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.

Today we lead with news a pall of uncertainty is still hanging over investment and financial markets, uncertainty about how the drive to quell inflation will turn out for asset prices.

US jobless claims rose slightly last week but remained below the 200,000 level in 'actual' terms, and the total number of people on these claims dipped below 1.3 mln and another new record low.

American existing home sales fell in April, and fell more than expected and the third retreat in a row. They are now down almost -6% from the same month a year ago, and the inventory of unsold houses is rising even if it is at historically low levels. 

US mortgage rates dipped unexpectedly last week.

The Philly Fed factory survey is still expanding, but at a sharply reduced rate. However new orders and shipments rose. But employment decreased, and the price indexes remained elevated although edged down. Their looking-ahead indexes remained positive but reflect more muted optimism for growth over the next six months.

Japan's exports rose strongly again in April, the second highest level ever after the record-breaking March result. But the rise actually disappointed analysts. And it came as imports surged, so it was overshadowed by the rising cost of oil and other raw materials which meant it has largely been overlooked.

Japanese machinery orders bounced back in April, building on a good March result. The latest data was higher than analysts were expecting, and builds on the more specialised machine tool order data we noted a few days ago.

In China, some observers are suspecting that President Xi has been forced to share power with Premier Li as a result of a string of policy mistakes. If so, it could mark a turning point in the hardline approach Xi has been pursuing. Or it might be just wishful thinking. In any event, China seems caught out by its hubris over the past few years.

Sri Lanka says it can't pay its debts, and is in "pre-emptive default". The G7 is moving to help, but China seems reluctant to give up the huge debts that it is owed.

In South Africa their central bank raised its benchmark rate by +50 bps to 4.75% at its overnight meeting, as widely expected. This is the 4th consecutive hike and the biggest in over six years. They too are responding to elevated inflation risks stemming from geopolitical tensions.

Although the Australian jobless rate held steady at 3.9% in April from March (NZ = 3.2%), their participation rate slipped to 66.3% (NZ = 70.1%). The total number of jobs rose by only +4000 when a +20,000 rise was expected. But more than +92,000 of that rise was full-time jobs, whereas part-time roles fell -88,000.

Over the past week there has been little change to the cost of shipping containerised freight by sea, but the cost of shipping bulk cargoes has risen.

The UST 10yr yield will start today another -5 bps lower at 2.84%. 

The price of gold is on the move today, up +US$25 since this time yesterday at US$1841/oz.

And oil prices are +US$3 higher today and now just under US$109.50/bbl in the US, while the international Brent price is now just over US$110/bbl.

The Kiwi dollar will open today nearly +1c stronger against the US dollar, now at 64 USc. Against the Australian dollar we are firmish at 90.6 AUc. Against the euro we are almost unchanged at 60.4 euro cents. That all means our TWI-5 starts today at 71 which is up +40 bps from this time yesterday.

The bitcoin price has risen +3.3% from this time yesterday and is now at US$29,946. Volatility over the past 24 hours has been high at +/- 3.3%.

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 on Monday.