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.

Today we lead with news there are growing concerns about the global growth trajectory - and wobbles in the US. Both equity and bond markets are picking up on the vibe.

American retail sales softened last week, as monitored by the Redbook survey, a noticeable shift lower than the week before.

And US new home sales took an unexpected fall in March, down -12% below year-ago levels and a rather sharp fall-away from February levels. Higher mortgage costs are probably biting this corner of their real estate markets rather hard now.

After they fell in February, US durable goods orders were expected to rise in March, and they did. But not by as much as was expected. The miss however is more to do with timing of "transportation" orders (read aircraft) which can be lumpy. Other than that, March durable goods orders actually rose more than expected and are up +9.9% from the same month a year ago. Orders for capital goods are up more than +10%.

The Richmond Fed factory survey has held its level in April, but the Dallas Fed services sector survey has weakened slightly.

American consumers however remain upbeat in the context of 2022, although still not back to pre-pandemic levels. But given the global challenges, the 2022 levels are quite positive.

The US Treasury had a very well supported 2-year bond auction earlier today. But the median yield was 2.53% vs 2.30% at the equivalent event a month ago.

Singaporean industrial production fell hard in March and that was not expected. But it is becoming a data item that has some sharp and unexpected retreats on a regular basis. 

In Malaysia there is an interesting real-time economic experiment underway. They are about to raise their minimum wage by +25% after a +25% rise over the prior three years. Will that aid consumer spending power? or just fuel inflation as low-paid job levels fall away? There is trepidation over the move.

The UST 10yr yield starts today lower by another -5 bps at 2.76%. 

The price of gold starts today up +US$2 since this time yesterday at US$1900/oz.

And oil prices are back up +US$4.50 at just over US$101.50/bbl in the US while the international Brent price is now just under US$105/bbl. In Germany, their Economy Minister said his country has already cut its reliance on Russian oil enough to make a full embargo “manageable”. A full EU ban that would upend the global trade in petroleum. Meanwhile, Russia has cut off Poland from gas supply. Russia is having trouble selling its oil now.

The Kiwi dollar will open today softer again at 65.8 USc and another -¼c fall. Against the Australian dollar we are little-changed at 92.1 AUc. And against the euro we are marginally firmer at 61.8 euro cents. That all means our TWI-5 starts today at 72.8 and little-changed since where we left it yesterday.

The bitcoin price is down -2.5% from this time yesterday at US$38,399. Volatility over the past 24 hours has been high at just under +/- 3.6%.

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.