Kia ora,

Welcome to Friday’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 that all the 'rich men north of Richmond' have now decamped to Jackson Hole WO, and are awaiting Fed boss Powell's speech.

So today we are left with the granular details of the American economy - which is actually doing remarkably well for the non-rich men south of Richmond (even if they can't actually acknowledge it).

New jobless claims last week fell to under +200,000 which is a low benchmark and confirming their labour market is in pink health still. There are now still 'only' 1.8 mln people on these benefits, an unusually low level even if has become normalised over the past two years.

American durable goods orders in July recorded a rather sharp -5.2% decrease following a +4.4% rise in June. But the July drop is all about the timing of large aircraft orders. Excluding those, durable goods orders rose in July. And overall they are +3.3% higher than year-ago levels. Orders for capital goods are +4.2% higher than a year ago. None of this suggests rust-belt activity is under any special pressure.

And the Chicago Fed's more broad national activity index pointed to a pickup in economic activity in July, again belying the doomsters.

And this in turn is confirmed by the Kansas City Fed factory survey which reported a sharp recovery in their key measures. And firms surveyed indicated that they expected a further pickup in the months ahead, so hiring remained positive.

The rich men north of Richmond seem to be organising an expansion that is keeping those south of Richmond in a positive economic state. New research shows that American males won't leave their jobs unless the new offer is US$78,645 pa on average (NZ$133,000), +8% higher than a year ago when CPI inflation is only 3.0%. That is the highest on record. (And for men - who seem attracted to the viral anthem - they won't switch jobs unless the offer is US$91,000 (NZ$154,000).) They may 'feel' left behind but clearly it is their sense of entitlement that is the thing that is unmoored.

In Turkey, the shift back from the disastrous Erdogan experiments with their monetary policy positions is requiring some rather sharp changes. Today they raised their benchmark policy interest rates by +750 bps to 25% following a +250 bps hike in the previous meeting. This rate has risen from 9% in June. All this is in the face of a currency that devalued by -77% from the pre-pandemic period and an inflation rate that is still at 48%. However, this latest indication that they are serious about tackling inflation saw the Turkish currency gain more than 5% against the USD in a day.

In China, the stories about foreign investors pulling out their exposures just keep on coming.

The recent rise in container freight rates hasn't been maintained in the latest weekly assessment. They fell -3.5% last week from the prior week, with the falls occurring on all major routes. Bulk cargo rates reversed to be lower too.

The UST 10yr yield will start today at 4.23%, recovering +3 bps from this time yesterday in a small bounce.

The price of gold will start today at US$1917/oz and unchanged from this time yesterday.

And oil prices are down yet another -50 USc at just over US$78.50/bbl in the US. The international Brent price is now just over US$82.50/bbl.

The Kiwi dollar starts today another -½c weaker at just on 59.2 USc. Against the Aussie we are softer at 92.2 AUc. Against the euro we are -¼c softer at 54.8 euro cents and a two week high. That all means the TWI-5 is now at 68.4 and down -40 bps from yesterday.

The bitcoin price is lower today and now at US$26,033 and down by -1.8% from yesterday. Volatility over the past 24 hours has been modest at just under +/- 1.8%.

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 on Monday.