Kia ora,

Welcome to Wednesday'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 those in China's trade orbit are doing well, those not less so.

But first in the US, retail sales were flat again last week, with a year-on-year gain of just +1.2% and lower than the prior week's +2.1% gain on the same basis.

And there is no stirring of overall consumer price inflation in the US either, still running at +1.7%. But food is up +3.9% pa, medical care is up +4.9%, and used cars are up a very sharp +10%. The overall CPI is held back by sharp falls in petrol (-15%) and fuel oil (-27%). American consumers expect inflation to rise +3% in the coming year.

China's exports rose almost +10% on a year-on-year basis in September which was as expected. But their imports surged more than +13% on that same basis and far more than expected. In fact, no increase was expected. This has resulted in a much smaller trade surplus even though both exports and imports were at record highs. China's domestic demand is helping revive international trade.

China's whole September surplus was +US$37 bln, of which almost $31 bln was with the USA. China ran a -$375 mln monthly deficit with New Zealand (or a NZ$570 mln monthly surplus for us). With Australia, China ran a -US$5.2 monthly deficit in September. And interestingly, it ran a massive -US$15.8 bln deficit with Taiwan, a country they are threatening to invade.

Vehicle sales in China rose at a faster rate in September, up an impressive +12.8% compared with the same month a year ago and are now running at 24.8 mln per year making this the world's largest car market and well ahead of the US (15.7 mln pa). China's sales of "new energy vehicles (NEVs) jumped +67%.

In Germany, economic sentiment reversed in a widely-watched October survey. It was a sharp retreat and reversed some strong recent gains, triggered by renewed pessimism over Europe's fast-rising second pandemic wave. It took equity markets lower with it.

And the WTO has ruled that American subsidies for Boeing justify the EU imposing US$4 bln in countervailing tariffs. At the same time Boeing reported large falls in orders and deliveries from its order books.

The WTO has also said 2020 will get a -9.2% decline in total world trade, to be followed by a +7.2 rise in 2021. That will only take global trade levels back to 2017 levels however. By that standard, New Zealand has been trading very much better than these global averages.

Wall Street is -0.4% lower today as recorded by the S&P500. Overnight, European markets fell about -0.6%. Yesterday, Shanghai traded flat, Hong Kong didn't trade due to a typhoon shutdown, and Tokyo was up +0.2%. The ASX200 ended its session up +1.0% from the prior day, and the NZX50 Capital Index was up +0.8%.

The latest global compilation of COVID-19 data is here. The global tally is 37,955,000 and up at a faster pace of +340,000 in one day.

The largest number of reported cases globally are still in the US, which is up 51,000 in one day to 8,053,000.

In Australia, there have now been 27,317 COVID-19 cases reported, and that is +31 more cases than we reported yesterday.

The UST 10yr yield is lower by -5 bps this morning, now at 0.73%.

The price of gold is down -US$31 or -1.6% this morning and now at US$1891/oz. Silver is down -4.4%.

Oil prices are up by about +US$1.50 today, now just under US$40.5/bbl in the US, while the international price is up a bit less to just on US$42.50/bbl. OPEC is watching a rebound in US crude production with some concern.

The Kiwi dollar starts today marginally lower at 66.4 USc. Against the Australian dollar we are firmer at 92.5 AUc and a gain of +½c. Against the euro we are also firmer at 56.6 euro cents. And that means our TWI-5 is slightly higher at 69.8.

The bitcoin price is a little softer today, now at US$11,401 and -1.4% lower than this time yesterday.

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, tomorrow.