Half full? or half empty?

<p>Kia ora,</p><p>Welcome to Tuesday'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 some investors are focusing on the positive, others on the negative today.</p><p>Firstly the bond market is tanking today, even though the equity markets are holding high. Investors may be sensing that the best of the recovery is behind them and the rapid spread of the delta variant is a reminder that we’re going to have to learn to live with the virus for years to come. But despite this, there are still reasons to be optimistic. Firstly, most of the Q2 GDP reports have been quite good and when ours are released next month, it will likely be too.</p><p>Secondly, the US is going to get its <a href="https://www.bloomberg.com/news/articles/2021-08-02/senate-poised-to-deliver-infrastructure-win-for-biden-s-agenda?srnd=premium" target="_blank"><strong>big infrastructure deal</strong></a>.</p><p>And thirdly the US PMIs for July were really very strong - but not quite as strong as markets expected, which is why some investors are pulling back. However that doesn't alter the real expansions in <a href="https://www.markiteconomics.com/Public/Home/PressRelease/34aa9db36f404018999241be9d6bf361" target="_blank"><strong>manufacturing</strong></a>.</p><p><a href="https://www.markiteconomics.com/Public/Home/PressRelease/e8db275755144aeaa6fdaab039e1dfad" target="_blank"><strong>European factories</strong></a> are expanding fast too.</p><p>It is true that <a href="https://www.markiteconomics.com/Public/Home/PressRelease/6ce8358538b54300a9344b1a5f6c3124" target="_blank"><strong>China is in a slowdown</strong></a>, and approaching a stall. But they are the weak one, the outlier. Beijing is eyeing a recovery that is <a href="https://www.yuantalks.com/chinas-top-leaders-signaled-more-support-to-economy-as-recovery-is-not-solid-and-uneven/" target="_blank"><strong>"not solid" and "uneven"</strong></a>