Kia ora,

Welcome to Tuesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.

I'm David Chaston and this is the International edition from Interest.co.nz.

Today we lead with news investors are now betting that the US Fed will need to cut rates in 2023, and that is twisting the global bond market. The Fed is widely expected to raise rates +75 bps on Thursday, so these signals are confusing as markets struggle to make the transition.

In the US, even though the Chicago Fed's National Activity Index was unchanged in June from May - and still recording a moderate expansion - the Dallas Fed's more current July survey is only expanding with "modest growth" and gives more evidence of an economic slowdown in the US factory sector.

There was another US Treasury bond auction overnight, this one for the 2 year maturity and raising US$49 bln. It was well supported with the median yield achieved at 2.95% and marginally less than the 3.00% at the prior equivalent event.

China said the number of new births in several Chinese provinces hit the lowest in 60 years and their experts now expect the country's population to start to shrink before 2025.

And staying in China, they said they will launch a real estate fund to help property developers resolve their crippling debt crisis, aiming for a war chest of up to US$44 bln in a bid to restore confidence in the industry.

Hong Kong exports sank in June, down -6.4% from the same month a year ago and extending a run of depressing results for them. Hong Kong is now but a shadow of its former vibrant self as all their economic data now seems quite weak.

Taiwanese industrial production went right off the boil in June with only a trivial (for them) +0.7% rise year-on-year. But their retail sales took off, up a quite remarkable +22% year-on-year.

Singapore reported its June CPI inflation rate at 6.7% and well above the 6.2% expected and also well above the 5.6% rate in the March quarter.

In Germany, a closely-watched Business Climate indicator fell in July to its lowest in over two years and below market expectations as higher energy prices and the threat of a gas shortage are weighing on their economy that is on the cusp of a recession. Germany's gas network regulator warned that if gas through the Nord Stream 1 pipeline continued to be pumped at only 20%, the country would need to take additional measures to reach the 90% of storage capacity set as a target to avert winter rationing.

The UST 10yr yield starts today at 2.81% and up +6 bps to start their week. 

The price of gold will open today at US$1720/oz in New York which is down -US$7 from this time yesterday.

And oil prices are little-changed at just under US$96/bbl in the US, while the international Brent price is now at just over US$100/bbl. These prices are a little less than +US$1 higher than this time yesterday

The Kiwi dollar will open today marginally firmer than this time yesterday at 62.7 USc. Against the Australian dollar we are softer at 90.1 AUc. Against the euro we are little-changed at just over 61.3 euro cents. That all means our TWI-5 starts today at 71.2 and a minor +10 bps above this time yesterday.

The bitcoin price is sharply lower than this time yesterday, down by -4.1% to US$21,859. Volatility over the past 24 hours has been moderate at just under +/-3.0%.

You can find links to the articles mentioned today in our show notes.

And get more news affecting the economy in New Zealand from interest.co.nz.

Kia ora. I'm David Chaston and we’ll do this again tomorrow.