Global bond sell-off intensifies

<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>And today we lead with news high interest rates are becoming the new normal, even as benchmark rates keep in rising fast. Where will it end?</p><p>But first, the overnight <a href="https://www.globaldairytrade.info/en/product-results/" target="_blank"><strong>dairy auction</strong></a> was a good one again, a third consecutive rise, this one by +4.4% in USD terms, up +5.0% in NZD terms. That takes the year-on-year change to -20.6% and an improvement from the -25% change at the last event. And today's gains only take things back to where we were at the start of August. But it is much better than more retreats. A very good sign is that SMP rose +6.6% indicating the foodservice market demand is returning in China. But EU buyers have been active too. We should note two more things; volumes sold at this auction were high, the most in three years. And worth noting is that milk production in both New Zealand and the US is down, and a decline is anticipated for China soon too, encouraging buyers to secure supplies now. NZ production is down -2.1% and American production down -0.2%. Luckily prices are up more.</p><p>In The US, more strong labour market indications. Their <a href="https://www.bls.gov/news.release/jolts.nr0.htm" target="_blank"><strong>August job openings</strong></a> rose by +690,000 from the previous month to 9.61 million, well above the market consensus of 8.8 million.</p><p>The American LMI (<a href="https://www.the-lmi.com/september-2023-logistics-managers-index.html" target="_blank"><strong>Logistics Managers Index</strong></a>) rose more than expected too in September, indicating stronger distribution activity.</p><p>The US retail <a href="https://www.redbookresearch.com/" target="_blank"><strong>Redbook survey</strong></a> rose +3.5% last week above the same week a year ago and