Kia ora,

Welcome to Friday's Economy Watch where we follow the economic events and trends that affect New Zealand.

I'm David Chaston and this is the International edition from Interest.co.nz.

Today we lead with news where the most interesting move globally has been the forced move by our Government to have the RBNZ target housing. Interest rate rises may become a self-fulfilling consequence.

But first in the US, new orders for durable goods in January rose much more than in December and came in much higher than expected with a +4.5% rise year-on-year. Orders for non-defence capital goods were up an even better +6.8% suggesting boardrooms are investing again.

The number of new regular jobless claims fell sharply last week to +710,000 (a 3 month low) and the new number of people on these claims is 4.8 mln, an equivalent drop. But there were +451,000 initial claims for Pandemic Unemployment Assistance. Both are still large levels but they do seem to be trending lower.

However, pending home sales slipped in January from December and this was an unexpected result. And the prior month's data was revised lower. But they are still well above the levels of January 2020.

The Kansas City Fed's factory survey is the latest regional survey out and that reports activity that is climbing and new order growth. But they are seeing lots of weather-related interruptions.

In Texas, a string of financial defaults arising from their power crisis threatens to start a domino effect in the state, all a consequence of the rocketing up of the electricity price in that period.

In Canada, weekly earnings data shows little change but is +6.4% higher than year-ago levels. This is largely the result of lower-paid jobs falling away however.

In China that are celebrating "the elimination of poverty" and showering Chairman Xi with accolades for the accomplishment.

China is having trouble containing its African Swine Fever pandemic. The outbreak is returning again after not really having been defeated in the first round and the emergence of a resistant strain.

In Taiwan, industrial production is climbing fast, up almost +19% in January from a year ago. Retail sales growth is returning too after lagging for a while, up +3.6% on the same basis.

In the UK, public transport frequency is being reduced as riders continue to shun that form of commute

Wall Street has turned sharply lower today and restarting their losing streak, with the S&P500 down by -1.9% in early afternoon trade and now at its lowest point in a week. There is a tech rout underway and the rising bond yields are accentuating the downward trend. Yesterday the NZX50 Capital Index ended its session down another -1.2%. In fact, in four days, the NZ exchange has lost -3.3% and since the start of the month it is down -7.6% in pretty much a one-way slide.

The UST 10yr yield is up dramatically today, up +8 bps at 1.46%. This sell-off now has global momentum, all based on rising expectations for inflation, expectations central bankers can't halt despite their attempted unison jawboning. The New Zealand Govt 10 year yield has raced up another +18 bps to be at 1.88%. Recall, it was at 1.16% at the start of the month and 1.02 at the start of the year, so the repricing has been sharp, with the largest rises in the past few days.

The savage sell-off of New Zealand bonds yesterday was after the RBNZ was forced to add housing to its policy remit. Bond managers think the RBNZ will now have no option but to raise interest rates to preserve affordability. And that may have been made into a self-fulfilling consequence.

The price of gold will start today down another -US$31 at US$1770/oz and falling.

Oil prices are marginally firmer and are now at just over US$63.50/bbl in the US, while the international price is just over US$66/bbl.

And the Kiwi dollar opens at 74.3 USc with another rise from this time yesterday. It is close to its high more than 4½ years and it has risen +33% in a year. Against the Australian dollar we are holding at 93.4 AUc. Against the euro we have slipped slightly, back at 60.8 euro cents. That means our TWI-5 is now up at 75.2 and also a 4½ year high.

The bitcoin price is now at US$50,827 and +2.4% higher than this time yesterday. It did get up to US$52,076 in between but is drifting lower now. Volatility in the past 24 hours is still high at +/- 4.1%.

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. We will do this again on Monday.