Tackling inflation at its source

<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 there has been an international move overnight to try and quell raging inflation levels by tackling oil prices.</p><p>But first, the 'flash' <a href="https://www.markiteconomics.com/Public/Home/PressRelease/c4f8600b63124921b109fba93bf6d523" target="_blank"><strong>November PMIs</strong></a> for the US shows that their expansion remains strong and that is despite it being held back by labour shortages and material delays. They factory expansion rose, their services expansion settled in at prior levels. However, the rate of input price inflation reached a new series high. Sharper increases in cost burdens at both manufacturers and service providers led to soaring prices, with a vast range of materials reported as having risen in cost. The pace of selling price inflation matched October’s series record high, as firms pushed to pass on these higher costs to their customers</p><p>The updated <a href="https://www.richmondfed.org/-/media/RichmondFedOrg/research/regional_economy/surveys_of_business_conditions/manufacturing/2021/pdf/mfg_11_23_21.pdf" target="_blank"><strong>factory survey from the Richmond Fed</strong></a> pretty much tells the same story.</p><p>Today's well-supported <a href="https://www.treasurydirect.gov/instit/annceresult/press/preanre/2021/R_20211123_3.pdf" target="_blank"><strong>UST 7yr bond auction</strong></a> brought higher median yields yet again.</p><p>In China, Aoyuan Group’s dollar bonds dropped sharply yesterday, with some on track for record lows. The property developer defaulted on part of a trust loan two weeks ago, it has emerged. And now a set of Kaisa Group offshore investors have hired advisers because that cash-strapped property developer also missed some dollar bond interest payments due earlier in the month. And the Hong Kong stock exch