Fed dread deepens

<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 investors are awaiting the outcome of the US Fed meetings underway which will be known tomorrow. They are nervous that the lateness of their response may bring an abrupt and unsettling policy shift. Wall Street is showing that nervousness with a renewed sell-off.</p><p>Meanwhile, US <a href="https://tradingeconomics.com/united-states/redbook-index" target="_blank"><strong>retail sales are holding</strong></a> with their good gains, but they are over a year-ago base that was pandemic affected.</p><p>And that is confirmed by the Conference Board tracking of US <a href="https://www.conference-board.org/topics/consumer-confidence" target="_blank"><strong>consumer sentiment</strong></a>.</p><p>In their factory sector, the <a href="https://www.richmondfed.org/-/media/RichmondFedOrg/research/regional_economy/surveys_of_business_conditions/manufacturing/2022/pdf/mfg_01_25_22.pdf" target="_blank"><strong>Richmond Fed's latest survey</strong></a> was positive, but less so. Not going away are the cost and price pressures however.</p><p>Today's <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2022/R_20220125_2.pdf" target="_blank"><strong>UST 5 year bond tender</strong></a> has brought sharply rising yields, with the median now 1.49% pa whereas a month ago at the <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20211228_2.pdf" target="_blank"><strong>prior equivalent event</strong></a> it was 1.21%. Demand for this bond remains very strong.</p><p>In South Korea, they <a href="http://www.bok.or.kr/portal/bbs/P0000559/view.do?nttId=10068671&menuNo=200690" target="_blank"><strong>reported their Q4 GDP result</strong></a> yesterday and it was impressive, up +4.1% and its fastest annual pace in 11 years.</p><p><a href="https://www.