Bond rout grows

<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 the international bond sell-off is intensifying, although equity holders seem to be ignoring the implications.</p><p>But first in the US, <a href="http://www.redbookresearch.com/" target="_blank"><strong>retail sales grew strongly</strong></a> last week even if it was off a low year-ago base, but they are above equivalent 2019 levels even accounting for inflation.</p><p>Also rising strongly was March <a href="https://www.richmondfed.org/-/media/RichmondFedOrg/research/regional_economy/surveys_of_business_conditions/manufacturing/2022/pdf/mfg_03_22_22.pdf" target="_blank"><strong>factory activity in the Richmond Fed district</strong></a> and putting the weaker February result behind it. At these levels it is well above pre-pandemic levels. New orders, shipments and employment all rose notably. Price pressure, while still high, is easing.</p><p><a href="https://www150.statcan.gc.ca/n1/daily-quotidien/220322/dq220322b-eng.htm?HPA=1" target="_blank"><strong>Canadian producer prices jumped</strong></a> +3.1% in February from January, the sixth consecutive monthly increase, and the largest monthly gain in more than 40 years. The rise year-on-year was +16.4% so this recent monthly rise is an acceleration.</p><p>We had missed it earlier in the month, but the latest tax cut in China of ¥2.5 tln (NZ$570 bln) add to four earlier big efforts, and all-up they now total almost ¥10 tln in tax cuts (NZ$2.2 tln). Compared to what the US (Trump) Administration pushed through in 2017, this Chinese effort is more. Xi is out-Trumping Trump with a supply-side boost, one that will probably be equally ineffective and work against 'common prosperity' as the Trump ones did too.</p><p>And staying in China, the echos of their property developer meltdowns build across the sector. <a href="https://