Downward pressures building in China

<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 downward pressures are starting to build in China.</p><p>But first, the overnight <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>dairy auction</strong></a> was a very good one with overall prices up +4.3% in US dollars and up +5.1% in New Zealand currency. There are many positives. The key WMP price rose slightly more than expected, up +2.7% but the foodservice products were all stronger than expected with SMP up +6.6%, butter up +4.7% and the star of the show was the cheddar cheese price up +14%. And in a virtuous influence, all this came as the Kiwi dollar retreated. On a pure calculation basis that suggests a farmgate milk price of NZ$8.80/kgMS and far above the new higher estimate of the dairy analysts. This is all 'good news' because we are now heading into the peak milk flow part of the dairy season.</p><p>Global attention is now turning to the US Fed's policy review tomorrow. The expected unwind of their easy money policies has traders watching for how that will reverberate through financial markets.</p><p>Elsewhere, <a href="https://www150.statcan.gc.ca/n1/daily-quotidien/211102/dq211102a-eng.htm?HPA=1" target="_blank"><strong>Canadian building permits</strong></a> rose more than expected in September and making back some earlier weakness.</p><p><a href="https://www.censtatd.gov.hk/en/press_release_detail.html?id=4918" target="_blank"><strong>Hong Kong retail sales</strong></a> rose +7.3% in September from a year ago, but that is still very disappointing for them and they remain in a deep funk. This data is still -6.4% lower than the September 2019 level, and an amazing -23% lower than the September 2018 level. China's takeover has left the City very badly damaged in a way it is now illegal to discuss there.</p><p>In Bei