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 the final round of Australian tax cuts have come into effect.

But first, the updated factory PMIs for the giant US economy have brought another diverging set. The S&P Global/Markit one, the internationally-benchmarked version, reported a rise based on a new order expansion to describe a moderately expanding sector. But the widely-watched local version from the ISM reported the opposite - easing new order levels and a small contraction in the sector. Take your pick. The recent trends in both are opposite too. It is hard to know what to make of these competing views, and markets seem to have ignored them.

In China, the private PMI survey by Caixin was much more upbeat than the official government version. This internationally-benchmarked Caixin factory PMI reported that in June business conditions improved the most in over three years. But it turns out that is not saying a lot - the improvement from May was marginal. But at least it is positive, and underpinned by rising new orders.

Staying in China, regular readers will know that we have been watching the Chinese Government bond yields falling into record-low territory as investors continued to snap up these bonds amid pessimism about the domestic economy. Now their central bank has moved to halt the slide.

In Japan, consumer sentiment, which has been quite low for years, improved in June but not by much and not a meaningful or trend-changing amount.

The German consumer inflation rate eased in June to just 2.2%, down from 2.4% in May. On an EU harmonised basis it fell to 2.5% from 2.8%. Their core inflation rate is a bit higher at 2.9% because the rise in food prices is now very low, and energy prices continue to retreat. They will be pleased with this progress and will be hoping it will be maintained.

The full EU CPI rate will be released tomorrow and that is expected to come in at 2.5% and a slight reduction from May.

In Australia, CoreLogic is reporting that dwelling values rose +0.7% nationally in June from May to be up +8.0% for the year. This rise is being led by a booming Perth market (+24% annually), although Brisbane (+16%) and Adelaide (+15%) are also strong contributors. Sydney's rises are about the average, but it is Melbourne's falls that offset the big gainers.

And staying in Australia, their 'Stage Three' tax cuts have come in to operation. They will benefit about 11 mln earners. The plan that has gone into effect was originally proposed by the Morrison Government, but the Albanese Government modified it so that those earning under AU$147,000 per year got more, those earning for than that level had their gains trimmed by half.

The UST 10yr yield is now at 4.48% and up +9 bps to start the Wall Street week. 

The price of gold will start today up +US$3 from yesterday at US$2329/oz.

Oil prices are up +US$2 from this time yesterday at just on US$83/bbl in the US while the international Brent price is now US$86.50/bbl.

The Kiwi dollar starts today slightly softer from yesterday at just on 60.8 USc. Against the Aussie we are slightly softer too at 91.2 AUc. Against the euro we are down -30 bps at 56.6 euro cents. That all means our TWI-5 starts today -20 bps lower at 70.3.

The bitcoin price starts today at US$63,241 and up +2.6% from this time yesterday. Volatility over the past 24 hours has been modest at just on +/- 1.7%

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.