Stresses rise everywhere

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news the war in Ukraine is adding to the global supply chain stress. And there has been a major bond market rally as risk-off sentiment spreads. And further, there are signs of a collateral squeeze in some financial markets.</p><p>But first, it has been a notable <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>dairy auction</strong></a> this morning. <a href="https://www.interest.co.nz/charts/commodities/dairy-prices" target="_blank"><strong>Overall record prices</strong></a> were reached, after the fourth consecutive solid rise, this one +5.1% from the prior even and the largest of the set. Since the first auction of the year overall prices are up +19%. But the rising Kiwi dollar has limited today's gain in local currency to +3.1%. New all-time record high prices were achieved for butter (after another +5.9% rise this time) and Cheddar cheese (up +10.9% this time). In USD it wasn't a record high for either SMP (+4.7%) or WMP (+5.7%), but in NZD, the WMP did touch a new record high.</p><p>Analysts were <a href="https://www.interest.co.nz/rural-news/114589/next-global-dairy-trade-auction-expected-show-strong-positive-market-shift-again" target="_blank"><strong>expecting</strong></a> higher prices along these lines. It will be interesting to hear their new farmgate payout forecasts which are all sure to rise. They have been all holding back to see this result after Fonterra raised its estimate for this season to above each of their prior calculations.</p><p>In eastern Europe, Ukraine holds - just - but faces a new more brutal version of the invasion as Russian anger grows that it wasn't welcomed by an easy victory, anger doubled because it is the Russian-speaking population fighting as hard against them as anyone. The Russians are now t