Pinned post –
That’s a wrap
That’s a wrap for live coverage of Sunday, October 23.
Here’s how the day unfolded:
–Australia signs the global methane pledge. Australia has committed to sign the global pledge to reduce methane emissions, Climate Change and Energy Minister Chris Bowen says.
–Relentless rise in rates looms over markets. Bond yields marched higher during another volatile week, upending global markets as investors navigated mixed earnings reports and signs that officials at the US Federal Reserve and the European Central Bank could push interest rates up much more to subdue stubbornly high inflation.
–Inflation will be ‘higher and a bit longer’ than we would like: Chalmers. Inflation will last longer and be higher than many people would like, Treasurer Jim Chalmers says after repeating the official forecast for inflation to peak at the end of next year.
–Real wages won’t rise until inflation is under control: Chalmers. Wages are unlikely to rise in real terms until inflation is under control, Treasurer Jim Chalmers says.
–Welfare payments to jump by $33b: Chalmers. An extra $33 billion will go towards the pension and other welfare payments in the federal budget, with inflation largely responsible for growing welfare costs.
–Russian troops withdraw from western Kherson: ISW. Russian forces are withdrawing from Ukraine’s western Kherson region while preparing to conduct delaying actions that will likely be only partially effective, according to the Institute for the Study of War.
–Russia hits Ukraine power grid in heaviest attack in weeks. Kyiv | Russian forces pounded Ukraine’s power plants and heating systems on Saturday with some of the heaviest missile strikes in weeks, Ukrainian officials said, as Moscow pressed ahead with an aerial campaign to bring misery to the country’s civilians even as it loses ground on the battlefield.
–Russia orders urgent evacuation of Kherson as troops flee. Russian annexation authorities issued an urgent evacuation order for the city of Kherson, held by Moscow’s forces since March, telling civilians to depart immediately ahead of an expected counteroffensive by Ukrainian troops. Ukraine has said that Russia intends to blow up a hydroelectric dam upstream.
–Israel’s Netanyahu urges Putin to rethink his war in Ukraine. Israel’s opposition leader and contender for next prime minister, Benjamin Netanyahu, criticised Russian President Vladimir Putin’s decision to invade Ukraine, and urged him to reconsider, in his most direct criticism yet of the war.
–Echuca residents told to go as flood peaks. The Murray River has surpassed the 1993 flood level at Echuca on the Victoria-NSW border, as the premier urges remaining residents to consider evacuating.
–Moree told to evacuate as waters rise. With up to 150mm of rain expected on the NSW north coast, thousands of residents are again bracing for floods.
–NSW transport minister to resign at election. NSW Transport Minister David Elliott will quit state politics next year, opting to pull out of a preselection race after his seat was abolished.
–Johnson and Sunak discuss deal on UK leadership. Boris Johnson and Rishi Sunak, contenders to be the next UK prime minister, held face-to-face talks on Saturday to discuss the Conservative leadership contest, according to people familiar with the discussions, seeking a deal that would eliminate the need to take a potentially divisive runoff vote between them to party members.
–Red Bull billionaire founder dies. Austrian billionaire Dietrich Mateschitz, the co-founder of energy drink company Red Bull and founder and owner of the Red Bull Formula One racing team, has died. He was 78.
Australia signs the global methane pledge
Australia has committed to sign the global pledge to reduce methane emissions, Climate Change and Energy Minister Chris Bowen says.
“It’s appropriate that Australia join. I want to thank groups across the country who have joined with us in consultation and engagement in recent months,” Bowen says. “And I thank the National Farmers Federation. I want to thank the Cattle Council of Australia.”
Bowen says Australia is “back at the international table” on matters of climate change.
“We’re back at the domestic action agenda when it comes to action on climate change and whether it’s CO2 or methane the Albanese government is happy to lead the way.”
Bowen says the methane reduction measures will not “involve taxes will not involve livestock reductions or arbitrary domestic targets. Our approach involves international cooperation and domestic co-operation”.
G7 condemn Russia’s kidnapping of Ukraine nuclear staff
The Group of Seven industrialised nations condemned Russia’s kidnapping of the Zaporizhzhia nuclear power plant leadership and called for the immediate return of full control of the plant to Ukraine.
“We condemn Russia’s repeated kidnapping of Ukrainian ZNPP (Zaporizhzhia nuclear power plant) leadership and staff,” G7 Nonproliferation Directors General said in a statement dated Saturday.
“We urge Russia to immediately return full control of the ZNPP to its rightful sovereign owner, Ukraine,” it said.
Russian forces have been in control of the nuclear plant, Europe’s largest, since the early days of their invasion of Ukraine, which began in February.
Russian troops withdraw from western Kherson: ISW
Russian forces are withdrawing from Ukraine’s western Kherson region while preparing to conduct delaying actions that will likely be only partially effective, according to the Institute for the Study of War.
The think tank says Ukrainian General Staff reported that Russian forces have completely abandoned their positions in Charivne and Chkalove (both about 33km northwest of Nova Kakhovka), and Russian officers and medics have reportedly evacuated from Beryslav.
“Russian forces are also removing patients from the Kakhovka Hospital on the eastern bank of the Dnipro River, likely to free up hospital beds for Russian military casualties that may result from the withdrawal across the river,” ISW says on its website, citing Ukrainian general staff.
“The Ukrainian General Staff noted that some Russian elements are preparing Kherson City for urban combat, while other service members continue to flee the city via the ferry operating in the vicinity of the Antonivsky Bridge.
“The UK Ministry of Defence reported on October 22 that Russian forces completed construction of a barge bridge alongside the damaged bridge and forecasted that the barge bridge would become a critical crossing point for Russian forces as Ukrainian forces advance toward Kherson City.
“A large part of the Kherson City population has also reportedly left the city.”
Relentless rise in rates looms over markets
The New York Times, Bloomberg
Bond yields marched higher during another volatile week, upending global markets as investors navigated mixed earnings reports and signs that officials at the US Federal Reserve and the European Central Bank could push interest rates up much more to subdue stubbornly high inflation.
Hopes that the Fed will ease its campaign of rate increases have been undercut by signs that high inflation remains persistent. The Fed and other central banks have been raising borrowing costs for consumers and companies to slow their economies and temper the pace of rising prices.
The European Central Bank in the coming week will tread into territory last visited in the run-up to the global financial crisis as it raises interest rates during what looks likely to be a recession.
It was in July of 2008, just as the euro area began four quarters of contraction, that the Governing Council raised borrowing costs for the first time in more than a year, only to reverse course soon after as the collapse of US investment bank Lehman Brothers inflicted unprecedented market turmoil.
This time, officials are confronting far higher inflation, stoked by risks of a different order as the energy crisis incited by the Russia’s war in Ukraine raises living costs and crushes economic growth.
As with central banks from Canada to Colombia that are likely to tighten policy, the ECB’s need to get rates higher to stop consumer prices from getting out of control will keep policymakers focused — even as the risk of a slump looms closer than ever.
That’s why, even as many economists now reckon a recession has begun in the euro region, they unanimously anticipate another jumbo hike of 75 basis points on Thursday.
Elsewhere, gross domestic product reports may show a return to growth in the US, a contraction in Germany, and a slowdown in France. The selection of a new UK prime minister and likely unchanged rate decisions in Japan, Russia and Brazil will be among other highlights.
On Tuesday, Treasurer Jim Chalmers unveils a budget update — his first since the Labor Party’s election victory. The following day, Australia’s latest prices data is set to show headline inflation running at its quickest pace since 1990.
The pressures that drive inflation have been prominent in recent corporate reports, with higher prices producing better-than-expected earnings, despite warnings from executives that customers are starting to show some signs of strain.
Whipsaw moves in stocks reflected investors’ concerns and confusion about the economic outlook. The S&P 500 closed last week up 4.7 per cent, the index’s best weekly performance since the end of June, with gains at the beginning and end of the week overcoming losses in the middle. The index rose 2.4 per cent on Friday.
All the while, government bond yields continued to climb higher. The 10-year US Treasury yield, which underpins everything from mortgage costs to credit card rates, rose for a 12th consecutive week, matching the longest streak of weekly increases since 1984.
The yield on 10-year notes, which moves inversely to its price, rose nearly 0.2 percentage points this week, to 4.22 per cent, around its highest level since 2007. That’s a big jump for an asset that typically moves in smaller increments, affecting markets around the world, including other sovereign bonds and currencies.
The rapid move higher in interest rates and government bond yields has worried investors, who are fearful that it may be too much for the global financial system to withstand.
This week, investors will also get a look at more corporate bellwethers’ books, with Apple, Amazon, McDonald’s and others set to report their latest earnings, shedding more light on the state of the economy.
Moree told to evacuate as waters rise
With up to 150mm of rain expected on the NSW north coast, thousands of residents are again bracing for floods.
The latest evacuation orders have been issued for Moree as a new major flood peak looms on the Mehi River, a tributary of the Gwydir River, threatening to surpass a 10.87m high mark recorded 67 years ago.
In all, there are 120 flood warnings current around NSW, 20 of them at emergency level.
The state’s SES says it conducted 31 rescues and responded to almost 400 requests for help in the 24 hours to 9am on Sunday.
A man in his 30s died in a suspected drowning on Saturday at West Ballina, on the far north coast, while two men stranded in vehicles in the Southern Tablelands centre of Yass were rescued overnight.
Authorities say renewed thunderstorms have impacted multiple flood-affected communities along swollen rivers.
Most are in areas surrounding Moree, Gunnedah and the neighbouring village of Carroll on the northern Namoi River, the Riverina town of Narrandera on the Murrumbidgee and Moama on the Murray River.
“We are seeing more rainfall come through this morning, which will lead to more water movement and fill rivers and flooding,” the SES said.
Incident controller Tom Jory said in a statement on Saturday the current predictions, while not as severe as earlier this year, meant low lying areas were still likely to be impacted.
The Bureau of Meteorology expects heavy rain over the state’s northeast from Sunday morning, affecting Lismore, Grafton, Casino, Kyogle, Yamba and Maclean.
Falls of up to 150mm in six hours were possible in some areas.
Emergency Services Minister Steph Cooke says large parts of the state, including the inland and west, are in for a “difficult few days”.
Emergency services and volunteers are currently handing out 30,000 sandbags a day.
“We are quite literally sandbagging the state,” Ms Cooke said on Saturday.
Two hundred Australian Defence Force personnel have been deployed in Dubbo, Moree and the Northern Rivers, with two additional ADF helicopters ready for night rescues.
Specialist swift-water rescue crews have also been dispatched to the flood-threatened north while others are in place on the Macquarie River, at Dubbo.
The 12 local government areas added to the state’s natural disaster declaration list are Albury, Berrigan, Carrathool, Cobar, Federation, Griffith, Hay, Leeton, Murray River, Murrumbidgee, Narrandera and Wagga Wagga.
Real wages won’t rise until inflation is under control: Chalmers
Wages are unlikely to rise in real terms until inflation is under control, Treasurer Jim Chalmers says.
“The budget will show that wages will move substantially, but they won’t cross over, in our estimation, or the Treasury’s estimation, until we get that inflation under control,” Chalmers says in an interview with the ABC.
“Real wages were falling before the election and they’ve been falling since the election. That’s because inflation is higher for longer as a consequence of the war in Ukraine, natural disasters, and issues in our own supply chains here at home. And also a consequence of a decade now of wage stagnation.”
Chalmers says the improvement in revenue in the near term won’t make up for the “structural, persistent spending pressures on the budget”.
Chalmers says the budget will need to make room for increases in the cost of the National Disability Insurance Scheme.
“It’s self-evident that the costs of the NDIS are rising. And this is one of the things that we need to make room for in the budget at the same time as we make it as efficient as possible”.
Welfare payments to jump by $33b: Chalmers
An extra $33 billion will go towards the pension and other welfare payments in the federal budget, with inflation largely responsible for growing welfare costs.
Treasurer Jim Chalmers said the government needed to find billions in extra funding because welfare payments are pegged to inflation.
“One of the pressures on the budget is making sure we can find room for that indexation so that people who are on pensions and payments get a little bit of help twice a year to try and keep up with the skyrocketing cost of living,” Chalmers told ABC News.
He said about a third of the additional $33 billion would go to the aged pension and another third to JobSeeker payments.
The Albanese government is delivering its first budget against a backdrop of soaring inflation that’s expected to peak at 7.75 per cent.
The latest round of floods is predicted to keep inflation higher for longer by driving up the costs of produce.
Despite soaring inflation putting households under pressure, the treasurer has made it clear the government will need to be careful not to fuel further inflation by handing out generous cost of living relief in the budget.
He said the fallout from the UK government’s mini-budget served as a cautionary tale about fiscal and monetary policy falling out of sync.
“You need to make sure that governments aren’t working against the difficult job that central banks are asked to do,” Dr Chalmers said.
Dismantling barriers to wages growth has been top of Labor’s agenda but the treasurer admitted wages were falling behind inflation.
Shadow Treasurer Angus Taylor said the government was giving up on managing cost of living pressures.
“They’re saying they’re going to shed 150,000 jobs, they seem to be giving up on real wage increases in this election cycle,” he told ABC News.
“That’s incredibly disappointing,” he said.
The Albanese government has also released details about its “family-friendly” budget, which includes a plan to extend the paid parental leave scheme from 20 to 26 weeks.
As well, new rules will open up the Commonwealth’s extended parental pay scheme to more families.
Starting from July next year, parents hoping to access the scheme will be assessed on a dual income basis, with $350,000 the combined cut off.
Parents have previously been assessed on their individual incomes.
At the last election, the previous Coalition government also promised to change the income thresholds.
Under the Albanese government’s new scheme, parents will be able to take their leave at the same time and the rules will be tweaked to make it easier for parents whose partners’ don’t meet residency requirements to access the scheme.
Echuca residents told to go as flood peaks
The Murray River has surpassed the 1993 flood level at Echuca on the Victoria-NSW border, as the premier urges remaining residents to consider evacuating.
The 1993 level of 94.77 metres above sea level was exceeded at the town on the Victoria-NSW border on Saturday night and was expected to peak around 95m overnight.
More rain is forecast for the flood-hit state as a low pressure system moves over northern Victoria on Sunday.
The state’s northeast and far northwest are tipped to cop the brunt of the falls and the Bureau of Meteorology predicts the system will bring wet weather to southern Victoria early in the week.
At Echuca, authorities warned anyone left in the area to leave after water spilled over a levee near the centre of town on Saturday.
Despite a makeshift dirt levee in the town holding, Premier Daniel Andrews said some residents were heeding the advice and pleaded with others to consider following suit.
“People give that very careful thought. We don’t issue those warnings lightly,” he told reporters on Sunday.
About 50 people from flood-hit communities across the state have taken refuge at the Mickleham quarantine centre, Andrews said.
More than 65 flood warnings remain active in Victoria.
Kerang residents are advised to evacuate amid fears flood water might not recede for a month or more.
“We’ve got water coming in from everywhere,” Gannawarra Shire Mayor Charlie Gillingham said on Saturday.
A major flood warning remains current for the Loddon River from Loddon Weir to Kerang after up to 35 millimetres of rain was recorded in the upper Loddon catchment in the 24 hours to 10pm on Saturday.
Further rainfall is forecast for the area over the next few days.
Meanwhile, in the state’s southwest, the State Emergency Service received about 140 requests for help from Geelong to Hamilton.
Three people were rescued after driving through floodwaters near Geelong.
The SES has received more than 8300 calls for help since the weather emergency began and more than 750 flood-related rescue requests.
Australian Defence Force personnel have been deployed to assist with preparation, including sandbagging at Barmah along the Murray River and Swan Hill.
Flood warnings remain for towns along the Loddon, Goulburn, Campaspe, Avoca, Barwon, Kiewa, and Ovens and King rivers.
Russian oil logistics in chaos before sanctions bite
Traders, tanker companies and the world’s most powerful governments are becoming increasingly fixated upon one question in the oil market: can the petroleum industry’s supply chain handle the harshest sanctions on Russian exports in history?
A vast shadow fleet of tankers with unknown owners is being amassed to service Moscow’s interests. Intense US-led diplomatic wrangling to soften aggressive European Union sanctions has been going on for months but time is ticking.
Will it be enough? With about six weeks until the bloc’s measures enter into force, little clarity exists on whether these steps will really suffice to help the world’s third-biggest oil producer to get much of its output to buyers to fend off a supply shock.
The US has been sounding the alarm for months that Europe’s sanctions on Russia could trigger such a shock. It’s pushing for companies to be allowed to access EU services — especially insurance — to avoid a price spike before the mid-term elections in November. To do that, buyers would have to sign up to a controversial oil price cap.
What looks certain is that a large part of Russian flows will be handled by a complex — and often secretive — network of ships, owners, ports and safe passages dominated by entities still willing to deal with Russia.
“If you look at how many ships have been sold over the past six months to undisclosed buyers, it’s very clear that a fleet is being built up in order to transport this,” said Christian Ingerslev, chief executive officer of Maersk Tankers A/S in Copenhagen, which runs a fleet of 170 ships — none of them serving Russia.
In the run-up to December 5, when the EU is due to ban Russian crude imports and halt the provision of shipping, financing and insurance cover to related trades, the most important question is whether there will be enough vessels.
Shipbroker Braemar estimates that to support four million barrels a day of Russian exports to the far east, many of the recently transacted vessels will need to be added to the 240 ships — 102 Aframaxes, 58 Suezmaxes and 80 very-large crude carriers — that have carried Iranian and Venezuelan crude in the past year to form a large shadow fleet that will support Moscow.
“There’s been a sharp rise in the tanker trading since the war and in the run-up to the Dec. 5 deadline by undisclosed entities based in countries such as Dubai, Hong Kong, Singapore and Cyprus,” said Anoop Singh, head of tanker research at Braemar. Many are older ships and will find their way to the shadow fleet, with Russian shipowner Sovcomflot supplying some tankers as well.
Beyond that, there will also almost certainly be a surge in ship-to-ship transfers — cargoes being switched from one tanker to another at sea. That’s a result of both the sanctions risk from handling exports directly from Russian ports and the need to collate a few small cargoes onto larger tankers for long-haul voyages.
That, though, is a logistical challenge in itself, especially from the Baltic Sea, Russia’s top export region.
Ship-to-ship transfers involve one vessel maneuvering itself alongside another, attaching a pipe to allow the cargo to be pumped between the two carriers. It can take up to two days and is best done in the calmest waters possible with good weather. Some can involve a multi-stage process of transferring oil from an initial tanker to a floating storage facility, before another step to move the cargo to another ship.
While vessels often used to sail straight to European buyers, Asia — notably China and India — seem certain to become the top destination after December 5.
Once the sanctions kick in, European seas will almost certainly be off limits for these so-called STS transfers, and it won’t be very helpful for Russia or its buyers to do them inside the Baltic Sea. That’s because, ideally, Asia-bound oil will be transferred onto giant supertankers that are too big to get out of the Baltic with cargoes on board.
The initial vessel would turn around after discharging its cargo to that supertanker and return for more Russian oil, creating a shuttling effect.