Bond yields push higher

<p>Kia ora,</p><p>Welcome to Wednesday’s Economy Watch where we follow the economic events and trends that affect Aotearoa/New Zealand.</p><p>I'm David Chaston and this is the International edition from Interest.co.nz.</p><p>Today we lead with news that bond yields continue to push higher.</p><p>But first, <a href="https://tradingeconomics.com/united-states/redbook-index" target="_blank"><strong>US retail activity is still expanding</strong></a> at a good clip even though the year-on-year base was weakish. But those base effects are falling away and the reported gains are lower now.</p><p>However American households are just not taking on new debt like they used to. <a href="https://www.federalreserve.gov/releases/g19/current/default.htm" target="_blank"><strong>Consumer debt rose</strong></a> by just +US$19 bln in December, and that was much less than the downwardly revised +US$39 bln gain in the previous month. It was also below market expectations of a +US$22 bln rise. They ended the year with household debt levels up just +5.9% and barely holding CPI. From pre-pandemic, household debt is up at just a +2.9% annual rate. (In 2019, it rose +4.6%.)</p><p>But even if they are falling away at the end of the year, at those growth rates, over the whole year, the increase is still material. <a href="https://www.newyorkfed.org/microeconomics/hhdc.html" target="_blank"><strong>Total household debt</strong></a> grew +US$1 tln in 2021 when US GDP grew +US$2.5 tln in the same period. US household debt is now 64.9% of US economic activity (GDP). But that is down from 67.8% at the end of 2020 and 65.2% at the end of 2019.</p><p>The US trade gap in both goods and services rose 27% to hit -US$859 bln in 2021, an annual record as imports grew faster than exports. The imports surged +20.5% while exports rose +18.5% from the prior year. That deficit is -3.6% of US GDP. For reference, the NZ 2021 trade deficit on the same basis was -1.8% of NZ GDP.</p><p><a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2022