Turmoil everywhere

<p>Kia ora, </p><p>Welcome to Wednesday's Economy Watch where we follow the economic events and trends that affect 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 of turmoil everywhere.</p><p>But first, you will probably know that New Zealand is suddenly back in a full Level 4 lockdown with one (presumably) delta case detected in the Auckland community. That has thrown financial markets a swift curve ball and the RBNZ Monetary Policy meeting outcomes will probably not be what markets were expecting this time yesterday. We will know at 2pm today. In the meantime our currency is sliding lower and wholesale interest rates are heading lower as well.</p><p>Overnight there was a <a href="https://www.globaldairytrade.info/" target="_blank"><strong>dairy auction</strong></a> and surprisingly there was an unexpected, if small, overall price rise - and only the second rise in the past ten auctions, even if it was small. The dominant WMP price did fall -1.5% as expected, but SMP rose unexpectedly and both butter (-4.0%) and cheese (-2.8%) also rose. The overall result was a +0.3% gain in USD terms, but with the NZD falling sharply, the gain was magnified in local currency to +1.7%. <a href="https://www.interest.co.nz/charts/commodities/dairy-prices" target="_blank"><strong>Volumes</strong></a> offered and sold at the auction were modest for this time of year and almost -30% less than this time last year. But overall prices are +27% higher than this time last year.</p><p>Separately, international financial markets turned sour overnight mainly on a surprisingly poor <a href="http://www.interest.co.nz/sites/default/files/embedded_images/marts_current.pdf" target="_blank"><strong>American retail sales data</strong></a> for July. A minor dip was expected after a strong June, but a major dip was reported, more than wiping out June's gain. A sharp fall in car sales is behind this result but sales of general goods were weaker too. Sales in July 2021 may b