Delivered on

We're getting there...

Good morning! Australia dropped five places between 22 April and 22 May according to the latest edition of Provocate's VaxEnomicTM Forecaster, which ranks countries based on the Department of Health's international comparisons at equivalent stages of rollout (to account for Australia's very late start).

It's all good though, because ScoMo yesterday reiterated that the COVID-19 vaccine rollout is "not a race". Sure, except that the border closure alone is probably costing millions of dollars a day (see below) and it's only a matter of time before there's another hotel quarantine leak.

Speaking of quarantine leaks, a returned traveller staying at the Pan Pacific in Perth caught COVID-19 from an infected guest in the room next door. The man returned a positive test on 29 May – one day prior to his scheduled release.

Talk about a lucky break. But yes, ScoMo is right: it's not a race (against other countries). Don't get vaccinated. Great messaging... 👏

Markets

Daily % change

AUD/USD

77.5

0.3%

10Y Bond

1.65

-1.1%

ASX200

7,143

-0.3%

Brent (bbl)

70.6

1.9%

Gold (oz)

1,902

-0.4%

Iron ore (t)

198.5

4.9%

Bitcoin

36,194

-1.2%

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

The US S&P500 (-0.05%) was flat in the first trading day following the Memorial Day holiday. Locally the Aussie dollar was stronger thanks to a record high current account surplus in the March quarter, built largely on the back of booming resource (iron ore) exports.

Pedal to the metal: At its meeting yesterday the Reserve Bank of Australia (RBA) kept the cash rate unchanged at a record low of just 0.1%. While the RBA noted that "progress in reducing unemployment has been faster than expected", and "there are reports of labour shortages in some parts of the economy", it reaffirmed that it is still "committed to maintaining highly supportive monetary conditions... until 2024 at the earliest".

Recovery rebound: The Caixin China manufacturing Purchasing Managers' Index (PMI) rose slightly to 52.0 in May from 51.9 the previous month. A reading above 50 indicates expansion. The report added that May saw the "strongest increase in new work for five months", with "new export orders increasing at the fastest pace in three months". The expansion came despite inflationary pressures, as the report showed "average costs of manufacturers rose sharply last month, with input prices increasing at the steepest pace since December 2016".

Inflation watch: Tesla is raising the price of its Model 3 and Model Y for the fifth time in just a few months, with Elon Musk tweeting: "Prices increasing due to major supply chain price pressure industry-wide. Raw materials especially."

Housing boom: CoreLogic reported that Australian home prices increased 2.2% over the month of May and the rise was broad-based: "Of the 334 SA3 sub-regions analysed by CoreLogic, 97% have recorded a lift in housing values over the past three months. Such a synchronised upswing is an absolute rarity across Australia's diverse array of housing markets."

Stimmy fade: Dwelling approvals fell 8.6% in April from the month prior but were still a whopping 39.2% higher than this time last year (back when everyone was worried about a large pandemic recession), with detached housing approvals reaching a fresh record high. But there might be a bit of a hangover in coming months, with the ABS reporting that: "The end of the HomeBuilder grant on 14 April 2021 did not have a material impact on the April building approvals data, as the building approval process typically occurs after the submission of the HomeBuilder application."

Oil over $70: Brent crude breached $US70 per barrel after OPEC+ – the global oil cartel involving most major producers and Russia – agreed to only gradually release more barrels into a strengthening oil market. Oil prices have increased over 30% this year.


Analysis

We're getting there...

The recent acceleration happened following Melbourne's lockdown.
The recent acceleration happened following Melbourne's lockdown.

Australia's rate of vaccination shot up following Melbourne's lockdown – nothing like a community outbreak to snap a bit of lingering vaccine complacency! At the current rate of about 90,000 per day, all adults who want one (we've assumed 80%) will be vaccinated against COVID-19 by early April 2022, provided there's enough supply.

Why this matters: Treasury is forecasting that Australia's borders will open by the end of June 2022. An earlier reopening would be worth quite a bit – the McKell Institute estimated that our border closure reduces economic activity by some $203 million per day.


The Wrap Up

  • Less than half of aged care residents and just over 10% of staff have been vaccinated against COVID-19. That cohort was supposed to be fully vaccinated by Easter.
  • UK house prices increased by 10.9% in the year to May, the highest level in seven years.
  • William Amos, a Liberal MP in Quebec, Canada, who was previously caught on a Zoom call in April without any clothes, has now been busted urinating into a coffee cup at his desk during a virtual session of the House of Commons. Oh Canada...
  • Why are enterprise IT systems so terrible?
  • Following Apple's iOS 14.5 update, which required apps to ask permission to track users, the average cost of adverts has fallen by 36%.
  • Android 12, the latest version of Google's Android operating system, is due out later this year. It seems as with iOS 14.5, Android will soon "require two different sets of privacy-focused popups... which are about to make Facebook's ongoing nightmare even worse".

We're getting there... was brought to you by Justin Pyvis. Forwarded this issue? Click here to subscribe.