Episode Details

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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 benchmark interest rates are rising quickly again today, especially in the US and Europe.

But first in Brazil, they will have a run-off election for President, with no candidate getting 50% of the vote. But the first round showed surprising support for the right-wing son of a previous military officer Jair Bolsonaro who has been president before Lula and who had thrown Lula into jail on grounds that were thrown out by Brazilian courts. In this latest poll, the younger Bolsonaro won 47% of votes versus Lula’s 45%, setting up an October 25 runoff which will be a bitter affair. Local financial markets rose on the prospects.

In the US, the service sector PMIs out overnight were both in a good expansion mode, but indicated different trajectories. The widely-watched local ISM one reported a moderating of the good expansion in August in its September update. Business activity eased back noticeably, and new orders also moderated even it both are still at very good levels.

Meanwhile, the internationally-benchmarked S&P Global one was much more up-beat. It reported a surge in activity as new order growth hit 4½ year high. Employment growth was its strongest since June 2022. But Input cost inflation reaccelerated to its steepest since November 2022 and matching the pandemic pressures.

Canada's equivalent services PMI was little-changed, stuck just below an expansion level, but they have the same cost intensification problem.

In China, official monitoring of holiday spending midway through the seven-day National Day holidays, shows foot traffic up +3.4% from last year and revenue up +5.3%. They will be happy with that.

Singapore said its retail sales growth was weak in August, coming in below July's modest level and well below the expected levels.

In France, their central bank boss has warned his country's budget is at risk of being strangled by rising interest payment costs.

In Australia, the independent Melbourne Institute Monthly Inflation Gauge increased for a third consecutive month in September, after falling in May and June. The increase was primarily attributed to transport price rises, with annual headline inflation of 4.8%, unchanged from August. (The ABS said the August CPI was 4.0%.) The monthly cost of living also increased across a range of household type.

The UST 10yr yield is rising, now just on 5.34%, up +6 bps from yesterday to its highest in 24 years. The 30 year yield is at 5.70%, up +7 bps and its highest since 2002 as well.

The price of gold is at US