Kia ora,

Welcome to Wednesday’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.

And today we lead with news our credit rating has been held with a stable outlook, and WMP prices didn't fall further, as expected.

But first in the US, job openings edged down in July and the number of people quitting their jobs fell. They declined by -338,000 from the previous month to 8.827 million in July, the lowest level since March 2021. These are early signs of an easing labour market, and that the Fed's tightening policies are having the 'desired' impact on their economy. Markets expect the rise in non-farm payrolls, to be reported for July on Saturday NZT, to be up a modest +170,000. The pre-cursor ADP employment report also sees a modest +195,000 rise in the employed workforce when they report tomorrow.

As we noted last week, there is a good move up in bricks & mortar retail sales underway in the US. They were up a creditable +4.2% last week from the same week a year ago on a same-store basis. Given they have 3% inflation, this is actually a quite positive sign and ends a six month dry patch, or a 10 month patch on an inflation-adjusted basis.

But you wouldn't know that from looking at the latest update from the Conference Board consumer sentiment survey. It dipped unexpectedly. They say consumers are noticing a cooling labour market and interest rates biting. But they also found consumer fears of an impending recession continued to recede.

The follow-up Dallas Fed survey of the Texas service sector was less negative than their factory sector and less negative that expected. But it was still negative in their region.

The US 7yr bond auction yield rose from 4.02% to 4.16% earlier today, reinforcing the bite of rising interest rates, although savers will be cheering and in the US there are more savers than borrowers.

In Japan, their unemployment rate rose for the first time in four months in July. It rose to 2.7% from June. Analysts had expected the reading to hold at 2.5%. The number of workers fell by -100,000 from the previous month to 67.5 mln, while those without jobs rose by +110,000 to 1.8 mln.

In China, Beijing is leaning on its large state-owned banks to cut home loan interest rates to encourage home buying, and cut deposit rates to discourage saving. There is fear in the air in the Chinese economy. But you wouldn't know it from their equity markets as the 'home team' buys aggressively to keep up appearances. Unfortunately for them it is foreign investors who are taking advantage of the 'market' and selling.

And despite 'opening up' rhetoric from China, US officials say American firms tell them China is now 'uninvestable' after all the fines, raids and other political measures like embedding Party committees inside their firms.

In Singapore, producer prices fell -8.9% in the year to July, but as sharp as that may seem it is a significant easing from the -14.3% drop in June. They rose +1.7% in July from June, a turn up that wasn't expected.

In New Zealand there was something of a surprise result in the GDT Pulse auction of WMP overnight. It came in unchanged, ending a series of sharp falls from late July, and staying at US$2450/tonne. Another fall was expected. Still this locks in a level we last saw in August 2016.

And staying in New Zealand, ratings agency Fitch has held its AA+ credit rating for New Zealand with a Stable Outlook. It identified our current account deficits a key weakness. But it isn't overly worried about household debt levels, less so about government debt levels and although fiscal target levels have been delayed, it likes both the RBNZ's monetary policies and our overall 'policy framework'..

The UST 10yr yield will start today at 4.12%, down -10 bps from this time yesterday. 

The price of gold will start today at US$1937/oz and up +US$17 from yesterday.

And oil prices are +US$1.50 higher at just under US$81/bbl in the US. The international Brent price is +US$1 higher at US$84.50/bbl.

The Kiwi dollar starts today +½c firmer than yesterday at just on 59.6 USc of a greenback pullback. Against the Aussie we are little-changed at 92.1 AUc. Against the euro we are also little-changed at 54.8 euro cents. That all means the TWI-5 is now at 68.6 and up a net +30 bps.

The bitcoin price has jumped sharply today and now at US$27,894 and up a whopping +6.9% from yesterday. Volatility over the past 24 hours has been very high at just over +/- 4.3%. In the US, a three-judge appeals court overturned a decision by the US Securities and Exchange Commission to block a bitcoin ETF.

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

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

Kia ora. I'm David Chaston. And we will do this again tomorrow.