Benchmark wholesale interest rates rise

<p>Kia ora,</p><p>Welcome to Friday’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>And today we lead with news the down-graded Fitch rating is costing the US higher wholesales interest rates. But to be fair, the benchmark UST 10 year yield is only back to what it was in late October, but that was a post GFC high.</p><p>And perhaps we should note a comment by Warren Buffet overnight: "There are some things people shouldn’t worry about," he said. "This is one."</p><p>In fact, the latest US earnings season company reports show that there is a definite shift to reinvest rising profits in new projects rather than returning money to shareholders. This is a big shift and a positive sign, probably an indication that the collective corporate view is that they will have no recession and that opportunity abounds.</p><p>Meanwhile, US <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20231722.pdf" target="_blank"><strong>jobless claims actually fell last week</strong></a> but not by as much as seasonal factors would have expected. (In seasonally adjusted terms there was a reported rise.) There are now 1.836 mln people on these benefits, unchanged in a week. The number of <a href="https://www.challengergray.com/blog/job-cuts-fall-to-lowest-point-in-11-months-in-july-2023-ytd-cuts-up-203-hiring-down-83-yoy/" target="_blank"><strong>job cuts reported</strong></a> in July also fell, and to their lowest level in almost a year.</p><p>Remember, we get the US labour market reports for July tomorrow, and analysts expect non-farm payrolls to grow +200,000, similar to the June expansion.</p><p>And recall yesterday we noted that the <a href="https://www.pmi.spglobal.com/Public/Home/PressRelease/f228fb3309884ca2a2f2c6adab5b18a7" target="_blank"><strong>US Markit manufacturing PMI</strong></a> "improved" slightly (contracted less) to be basically at a steady state helped by new