China grumpier with Australia

<p>Kia ora,</p><p>Welcome to Thursday'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 China is signaling more action is coming from it to punish Australia.</p><p>But first, the US <a href="https://www.federalreserve.gov/monetarypolicy/files/fomcminutes20210616.pdf" target="_blank"><strong>Fed minutes were released</strong></a> today and all eyes were on tapering signals. The market caution with the risk-off mood has been largely attributed to hesitation ahead of this release. And in fact, these minutes show that they sense a move to tapering is getting closer (page 11). The minutes also showed they are seeing 'progress' on the inflation front too. That resulted in an overall signal of two interest-rate hikes for 2023, according to the median of their projections, while seven of 18 wanted to raise interest rates next year. Thirteen officials viewed inflation risks were weighted to the upside, up from five in March, their forecast showed.</p><p>The rise analysts had expected in <a href="https://www.bls.gov/news.release/jolts.nr0.htm" target="_blank"><strong>job openings</strong></a> in June hasn't happened, holding steady at 9.2 mln.</p><p>Separately, the US booked total vehicle sales in June at the annual rate of 15.4 mln, which was a sharp drop from the 17 mln annual rate in May. The US is the second largest vehicle market in the world after China which sold 25.8 mln vehicles in the year to June.</p><p>US <a href="https://www.mba.org/2021-press-releases/july/mortgage-applications-decrease-in-latest-mba-weekly-survey" target="_blank"><strong>mortgage application activity fell</strong></a> for the second week in a row, and on top of earlier falls, now reaching the lowest level since the beginning of 2020. A lack of houses for sales is restraining mortgage activity. <a href="http://www.freddiemac.com/pmms/" target="_blank"><strong>Low interest rates</strong></a> are