Business bites: Greece turns its back … RBA’s new tack … egg prices crack …
Is Greece going to repay the IMF? Plus other business tidbits of the day.
Greeks sans gifts. Time is running out for Greece and its creditors to get the debt relief talks back on track this week and a deal reached so it can be approved by the end of June. The Greeks walked out of talks in Brussels overnight Sunday -- a sort of Aegean tit for tat for the walkout last Thursday by the International Monetary Fund. The IMF departed because it felt the Greeks were not being serious, and the Greeks departed overnight because they felt the Europeans were being too tough. Does a new crisis loom? Maybe not -- time might not be running out if someone, such as German Chancellor Angela Merkel (who will decide what sort of deal is finally acceptable), wants to kick the retsina bottle down the road a bit more and into July or August. It is clear Greece is not being serious in not offering cuts in the public sector on employment levels and pensions -- and that has been the key sticking point. The Greeks need the 7.2 billion euros remaining from the second bailout -- the country has a 1.5 billion euro repayment to the IMF on June 30, and billions more in loans to the ECB and IMF in July. Eurozone finance ministers are due to meet Thursday night, so more talk of a Grexit. -- Glenn Dyer
RBA watches. The Reserve Bank will be watching the US Federal Reserve's two-day meeting this week closely because a rate rise in the US will take some pressures off it for another rate cut here, especially if the Aussie dollar slides under 75 US cents. But before then we get the minutes of the June meeting of the bank tomorrow, which won’t give us much more enlightenment than we got last week from governor Glenn Stevens in one of his most forthright speeches and commentaries of his nine years leading the bank. Apart from the minutes there are speeches by the RBA's assistant governor of economics, Christopher Kent (later today), and assistant governor of financial markets Guy Debelle (tomorrow). These will be watched for any more clues regarding the outlook for interest rates. The RBA will be watching Greece’s twists and turns in its dealings with the EU -- a default or other major crisis of confidence will likely bring a run of foreign money into the Aussie, pushing it higher. But the biggest surge of money into the greenback from the euro will offset that, leading to a sharp increase in volatility. It could be a big week.-- Glenn Dyer
Hatching inflation. The Fed is concerned US inflation is proving hard to budget, so it will be quietly cheering a surge in the price of eggs. In fact, egg prices are rising faster than a souffle. The wholesale price of US eggs soared 42.9% in May, according to the US Commerce Department’s producer price inflation report on Friday. The wholesale price of large eggs in the US more than doubled to US$2.43 on average last month -- that is also more than double the average price over the past three years. Usually of all the breakfast staples, it has been coffee, bacon and orange juice that have shown volatility in the past three years, rather than the humble egg. But an outbreak of avian influenza in the past three months in states like Iowa, has limited the supply of eggs and egg products. A US Department of Agriculture report last month said forecasts for egg production in 2015 were slashed by 87 million dozen from April because of reports of outbreaks of highly pathogenic avian influenza (HPAI), or bird flu, primarily in egg-laying chickens flocks in Iowa. The majority of the 26.8 million chickens affected by HPAI through early May were likely to be egg layers. So far, there’s been no significant impact on retail prices and the availability of meals including eggs at US eateries. But the May consumer-price inflation report this week will contain an update on that impact in supermarkets and other outlets. Some diners and other eateries have reportedly been cutting back on egg dishes to save money and avoid shocking customers. -- Glenn Dyer