Equities rally on bond sell-off pause

<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>Today we lead with news Wall Street is rallying today as the bond sell-off hits a pause.</p><p>But first, the Omicron wave is biting into American jobs now. Last week should have seen a large seasonal fall in jobless claims but the actual fall was less than expected. <a href="https://www.dol.gov/sites/dolgov/files/OPA/newsreleases/ui-claims/20220091.pdf" target="_blank"><strong>It decreased by an actual -83,000</strong></a> when -139,000 fall in jobless claims was expected. Now just over 2 mln people are on these benefits. Most other news reports will focus on a rise in the seasonally adjusted number, but there isn't in fact any rise, only a lesser than-expected fall. To say jobless claims 'rose' misrepresents what actually happened.</p><p>But there was a real <a href="https://www.nar.realtor/newsroom/annual-existing-home-sales-hit-highest-mark-since-2006" target="_blank"><strong>fall in existing home sales</strong></a> in December, driven by a record low availability of houses for sale - just 910,000 in the whole country and an unprecedented level. As a consequence, prices rose to a median of US$358,000 (NZ$526,000) a record, and completing ten straight years of year-on-year price increases. But the expectation is growing that sharpish mortgage rate rises will quell some of this. 30% of their home sales are to first home buyers.</p><p>Meanwhile, <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf" target="_blank"><strong>new housing starts rose</strong></a> more than expected to an annualised rate of just over 1.7 mln in December, the highest since March and beating market forecast of 1.65 mln Housing demand remains strong although high prices for building materials, (especially timber) supply constraints and labour shortages persist and are weighing on construction times. But