Benchmark yields retreat as some key data stumbles

<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 from the major economic powers.</p><p>US <a href="https://cdn.nar.realtor/sites/default/files/documents/ehs-02-2021-summary-2021-03-22.pdf" target="_blank"><strong>existing home sales</strong></a> fell more than the -3% month-on-month than was expected for the shorter February month. In fact they fell a rather sharp -6.6% which is being blamed on rising mortgage interest rates, cold weather and tight supply. However, it is more likely that higher prices (and decreased affordability) are playing an even larger role in the February hesitation. And we should remember they are still +9% higher than a year ago, but that was just before the pandemic started to bite. The median sales price is now up to US$313,000 (NZ$436,000) and +16% higher than a year ago.</p><p>The Chicago Fed's <a href="http://file:/C:/Users/User/Downloads/cfnai-march2021-pdf.pdf" target="_blank"><strong>National Activity Index</strong></a> also slipped more than was expected and in stark contrast to the rise in January. The retreats by the production, personal consumption and housing categories suggests the US economy may have been in contraction in February.</p><p>All the pandemic turmoil hasn't hurt the US central bank's 'earnings'. It has <a href="https://www.federalreserve.gov/newsevents/pressreleases/other20210322a.htm" target="_blank"><strong>reported</strong></a> that it sent US$87 bln to the US Treasury in 2020, up from US$55 bln in 2019. (Interestingly, this US$87 bln transfer is NZ$121 bln and about the same as the New Zealand Government's spending budget for 2020.)</p><p>We should also note that <a href="https://fred.stlouisfed.org/series/WALCL" target="_blank"><strong>the US Fed's balance sheet</strong></a> took an unusually large jump last week, now at US$7.7 tln, and up +$114 bln in one week to a new