, and I don't think any premier thinks that's the case.

Home quarantine needs to work, and the QR code readers that the states have, they need to work to be able to show whether someone has been vaccinated or not."

It really shouldn't take long to get to that point now that vaccine supply is no longer a constraint. But has he looked at the WA data lately, where the daily vaccination rate peaked back on 25 August (over 3 weeks ago!) and has been in freefall ever since?

If ScoMo truly wants open borders and not just another shouting match with a certain Premier then he needs to introduce incentives to encourage the hesitant to come forward. And he needs to do it yesterday.


Daily % change







10Y Bond










Brent (bbl)





Gold (oz)





Iron ore (t)









Note: Brent oil, gold bullion and iron ore prices are the second futures contract.

The US S&P500 lost 0.34% overnight after Goldman Sachs pointed to a "harder path" for the US economy, with GDP growth in 2021 now expected to be 5.7% (down from the 6% it forecast in August). The bank cited the Delta variant, fading fiscal stimulus and a slower service sector recovery as the reasons for the downgrade.

The tech-heavy Nasdaq index actually finished higher (+0.07%), as weaker growth these days generally means more stimmy and lower rates (great for those sky-high valuations).

Locally, the ASX200 (+0.02%) finished marginally stronger, rallying after the RBA committed to maintaining quantitative easing into February next year (see the Feature below for more on that). The big iron ore miners all finished down after yesterday's big price fall, although stronger futures prices during the day no doubt helped to pare some of their losses.


Heating up: And not just because Spring is here. According to the weekly ANZ-Roy Morgan survey, Australian consumer confidence fell 1.8% to an even 100, "with sentiment now evenly balanced between positive and negative... The most notable thing in this week's release is the jump in inflation expectations to its highest level in almost three years [0.3 percentage points to 4.7%]".

Inflation watch: Consumer prices in the Philippines accelerated to 4.9% in August due to higher utility and food prices, the highest rate since December 2018. The government has a 2-4% annual inflation target but is averaging 4.4% this year.

"Revived with full spirit": China doing what it does best... exporting! August's exports were up 25.6% (from a low base last year), well above a Bloomberg survey that predicted 17.3% growth. Demand from the US and Europe was particularly strong, "as retailers in advanced economies started replenishing their inventories ahead of Christmas".

Bitcoin believers: El Salvador's government announced it now owns at least 400 bitcoin, purchased shortly before the price plunged over 10%. Awkward 😬

Transitory, right: According to Halifax UK house prices hit a fresh record high in August, rising 0.7% from the prior month despite the partial phase out of a stamp duty tax break.

Thanks for reading Brekky Wrap.
Forwarded this issue? Click here to subscribe.

Delay, but not derail

The Reserve Bank of Australia (RBA) left rates on hold yesterday and committed to buying Australian government bonds until at least February 2022 (previously November 2021), effectively agreeing to print away an additional $A50 billion or so of Australia's public debt.

After an initial jump most likely due to algorithmic traders not scanning beyond the confirmation that bond purchases would be lowered from $A5 billion per week to $A4 billion as planned, the Aussie dollar fell 3 US cents. All else equal there will now be more dollarydoos chasing the same amount of everything else, meaning it's worth less.

Why this matters: The RBA has been flirting with tapering its purchases for months and would probably have at least started talking about raising rates by now had NSW and VIC not succumbed to the Delta variant. It revealed as much in its statement, noting that the decision to keep things easy "reflects the delay in the economic recovery and the increased uncertainty associated with the Delta outbreak".

However, the longer the RBA maintains its "highly supportive" monetary policy the greater the risks of blowing more air into various asset prices and, eventually, consumer price inflation and inflation expectations.

Looking forward: In its statement, the RBA assumed that:

"This setback to the economic expansion is expected to be only temporary. The Delta outbreak is expected to delay, but not derail, the recovery... In our central scenario, the economy will be growing again in the December quarter."

The December quarter starts in 23 days. For Australia as a whole to grow, one would think NSW and VIC would have to be out of lockdown relatively early in the quarter. All the more reason for the government to announce vaccination incentives (demand and supply), now!

The Wrap Up
  • 🍻 NSW will trial a vaccine passport at pubs and restaurants for two weeks at the start of October.
  • 📉 A literal black swan appeared in Tiananmen square last weekend.
  • 🗳️ Matthew Guy defeated Michael O'Brien in a leadership spill to become opposition leader of Victoria's Liberal Party.
  • 🛒 Staff at retail giant Spotlight won't get a Christmas bonus unless they prove they're vaccinated against COVID-19.
  • 🦘 After their clean sweep of losses to the All Blacks the Wallabies have fallen to be ranked 7th in the world – below Argentina and barely above Scotland.
  • ⚽ The Socceroos defeated Vietnam 1-0 in World Cup qualifying to make it 10 wins in a row.
  • 🚔 NSW Police will make COVID-19 vaccination mandatory for all employees.
  • 🦆 An Australian musk duck knows how to say "you bloody fool", and can imitate other sounds.
  • 👩‍🎓 In the 2020-21 academic year women made up 59.5% of US college and university students, an all-time high.
  • 🤖 Singapore is trialling the use of street robots to spot and discourage "undesirable social behaviour", blaring out pre-recorded messages when it spots "wrongdoing".
  • 🙃 Democracy, Russian-style: Boris Vishnevsky is up against two impersonators on the St Petersburg election ballot with identical surnames and who have changed their faces to confuse voters.
  • 🛂 Hong Kong announced that from 15 September up to 2,000 mainland Chinese visitors per day will be allowed to enter quarantine-free.
If you were forwarded this Wrap, why not sign up for yourself - it's free!

Delay, but not derail was brought to you by By Justin Pyvis. Forwarded this issue? Click here to subscribe.