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Good morning! We're mostly covering events from elsewhere in the world today but it's important to peer outside the Australian bubble every so often, right?

Market Wrap

Inflation brewing?

Daily % change

AUD/USD

77.1

-0.4%

ASX200

6,708

-0.6%

Brent (bbl)

64.5

2.0%

Gold (oz)

1,742

0.5%

Iron ore (t)

153.1

-4.5%

Bitcoin

57,779

-1.0%

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

Most global market indices finished the week lower as the effects of the Fed's doveish signal wore off and concerns grew about the European Union's ability to vaccinate its population in a timely manner.

Oil takes a breather: The oil price stabilised on Friday, ending five consecutive days of declines and a huge 6.9% fall on Thursday after France announced another lockdown, raising doubts about the demand recovery.

Yield watch: Markets are sending a signal that they don't believe central banks' inflation forecasts. US 10-year bond yields reached 1.73% on Friday, the highest rate since January 2020. Aussie 10-year bonds also crept up to 1.85%, closing at their highest rate since February 2019.


Corona Wrap

A Very European Disaster

The Guardian

We may not agree with Nobel-winning economist Paul Krugman very often but in a New York Times column last week he made some good points about the failure of European Union (EU) nations to vaccinate against COVID-19 in a timely manner. To sum it up:

"European officials were not just risk averse, but averse to the wrong risks. They seemed deeply worried about the possibility that they might end up paying drug companies too much, or discover that they had laid out money for vaccines that either proved ineffective or turned out to have dangerous side effects.

So they minimized these risks by delaying the procurement process, haggling over prices and refusing to grant liability waivers. They seemed far less worried about the risk that many Europeans might get sick or die because the vaccine rollout was too slow."

That 'bureaucratic rigidity' persisted at least through to last week, when most European nations finally agreed to start using the AstraZeneca vaccine again after the bloc's regulator found it did not increase the risk of blood clots.

To its credit Australia's medicines regulator, the Therapeutic Goods Administration, never wavered in its support of the AstraZeneca vaccine (someone there must still remember how to do a cost-benefit analysis). It also finally approved domestic production of the vaccine, with the first batches expected to be released within days.

Looking forward: There are no solutions, only trade-offs. The EU's calculus was, and still is, poorly calibrated. As Krugman notes, there are "fundamental flaws in [European] institutions and attitudes", with the EU itself "in deep trouble". We suspect Brexit will not be the last exit from the EU this decade.

Elsewhere: Federal Health Department secretary Brendan Murphy said he's hopeful international travel will be possible in 2022. He noted the government is considering options including "reducing the length of quarantine, or more home quarantine, particularly for vaccinated people", and the government's "risk tolerance will change over the second half of this year". 🙏


Sport Wrap

No cheering, shouting, singing or drinking alcohol

If you ask us, overseas ticket holders dodged a bullet. Motoko Rich/NYTimes

Overseas spectators have officially been banned from attending the Tokyo Summer Olympics. That's news to us – we were expecting the whole event to be cancelled!

Some context: The Tokyo Olympics were supposed to take place between 24 July to 9 August 2020. However, the coronavirus pandemic caused a 12-month postponement to 23 July 2021. Tokyo and three neighbouring prefectures only exited a state of emergency today. Sporting events held in Japan these year have seen fans banned from chanting, singing, flag waving and drinking alcohol. Fun times.

600,000 tickets for the Olympics and 30,000 for the Paralympics had been sold to overseas spectators, all of which will now be refunded. Japanese taxpayers are on the hook for all but $US6.7 billion of the costs to host the Olympics, which Japanese government audits have estimated will cost at least $US25 billion – before they had to refund overseas ticket holders!

Look out: Brisbane is in the box seat to win the 2032 Olympics. 😲

Elsewhere: The Adelaide Crows' win against the Geelong Cats made them the first AFL wooden spooner to defeat a previous year's grand finalist in round one since 1971. 👏


Disaster Wrap

A one-in-50-year event

NSW is underwater.
Jessie Yeung/CNN

In 2019-20, a reported ~7% of New South Wales (NSW) burned. Now much of the state is underwater, with residents in western parts of Penrith, Jamisontown and Mulgoa ordered to evacuate on Sunday afternoon.

More pain to come: The Bureau of Meteorology (BOM) is expecting rains to continue through much of NSW until at least Tuesday, with the damage to be "substantial".

The floods have also delayed the government's ability to distribute the COVID-19 vaccine through Australia's most populous state, slowing Australia's already snail-paced vaccine rollout. According to Our World in Data, at 0.6% Australia currently ranks 102nd in the world in terms of the percent of the population who have received at least one dose of a COVID-19 vaccine.


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