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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 it seems yesterday's unanimous Fed decision to prioritise the inflation fight has financial markets reassured. The US Treasury yields have pulled back from their highs, although still at Tuesday's high level.

One thing millions are watching is whether US mortgage rates will hit 7% again. They haven't quite yet but it is close. Not only are new home and refinance borrowers affected, the house building industry and all that it supports are anxious as well.

But first in the US today, their weekly initial jobless claims fell last week and by more than expected and by more than seasonal factors would have indicated. There are now 1.58 mln people on these benefits, also a notable fall as the much tighter qualification rules start to bit hard now.

US housing starts fell and to their slowest pace since 2019, with the exceptions of the sharp and unusual May dip, and the pandemic. That was matched by low building consent levels, so the easing off in this homebuilding sector will continue.

The regional Philly Fed factory survey for the important Pennsylvanian rust belt region was expected to fall in September from August and it did, but not by as much as expected. New orders and shipments remained elevated, while the employment index declined but stayed positive, signaling continued job growth. Both input and output price indicators moved higher and at a faster pace.

US pending home sales were down -4.7% in August from a year ago, but at least they did manager to level-peg from July.

There was a US 10 year TIPS bond auction overnight which delivered a median yield of 2.58% (high 2.65%), which is a notable rise from the 2.37% at the prior equivalent event a month ago. Although not as dramatic as the -17% fall off in demand for yesterday's 20 year bond, this auction attracted lower demand as well, -12% less.

And we should probably note that Chinese president Xi will be visiting the US next week and there is a frenzy of advanced negotiations underway in preparation so that both he and Trump can announce something 'substantial' and worth the visit. What will be interesting will be the moves after the event glad-handling.

In Canada, their producer prices rose sharply again, up +13.5% from a year ago in August, driven of course by high fuel costs. On the same basis their diesel is up +75% and petrol up +42%. Both rose notably from July as well.

Singapore's electronics sector had a boom month in August helping power the country's

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